Quarterly Report for Quarter Ending June 30, 2024 (Form 10-Q)

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1. Nature of Business

Syros Pharmaceuticals, Inc. (the "Company"), a Delaware corporation formed in November 2011, is a biopharmaceutical company committed to developing new standards of care for the frontline treatment of patients with hematologic malignancies.

On April 6, 2023, the Company filed a universal shelf registration statement on Form S-3 (the "2023 Registration Statement"), with the Securities and Exchange Commission (the "SEC") to register for sale from time to time up to $250.0million of common stock, preferred stock, debt securities, warrants and/or units in one or more registered offerings. The 2023 Registration Statement was declared effective on April 28, 2023. Further, in April 2023, the Company entered into an at-the-market sales agreement (the "2023 Sales Agreement") with Cowen and Company, LLC ("Cowen") pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50.0million through Cowen pursuant to the 2023 Registration Statement.

On October 2, 2023, the Company announced a strategic realignment to prioritize key development and pre-launch activities to advance tamibarotene for the treatment of newly diagnosed higher-risk myelodysplastic syndrome and newly diagnosed acute myeloid leukemia, and to stop further investment in the clinical development of SY-2101 (oral arsenic trioxide) for the treatment of newly diagnosed acute promyelocytic leukemia, as well as in the Company's preclinical and discovery-stage programs. In connection with these decisions, the Company instituted certain expense reduction measures (the "Restructuring"), including a reduction of approximately 35% of the Company's employee base excluding members of the Company's drug discovery organization whose employment ended concurrently with the termination, effective October 16, 2023, of its collaboration with Pfizer, Inc. ("Pfizer") related to the discovery, development and commercialization of novel therapies for sickle cell disease and beta thalassemia. The Restructuring was completed by February 2024.

The Company is subject to a number of risks similar to those of other late-stage clinical companies, including dependence on key individuals; risks inherent in the development and commercialization of medicines to treat human disease; competition from other companies, many of which are larger and better capitalized; risks relating to obtaining and maintaining necessary intellectual property protection; and the need to obtain adequate additional financing to fund the development of its product candidates. If the Company is unable to raise capital when needed or on favorable terms, it would be forced to delay, reduce, eliminate or out-license certain of its research and development programs or future commercialization rights to its product candidates.

The Company has incurred significant net operating losses in every year since its inception. It expects to continue to incur significant and increasing net operating losses for at least the next several years. As of June 30, 2024, the Company had an accumulated deficit of $749.8million. The Company has not generated any revenues from product sales, has not completed the development of any product candidate and may never have a product candidate approved for commercialization. The Company has financed its operations to date primarily through a credit facility, the issuance of equity securities and through license and collaboration agreements. The Company has devoted substantially all of its financial resources and efforts to research and development and general and administrative activities to support such research and development. The Company's net losses may fluctuate significantly from quarter to quarter and year to year. Net losses and negative cash flows have had, and will continue to have, an adverse effect on the Company's stockholders' equity and working capital.

Under ASC Topic 205-40, Presentation of Financial Statements - Going Concern, management is required at each reporting period to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates the substantial doubt about the Company's ability to continue as a going concern.

Successful completion of the Company's development programs and, ultimately, the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to support the Company's cost structure and operating plan. Management's plans to alleviate its financing requirements include, among other things, pursuing one or more of the following steps, none of which can be guaranteed or is entirely within the Company's control:

• raise funding through the issuance of the Company's common or preferred stock;

• raise funding through debt financing; and

• raise funding through business development activities, including the potential sale of SY-2101-related assets.

If the Company is unable to raise capital when needed or on acceptable terms, or if it is unable to procure collaboration arrangements to advance its programs, the Company would be forced to discontinue some of its operations or develop and implement a plan to further extend payables, reduce overhead or scale back its current operating plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan would be successful.

The Company's history of significant losses, its negative cash flows from operations, its limited liquidity resources currently on hand, and its dependence on its ability to obtain additional financing to fund its operations after the current resources are exhausted, about which there can be no certainty, have resulted in management's assessment that there is substantial doubt about the Company's ability to continue as a going concern for a period of at least 12 months from the issuance date of this Quarterly Report on Form 10-Q. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments that may result from the outcome of this uncertainty.

2. Summary of Significant Accounting Policies

The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements("ASC 808"), to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606. For those elements of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above.

3. Collaboration and Research Arrangements

During the three and six months ended June 30, 2023, the Company recognized revenue of $2.8million and $5.8million, respectively, under a license and collaboration agreement with Global Therapeutics, Inc, now a subsidiary of Pfizer. As of June 30, 2023, the Company had deferred revenue outstanding under that agreement of approximately $2.2million, all of which is classified as deferred revenue, current portion on the Company's condensed consolidated balance sheet. As the agreement was terminated in October 2023, norevenue was recognized during the three and six month periods ended June 30, 2024.

4. Cash and Cash Equivalents

Cash equivalents are highly liquid investments that are readily convertible into cash with original maturities of three months or less when purchased. Unrealized gains or losses are included in accumulated other comprehensive loss. Premiums or discounts from par value are amortized to interest income over the life of the underlying security.

5. Fair Value Measurements

Assumptions Used in Determining Fair Value of Warrants

The Company issued warrants to purchase an aggregate of up to 13,813,912shares of common stock in connection with a private placement in September 2022 (the "2022 Warrants") and warrants to purchase an aggregate of up to 282,809shares of common stock in connection with a private placement in December 2020 (the "2020 Warrants"). The Company accounted for the 2022 Warrants and 2020 Warrants as liabilities. The Company recorded the fair value of these warrants upon issuance using the Black-Scholes valuation model and is required to revalue these warrants at each reporting date with any changes in fair value recorded on the Company's statement of operations. The valuation of the 2022 Warrants and 2020 Warrants is considered under Level 3 of the fair value hierarchy and influenced by the fair value of the underlying common stock of the Company.

Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis

6. Restricted Cash

As of each of June 30, 2024 and December 31, 2023, the Company had $2.1million in restricted cash, which was classified as long-term on the Company's condensed consolidated balance sheets, and all of which was attributable to the lease with respect to the Company's corporate headquarters (the "HQ Lease") (See Note 9).

In connection with the execution of the HQ Lease, the Company was required to provide the landlord with a letter of credit in the amount of $3.1million that will expire 95days after expiration or early termination of the HQ Lease. Pursuant to the HQ Lease, the Company exercised its right to reduce the amount of the letter of credit to $2.1million during the year ended December 31, 2023.

7. Oxford Finance Loan Agreement

On February 12, 2020, the Company entered into a Loan and Security Agreement (as subsequently amended, the "Loan Agreement") with Oxford Finance LLC (the "Lender"). Pursuant to the terms of an amendment dated May 9, 2024 (the "Fourth Loan Amendment"), the Loan Agreement was modified to increase the aggregate amount of term loans available to the Company from $60.0million to $100.0million. A $20.0million term loan was funded on February 12, 2020 (Term A) and another $20.0million term loan was funded on December 23, 2020 (Term B). Two additional $20.0million term loans (Term C and Term D) will become available upon achievement of certain clinical development, regulatory and equity-raising milestones, and another $20.0million term loan (Term E) remains available solely at the discretion of the Lender.

The floating annual rate for each term loan is equal to the greater of (i) 7.75% and (ii) the sum of (a) the 1-month CME Term SOFRreference rate, (b) 0.10%, and (c) 5.98%. Pursuant to the terms of the Fourth Loan Amendment, the Lender agreed to extend the interest-only period from September 1, 2024to November 1, 2025, with further extensions to as late as November 1, 2026upon the achievement of certain milestones and the payment of certain fees, and to provide for the repayment of the aggregate outstanding principal balance of the term loan in monthly installments starting on November 1, 2025 through February 1, 2028(the "Maturity Date"), subject to the potential further extension of the interest-only period.

The Company paid a facility fee of $0.1million upon the issuance of the Term A loan, paid a facility fee of $75,000upon the issuance of the Term B loan, and must pay a $50,000facility fee if and when each of the Term C loan, the Term D loan, and the Term E loan is issued. In connection with prior extensions of the interest-only period, the Company paid fees of $300,000in September 2022 and agreed to pay fees of $300,000upon the first to occur of the Maturity Date or the acceleration or prepayment of any term loan. In connection with the Fourth Loan Amendment, the Company agreed to pay an additional fee of $1,050,000upon the first to occur of the Maturity Date or the acceleration or prepayment of any term loan. The Company is required to make a final payment equal to 5.00% of the amount of the term loan drawn payable on the earlier of (i) the prepayment of the term loan or (ii) the Maturity Date. At the Company's option, the Company may elect to prepay the loans subject to a prepayment fee equal to the following percentage of the principal amount being prepaid: 2% if an advance is prepaid during the first 12 months following the applicable advance date, 1% if an advance is prepaid after 12 months but prior to 24 months following the applicable advance date, and 0.5% if an advance is prepaid any time after 24 months following the applicable advance date but prior to the Maturity Date.

In connection with the Loan Agreement, the Company granted the Lender a security interest in all of the Company's personal property now owned or hereafter acquired, excluding intellectual property (but including the right to payments and proceeds of intellectual property), and a negative pledge on intellectual property. The Loan Agreement also contains certain events of default, representations, warranties and covenants of the Company. In consideration of the Fourth Loan Amendment, the Company has agreed to, among other things, certain cash covenants, which requires an unrestricted cash balance in an aggregate amount of not less than (i) for May 31, 2024 and at all times thereafter through and including January 31, 2025, seventy-five percent (75.00%) of the aggregate principal amount of the outstanding obligations, and (ii) for February 1, 2025 and at all times thereafter through and including May 31, 2026, one hundred twenty percent (120.00%) of the aggregate principal amount of the outstanding obligations, and revenue performance covenants, and that the failure to satisfy the primary endpoint for the SELECT-MDS-1 trial, the termination of the Company's SELECT-MDS-1 trial for safety reasons, or the failure to obtain United States Food and Drug Administration ("FDA") approval for tamibarotene for the treatment of newly diagnosed HR-MDS patients with RARA overexpression by May 31, 2026, would each constitute events of default under the Loan Agreement. In addition, upon drawing any further loans under the Loan Agreement the Company has agreed to grant the Lender, to the extent permitted under existing agreements and applicable law, a security interest in all intellectual property owned by the Company. As of June 30, 2024, the Company was in compliance with all covenants under the Loan Agreement.

In connection with the issuance of the Term A loan, the Company issued the Lender warrants to purchase 2,754shares of the Company's common stock at an exercise price per share of $72.60in February 2020. In connection with

the issuance of the Term B loan, the Company issued the Lender warrants to purchase 1,738shares of the Company's common stock at an exercise price of $115.00per share in December 2020 (collectively, the "Oxford Warrants"). The Oxford Warrants are exercisable within five yearsfrom the respective dates of issuance.

The Oxford Warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the Oxford Warrants do not provide any guarantee of value or return.

8. Accrued Expenses and Other Current Liabilities

9. Commitments and Contingencies

There have been no significant changes to the Company's commitments and contingencies as discussed in its Annual Report on Form 10-K for the year ended December 31, 2023.

The Company has a supply management agreement with TMRC Co. Ltd. under which the Company agreed to pay TMRC a fee for each kilogram of tamibarotene that is produced. The Company incurred nofees under this supply management agreement during the three and six months ended June 30, 2024. The company incurred fees of $1.8million under this supply management agreement during both the three and six months ended June 30, 2023.

10. Stockholders' Equity (Deficit)

Increase of Authorized Shares

On June 5, 2024, the Company's stockholders approved an amendment to the Company's Restated Certificate of Incorporation to (i) increase the number of authorized shares of the Company's capital stock from 80,000,000shares to 150,000,000shares, and (ii) increase the number of authorized shares of the Company's common stock from 70,000,000shares to 140,000,000shares. The Company filed a Certificate of Amendment of Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on the same day to effect the increase in the Company's authorized shares.

Issuance of Securities through an Underwritten Registered Direct Offering

In December 2023, the Company issued 4.9million shares of common stock and, in lieu of its common stock to certain investors who so chose, pre-funded warrants (the "2023 Pre-Funded Warrants") to purchase an aggregate of 5,242,588shares of common stock, pursuant to the 2023 Registration Statement, in an underwritten registered direct offering for gross proceeds of $45.0million, before deducting underwriting fees and other transaction costs of $3.4million.

The Company determined that the 2023 Pre-Funded Warrants are freestanding financial instruments because they are both legally detachable and separately exercisable from the common stock sold in the offering. As such, the Company evaluated the 2023 Pre-Funded Warrants to determine whether they represent instruments that require liability classification pursuant to the guidance in ASC 480. However, the Company concluded that the 2023 Pre-Funded Warrants are not a liability within the scope of ASC 480 due to their characteristics. Further, the Company determined that the 2023 Pre-Funded Warrants do not meet the definition of a derivative under ASC 815 because they do not meet the criteria regarding no or little initial net investment. Accordingly, the Company assessed the 2023 Pre-Funded Warrants relative to the guidance in ASC No. 815-40, Contracts in Entity's Own Equity, to determine the appropriate treatment. The Company concluded that the 2023 Pre-Funded Warrants are both indexed to its own stock and meet all other conditions for equity classification. Accordingly, the Company has classified the 2023 Pre-Funded Warrants as permanent equity.

Issuance of Securities through a Private Placement

On September 16, 2022, the Company issued in a private placement (the "2022 Private Placement") 6,387,173shares of common stock, and, in lieu of shares of common stock, the pre-funded warrants to purchase an aggregate of 7,426,739shares of common stock (the "2022 Pre-Funded Warrants"), and, in each case, the accompanying 2022 Warrants to purchase an aggregate of up to 13,813,912additional shares of common stock (or 2022 Pre-Funded Warrants to purchase common stock in lieu thereof) at a price of $10.34per share and accompanying 2022 Warrant (or $10.33per 2022 Pre-Funded Warrant and accompanying 2022 Warrant). The 2022 Private Placement resulted in aggregate gross proceeds of $129.9million, before $10.1million of transaction costs.

On December 8, 2020, through a private placement (the "2020 Private Placement"), the Company issued 1,031,250shares of common stock, and, in lieu of shares of common stock, pre-funded warrants to purchase an aggregate of 100,000shares of common stock (the "2020 Pre-Funded Warrants"), and, in each case, accompanying 2020 Warrants to purchase an aggregate of up to 282,809additional shares of common stock (or 2020 Pre-Funded Warrants to purchase common stock in lieu thereof) at a price of $80.00per share and accompanying 2020 Warrant (or $79.90per 2020 Pre-Funded Warrant and accompanying 2020 Warrant). The 2020 Private Placement resulted in aggregate gross proceeds of $90.5million, before $0.4million of transaction costs.

In the event of certain fundamental transactions involving the Company, the holders of the 2022 Warrants and 2020 Warrants may require the Company to make a payment based on a Black-Scholes valuation, using specified inputs. The holders of 2022 Pre-Funded Warrants and 2020 Pre-Funded Warrants do not have similar rights. Therefore, the Company accounted for the 2022 Warrants and 2020 Warrants as liabilities, while the 2022 Pre-Funded Warrants and 2020 Pre-Funded Warrants met the permanent equity criteria classification. The 2022 Pre-Funded Warrants and 2020 Pre-Funded Warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the 2022 Pre-Funded Warrants and 2020 Pre-Funded Warrants do not provide any guarantee of value or return. The initial fair value of the 2022 Warrants and the 2020 Warrants at issuance was $64.7million and $19.3million, respectively, determined using the Black-Scholes valuation model. For the three and six months ended June 30, 2024, the Company recorded a gain (loss) for the remeasurement of the aggregate fair value of the 2022 Warrants and the 2020 Warrants in its condensed statement of operations of $4.4million and $31.4million, respectively. For the three and six months ended June 30, 2023, the Company recorded a gain for the remeasurement of the aggregate fair value of the 2022 Warrants and the 2020 Warrants in its condensed statement of operations of $(3.1) million and $5.8million, respectively. As of

June 30, 2024 and December 31, 2023, the aggregate fair value of the 2022 Warrants and the 2020 Warrants included in the Company's condensed balance sheet was $30.4million and $61.7million, respectively.

11. Stock-Based Payments

2016 Employee Stock Purchase Plan

The 2016 Employee Stock Purchase Plan (the "2016 ESPP") was adopted by the board of directors on December 15, 2015, approved by the stockholders on June 17, 2016, and became effective on July 6, 2016 upon the closing of the IPO. The number of shares of the Company's common stock reserved for issuance under the 2016 ESPP automatically increases on the first day of each calendar year through the 2025 calendar year, in an amount equal to the least of (i) 117,333shares of the Company's common stock, (ii) 1.0% of the total number of shares of the Company's common stock outstanding on the first day of the applicable year, and (iii) an amount determined by the Company's board of directors. For the calendar year beginning January 1, 2024, the number of shares reserved for issuance under the 2016 ESPP was increased by 117,333shares. As of June 30, 2024, 349,590shares remained available for future issuance under the 2016 ESPP.

2022 Inducement Stock Incentive Plan

On January 25, 2022, the Company's board of directors adopted the 2022 Inducement Stock Incentive Plan (the "2022 Plan"), pursuant to which the Company may grant non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Awards under the 2022 Plan may only be granted to persons who (i) were not previously an employee or director of the Company or (ii) are commencing employment with the Company following a bona fide period of non-employment, in either case as an inducement material to the individual's entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4). In January 2023, the Company's board of directors amended the 2022 Plan to increase the aggregate number of shares that can be granted by 750,000shares of common stock. As of June 30, 2024, 702,555shares remained available for future issuance under the 2022 Plan.

2022 Equity Incentive Plan

The 2022 Equity Incentive Plan (the "2022 EIP") was adopted by the board of directors on July 14, 2022, approved by the stockholders and became effective on September 15, 2022. The 2022 EIP replaced the 2016 Stock Incentive Plan (the "2016 Plan"). Any options or awards outstanding under the 2016 Plan remained outstanding and effective. Under the 2022 EIP, the Company may grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Under the 2022 EIP, stock options may not be granted at less than fair value on the date of grant. On June 5, 2024, the Company's stockholders approved an amendment to the 2022 EIP to increase the number of shares of the Company's common stock available for issuance thereunder by 1,750,000shares. As of June 30, 2024, 1,297,396shares remained available for future issuance under the 2022 EIP.

Stock Options

Terms of stock option agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the applicable plan. Stock option awards granted by the Company generally vest over four years, with 25% vesting on the first anniversary of the vesting commencement date and 75% vesting ratably, on a monthly basis, over the remaining three years. Such awards have a contractual term of ten yearsfrom the grant date.

There were nostock options exercised during the six months ended June 30, 2024.

As of June 30, 2024, there was $2.5million of total unrecognized compensation cost related to unvested stock options granted to employees, which is expected to be recognized over a weighted-average period of less than 1.0year.

Restricted Stock Units and Restricted Stock Awards

From time to time, upon approval by the Company's board of directors, certain employees have been granted restricted stock units with time-based vesting criteria. The majority of these restricted stock units vest annually over a three-yearor four-yearterm. In addition, pursuant to the Company's director compensation policy, members of the Company's board of directors have been granted, at their election, either restricted stock units or restricted stock awards, which awards vest annually over a three-yearterm with 33.33% vesting on each anniversary of the grant date. The fair value of restricted stock units and restricted stock awards are calculated based on the closing sale price of the Company's common stock on the date of grant.

The Company has granted performance-based restricted stock units for which vesting occurs upon the achievement of certain clinical development milestones. Stock-based compensation expense associated with these performance-based restricted stock units is recognized when the achievement of the vesting conditions becomes probable. The Company did not recognize any stock-based compensation expense relating to the achievement of performance-based milestones during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, there was $16.6million of unrecognized stock-based compensation expense related to outstanding restricted stock units and restricted stock awards, with an expected recognition period of 1.1years.

Stock-based Compensation Expense

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