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Syros Cuts Price But Bags $50M in IPO to Fuel Cancer Drug Trials

Xconomy Boston — 

Syros Pharmaceuticals has a long way to go before it knows whether its drug discovery work will pay off. But insiders and Wall Street investors have given the firm’s efforts a boost, helping it go public Wednesday evening with a $50 million IPO.

Cambridge, MA-based Syros sold 4 million shares at $12.50 apiece in the offering, coming in short of the $14 to $16 per share projections the firm had set last week. Syros will begin trading on the Nasdaq tomorrow under the symbol “SYRS.”

As was the case with another Boston-area biotech, Selecta Biosciences (NASDAQ: SELB), Syros apparently got a big lift from its so-called “insider” shareholders—those who held shares when it was private and pledged to buy IPO shares, as well.

It continues a notable trend. IPO research firm Renaissance Capital noted in a report released  Wednesday that the healthcare sector relied heavily on insider buying to complete second-quarter offerings. Nine companies, many of them biotechs, disclosed that insiders had committed to buy at least 40 percent of their IPOs.

Prior to Selecta’s IPO, shareholders expressed interest in buying about $40 million of Selecta’s IPO shares. These agreements aren’t binding, but they usually end up being accurate. Selecta sold 5 million shares at $14 apiece, raising $70 million total.

Similarly, Syros shareholders have indicated interest in buying $35 million of its shares, more than half its total IPO haul. A spokesperson declined to specify whether those shareholders followed through.

It’s difficult to say, case by case, whether significant insider interest reflects problems finding outside investors, or a willingness of previous backers to double down on their bets.

Syros will use its IPO cash to fund early clinical trials for drug candidates SY-1425 and SY-1365, the first test cases for the discovery work Syros has been doing since its inception in 2011. SY-1425 will begin a Phase 2 study this year in a genomically defined subset of patients with acute myeloid leukemia. Early next year, Syros aims to start the first study of SY-1365 with patients who have a different genetic subset of leukemia.

Here’s more on Syros and its drug discovery work trying to identify “super enhancers,” or master switches responsible for turning genes on an off. The company was formed by Flagship Ventures and Arch Venture Partners and based on the work of Richard Young (Whitehead Institute for Biomedical Research), Nathanael Gray (Harvard Medical School and the Dana-Farber Cancer Institute), and Jay Bradner (now the head of the Novartis Institutes for Biomedical Research). Nancy Simonian (pictured), a former Millennium Pharmaceuticals and Biogen (NASDAQ: BIIB) executive, is Syros’s CEO.