SYRS - Syros Pharmaceuticals A Buy Given Stock Price And Pipeline Potential (Rating Upgrade)

Summary

• Syros Pharmaceuticals is developing cancer therapies.
• Its most advanced potential therapy is tamibarotene for MDS.
• The September merger with Tyme Technologies and cash raise provides a cash runway to 2025.

Syros Pharmaceuticals ( SYRS ) is a small-cap, clinical stage biotech company developing potential cancer therapies. Syros was trading for over $100 per share back in early 2021, but today you can buy it for under $5.00 per share. While risks still abound, I believe the share price greatly undervalues the potential of the pipeline. The company has enough cash to get it through 2023 and 2024. The hope would be that more data from the pipeline would allow it to raise capital at a reasonable cost and get one or more of its pipeline candidates to FDA approval. I do not want anyone to underrate the risk involved in investing in this or any other clinical-stage biotechnology company. However, given the potential rewards if a cancer therapy gains approval, I think this is a good investment for those who understand and can tolerate the degree of risk, within their overall portfolio.

Tyme Technologies merger, reverse stock split

On July 5, 2022, Syros and Tyme Technologies , another small-cap, clinical stage biotech, announced a merger, which was completed in September 2022. The merger was accompanied by a cash raise and reverse stock split. Syros paid only $60 million for Tyme, which had discontinued development of SM-88 for pancreatic cancer, but which did have $60 million in cash at the end of Q1 2022. Syros acquired Tyme’s pipeline along with the cash. Concurrently Syros raised $130 million in new cash, showing investor confidence in the Syros pipeline. Syros also made a 1-for-10 reverse stock split, trading that way starting September 19, 2022. It ended with 27.8 million shares of common stock and prefunded warrants to purchase common stock, plus additional warrants to purchase an addition 13.8 million share of stock. The Syros executive structure remained intact.

Q3 2023 results

Syros Q3 2022 results were released on November 14, with results through September 30 including the Tyme transaction. Revenue was $3.9 million from collaborations. Net loss was $30.3 million or $3.21 per share. That was before the 1-for-10 reverse split. Cash at the end of the quarter was $245 million with no debt. Management expects cash to be sufficient to the beginning of 2025.

2023 Strategic Priorities Update

On January 9, 2023, Syros announced its 2023 Strategic Plan . Tamibarotene for AML and MDS seems to be the top priority (see more below). Also important will be SY-2101 for APL (acute promyelocytic leukemia), which has a well-proven mechanism of action, but its registrational study will be deferred in favor of tamibarotene. The other priority is SY-5609 for pancreatic cancer and, in partnership with Roche ( OTCQX:RHHBY ), for colorectal cancer, but that is early-stage, currently in Phase 1. None of the Tyme pipeline candidates were mentioned, but they can be on the backburner to be developed as funds become available. Syros continues to explore partnership opportunities for its programs.

Tamibarotene

Tamibarotene is a small molecule targeting RARA-positive cells, currently in a Phase 2 trial for AML (acute myeloid leukemia) and a Phase 3 trial for MDS (myelodysplastic syndrome). Results to date have been quite encouraging. For high-risk MDS tamibarotene is being combined with azacitidine and venetoclax. Positive data was reported for the Phase 2 trial. The Phase 3 trial continues to enroll with initial data now expected in Q3 2023.

In AML, data was shared at ASH in December 2022, showing that newly diagnosed, unfit, RARA+ patients achieve better outcomes than with chemo alone, including those resistant to venetoclax. The randomized portion of the Phase 2 trial should commence this quarter, then report initial data in Q4 2023. It will compare responses in the regimen three-drug regimen including tamibarotene against azacitidine with venetoclax alone.

SY-2101

SY-2101 is a reformulation of arsenic trioxide, which is already used to treat a rare type of AML known as APL (acute promyelocytic leukemia). SY-2101 is an oral formulation of the established therapy. The first patient was dosed in the APL dose confirmation study in September 2021. In August 2022 preliminary data was positive. More data should be available in the second half of 2023, at which time the timeline for the Phase 3 study may be announced.

SY-5609

In September 2022 SY-5609 received orphan drug status for pancreatic cancer. It is in a Phase 1 trial for that indication. A partial response in one patient has already been observed. Dosing will continue both as a single agent and in combination with gemcitabine. In partnership with Roche it is being tried with a PD-L1 inhibitor for BRAF-mutant colorectal cancer. Syros would like a partner for development of the pancreatic cancer indication. Pancreatic cancer is notoriously difficult to treat and has high unmet medical need.

Syros Stock Price Action and Analysis

Syros has taken a serious beating in the last year, somewhat in line with stocks including biotechs, but also company-specific. The 52-week high, reached about a year ago, is $27.20. Closing at $4.77 on January 13, 2023, would put it at 18% of that high. Going forward, I expect some rebound based simply on the cash available, plus the pipeline, compared to the market capitalization of $95 million. The price should become data driven. A therapy that is FDA-approvable for a subtype of AML and MDS would be a very valuable asset. How valuable depends on the quality of the data compared to results from currently available therapies. Beyond that, there should be some value in SY2101, and the small-drug gene-expression platform should be able to generate more potential therapies. All in all a good bet, keeping in mind that potential therapies can fail at any point in the testing pipeline, or even fail to be commercially viable (or to meet management projections or investor expectations for sales) after FDA approval. The possibility of deals with larger pharmaceutical companies, which would become more probable if good data continues to come in, should also be taken into account.

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