Syros Pharmaceuticals Inc (SYRS) 2018 Q1 法說會逐字稿

Welcome to the Syros Pharmaceuticals' First Quarter 2018 Financial Results and Corporate Update conference call.

(Operator Instructions)

As a reminder, this call may be recorded.

I would now like to introduce your host for today's conference, Ms. Naomi Aoki, Head of Corporate Communications.

This morning we issued a press release with our first quarter 2018 financial results along with upcoming milestones and recent platform and pipeline highlights. This release is available on the Investors and Media section of Syros' Web Site at www.syros.com.

We will begin the call with prepared remarks by Dr. Nancy Simonian, Chief Executive Officer; Dr. David Roth, Chief Medical Officer; and Joe Ferra, Chief Financial Officer. Then we will open the call for questions. Eric Olson, our Chief Scientific Officer and Jeremy Springhorn, our Chief Business Officer, are also on the call and will be available for Q&A.

Before we begin, I would like to remind everyone that statements we make on this conference call will include forward-looking statements.

Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors including those set forth in the Risk Factors section of our annual report on Form 10K as updated in our most recent quarterly report on Form 10Q and any other filings that we make with the SEC in the future.

In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements.

I would now like to turn the call over to Nancy.

Thanks, Naomi. Good morning, everyone, and welcome to Syros' first earnings call. Our vision for Syros is build a great and enduring Company that translates our leadership in gene control into medicines that provide a profound and durable benefit for patients with serious diseases.

I'm confident that we are well on our way to achieving that vision thanks to the promise of our clinical programs, a robust pre-clinical and discovery pipeline, a powerful platform and our exceptional people and culture. Leveraging those assets, we continued to make great strides in the first quarter, positioning us for a potentially transformative year in 2018.

Let me begin with a brief recap of our first quarter accomplishments before providing an update on our two clinical stage assets, SY-1425 and 1365.

In January, we entered into a collaboration with Incyte to discover and validate novel drug targets for Myeloproliferative Neoplasms leveraging our platform to benefit patients with diseases beyond our current areas of focus.

In February, we completed a $46 million follow on offering, fortifying our cash position to fund our plan operations into 2020 and to drive our two clinical stage programs, 1425 and 1365, to key value inflection points.

In March, we announced the appointment of Joe Ferra as our Chief Financial Officer. As many of you know, Joe came to us from JMP Securities where he was most recently the Managing Director and Co-Head of Health Care Investment Banking. I firmly believe that people are our greatest assets in building a successful Company and with Joe's addition, I am confident we have the right team and the right expertise to do just that.

I would now like to provide a quick update on our clinical and pre-clinical program before I ask David Roth, our Chief Medical Officer, to share his clinical perspective.

Fourteen-twenty-five is our first-in-class selective RAR alpha agonist that is currently in a Phase 2 biomarker directed combination trial in AML and MDS patients. The primary objective of the trial is to evaluate the safety and efficacy of 1425 in combination with either azacitidine or daratumumab in patients who are positive for the RARA and IRF8 biomarkers discovered by our platform. And we plan to present initial clinical data on both combinations in Q4.

This morning we also announced that we are adding a cohort of biomarker negative AML patients to our 1425 trial to support the ongoing development of a commercial companion diagnostic.

Turning to 1365, our first-in-class selective CDK7 inhibitor, we presented new pre-clinical data last month at AACR. The data showed that 1365 demonstrated potent anti-tumor activity in multiple models of heavily pre-treated ovarian cancer, providing strong support for the planned expansion of our Phase 1 trial into ovarian cancer as both a single agent and in combination.

David will discuss the data in more detail, but I wanted to highlight the growing excitement around selective CDK7 inhibition as an important therapeutic approach for a range of cancers.

CDK inhibitors, specifically for 6 and CDK7 inhibitors, was a subject of a major symposia at AACR. The energy was palpable and the attendance so high that an overflow room was required. Thirteen-sixty-five is the most advances selective CDK7 inhibitor in the clinic and it was exciting to see growing recognition of this opportunity.

The dose escalation portion of the 1365 Phase 1 trial in advanced solid tumor patients is ongoing and we are on track to present data from this portion of the trial in Q4. We also expect to open single agent and combination expansion cohorts mid-year in patients with ovarian and breast cancers.

In addition to our two clinical programs, we have three programs in pre-clinical development. An oral selective CDK7 inhibitor, a CDK12/13 inhibitor and an undisclosed macrophage target in immuno-oncology. We plan to select a new drug development candidate from our pre-clinical pipeline this year with the aim of filing an IMD in 2019.

So as you can see, we are rapidly advancing toward our vision. Our leading gene control platform is focused on elucidating regulatory regents of the genome to home in on which genes to control in which cells for which patients and to discover and develop a new wave of drugs that can control the expression of those genes.

In less than five years, our platform has generated multiple novel approaches aimed at treating disease as exemplified by two first-in-class clinical stage programs, three pre-clinical programs and two discovery programs in both cancer and sickle cell disease. I'm excited about the opportunities ahead to make a difference for patients.

I would now like to turn the call over to David to give a more comprehensive overview of 1425 and 1365.

Thanks, Nancy, and good morning to everybody on the call. I would like to begin this morning by discussing SY-1425. After a decade's long drought, there have been four new drug approvals in AML in the past year with others in clinical development. Despite this rapidly evolving landscape, there continues to be a significant need for safe and well tolerated therapies that extend survival, improve quality of life and combine well with other agents.

Nearly half of newly diagnosed AML patients are unfit, by which we mean they are not suitable candidates for standard intensive chemotherapy. Relapsed and refractory AML patients progress quickly and recently approved targeted therapies address only limited subsets of AML patients. There have been no new drugs approved for higher risk MDS since 2006 and the prognosis for these patients remains poor.

AML and MDS are complex and heterogeneous diseases that will require a broad arsenal of drugs to address various patient populations and disease subtypes. And it's increasingly clear that those drugs will need to be used in combination to attack the disease on multiple fronts.

Fourteen-twenty-five represents a promising therapeutic approach for RARA and IRF8 biomarker positive patients. It has broad combination potential and we continue to see a significant opportunity for 1425 in AML and higher risk MDS. Fourteen-twenty-five has a unique mechanism of action which counteracts the effect of high RARA and IRF8 expression in these subsets of patients to promote myeloid differentiation.

As we reported late last year, initial data from the Phase 2 trial showed that 1425 has encouraging clinical and biological activity as a single agent in biomarker positive relapsed or refractory AML and higher risk MDS patients supporting our combination strategy for 1425.

As a single agent in these difficult to treat AML and MDS patients, 43 percent of the valuable patients had improved blood counts and/or reduced bone marrow blasts and 57 percent had stable disease. There was strong evidence of myeloid differentiation consistent with the underlying mechanism of action of 1425.

And importantly, chronic daily dosing of 1425 as a single agent was generally well tolerated with a majority of adverse events being low-grade. Notably, 1425 has not demonstrated significant myeloid suppressive activity, suggesting it would not have overlapping toxicities with other therapies that may be used with 1425 to treat AML and MDS.

We were encouraged by the demonstration of single agent activity in those particularly sick, relapsed AML and higher risk MDS patient population and we believe that, together with 1425's tolerability profile, these data provide a strong rationale for evaluating 1425 as a combination agent.

We are focusing initially on the combinations with azacitidine and with daratumumab based on pre-clinical data showing significant tumor killing activity of 1425 in combination with each of these agents.

In pre-clinical models, 1425 combined with azacitidine resulted in deeper and more durable responses than either drug alone. Additionally from a mechanistic perspective, while 1425 primarily inducing differentiation, when combined with azacitidine we observed a apoptotic cell death of leukemia cells.

Our pre-clinical data also provide a strong mechanistic rationale for the combination with daratumumab, an anti-CD38 antibody approved in multiple myeloma. CD38 is one of the most strongly induced genes in AML cells in response to 1425. And in pre-clinical studies we saw that 1425 sensitizes AML cells to daratumumab, triggering a new mediated tumor cell death.

Notably, AML cells do not normally express high levels of CD38 so they wouldn't be expected to response to an anti-CD38 targeted therapy. The clinical data from the single agent cohorts of our Phase 2 trial provide additional support for the ongoing development of the daratumumab combination with 85 percent of our patients who had valuable bone marrow samples pre- and post-treatment showing an increase in CD38 expression after just one 28-day cycle of treatment with 1425.

Enrollment is ongoing now to assess 1425 in combination with azacitidine in biomarker positive, newly diagnosed, unfit AML patients. As well as to assess 1425 in combination with daratumumab in biomarker positive, relapsed or refractory AML and higher risk MDS patients. We expect to report initial clinical data from both of these biomarker positive cohorts in the fourth quarter.

In addition to assessing safety and efficacy in the combination (positive) cohort with DARA, we'll also be looking at quantifying the level of CD38 expression with an eye toward better understanding the level of CD38 as needed to see clinical activity.

As Nancy mentioned at the outset of the call, we're now adding a biomarker negative cohort of approximately 25 newly diagnosed, unfit AML patients who will receive 1425 in combination with azacitidine. We believe having clinical data from both biomarker positive and negative patients will be valuable in the development of our companion diagnostic for the 1425 program.

I'd like now to turn to our second clinical candidate, SY-1365. I previously led the teams responsible for early clinical development of the CDK4/6 inhibitor, palbociclib, in breast cancer. And I can say now that I see a similar level of excitement and strong interest in our CDK7 inhibitor, SY-1365, as I saw back then.

CDK7 is a transcriptional kinase that acts as a master regulator of transcription and cell-cycled progression. Many cancers are perpetually committed to the cell-cycle and many have also developed adaptations to successfully progress through the cell-cycle despite having damaged DNA and genomes. By selectively and potently inhibiting CDK7, 1365 can overcome these adaptations at multiple points.

Our pre-clinical studies show that 1365 preferentially kills cancer cells and lowers the expression of (tumor riding) genes, including oncogenic transcription factors and anti-apoptotic proteins and it has shown significant anti-tumor activity in pre-clinical models of a range of difficult to treat solid tumors and blood cancers.

Thirteen-sixty-five is a selective and potent component inhibitor of CDK7. It's currently in the dose escalation portion of a Phase 1 trial in patients with advanced solid tumors and we plan to open expansion cohorts mid-year that will evaluate 1365 in multiple populations with ovarian cancer and breast cancer as single agent and in combination with standard-of-care therapies.

For ovarian cancer we plan to evaluate single agent 1365 in cohort of ovarian cancer patients who are relapsed after multiple lines of prior treatment and in patients with primary platinum refractory disease. We also plan to evaluate 1365 in combination with carboplatin in relapsed ovarian cancer patients considering sensitive to platinum.

For breast cancer we're focused initially on patients with hormone receptor positive metastatic disease who progressed after treatment with a CDK4/6 inhibitor plus an aromatase inhibitor and we'll evaluate 1365 in combination with fulvestrant.

This clinical strategy follows pre-clinical testing in which 1365 demonstrated significant antiproliferative and pro-apoptotic activity in a range of models of ovarian and breast cancers, as well as combination synergy reflecting the broad potential of 1365 in these initial tumor indications.

As Nancy mentioned, some of the 1365 pre-clinical data was newly presented at AACR last month. Together with researchers at the Dana-Farber Cancer Institute, we evaluated the anti-tumor activity of 1365 in ovarian PDX models developed from patients treated with multiple prior therapies including standard-of-care platinum based therapies and PARP inhibitors.

In these studies, 1365 inhibited tumor growth in 10 of the 17 tested ovarian PDX models of treatment relapse disease and even led to complete regressions. Notably, these responses were observed irrespective of BRCA status or sensitivity to a PARP inhibitor.

The data also showed that sensitivity to 1365 was associated with low expression of Bcl-xL, which is a known apoptosis inhibitor, and RB1, a known tumor suppressor, pointing to potential biomarkers that may be predictive of response to 1365.

We believe 1365 has potential across a number of cancers as both a single agent and in combination. We are focusing the initial expansion cohort on advanced high-grade serious ovarian cancer and HR positive metastatic breast cancer patients because of the strong pre-clinical data and the significant unmet need in these cancers.

As you may know, about 70 percent of ovarian cancer patients have high-grade serious ovarian cancer and most patients have advanced disease at initial diagnosis. Current standards-of-care include platinum based chemotherapy where the majority of patients, even those who initially respond, relapse within a year.

Regarding breast cancer, roughly 80 percent of new breast cancer patients diagnosed in the U.S. each year are hormone receptor positive. Standard-of-care for metastatic HR positive breast cancer now includes a CDK4/6 inhibitor plus an a aromatase inhibitor. And despite treatment, about half of these patients progress within roughly two years and second line hormone-based therapies have limited efficacy underscoring the need for new therapies.

Again, we expect to present data from the dose escalation portion of the Phase 1 trial in the fourth quarter. As a reminder, the dose escalation phase of this trial is open to patients with advanced solid tumors of any histology and the prior purpose is to establish the maximum tolerated dose and also to choose an appropriate dose and dosing schedule for the expansion phase of the trial.

In addition, we'll also be assessing safety, pharmacokinetics, pharmacodynamics and hopefully proof of mechanism.

I'd like to conclude my remarks by saying how truly excited I am about each of these programs. Both 1425 and 1365 have the potential to make a significant difference in the lives of many patients who are currently in dire need of better treatment options and I look forward to keeping you updated on our progress.

I'd like now to turn the call over to Joe Ferra, our Chief Financial Officer, to discuss our first quarter financials.

Thanks, David. As Nancy noted earlier in the call, Syros continues to operate from a position of financial strength. This will enable us to continue to fund investments in our clinical stage portfolio, including the ongoing trials that David just reviewed while further leveraging the potential of our pre-clinical pipeline and platform.

Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities will support our operating expenses and CapEx requirements into 2020.

Now, I'd like to turn to our first quarter 2018 financial results. We ended the first quarter with $121.7 million in cash, cash equivalents and marketable securities. This compares with $72 million on December 31st, 2017.

This increase in cash reflects aggregate gross proceeds of approximately $46 million from our underwritten common stock offering in February, $1.4 million in proceeds from the private placement of stock to Incyte concurring with that offering and the $10 million up-front payment and $10 million purchase of Syros common stock in connection with our collaboration with Incyte which was announced in January.

We recognize $0.4 million of revenue from that collaboration with Incyte in the first quarter as compared to $1.1 million of revenue for the same period in 2017 from a research agreement with a multi-national pharmaceutical Company which has now been completed.

R&D expenses for the first quarter were $11.1 million compared to $9.6 million for the same period in 2017. This increase was primarily attributable to increased external R&D costs associated with our ongoing clinical trials.

G&A expenses were $4.1 million for the first quarter compared to $3.1 million for the same period in 2017. This increase was primarily attributable to an increase in employee related costs including salary, benefits and stock-based compensation, as well as legal and professional fees associated with entering into the collaboration with Incyte.

Finally, we reported a net loss for the first quarter of $14.5 million, or $0.48 per share, compared to a net loss of $11.5 million, or $0.49 per share, for the same period in 2017.

With that, I will turn the call over to the Operator for questions.

(Operator Instructions)

Ted Tenthoff with Piper Jaffray.

I had questions for 1365. As we start to look going into these expansion cohorts, what is going to constitute activity, in your mind, such that this is going to be an indication or an application where you will make the investment and pursue? Thank you.

As you know, the expansion phase involves multiple different cohorts of patients, different stages of their disease, and some in combination and some in single agent.

And we have an idea for each of those cohorts either based on what the combination alone does or, if it's on a single agent, what we think is going to be necessary to move it along. And we designed the trial to be very flexible which would allow us to go with where we think the data is most interesting, potentially expand there, we have the opportunity to add additional cohorts.

I think each one will have a different hurdle, but we're using that to really guide which combinations or single agent arms we want to move forward.

Well, that makes sense, too, just in similar to just how the landscape is evolving to. The flexibility will be important, so. And just remind me when we expect data from the escalation portion?

The data from the escalation portion we plan to present in the fourth quarter and we plan to start enrolling in the expansion phase mid-year.

Kenneth Atkins with Cowen.

Could you give us a bit more detail about the companion diagnostic test you plan to develop for 1425? What type of test will it be and will the additional biomarker negative patients be helpful in developing that test?

Yes, we have an ongoing relationship with for a clinical lab test that we're using to select patients in the ongoing trial. But then part of the ongoing development of the drug is obviously to develop a companion diagnostic. And so we're evaluating different companion diagnostic partners. At this point in time we really haven't said much more, but it's very important and our plan is to developing the companion diagnostic in conjunction with our clinical plan.

And as you know, it's pretty common in the development of a companion diagnostic to have the ability to evaluate both biomarker negative and positive patients. That's really the rationale for looking at some biomarker negative patients for the companion diagnostic development.

And then also in the data readout in Q4, will the biomarker negative patients be included in that release?

I'm going to ask David to answer that.

Yes, so right now we're just beginning to initiate the enrollment of those patients. So we've just announced that so I wouldn't expect those types of patients to be in the fourth quarter.

And just to add to what David said, the primary objective of the trial has not changed at all in that it's really to evaluate 1425 in combination with azacitidine and daratumumab in the biomarker positive patients. And then therefore, applying to do that in the fourth quarter.

[Leah Can] with Oppenheimer.

On 1365 and breast cancer, is there a reason to believe that her2 status would not matter?

Leah, I'm going to ask David to answer that question.

Right now our data are focused on hormone receptor positive patients and the opportunity that we have identified relates to current approaches with treatment standards including the CDK4/6 inhibitors in her2 negative patients. But we're continuing to explore the breadth of opportunity in breast cancer and it may be early to say whether it does or doesn't matter.

I'll just add that we see these initial cohorts in HR positive breast and ovarian cancer as the foundation for 1365, but we believe that there's the opportunity for applications beyond this. So as David said, we're going to continue to evaluate 1365 in a broader set of tumors such as he described.

(Operator Instructions)

[Jody Marino] with Ross Capital.

I have two questions, both about 1365. As this clinical program is moving along, are there genomic [dependencies] that you have gathered from pre-clinical work which would then help you segment the population better, potentially pre-select similarly to what you did with 1425?

I know that you mentioned several potential expansion cohorts depending on, I think, it was platinum therapy, hormone therapy, but that sounds a little bit like clinical profiling, not necessarily genomic profiling like you did with 1425. So what can you tell us in that direction?

I'm going to turn over to David because he presented some of these data at AACR and maybe he can describe a little bit more of what we learned from that data and how we're using it.

Yes, Jody, you may recall from AACR if you had the opportunity, we had a poster that was largely focused on new data we've generated in a range of ovarian cancer, patients who are xenograft models, as well as a bunch of cell-line based assets. And we were able to show that the opportunity for responses or sensitivity to the drug was strongly correlated with changes in the RB pathway, as well as the apoptotic control pathway, in particular through Bcl-xL.

And so those are important clues to helping us understand a future development of a patient selection strategy and we certainly have several hypothesis that we're actively exploring in our ongoing Phase 1 trial right now. I think that's the foundation for the beginning of our effort there.

And another one on the same program. There is another CDK7 inhibitor, which I believe you know, in Phase 1 originally from Cancer Research U.K.. Just extrapolating from pre-clinical data that you've seen, that you know from your program and that we've seen from theirs, are you able at this point to comment or extrapolate on potential differences as they might manifest in the clinic between this compounds just from what we know right now?

Jody, obviously we're aware of other people developing CDK7 inhibitors and I would just say and then we've characterized them and I think that we aren't probably going to comment on anything specifically related to the competition. But I would say that we remain very confident in terms of the profile of 1365 and the ability to treat a lot of really important cancers.

And we haven't seen anything that is concerning to us in terms of our ability to be the leader in this space.

At this time, I'm showing no further questions. I'd like to turn the call back over to Nancy Simonian for closing remarks.

As I said at the start of the call, our vision for Syros is and has always been to build a great and enduring Company that translates our leadership in gene control into a new wave of medicines that provide a profound and durable benefit for patients. The progress we have made toward that vision is a testament to the power of our platform, the promise of our programs and the quality of our people.

With key data readouts for our two clinical programs expected in the fourth quarter, 2018 has the potential to be a transformative year for Syros. We are excited about what's ahead and about making an impact in patients' lives.

With, I will conclude the call and thank you for your continued support and interest.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect.