What happened

Shares of Syros Pharmaceuticals (SYRS 6.75%) dropped by as much as 49.1% Monday after the company provided a clinical update on its lead drug candidate. Investors probably couldn't tell by the press release, which had a rosy takeaway on the news, but just one of 48 evaluable patients taking SY-1425 as a potential stand-alone treatment for acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS) had a complete response. 

The phase 2 trial for the two bone marrow diseases remains ongoing, but the company will instead focus on the potential for SY-1425 to be used in a combination therapy with both azacitidine, a standard chemotherapy drug, and Darzalex from Johnson & Johnson. As of 12:42 p.m EST, the stock had settled to a 29.8% loss. 

A man standing on and looking down a line chart showing steep losses.

Image source: Getty Images.

So what

Despite the gloomy outcome for the lead drug candidate as a stand-alone therapeutic agent, Syros Pharmaceuticals reported a broad range of data it claims show SY-1425 could hold promise in a combination therapy. That's because the drug has previously been shown to selectively control expression of genes associated with the bone marrow diseases.

The new data show the drug increased expression of CD38, an important protein located on the surface of immune cells that plays a critical function in overall immune system function. So, the thinking goes, perhaps it will be better to deploy SY-1425 as part of a one-two oncology punch.

Of course, as today's share price movement indicates, Wall Street is coming to grips with the reality that a combination therapy may be the only way for the tiny biopharma to find a market for its oral first-in-class drug. Given that data on that front don't yet exist -- and won't be available until sometime in 2018 at the earliest -- investors aren't sticking around to find out.

Now what

Syros Pharmaceuticals is touting that its novel gene expression platform could pave the way for a new group of effective therapies for a range of metabolic diseases and cancers. On paper, that may still be possible, but the company appears to be shifting its approach for both of its named pipeline programs to combination therapies. That could limit the potential of the platform going forward, and no doubt constrains the range of possible outcomes for investors.