SYROS PHARMACEUTICALS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 that we filed with theSecurities and Exchange Commission , orSEC , onMarch 5, 2020 , or the 2019 10-K. Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods. The following information and any forward-looking statements should also be considered in light of risks identified under the caption "Risk Factors" in the 2019 10-K and in this Quarterly Report on Form 10-Q. We caution you not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of theSEC , to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Overview
We are a biopharmaceutical company seeking to redefine the power of small molecules to control the expression of genes. Based on our unique ability to elucidate regulatory regions of the genome, we aim to develop medicines that provide a profound benefit for patients with diseases that have eluded other genomics-based approaches. We are currently focused on developing treatments for cancer and diseases resulting from mutations of a single gene, also known as monogenic diseases, and building a pipeline of gene control medicines.
Our lead product candidates are:
• SY-1425, a selective retinoic acid receptor alpha, or RAR?, agonist
that is currently being evaluated in combination with azacitidine, a
hypomethylating agent frequently used to treat acute myeloid leukemia,
or AML, in patients in a Phase 2 clinical trial in a genomically
defined subset of patients with AML; and
• SY-5609, a highly selective and potent oral inhibitor of
cyclin-dependent kinase 7, or CDK7, that is currently beingevaluated
in the dose escalation portion of a Phase 1 clinical trial in patients
with select advanced solid tumors.
In October 2019 , we announced a decision to prioritize the development of
SY-5609 and to discontinue further development of SY-1365, our intravenously
administered CDK7 inhibitor for which we are conducting a Phase 1 clinical trial
in patients with advanced solid tumors.
We also have multiple preclinical and discovery programs in oncology and
monogenic diseases such as sickle cell disease and myotonic dystrophy type 1. We
expect to nominate our next development candidate to enter investigational new
drug application, or IND, enabling preclinical studies by the end of 2021. In
December 2019 , we entered into a collaboration with Global Blood Therapeutics,
Inc., or GBT, to discover, develop and commercialize novel therapies for sickle
cell disease and beta thalassemia. We also use our gene control platform in
collaboration with third parties to identify and validate targets in diseases
beyond our current areas of focus. To this end, we entered into a target
discovery, research collaboration and option agreement with Incyte Corporation,
or Incyte, in January 2018 under which we are using our platform to identify
novel therapeutic targets with a focus on myeloproliferative neoplasms.
Our ongoing Phase 2 clinical trial is assessing the safety and efficacy of
SY-1425 in combination with azacitidine in approximately 50 newly diagnosed AML
patients who are "unfit," meaning that they are not suitable candidates for
standard intensive chemotherapy, who have been identified as either
RARA-positive or RARA-negative using our proprietary RARA biomarker. The
RARA-negative patients were enrolled to support the development of a commercial
companion diagnostic test for SY-1425. In addition, we are evaluating the safety
and efficacy of SY-1425 in combination with azacitidine in approximately 25
relapsed or refractory RARA-positive AML patients who are being prospectively
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selected using the RARA biomarker. Enrollment in all cohorts of the trial is
complete and we continue to follow patients in the trial. We expect to report
mature data from the newly diagnosed AML cohorts of the trial, as well as data
from the ongoing relapsed or refractory AML cohort of the trial and our future
development plans for SY-1425, at the 62nd American Society of Hematology Annual
Meeting and Exposition to be held in December 2020 ("ASH 2020"). Also at ASH
2020, we plan to present a poster with new data showing that the majority
of RARA-positive patients have a disease phenotype that is associated with
resistance to upfront treatment with venetoclax.
In January 2020 , we dosed the first patient in a Phase 1 clinical trial of
SY-5609 in patients with select advanced solid tumors, including breast,
colorectal, lung, ovarian and pancreatic cancers, and in solid tumors of any
histology having retinoblastoma-pathway, or Rb pathway, alterations. The primary
objectives of this trial are to assess the safety and tolerability of escalating
doses of SY-5609, with the goal of establishing a maximum tolerated dose.
Additional objectives include assessments of anti-tumor activity,
pharmacokinetics (PK), pharmacodynamics (PD) and potential predictive
biomarkers, including Rb pathway alterations. In a future expansion portion of
the Phase 1 trial, multiple cohorts are planned to further evaluate the safety
and anti-tumor activity of SY-5609 as both a single agent and in combination
with other therapies. In this regard, in June 2020 , we began enrolling patients
in a trial cohort assessing the safety of escalating doses of SY-5609 in
combination with fulvestrant in HR-positive/HER2-negative metastatic breast
cancer patients who have progressed after treatment with a CDK4/6 inhibitor.
At the 32nd EORTC-NCI-AACR Molecular Targets and Cancer Therapeutics Symposium
held in October 2020 , or ENA, we reported initial safety, PK, and PD data from
the ongoing Phase 1 study of SY-5609. These data demonstrated proof of mechanism
and support our ongoing development of SY-5609 for difficult-to-treat cancers.
As of an August 21, 2020 data cut-off, 17 patients had been enrolled in the
trial and were eligible for safety, PK and PD analysis. Patients were either
treated with continuous daily dosing of single-agent SY-5609 at 1, 3, 4 or 5 mg,
or for three weeks on and one week off at 3 mg in combination with fulvestrant.
The maximum tolerated dose for continuous daily dosing was achieved at 3 mg. The
data showed that SY-5609 demonstrated dose-dependent increases in POLR2A mRNA
expression, a PD marker being used in the trial to measure CDK7 biological
activity. Notably, increases in POLR2A in patients treated at 3 mg daily reached
levels associated with tumor regressions in preclinical models, as well as with
levels of CDK7 target engagement at which a clinical response and apoptosis were
observed in a trial of patients treated with SY-1365. SY-5609 demonstrated
approximately dose-proportional PK as both a single agent and in combination,
minimal accumulation with repeat dosing, and a steady state half-life compatible
with once-daily dosing. The majority of adverse events reported with SY-5609 as
a single agent were low grade. The most common adverse events were nausea,
diarrhea, fatigue, platelet count decrease, and vomiting. The safety profile of
SY-5609 in combination with fulvestrant was consistent with that of single-agent
SY-5609. Five of the 13 patients treated with single-agent SY-5609 were response
evaluable, and of those, three achieved stable disease and two had progressive
disease; one of the four patients treated in the combination cohort was response
evaluable and had progressive disease. The Phase 1 trial continues to actively
enroll patients with select solid tumors, including an expanded single-agent
cohort in lung cancer patients that began in September 2020 and the combination
cohort in breast cancer patients, to further evaluate the 3 mg daily dose in
focused patient populations. Alternate dosing regimens are also being explored
in the trial. We also expect to report additional dose escalation data,
including clinical activity data, in mid-2021.
Since our inception in November 2011 , we have devoted substantially all of our
resources to organizing and staffing our company, business planning, raising
capital, developing our technology platform and conducting preclinical research
and clinical development for our product candidates. We do not have any products
approved for sale and have not generated any revenue from product sales. We have
financed our operations to date primarily through the sale of equity securities,
license and collaboration agreements, and our term loan with Oxford Finance LLC ,
or Oxford. From inception through September 30, 2020 , we raised an aggregate of
$390.7 million from such transactions, including aggregate proceeds of $20.0
million through our draw down on the first tranche of our term loan with Oxford
in February 2020 and $12.3 million in proceeds from the sale of common stock
under our at-the-market sales facility during the first quarter of 2020.
Since inception, we have incurred significant operating losses. Our net losses
were $53.9 million and $55.7 million for the nine months ended
September 30, 2020 and 2019, respectively. As of September 30, 2020 , we had an
accumulated deficit of $346.9 million . We expect to continue to incur
significant expenses and operating losses for the foreseeable future. We
anticipate that our expenses will increase significantly in connection with our
ongoing activities, as we:
• continue our planned clinical development activities with respect to
SY-1425 and SY-5609;
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• develop and seek approval of companion diagnostic tests for use in
identifying patients who may benefit from treatment with our products
and product candidates;
• initiate and continue research, preclinical and clinical development
efforts for our research and preclinical programs;
• further develop our gene control platform;
• seek to identify and develop additional product candidates;
• acquire or in-license other product candidates or technologies;
• seek regulatory and marketing approvals for our product candidates that
successfully complete clinical trials, if any;
• establish sales, marketing, distribution and other commercial
infrastructure in the future to commercialize various products for
which we may obtain marketing approval, if any;
• require the manufacture of larger quantities of product candidates for
clinical development and, potentially, commercialization;
• maintain, expand and protect our intellectual property portfolio;
• hire and retain additional personnel and add operational, financial and
management information systems, including personnel and systems to
support our product development and commercialization efforts and help
us comply with our obligations as a public company; and
• add equipment and physical infrastructure to support our research and
development programs.
Financial Operations Overview
Revenue
To date, our only revenue has consisted of collaboration and license revenue and we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. For the three months endedSeptember 30, 2020 , we recognized$3.8 million of revenue, of which$3.5 million was related to our collaboration with GBT and$0.3 million to our collaboration with Incyte. For the nine months endedSeptember 30, 2020 , we recognized$9.4 million of revenue, of which$8.2 million was related to our collaboration with GBT and$1.2 million to our collaboration with Incyte. For the three and nine months endedSeptember 30, 2019 , the Company recognized$0.6 million and$1.5 million of revenue, respectively, all of which was attributable to our collaboration with Incyte.
Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including development of our gene control platform and the development of our product candidates, which include: • employee-related expenses including salaries and benefits; • stock-based compensation expense;
• external costs of funding activities performed by third parties that
conduct research and development on our behalf and of purchasing
supplies used in designing, developing and manufacturing preclinical
study and clinical trial materials;
• consulting, licensing and professional fees related to research and
development activities; and
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• facilities costs, depreciation and amortization and other expenses,
which include direct and allocated expenses for rent and maintenance of
facilities, insurance and other operating costs.
Research and development costs are expensed as incurred. Nonrefundable advance
payments made to vendors for goods or services that will be received in the
future for use in research and development activities are deferred and
capitalized, even when there is no alternative future use for the research and
development, until related goods or services are provided.
We typically use our employee, consultant and infrastructure resources across
our research and development programs. We track outsourced development costs by
product candidate or development program, but we do not allocate personnel
costs, other internal costs or certain external consultant costs to specific
product candidates or development programs.
The following table summarizes our external research and development expenses by
program, as well as expenses not allocated to programs, for the three and nine
months ended September 30, 2020 and 2019 (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
SY-1425 external costs (1) $ 4,049 $ 2,342 $ 9,204 $ 4,157
SY-5609 and other CDK7 program
external costs (1) 2,994 5,020 8,483 13,515
Other research and platform program
external costs 3,182 2,271 7,962 8,329
Employee-related expenses, including
stock-based compensation 5,847 4,673 16,703 14,009
Facilities and other expenses 1,602 1,625 4,687 3,958
Total research and development
expenses $ 17,674 $ 15,931 $ 47,039 $ 43,968
_________________
(1) The results for the nine months ended
respectively, due to a change in estimate of costs incurred over the life
of these clinical trials through March 31, 2019 .
We expect our research and development expenses will increase for the
foreseeable future as we seek to advance our programs. At this time, we cannot
reasonably estimate or know the nature, timing and estimated costs of the
efforts that will be necessary to complete the development of our product
candidates. We are also unable to predict when, if ever, material net cash
inflows will commence from sales of our product candidates. This is due to the
numerous risks and uncertainties associated with developing such product
candidates, including the uncertainty of:
• successful completion of preclinical studies, including activities
related to preparation of an IND and minimally efficacious dose studies
in animals, where applicable and required, under the requirements of
the U.S. Food and Drug Administration , or FDA, or another regulatory
authority;
• approval of INDs for our product candidates to commence planned or
future clinical trials;
• successful enrollment in, and completion of, clinical trials;
• successful data from our clinical programs that support an acceptable
benefit-risk profile of our product candidates in the intended
populations;
• successful development, and subsequent clearance or approval, of
companion diagnostic tests for use in identifying potentialpatients;
• receipt of regulatory approvals from applicable regulatory authorities;
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• establishment of arrangements with third-party manufacturers for
clinical supply and commercial manufacturing and, where applicable,
commercial manufacturing capabilities;
• establishment and maintenance of patent and trade secret protection or
regulatory exclusivity for our product candidates;
• commercial launch of our product candidates, if and when approved,
whether alone or in collaboration with others;
• enforcement and defense of intellectual property rights and claims;
• maintenance of a continued acceptable safety profile of the product
candidates following approval;
• retention of key research and development personnel; and
• the impact of the COVID-19 pandemic.
Any changes in the outcome of any of these variables with respect to the
development of our product candidates in preclinical and clinical development
could mean a significant change in the costs and timing associated with the
development of these product candidates. For example, if the FDA or another
regulatory authority were to delay our planned start of clinical trials or
require us to conduct clinical trials or other testing beyond those that we
currently expect or if we experience significant delays in enrollment in any of
our planned clinical trials, we could be required to expend significant
additional financial resources and time on the completion of clinical
development of our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal fees related to patent and corporate matters, and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates.
Other (Expense) Income, Net
Other (expense) income, net, consists of interest expense related to the Oxford term loan and equipment financing lease arrangements, net of interest income on our cash and cash equivalents and interest and amortization of premiums and discounts on our investments in marketable securities.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance withU.S. generally accepted accounting principles, orU.S. GAAP. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of the change in estimates. We believe that our most critical accounting policies are those relating to revenue recognition, accrued research and development expenses and stock-based compensation. There have been no significant changes to our critical accounting policies discussed in our Annual Report on Form 10-K for the year endedDecember 31, 2019 that we filed with theSEC onMarch 5, 2020 . 32 --------------------------------------------------------------------------------
Results of Operations
Comparison of three months ended
The following table summarizes our results of operations for the three months endedSeptember 30, 2020 and 2019, together with the changes in those items in dollars (in thousands): Three Months Ended September 30, 2020 2019 Dollar Change % Change Statements of Operations Data: Revenue$ 3,828 $ 558 $ 3,270 586 % Operating expenses: Research and development 17,674 15,931 1,743 11 % General and administrative 5,151 5,016 135 3 % Total operating expenses 22,825 20,947 1,878 9 % Other (expense) income, net (489 ) 596 (1,085 ) (182 ) % Net loss$ (19,486 ) $ (19,793 ) $ (307 ) (2 ) % Revenue
For the three months ended
Research and Development Expense
Research and development expense increased by approximately$1.7 million , or 11%, from$15.9 million for the three months endedSeptember 30, 2019 to$17.7 million for the three months endedSeptember 30, 2020 . The following table summarizes our research and development expenses for the three months endedSeptember 30, 2020 and 2019, together with the changes to those items in dollars (in thousands): Three Months EndedSeptember 30, 2020 2019
Dollar Change % Change External research and development $ 9,333 $ 8,710 $
623 7 %
Employee-related expenses, excluding
stock-based compensation 4,618 3,798 820 22 %
Stock-based compensation 1,229 875 354 40 %
Consulting, licensing and professional
fees 892 923 (31 ) (3 ) %
Facilities and other expenses 1,602 1,625 (23 ) (1 ) %
Total research and development expenses
11 %
The change in research and development expense was primarily attributable to
activities associated with advancing our clinical and preclinical programs as
well as enhancing our internal capabilities, including the following:
• an increase of approximately
and development costs, primarily due to increases in costsassociated
with the continued advancement of our existing clinical trials of
SY-5609 and SY-1425 and advancement of our preclinical programs,
including our sickle cell disease development activities in
collaboration with GBT;
• an increase of approximately
expenses, including increased salary and benefits, primarily due to our
increased headcount; and
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• an increase of approximately
compensation expense, also primarily due to our increasedheadcount.
General and Administrative Expense
General and administrative expense increased by approximately$0.1 million , or 3%, from$5.0 million for the three months endedSeptember 30, 2019 to$5.2 million for the three months endedSeptember 30, 2020 . The change in general and administrative expense was primarily attributable to slight increases in patent and accounting fees. Other (Expense) Income, Net Other (expense) income, net, consists of interest expense related to the Oxford term loan and equipment financing arrangements, net of interest income on our cash and cash equivalents and interest and amortization of premiums and discounts on marketable securities. The change in other (expense) income, net from the three months endedSeptember 30, 2019 as compared to the three months endedSeptember 30, 2020 is primarily due to the Oxford term loan executed inFebruary 2020 , and the related interest expense incurred during the three months endedSeptember 30, 2020 .
Comparison of nine months ended
The following table summarizes our results of operations for the nine months endedSeptember 30, 2020 and 2019, together with the changes in those items in dollars (in thousands): Nine Months Ended September 30, 2020 2019 Dollar Change % Change Statements of Operations Data: Revenue$ 9,394 $ 1,474 $ 7,920 537 % Operating expenses: Research and development 47,039 43,968 3,071 7 % General and administrative 15,433 15,077 356 2 % Total operating expenses 62,472 59,045 3,427 6 % Other (expense) income, net (830 ) 1,862 (2,692 ) (145 ) % Net loss$ (53,908 ) $ (55,709 ) $ (1,801 ) (3 ) % Revenue For the nine months endedSeptember 30, 2020 , revenue was$9.4 million of which$8.2 million was attributable to our collaboration with GBT and$1.2 million was attributable to our collaboration with Incyte. For the nine months endedSeptember 30, 2019 , revenue was$1.5 million , all of which was attributable to our collaboration with Incyte.
Research and Development Expense
Research and development expense increased by approximately$3.1 million , or 7%, from$44.0 million for the nine months endedSeptember 30, 2019 to$47.0 million for the nine months endedSeptember 30, 2020 . The following table summarizes our research and development expenses for the nine months endedSeptember 30, 2020 and 2019, together with the changes to those items in dollars (in thousands): Nine Months EndedSeptember 30, 2020 2019
Dollar Change % Change
External research and development
(1 ) %
Employee-related expenses, excluding
stock-based compensation 13,244 11,520 1,724 15 %
Stock-based compensation 3,459 2,490 969 39 %
Consulting, licensing and professional
fees 2,575 2,699 (124 ) (5 ) %
Facilities and other expenses 4,687 3,957 730 18 %
Total research and development expenses
7 %
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The change in research and development expense was primarily attributable to
activities associated with advancing our clinical and preclinical programs as
well as enhancing our internal capabilities, including the following:
• a decrease of approximately
and development costs, primarily due to decreases in costsassociated
with the SY-1365 program following our October 2019 decision to
prioritize our CDK7 development activities on our SY-5609program;
• an increase of approximately
expenses, including increased salary and benefits, primarily due to our
increased headcount;
• an increase of approximately
compensation expense, also primarily due to our increasedheadcount;
and
• an increase of approximately
other expenses primarily due to the rent expense related to the lease
for our new headquarters, over which we took possession foraccounting
purposes in May 2019 , and depreciation related to the build-out of our
new corporate headquarters.
General and Administrative Expense
General and administrative expense increased by approximately$0.4 million , or 2%, from$15.1 million for the nine months endedSeptember 30, 2019 to$15.4 million for the nine months endedSeptember 30, 2020 . The change in general and administrative expense was primarily attributable to an increase in employee-related costs, including salary, benefits and stock-based compensation due to our increased headcount.
Other (Expense) Income, Net
Other (expense) income, net, consists of interest expense related to the Oxford term loan and equipment financing arrangements, net of interest income on our cash and cash equivalents and interest and amortization of premiums and discounts on marketable securities. The change in other (expense) income, net from the nine months endedSeptember 30, 2019 as compared to the nine months endedSeptember 30, 2020 is due to the Oxford term loan executed inFebruary 2020 , and the related interest expense incurred during the nine months endedSeptember 30, 2019 .
Liquidity and Capital Resources
Sources of Liquidity
We funded our operations from inception throughSeptember 30, 2020 , primarily through the sale of equity securities, through license and collaboration agreements, including those with Incyte and GBT, and through the Oxford term loan. OnJune 12, 2020 , we filed a universal shelf registration statement on Form S-3 with theSEC to register for sale from time to time up to$300.0 million of common stock, preferred stock, debt securities, warrants and/or units in one or more registered offerings. The registration statement was declared effective onJune 22, 2020 . Further, inJune 2020 , we entered into an at-the-market sales agreement, or the 2020 sales agreement, withCowen & Co. , or Cowen, pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to$75.0 million through Cowen pursuant to the registration statement. Upon entry into the 2020 sales agreement, we terminated our prior at-the-market sales facility pursuant to the original sales agreement with Cowen, datedJuly 20, 2017 , or the 2017 sales agreement. During the nine months endedSeptember 30, 2020 , we issued$12.3 million in common stock under the 2017 sales agreement.
As of
As of
As of
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The following table provides information regarding our cash flows for the nine
months ended
Nine Months Ended September 30,
2020 2019
Net cash (used in) provided by:
Operating activities $ (27,440 ) $ (49,650 )
Investing activities 46,693 (28,687 )
Financing activities 32,149 64,901
Net increase (decrease) in cash, cash equivalents and
restricted cash $ 51,402 $ (13,436 )
The use of cash in the nine months ended
Net cash used in operating activities was$27.4 million during the nine months endedSeptember 30, 2020 compared to net cash used in operation activities of$49.7 million for the nine months endedSeptember 30, 2019 . The decrease in net cash used in operating activities was primarily due to the$20.0 million proceeds received inJanuary 2020 from our collaboration agreement with GBT that was entered into inDecember 2019 , as well as$3.8 million of cost reimbursement collected from GBT pursuant to the collaboration agreement,$0.5 million of additional consideration collected from the Incyte collaboration, and$2.0 million received as tenant improvement incentive for the buildout of our offices, each of which were received during the nine months endedSeptember 30, 2020 .
Net Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities was$46.7 million during the nine months endedSeptember 30, 2020 compared to net cash used in investing activities of$28.7 million during the nine months endedSeptember 30, 2019 . The increase in cash provided by investing activities was primarily due to maturities of marketable securities of$50.0 million during the nine months endedSeptember 30, 2020 as compared to net purchases of marketable securities of$24.2 million during the nine months endedSeptember 30, 2019 , and due to the$3.3 million of property and equipment purchased in the nine months endedSeptember 30, 2020 as compared to$4.5 million during the nine months endedSeptember 30, 2019 .
Net Cash Provided by Financing Activities
Net cash provided by financing activities was$32.1 million during the nine months endedSeptember 30, 2020 compared to net cash provided by financing activities of$64.9 million for the nine months endedSeptember 30, 2019 . Cash provided by financing activities for the nine months endedSeptember 30, 2020 was primarily due to net proceeds of$19.7 million received from our term loan with Oxford, net proceeds of$11.9 million through the issuance of common stock pursuant to the 2017 sales agreement,$0.5 million in proceeds from exercise of stock options and$0.2 million in proceeds from the issuance of shares through the employee stock purchase plan, offset by$0.2 million of payments made under our capital lease obligations. Cash provided by financing activities for the nine months endedSeptember 30, 2019 was primarily due to$65.0 million in net proceeds raised through two concurrent public offerings of equity securities that closed inApril 2019 . Funding Requirements We expect our expenses to increase in connection with our ongoing activities, particularly as we seek to continue clinical trials of SY-1425 and SY-5609, advance additional product candidates through research and preclinical development and into clinical trials, seek to develop companion diagnostic tests for use with our product candidates, initiate new research and preclinical development projects and seek marketing approval for any product candidates that we successfully develop. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to establishing sales, marketing, distribution and other commercial 36 -------------------------------------------------------------------------------- infrastructure to commercialize such products. We will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on favorable terms, we would be forced to delay, reduce, eliminate, or out-license our research and development programs or future commercialization rights to our product candidates. We believe that our cash and cash equivalents as ofSeptember 30, 2020 , will enable us to fund our planned operating expense and capital expenditure requirements into 2022. Our future funding requirements, both short-term and long-term, will depend on many factors, including:
• the scope, progress, timing, costs and results of clinical trials of
SY-1425 and SY-5609 and any associated companion diagnostic
tests;
• research and preclinical development efforts for any future product
candidates that we may develop;
• the number of future product candidates that we pursue and their
development requirements;
• our ability to enter into, and the terms and timing of, any
collaborations, licensing agreements or other arrangements;
• whether a drug candidate will be nominated to enter investigational new
drug application-enabling studies under our sickle cell disease
collaboration with GBT, whether GBT will exercise its option to
exclusively license intellectual property arising from the
collaboration, whether and when any option exercise fees,milestone
payments or royalties under the collaboration agreement with GBT will
ever be paid, and whether we exercise our U.S. co-promotion option
under the GBT agreement;
• whether our target discovery collaboration with Incyte will yield any
validated targets, whether Incyte will exercise any of itsoptions to
exclusively license intellectual property directed to suchtargets, and
whether and when any of the target validation fees, optionexercise
fees, milestone payments or royalties under the collaboration agreement
with Incyte will ever be paid;
• the outcome, timing and costs of seeking regulatory approvals;
• the costs of commercialization activities for any of our product
candidates that receive marketing approval to the extent such costs are
not the responsibility of any future collaborators, including the costs
and timing of establishing product sales, marketing, distribution and
manufacturing capabilities;
• the costs of acquiring potential new product candidates or technology;
• the costs of any physician education programs relating to selecting and
treating genomically defined patient populations;
• the timing and amount of milestone and other payments due to licensors
for patent and technology rights used in our gene controlplatform or
to TMRC Co. Ltd. , or TMRC, associated with the development,manufacture
and commercialization of SY-1425;
• revenue received from commercial sales, if any, of our current and
future product candidates;
• our headcount growth and associated costs as we advance our research
and development programs and establish a commercialinfrastructure;
• the costs of preparing, filing and prosecuting patent applications,
maintaining and protecting our intellectual property rights and
defending against intellectual property related claims; and
• the impact of the COVID-19 pandemic.
Identifying potential product candidates and conducting preclinical studies and
clinical trials is a time-consuming, expensive and uncertain process that takes
many years to complete, and we may never generate the necessary data or results
required to obtain marketing approval and achieve product sales. In addition,
our product
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-------------------------------------------------------------------------------- candidates, if approved, may not achieve commercial success. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, such as our term loan with Oxford, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, the trading prices for our common stock has been and may continue to be highly volatile, and this volatility may be exacerbated by the COVID-19 pandemic. As a result, we may face difficulties raising capital when needed through sales of our common stock or such sales may be on unfavorable terms. If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under applicable
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