Syros Pharmaceuticals Inc (SYRS) 2018 Q2 法說會逐字稿

Good morning, and welcome to the Syros Pharmaceuticals Second Quarter 2018 Financial Results Conference Call.

(Operator Instructions)

This call is being webcast live on the Investors & Media section of Syros' website at www.syros.com. Please be advised that today's call is being recorded.

(Operator Instructions)

At this time, I would like to turn the call over to Naomi Aoki, Head of Corporate Communications at Syros.

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

We will begin the call with prepared remarks by Dr. Nancy Simonian, our Chief Executive Officer; Dr. David Roth, our Chief Medical Officer; and Joe Ferra, our Chief Financial Officer. Then we will open the call for questions.

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 10-K, as updated in our quarterly reports on Form 10-Q, and any other filings that we may 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 thank you for joining us today. Syros has had a very productive second quarter, and we are pleased to share our recent progress with you.

We have spent the last 5 years building a strong pipeline of drug candidates to control the expression of genes, with the aim of providing a profound benefit for patients with severe diseases that are not adequately addressed by existing therapeutic approaches.

Through these efforts, we have advanced our 2 lead assets, SY-1425 and SY-1365, into Phase II and Phase I clinical studies. We have also generated a deep early-stage pipeline with 3 preclinical programs, including an oral CDK7 inhibitor, a CDK12/13 inhibitor and a macrophage-related immuno-oncology program, as well as 2 discovery programs in cancer and in sickle cell disease.

Over the course of the next several months, we plan to report initial data from our Phase II trial of 1425 in combination with azacitidine and with daratumumab in AML and MDS patients. We also expect to present what we believe will be the first ever data reported in patients on a selective inhibitor of CDK7, a drug target that is rapidly gaining recognition as an important new approach in a range of difficult-to-treat solid tumors and blood cancers. Together, we believe these clinical results will yield important insights for these programs and, we hope, bring us closer to our vision of translating our leadership in gene control into medicines that provide a profound benefit for patients.

Earlier this year we laid out several key objectives for 2018. In addition to reporting clinical data for 1425 and 1365 in the fourth quarter of this year, these objectives included opening expansion cohorts in the Phase I trial to evaluate 1365 in ovarian and HR-positive breast cancer in both a single agent and in combination with standard-of-care therapies; naming a new drug development candidate from our preclinical pipeline; leveraging our platform to continue to advance and fuel our early-stage pipeline; and finally, to continue to build our development organization and capabilities to support our longer-term evolution into a fully integrated company. At midyear, I am proud of the progress we've made toward these goals, and I am confident that we are entering the second half of 2018 with positive momentum.

As our Chief Medical Officer, David Roth will discuss shortly in greater depth, we expect to open the expansion cohorts in the Phase I trial of 1365 in the fall and remain on track to name our next development candidate by year-end. We're also pleased to report that the European Medicines Agency recently granted 1425 orphan drug designation for the treatment of AML.

On the people front, we've welcomed Michael Bonney to our board of directors in June. Mike has tremendous strategic, operational and commercial leadership experience, and we are confident that he will provide invaluable guidance as we prepare to enter the next phase of our growth and continue to mature as a company.

Our focus on controlling the expression of genes to treat disease represents a largely unexploited field for drug discovery and development with broad potential, and I am excited about the opportunities ahead to make a difference for patients.

I would now like to turn the call over to David for a more comprehensive overview of our clinical programs.

Thanks, Nancy, and good morning to everyone on the call.

I'll begin by discussing SY-1425. 1425 is our first-in-class selective RARa agonist that is currently in a Phase II combination trial in patients with AML and higher-risk MDS who are positive for our RARa and IRF8 biomarkers. The primary objective of the trial is to evaluate the safety and efficacy of 1425 in combination with azacitidine in newly diagnosed, unfit AML patients, and with daratumumab in relapsed or refractory AML and higher-risk MDS patients. In the pilot cohort with daratumumab, we are also assessing the time course and the level of CD38 induction that we see in patients, with the aim of better understanding the potential relationship between CD38 induction and clinical activity.

Last month, we hosted a well-attended KOL breakfast featuring 2 leading physicians: Dr. Rachel Cook from the Knight Cancer Institute at Oregon Health and Science University in Portland and Dr. Eytan Stein from Memorial Sloan Kettering Cancer Center in New York. Both have extensive experience treating AML and MDS.

In their presentations, both doctors spoke to the grim prognosis for patients with these diseases and the significant unmet need that still remains despite recent drug approvals. They highlighted the complexity and heterogeneity of these diseases and the urgent need for new medicines that can be safely combined with other treatments to extend survival and to improve quality of life in this generally elderly population in which curative intent is not the goal. Dr. Cook noted that many older, unfit AML patients currently forego treatment altogether because of concerns around side effects, accessibility and quality of life. Despite recent drug approvals in AML, Dr. Stein highlighted the dearth of approvals and the lack of treatment options for higher-risk MDS patients, describing the disease as an area ripe for new drug development. For anyone interested in hearing more, an archived webcast of the event is available on our website.

Given 1425's unique mechanism of action, its tolerability profile, its single-agent activity in biomarker-positive AML and higher-risk MDS, and the strong preclinical data supporting the combinations with azacitidine and with daratumumab, we believe these 2 combinations have the potential to address significant unmet needs for subsets of AML and MDS patients. As Nancy mentioned earlier in the call, we remain on track to report initial clinical data on both these combinations in the fourth quarter.

Turning now to our second candidate, SY-1365. 1365 is our first-in-class selective CDK7 inhibitor, which is currently in the dose-escalation portion of our Phase I clinical trial in patients with advanced solid tumors. As we discussed last quarter, there is growing recognition around the potential for CDK7 inhibition to be a transformative new approach for treating cancer, with the potential to disrupt 2 important processes that cancer cells use to survive and thrive: the increased expression of cancer-promoting genes and the uncontrolled cell cycle progression. 1365 is the most advanced selective CDK7 inhibitor in clinical development, which adds to our excitement as we look forward to reporting data from the dose-escalation portion of our trial in the fourth quarter.

As a reminder, the dose-escalation portion of the trial is open to patients with advanced solid tumors of any histology, and the primary purpose is to establish a maximum tolerated dose and an appropriate dose and dosing schedule for the expansion phase of the trial. We expect data from the dose escalation to include details on safety, pharmacokinetics, pharmacodynamics and, importantly, we're measuring direct engagement of the target, CDK7, as well as downstream effects, to determine proof of mechanism.

At the American Society of Clinical Oncology or ASCO, meeting in June, we presented on the design of our Phase I trial. As Nancy mentioned, we expect to open expansion cohorts this fall to evaluate 1365 in multiple patient populations with ovarian and breast cancers as both a single and combination agent. For ovarian cancer, we plan to evaluate 1365 as a single agent in patients who have 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 who are still considered sensitive to platinum-based therapies. And for breast cancer, we're focused initially on patients with HR-positive metastatic disease who have progressed after treatment with a CDK4/6 inhibitor plus an aromatase inhibitor, and we'll evaluate 1365 in combination with fulvestrant.

The clinical strategy is rooted in 3 key observations. First, in preclinical studies, 1365 demonstrated robust antiproliferative and pro-apoptotic activity in a range of models of ovarian and breast cancers, as well as synergy in combination with existing therapies, including carboplatin and fulvestrant.

Second, there's a significant need for new therapies in both diseases. The majority of ovarian cancer patients, even those who initially respond to standard-of-care platinum-based therapies, relapse within a year, and treatment options for these patients are limited. In hormone-receptor-positive breast cancer, CDK4/6 inhibitors have emerged as the standard of care. However, despite the success of these therapies, patients eventually relapse, and second-line hormone-based therapies have limited efficacy, underscoring the need for new medicines for this growing patient population.

Third, in addition to the strong preclinical activity and unmet need, there is a mechanistic rationale for starting in these cancers. As we presented at the American Association for Cancer Research, or AACR, meeting this past April, preclinical data suggests that alterations in the RB pathway, a known tumor suppressor, as well as in apoptotic control pathways, are associated with sensitivity to SY-1365 in ovarian cancer models. Notably, genomic data tell us that approximately 2/3 of high-grade serous ovarian cancer patients have alterations in the RB pathway, and alterations in the RB pathway have recently emerged as a resistance mechanism to CDK4/6 inhibitors in breast cancer.

So while our initial focus is on ovarian and HR-positive breast cancers, we believe 1365 has potential in a number of difficult-to-treat solid tumors, as well as in blood cancers, with apoptosis signaling may be important. We view the ongoing Phase I trial as setting the stage for potential expansion into additional tumor types.

I'd like to conclude my remarks by saying how excited I am about the potential of these programs to make a difference in the lives of patients who are currently in dire need of better treatment options. I look forward to keeping you updated on our progress as we head into what promises to be a busy and productive second half of 2018.

So with that, I'll turn the call over to our Chief Financial Officer, Joe Ferra, to review our financial results for the second quarter. Joe?

Thanks, David. Syros continues to maintain a strong financial position to support the advancement of our clinical programs while continuing to invest in our early-stage pipeline and discovery engine. 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 for our second quarter 2018 financial results. We ended the second quarter with $124.4 million in cash, cash equivalents and marketable securities. That compares with $72 million on December 31, 2017.

During the second quarter, we sold $16.6 million in common stock under our ATM sales facility. We recognized $0.4 million of revenue from a collaboration with Incyte in the second quarter of 2018. We did not record any revenue for the same period in 2017.

R&D expenses for the second quarter were $11.1 million, compared to $10 million for the same period in 2017. This increase was primarily attributable to an increase in costs associated with our Phase I clinical trial of 1365 and increased headcount.

G&A expenses were $3.8 million for the second quarter, compared to $3.5 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.

Finally, we reported a net loss for the second quarter of $14 million, or $0.43 per share, compared to a net loss of $13.4 million, or $0.52 per share, for the same period in 2017.

With that, I will turn the call over to the operator for questions. Thank you.

(Operator Instructions)

And our first question comes from the line of Kenneth Atkins from Cowen Company.

For the 1365 program, I'm just wondering, do you plan to eventually select patients based on biomarkers that you think would be useful at predicting a response to a CDK7 inhibitor? And if so, what biomarkers do you anticipate would be useful in that regard?

David? I'll have David answer that question. Thanks, Ken.

Sure. So as we had presented at the AACR meeting, we do have clinical data that shows a relationship between RB pathway and changes in the apoptotic pathways, in particular, BCL-XL, and we are certainly taking those things into consideration as we evaluate patients for the efficacy and safety during our Phase I dose-escalation and expansion cohorts.

Great. And then just one more: For the biopsy-accessible cohort in that same study, could you give us a bit more detail about what sort of analyses are planned for those patients?

Sure. So we have demonstrated preclinically that there is a correlation between target occupancy, which specifically means measurement of drug being bound to target CDK7, and we're looking at evidence of target occupancy and target engagement during the course of the dose escalation. We're evaluating that in peripheral blood. And we're also going to be evaluating that during dose escalation in tumor tissues in patients who volunteered for tumor tissues. We also have a selected cohort in the expansions with approximately 10 patients who will be volunteering for tissue sampling during the course of their treatment, and we'll be evaluating things in that context as well.

And our next question comes from the line of Ed Tenthoff from Piper Jaffray.

Just with respect to [1465], what data should we be expecting in the back half year? And in particular, from some of the combination studies? And then I was intrigued to hear about the new candidate in sickle cell disease; I don't know if you can tell us a little bit more about that.

So Ted, I just want to confirm: You're asking about 1425 combination data and what to expect?

Yes, correct.

Okay, great. So as we said, we plan to report initial clinical data from the 2 combination arms with azacitidine and with daratumumab, and I think David laid out kind of the objectives in terms of those 2 cohorts. So that -- and our general approach is to -- been to present the data when we think we have a kind of meaningful amount of data to present, so that is -- we're still planning to present data from those cohorts, as we had data earlier this year. In terms of the sickle cell program, we're really excited about having branched, in addition to focusing on oncology, now into monogenic diseases, where the approach is to use our platform to focus on diseases where we think, or we know pretty definitively, if we could control the expression of a single gene we could have therapeutic benefit. And the first disease that we are working on, and have been working on for over a year now, is in sickle cell disease, where, as you probably know, there's very strong genetic validation, that if we can alter the level of expression of hemoglobin F, we can ameliorate the symptoms of the disease. So our sickle cell program is focused on a particular target that we think can be important in controlling the level of expression of that gene, and currently, that program is in the discovery phase, but we're excited to continue to move that along.

And our next question comes from the line of Konstantinos Aprilakis from JMP Securities.

So, regarding the upcoming readout for the dose-escalation portion of the Phase I trial of 1365, would you be able to review the specifics of what we should be expecting? And if I recall correctly, 2 dosing schedules are being tested: weekly, biweekly. Will we see data from both of those?

I'm going to have David answer that question.

Okay, thanks, Konstantine. So yes, the primary purpose of the dose-escalation phase of the trial is to establish a maximum tolerated dose, and as you point to, also to be able to choose an appropriate dose and dosing schedule to take forward into the expansion phase. The data that you can expect to see in the fourth quarter certainly will relate to that dosing information, and will also include information on safety, the PK, the pharmacodynamics and proof of mechanism, where we'll -- in addition to looking at things like the CDK7 binding and the target occupancy, we'll also be looking at other downstream changes that are induced by the drug. As you know, we've seen a strong in vivo correlation with target engagement and efficacy, and we're using that in those -- from those preclinical models to guide our dose and regimen optimization as we move forward. And so we'll be looking forward to reporting out on those types of data.

David, what AEs are you expecting versus, like, a CDK4/6?

Okay, so with respect to the toxicities, we've obviously evaluated our drug in preclinical models, and while we haven't specifically reported out the data that we've observed in our preclinical testing, I think it's fair to say that for pan-CDK inhibitors, as well as CDK4/6 inhibitors, there have been some reports of myelosuppression as one of the toxicities that can be seen. Interestingly, in our preclinical experiments, we haven't seen a significant degree of effect on blood cells; in particular, the white cells, or the neutrophils. So we'll be reporting the -- all the safety that we have available at the time. Obviously, that's of utmost importance, in particular during a dose-escalation trial.

And then let me just add, Konstantine, that -- to part of your question, we are studying both weekly and twice-weekly, and the data that we plan to present will be all of that data from the dose-escalation phase. And I think it's -- as I think, David and the team have designed a really great study, because one of the key things is coming up with the optimal, both dose and schedule. And so the ability to kind of evaluate different types of schedules was always part of the plan in the dose escalation, and so I think that will yield, I think, kind of a very robust package of data for us to choose the dose in the expansion phase.

(Operator Instructions)

And our next question comes from the line of David Nierengarten from Wedbush Securities.

I was wondering if the patients for 1365, or as you look to 1365, will have experience with or be PARP -- experienced with any of the PARP agents? And also, if so or if not, either way, what preclinical evidence or -- is there any that you have looked at for your 1365, either in combination with or pre- or post-PARP treatment?

Yes, thank you. So as we presented back at AACR, we had a range of ovarian patient-derived xenograft, or PDX, models, which corresponded to very heavily previously treated patients with ovarian cancer. And we saw sensitivity to 1365 irrespective of BRCA status or prior PARP exposure. Several of those models had been patients who progressed despite prior treatment with olaparib, as an example. And so, when we designed our trial, we specifically focused on earlier lines of therapy in combination with carboplatin, but also later lines as a single agent in patients who would not be expected to respond to platinum, and we think that in consideration of our preclinical data, that supports the potential for therapeutic effects, despite having progressed on PARP, and are using the drug in various lines of therapy, we'll be well positioned to incorporate this drug into the treatment landscape, so.

And I'll just add, David, we are studying PARP inhibitors. Obviously, it's where we have a lot of focus in ovarian cancer. We're doing preclinical work right now to study the combination of 1365 with a PARP inhibitor.

Would you -- just a quick follow-up. Would you plan, or you'll wait till you see the Phase I, on any kind of bridging or safety study to take a look at, either in combination or post-PARP, given, obviously, some of the PARPs have different side effect profiles, but myelosuppression being one of them? Or will you just wait and see what you see in the Phase I and we'll go from there?

I think as David was saying, we're going -- the patients that will be in the trial, some of them will have been on -- previously on PARPs and others won't have. I think we're going to look at the data and we're constantly thinking about, kind of, what's the next step that we want to take strategically with this program, based on the data that we get? So we want to be in the best position to think about how to maximize the benefit of this drug, which is definitely going to be -- we're studying it both as a monotherapy and in combination. We've started the first combination with carboplatin, but that's just a start for us thinking more broadly about how we're going to use this drug, including the PARP inhibitors.

Thank you. I show no further questions at this time. I would like to turn the call back over to Nancy Simonian for closing remarks.

Great. Thank you all for your continued support and interest in Syros. I want to reiterate our excitement for the second half of 2018. I look forward to keeping you updated as we execute on our vision of building a great and enduring company and work hard to translate our leadership in gene control into new medicines that provide a profound benefit for patients.

Thank you all, and have a great rest of the summer.

Thank you, ladies and gentlemen, for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.