On Tuesday, H.C. Wainwright shifted its stance on shares of Syros Pharmaceuticals (NASDAQ:SYRS), downgrading the stock to a Neutral rating from Buy and slashing the price target to $1.00 from the previous $6.00. The decision came in response to the company's Phase 3 SELECT-MDS-1 trial outcomes, which did not meet the primary endpoint.
Syros Pharmaceuticals disclosed that its SELECT-MDS-1 trial, assessing tamibarotene in combination with azacitidine for patients newly diagnosed with higher-risk myelodysplastic syndrome (HR-MDS) who exhibit RARA gene overexpression, failed to achieve the complete response rate needed for success.
The trial's results showed a complete response rate of 23.8% in the tamibarotene plus azacitidine group, versus 18.8% in the placebo group—a difference not statistically significant.
Despite the trial's unsuccessful primary outcome, the safety profile of tamibarotene was consistent with prior studies by Syros. The analysis included all 245 enrolled patients, indicating that the drug was generally well tolerated when administered with azacitidine.
The implications of the trial's failure extend beyond the drug's development, as it triggers an event of default under the company's secured loan agreement with Oxford Finance LLC. This development has led H.C. Wainwright to remove tamibarotene from their valuation model for Syros Pharmaceuticals.
The downgrade and price target reduction reflect the diminished prospects for tamibarotene following the SELECT-MDS-1 trial results. Syros Pharmaceuticals and its stakeholders now face a reassessment of the company's pipeline and financial position in light of this setback.
In other recent news, Syros Pharmaceuticals faced significant developments following the failure of its Phase 3 SELECT-MDS-1 trial. The trial, which was testing tamibarotene combined with azacitidine, did not meet its primary goal, leading to stock downgrades by TD Cowen and JMP Securities. TD Cowen downgraded Syros Pharmaceuticals stock from Buy to Hold, while JMP Securities cut its rating from Market Outperform to Market Perform.
Despite the trial's setback, the results did show a slight trend favoring tamibarotene over the control. However, the statistical significance of this difference was not strong enough to continue the development of tamibarotene. In response to these developments, Syros Pharmaceuticals has stated that it intends to conduct a thorough analysis of the SELECT-MDS-1 data to decide on future actions for the program.
In financial news, Syros Pharmaceuticals reported no revenue for Q3 2024 and a net loss of $6.4 million. Despite this, the company maintains sufficient cash reserves to fund operations into Q3 2025. Syros is preparing for the commercial launch of tamibarotene and exploring business development opportunities for the CDK7 inhibitor asset, 5609. These are the recent developments in Syros Pharmaceuticals' journey.
InvestingPro Insights
The recent downgrade of Syros Pharmaceuticals (NASDAQ:SYRS) by H.C. Wainwright aligns with several key metrics and insights from InvestingPro. The company's market cap stands at a modest $73.19 million, reflecting the market's cautious stance following the disappointing Phase 3 trial results.
InvestingPro data reveals that Syros is quickly burning through cash, a critical concern given the trial's failure and the potential default on its secured loan agreement. This is further underscored by the company's negative gross profit margin of -22,862.95% for the last twelve months as of Q3 2024, indicating significant financial challenges.
Despite these headwinds, InvestingPro Tips highlight that SYRS has seen a significant return over the last week, with a 1-week price total return of 11.43%. This short-term rally could be attributed to speculative trading or potential reassessment of the company's other pipeline assets.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Syros Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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