Q4 2022 Spero Therapeutics Inc Earnings Call
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Speaker 1: PR, our press release and available design initiation, therapy, progress and results of before studies, I've been to the miles and it's research and the program's call contains management assessment of the results of clinical trials and statements about the future development companies cash forecast and anticipated our second to end the sufficient PR to access resources and heavy pen of HPR such forward looking statement and not a guaranteed performance companies as a result of different results contained in such a state and clinical trials and several factors on the call to contribute to such differences management. So pretty much their filings with the FCC, including the risk factors section of our annual report on 10k for the year and it's December 31 2020. statements are not a guarantee of performance and the companies at the portal statements are only at the date of the conference call and the company. No obligations are complete update any for looking statements or supply new information regarding their company's call, including in the respect of our annual report, our doctor, my dear, the SEC, one of our 22 today, chief medical officer, these four and it was happy to only at this conference call. And with that, I'd like to turn it all over to Dr. statements or please go ahead information regarding the company. Thanks everyone listening.
Speaker 1: Spirosoft to a strong call are Dr. Anca Maria, the executive officer of the Strong Balance Sheet, and world-class partners to support the advancement of our multi-program pipeline of differentiated medicines. We remain committed to developing a pipeline of medicines that marry unmed needs with high-tech, commercial potential, and we continue to do so while placing a pre...
Speaker 1: as potentially the first oral carbon continue to be used while placing a premium in capital-based and complementing our efforts with those of our partners in pharma and in public agencies. SEBI-PENOM-HBR is the subject of an exclusive license agreement with GSK, which closed last quarter. This agreement came with a $66 million upfront payment as well as a $9 million oral carbon-penned biotic for the E-stock, both of which have now been received.
Speaker 1: is accepted in addition to certain other Asian countries where rights are being retained by our partner, Beijing Teika, sales and milestone agreements, as well as single digit to low digit royalties on HBR, while GSK will be responsible for additional development, commercialization activities outside of the US development and commercialization.
Speaker 1: in all we're engaged with the FDA on a planned protocol for Tepi-pano-DCR becoming by our clinical trial. As you may recall we had a tight agreement with the agency in 2022 during which we aligned on high level aspects while GSD will be responsible for additional development indicating positive results from the trial together with confirmatory non-clinical evidence of efficacy.
Speaker 1: regulatory and development activities over the coming months to trigger milestone payments from our GSK partnership. We'll continue to anticipate initiating the phase three trial in the second half of 2020. And if all goes well with the program, we believe the end of the penthouse of this year could reach more table station by 2026 as noted by GSK on their earnings call last month.
Speaker 1: these pillars is the extensive data set supported by TEBI-PENOM-SAKE and NAC. Between our work and that of Meiji Seika, TEBI-PENOM has been evaluated in 24 with a core trial set that has been collectively based through a 2500 subject. These are highlighted by our double-blind placebo-controlled Phase III trial with APL. MORE LOG pills
Speaker 1: Post-marketing surveillance is the extensive data set supporting Tebibam safety methods between our work and that of Mediasitis. Tebibam has been evaluated and deceived while noting no safety issues in a review of more than 30, 25, 100 subjects.
Speaker 1: These are highlighted by our goal of live people's potential to address the health, clear and pressing more over post-market surveillance efforts on carbon-bionid biopsy available for millions of people yet for pneumonia, many of whom have no other option other than to receive an IV therapy and hospital setting. By successfully developing heavy patients, we believe we can provide the key pillar of the at-home oral treatment that can provide health and economic...
Our first question comes from Louise Chen Cantor. Please go ahead.
Hi, congratulations on all the progress this quarter and thanks for taking my questions.
So a few questions first on your cash balance will it take you to that 720 phase two readout.
Then the other question I wanted to ask you was if your drug the 720 approved for MTM, where do you expect this patent in the treatment paradigm and then last question is just on Opex, how we should think about that relative to 2022, and then what that potential increase in R&D expense I guess, given the new programs that you're working on.
How we should think that end. Thank you.
Thanks Louise for the questions. Your first and third question relate to some of our financials. So I'll have.
Stop enter answer those but perhaps I'll start with.
The treatment paradigm for 720.
Just to zoom out to a 100000 feet MTM is a debilitating chronic disease. It affects about a quarter of million patients worldwide happened in the U S have in the rest of the world. It's a slow growing debilitating disease, where patients really.
Lose their quality of life slowly in the longer a patient has the disease the more long term and lasting damage. The lungs have so we believe that the treatment paradigm for MTM drugs generally and also 720 is to be a solution for patients early in their disease journey now certainly the drug has the <unk>.
<unk> biological characteristics to be useful throughout a patient's disease journey, we're starting with first line because it's 75% of the current patient population number one and number two.
As we've looked at published literature suggests that 75% of patients that are on the current options. They have discontinue within a year and of the patients that actually stick with it half of them don't find any relief. So the major unmet need right. Now is first line treatment and something that patients can take throughout their disease journey to avoid becoming <unk>.
Factory patients, that's where we'll start and then we'll explore how we expand the story from there as we continue to generate clinical data.
So that's perhaps the first part of your question for the financial components of your question I'll turn it to <unk>.
Yes. Thanks for the question Sarah Louise So your first question on whether the cash balance will take us through the topline data readout for <unk> 'twenty that is indeed, the case our expected top line data readout is in the first half of next year, our expected cash runway is to beyond 2024.
Meaning beyond the end of 2024, so we expect to have this data read out where it's still a healthy balance of cash sitting on our books when it becomes available.
So that unless you had questions on the cash I can move on to the operating expenses question.
Yes that makes sense. Thank you.
On the operating expenses Louise.
If you look at our financials for this quarter other than a onetime payment made to a major yet disclosed in our 10-K the run rate for Opex is virtually the same as our burn on the Opex for <unk> of last year, So for <unk> of last year or even the early teens.
In terms of dollars.
If you extrapolate that early teens born on non <unk> expenses on a $109 million cash balance that would give you the support for our disclosed cash Sunday to beyond 2024.
For the in between R&D, you're of course, right that we expect to scale that up and we start phase III trials, but it also would be funded by the milestone fee received from GSK on <unk> through that process.
So indeed, R&D expenses will go up but so.
Although the cash and milestones coming in from our partners.
And therefore for GSK, we expect that to be awash. Prior run rates will give you the the calculations that would support our discourse cash runway.
Thank you.
Please go ahead.
This concludes our question and answer session I will now turn the call back to Doug.
Yeah.
Thank you operator, and thanks to everyone, who joined US on the call today to hear about our recent progress. We look forward to the continued advancement of our programs and wish everyone. A nice evening.
Okay.
This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a J D.
Okay.
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Fourth quarter.
Financial results conference call.
This time all participants.
Following the call.
In my remarks, we will open up the call for questions. Please.
Please be advised that this call is being recorded and a replay.
We'll be available.
You can find information.
Plate and further information related.
Fedex website at Www dot.
<unk> Dot com.
At this time I would.
Turn to call over to Todd.
Nice president of Investor Relations and strategic finance.
Mr. <unk>. Please go ahead.
Thank you operator, and thank you all for participating in today's conference call.
This afternoon, Spero Therapeutics released financial results and provided a pipeline update for the fourth quarter and full year 2022 press.
Our press release is available on the Investor page of the Spirit Therapeutics website.
Before we begin I'd like to remind you that some of the information presented on this conference call contains forward looking statements based on our current expectations, including statements about the future development and commercialization of SPR 720, <unk> hundred six and have you kind of HDR.
And the design initiation timing progress and results of the company's preclinical studies and clinical trials and its research and developmental programs.
Management's assessment of the results of preclinical studies and clinical trials.
The company's cash forecasting and anticipate expenses and the sufficiency of its cash resources.
Such forward looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in sparrow therapeutics filings with the SEC, including in the risk factors section of our annual report on Form 10-K for the year ended December 31 2022 filed.
With the SEC today.
These forward looking statements speak only as of the date of this conference call and the company undertakes no obligation to publicly update any forward looking statements or supply new information regarding the company. After the date of today's call.
Participating in today's call are Dr. <unk>, <unk>, Chief Executive Officer, Dr Kumar Ahmad Chief Medical Officer.
Seth <unk>, Chief financial officer, and with that I'd like to turn the call over to Dr. <unk> <unk>.
Please go ahead.
Thanks, Todd and thanks to everyone listening.
<unk> is off to a strong 2023. Thanks to recent achievements that have provided us with a strong balance sheet and world class partners to support the advancement of our multi program pipeline of differentiated medicines, we remain committed to developing a pipeline of medicines that Mary unmet need with high commercial potential and we continue to do so while placing a premium on <unk>.
Capital efficiency and complementing our efforts with those of our partners in pharma and in public agencies.
We will be providing an update on Spi 720, <unk> to a six so I'll focus my part of the call on <unk> <unk>, which we are developing as potentially the first oral cobre, Panama antibiotic for the treatment of complicated urinary tract infections or cdti.
As a reminder, <unk> is the subject of an exclusive license agreement with GSK, which closed last quarter disagreement came with a $66 million upfront payment to us as well as a $9 million equity investment in our common stock both of which have now been received in.
In addition, we are eligible for up to $525 million in development sales in milestone payments as well as single digit to low double digit royalties on net product sales in exchange for all this GSK was granted an exclusive license for <unk> development and commercialization in all territories, except Japan and certain other Asia.
In countries, where Reits are being retained by our partner maybe Sega.
Per the agreement, we hold responsibility front upcoming phase III trial of <unk>, while GSK will be responsible for additional development and commercialization activities outside of that made you take a territory.
We're engaged with the FDA on the planned protocol for it can be found on <unk> upcoming clinical trial as you may recall, we had a type a meeting with the agency in 2022 during which we aligned on high level aspects of the trial design and receive feedback, indicating the positive results from the trial together with confirmatory non clinical evidence of efficacy could be.
Be sufficient to support <unk> approval into UTI, including Pyelonephritis for unlimited use indication.
We still anticipate providing an update on our engagement with the FDA in the first half of this year. This update will include details of the clinical trial designed as well as granularity on the specific regulatory and development activities over the coming months, they will trigger milestone payments from our GSK partnership will continue.
To anticipate initiating the phase II trial in the second half of 2023, and if all goes well with the program. We believe <unk> could reach commercialization by 2026 as noted by GSK on their earnings call last month, I would like to thank GSK for their role in what's been a very productive partnership to date.
As we work to advance <unk> through the regulatory process and complete the phase II trial. It's the program strong foundation that fuels. Our enthusiasm. This foundation consists of three key pillars.
First of these pillars is the extensive data set supporting <unk> safety and efficacy between our work and that has made you say Debbie Panama has been evaluated in 24 clinical trials that have been collectively enrolled over 2500 subjects. These are highlighted by our double blind placebo controlled phase III trial adapt Po. Moreover, post marketing surveillance efforts on <unk>.
In Japan.
Where it's approved for pneumonia otitis media and sinusitis have demonstrated efficacy, while noting no safety issues and a review of more than 3300 patients.
The second key pillar of <unk> Foundation is its potential to address a clear and pressing unmet need there are currently no oral carbo kind of antibiotics available for millions of COPD patients in the U S. Many of whom have no other option other than to receive an IV therapy in a hospital setting by successfully developing turbine kind of we believe we can provide these patients.
With an at home oral treatment that could provide health and economic benefits for them, while also improving costs for the health care system.
The last key pillar, making up the <unk> Foundation for success coming from the support of our partners. We believe GSK is the ideal partner to lead <unk> commercialization if approved given its well established commercial organization and commitment to serving patients with infection, including urinary tract infections. We're also grateful for the continued support of BARDA for the advancement of <unk>.
With that I'll turn the call over to <unk> to discuss SPR 720, and Spi to Asics.
Thanks Duncan.
I'll begin blackboard.
Based on STR plenty.
Multiple blood candidate being developed as a first line treatment for the orphan designated lump trabecular micro bacterium.
<unk> or anti PD.
Sure.
An important aspect of all.
All 720 program Paul.
Target patient population, which cancer patients will all treatment naive although to boutique.
Perfect.
This is noteworthy because patients with MTN progressed.
<unk> all been swapped out.
One.
Limiting the potential for <unk> with <unk> group.
Function.
Quite the inherent challenges facing patients with refractory <unk>.
Yes.
But on therapy.
PV.
In bed patients with early in that journey, all frequently treated with combinations.
Well let.
With limitation related proposal.
Yes.
And Black Hawk.
Estimates indicate that 70 odd percent of the patients with <unk>.
The key positive CAD.
This continued thoughts Steve was asking about the year, mainly due to tolerability and effectiveness.
Even when they complete their course of therapy and I hope it <unk> proportion of patients experience.
Okay.
<unk> also been plenty of developments.
We hope to improve the first line standard of care for patients with PBC.
We initiated the phase two.
Clinical trial designed to establish proof of concept.
We recently completed the fact that for them.
That's the gate the methane and we all can.
Conducting the appropriate development activities.
What I can say eventually.
Seven.
Yes.
Okay.
I'll jump in for <unk> I think he is having technical difficulties.
These activities include ongoing toxicology work CMC and quality initiatives engagement with FDA and activities to expand into Japan. As there is a large prevalence of Japanese patients with MTM. PD. Importantly, we are also actively progressing with the development and validation of relevant patient reported outcomes for <unk>.
As part of the clinical endpoint work for follow ons clinical studies.
The phase II trial is designed to enroll approximately 35 patients with MTN PD due to Mycobacterium Avium complex implicated in approximately 80% of MTM PD cases eligible participants are either treatment naive or have received prior treatment, but have non refractory disease. The <unk>.
Study will compared two doses of oral SPR 720 mono therapy.
501000 milligrams versus placebo. The primary endpoint is slope change a weekly sputum bacterial burden from day, one to the end of the trial is 56 day treatment period, we aim to see Sps 720 treatment, leading to a weekly sputum bacterial slope change, which is both negative and significantly better than placebo.
Achieving this goal would make Sps 720, the only agent in development that we're aware of with a demonstrated ability to drive early microbiological response against MTM as a standalone agent versus placebo carrying this result with safety data that are consistent with a favorable safety findings observed in SPR 700, Twenty's prior phase one trial.
Strongly support advancement of the program more broadly speaking the goal of our phase Iia proof of concept studies to inform the design of a later stage and longer term trial evaluating <unk> in combination with current standard of care agents.
Although we do not expect to comment on enrollment. This trial progresses 10 U S sites are currently active in more sites are expected to come on board in the coming months. This progress is in line with our targeted timelines that we remain on track to report top line results from this phase Iia trial in the first half of 2024.
On behalf of come I'll now briefly discuss <unk>, our investigational next generation polymyxin candidate being developed to treat multi drug resistant gram negative infections in the hospital setting. This program is supported by multiple collaborations, including Pfizer adverse medicine and the National Institute of.
Allergy and infectious disease in the U S Department of defense.
Major limitation of currently available polymyxin as the nephrotoxicity associated with these agents with that as a premise our team leveraged the understanding of the structure activity relationships to design 206 in a way that minimizes in vitro cytotoxicity and in vivo kidney exposure in animal models. This led to a substantial reduction of the nephrotoxicity.
<unk> profile compared to currently available polymyxin subsys.
Subsequent phase one trials indicated that <unk> was generally well tolerated at dose levels of bulk predicted therapeutic exposures in key tissues, such as the lungs.
These data together with in vitro data demonstrating its potent activity against Multidrug resistant pathogens.
<unk> are believed to have six has the potential to be a best in class probably mixing.
Supported by encouraging clinical and preclinical results. We've seen to date, we are now working to advance <unk> into an externally funded phase II trial in patients with hospital acquired ventilator associated bacterial pneumonia.
We expect to submit an IND application to the FDA to support this phase II trial in the fourth quarter of this year.
With that we'll pass the call over now to South to review our financial results.
Thank you Ed and good.
Good afternoon to all listening.
It is my pleasure to now provide an overview of <unk> financial results for the fourth quarter and full year ended December 31 2022.
Total revenues for the fourth quarter of 2020 to.
$47 $4 million compared with revenues up $2 $7 million for the fourth quarter of 2021.
The revenue increase for the fourth Quadro <unk> thousand 22 was primarily due to $46 $1 million in collaboration revenue related to our agreement with GSK and Pfizer.
Total revenue for the year ended December 31, 2022 was $53 5 million compared to $18 3 million for the year ended December 31 2021.
The revenue increase for the year ended December 31, 2022 was primarily due to the aforementioned partnership collaboration revenue.
Research and development expenses for the fourth quarter of 2020 to $15 $1 billion.
Compared to $17 2 million of research and development expenses for the same period in 2021.
This year over year decrease was primarily due to a reduction in personnel related costs, while laying the strategic restructuring announced in May 2022.
Research and development expenses for the year ended December 31, 2020 to $47 6 million compared to $64 5 million for the year ended December 31, 2021 had lower expenses in 2022 compared to 2021, primarily due to reduced program activity for <unk>.
As a result, the strategic restructuring last year.
General and administrative expenses for the fourth quarter of $2022 $6 5 million compared to $13 million of G&A expenses for the same period in 2021.
This year over year decrease was primarily due to reduced head count costs in our commercial general and administrative functions as a result of the strategic restructuring.
General and administrative expenses for the year ended December 31, 2022 were $36 5 million compared to $41 7 million for the year ended December 31 2021.
We had lower expenses in 2022 compared to 2021 again, primarily as a result of the strategic restructuring.
Restructuring expenses of $11 6 million.
Were incurred during the year ended December 31 2022.
These expenses, primarily comprised of $8 6 million of severance and other employee cost too.
$2 $4 million of discontinuation costs, such as contract termination fees.
$6 million of lease impairment expenses.
Reported net income of $26 8 million for the fourth quarter and full year net loss of $46 4 million for the year ended December 31 2022.
Our net income of 55.
And net loss of one to $3 per share of common stock respectively.
Net losses for the fourth quarter and year ended December 31, 2021 were $29 2 million and $89 8 million or 90.
$2 91 per share of common stock respectively.
As of December 31, 2022.
<unk> had cash and cash equivalents of $109 1 million.
Based on their current operating plan.
<unk> believes that its cash and cash equivalents together with other non dilutive funding commitments that would be sufficient to fund its operating expenses and capital expenditure requirements beyond 2024.
For further details on our financials.
Please refer to our 10-K filed with the SEC today.
Now open the call for questions.
Later.
Thank you we will now be conduction a question and answer session.
Thanks, I'll ask a question please press <unk>.
One on your telephone keypad.
A confirmation tone will indicate your line is <unk> good question.
You May press Star two if you would like to remove yourself from the queue.
For participants using speaker equipment, it may be necessary to see Katherine Hudson before pressing the star keys.
One moment please.
Quick question.
Our first question comes from Louise Chen Cantor. Please go ahead.
Hi, congratulations on all the progress this quarter and thanks for taking my questions.
So I would ask a few questions first on your cash balance will it take you to the 720 phase two readout.
And then the other question I wanted to ask you was if your drug the 700 <unk> approved for MTM, where do you expect to fit into the treatment paradigm and then last question is just on Opex. How we should think about that relative to 2022, and then with the potential increase in R&D expense I guess, given the new programs that youre working on.
How we should think that Ann thank you.
Thanks Louise for the questions. Your first and third question relate to some of our financial so I'll have.
Stop enter answer those but perhaps I'll start with.
The treatment paradigm for 720.
So just to zoom out to 100000 feet MTM is a debilitating chronic disease. It affects about a quarter of million patients worldwide happened in the U S have in the rest of the world. It's a slow growing debilitating disease, where patients group.
Their quality of life slowly in the longer a patient has the disease the more long term and lasting damage. The lungs have so we believe that the treatment paradigm for MTM drugs generally and also 720 is to be a solution for patients early in their disease journey now certainly the drug has the.
Microbiological characteristics to be useful throughout a patient's disease journey, we're starting with first line because it's 75% of the current patient population number one and number two.
As we've looked at published literature suggests that 75% of patients that are on the current options. They have discontinued within a year and of the patients that actually stick with it half of them don't find any relief. So the major unmet need right. Now is first line treatment and something that patients can take throughout their disease journey to avoid becoming.
Factory patients, that's where we'll start and then we'll explore how we expand the story from there as we continue to generate clinical data.
So that's perhaps the first part of your question for the financial components of your question I'll turn it to SaaS.
Yes. Thanks for the question Louise So your first question on whether the cash balance will take us through the top line data readout for <unk> 'twenty that does indeed the case.
Expected topline data readout in the first half of next year.
Expected cash runway is to beyond 2024.
Meaning beyond the end of 2024, so we expect to have this data readout with still a healthy balance of cash sitting on our books when it becomes available.
So that unless you had questions on the cash I can move on to the operating expense question.
Yes that makes sense. Thank you.
On the operating expenses Louise.
If you look at our financials for this quarter other than a onetime payment made to a major U S disclosed in our 10-K.
Run rate for Opex is virtually the same as our board on the Opex for <unk> of last year. So if a tweak of last year, even the early teens in terms of dollars.
If you extrapolate that early teens born on non <unk> expenses on a $109 million cash balance that would give you the support for our disclosed cash Sunday to beyond 2024.
For the in between R&D, you're of course, right that we expect to scale that up and be start phase III trials, but those will be funded by the milestone C received from GSK on Dunlop meant through that process.
So indeed R&D expenses will go up so that the cash and milestones coming in from our partners.
And therefore for GSK, and we expect that to be a wash prior run rates.
You.
The calculations that would support our disclosed cash runway.
Okay. Thank you.
Please please.
This concludes our question and answer session I will now turn the call back to Doug.
Sure.
Thank you operator, and thanks to everyone, who joined US on the call today to hear about our recent progress. We look forward to the continued advancement of our programs and wish everyone. A nice evening.
Okay.
This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a J D.