Q2 2023 Spero Therapeutics Inc Earnings Call
Good afternoon, and welcome to the spire Therapeutics second quarter 2023 financial results Conference call. At this time all participants are in listen only mode. Following the company's formal remarks, we will open up the call for questions. Please be advised that this call is being real.
Corded and a replay will be available you can find information on the replay and further information related to todays announcements on the stereotype Iridex website at www dot spray of therapeutics Dot com at this time I would like to turn the call over to Ted Jenkins, Vice President Investor Relations and strategic finance.
That's fair Therapeutics Mr. Jenkins. 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 second quarter of 2023.
Press release is available on the Investor page of the Spero 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 to dependent H B R. SPR 720, <unk> hundred six and the design initiation timing progress and results of the company's preclinical studies and clinical trials.
And its research and development programs Managements assessment of the results of preclinical studies and clinical trials, the company's cash forecast and anticipated expenses and the sufficiency of 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 Spero therapeutics filings with the SEC, including in the risk factors section of our quarterly report on Form 10-Q for the quarter ended June 32023 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.
With that I'd like to turn the call over to Spyros Chief Executive Officer. Please go ahead Sir.
Thanks, Ted and I. Thank you all for joining us this afternoon.
This is my first earnings call, so stay coming the company's president and CEO on August one.
That wasn't just say how excited and honored I am to take on this role is actually a very exciting time for sparrow.
Each of our three late stage clinical programs is making excellent progress.
I am pleased to be working with such an experienced and talented management team.
We shared a vision to advance our pipeline of differentiated investigational medicines that are designed to address important unmet needs in infectious disease.
I believe that together, we have a great opportunity to grow.
Value for patients and stakeholders in the company.
Joining me on the call today are Dr coming out have met our Chief Medical Officer, and Steve Dipalma interim CFO and treasurer.
Let me begin with Kevin H B R. They just partnered with GSK and Victoria developing as potentially the first oral cobre, Panama antibiotic treatment.
Treatment of complicated urinary tract infections or <unk>.
As we have discussed previously we have been engaged with the FDA to agree on a path forward for this investigational drug and we were very pleased to announce on July 31st that'd be the separation agreement from the agency on journeys special protocol assessment or SBA.
The design and size of our planned phase III trial.
Please see the S. P agreement as a major milestone and the pandemic H B R program.
S. A S. P. A typically represents a very high level of concordance on the overall design between the FDA and a sponsor.
We believe the regulatory aspects with respect to the design of the program had been de risk substantially.
Surely.
We expect to begin enrollment in pivot appeal in the fourth quarter of this year.
Commodity provides further detail in a few minutes.
Under the terms of our exclusive license agreement with GSK.
Now entitled to receive the first Kochi millions of up to 115 million of development milestones.
This first payments had been Invoiced and just expect it to be received in the current quarter.
In addition to this payment we are also eligible to receive the following additional milestone and royalty payments under the GSK agreement.
These comprise off.
Up to 120 million in development milestone as the phase III trial progresses.
115 million in potential commercial milestones based on first commercial sales of <unk>.
225 million in potential sales based milestones and.
Low single digit to low double digit tiered royalties if sales exceed $1 billion on net product sales, but have you found them H B R. In all territories, except Japan, and such and other Asian countries.
In addition to progress on tape and H B R. We continue to move our other assets followed.
The phase Iia proof of concept clinical trial for Spi 2020 continues enrollment.
With sites open and patients enrolling and being dosed.
Spi two or six I investigational next generation polymyxin can.
<unk> to be on track for phase two I N T in the fourth quarter of this year.
By grant and other non diluted funding.
And then the organizational not a bunch of spend a minute talking about the management changes, we announced in June and that came into effect on August 1st.
On that date, although you can get three year tenure as CFO I took on the role of the company's president and CEO .
My predecessor, Dr anchor Dahlia Wei.
Who is the co founder of sped up.
<unk> to become chairman of the board of directors.
The prior chairman Dr Melanin, they spun it.
Is the remaining on the board as an independent director and another Board member Dr. Patrick Lee was appointed lead director.
The net result here is that while some members of the executive team and the board have changed rules.
The company has retained all that fixed officers or directors and these transactions.
On behalf of my fellow directors and the management team a bunch of tank and get for his contributions and leadership and getting better into this advanced stage and.
And we all look forward to continuing to work with him in his new role.
Separately, we have launched a search for a CFO .
Until this process is completed the board has appointed Steve Dipalma as interim CFO and treasurer.
We've worked with <unk> in the same capacity before I joined the company and to also is an experienced public company CFO .
I would now like to hand, the call over to Dr come out of the met coal.
Provide more details on the clinical programs.
Thank you Seth.
So very pleased that we now have an S. P. A W.
That'd be panel pivotal phase III trial.
Vivek V O and would like to thank all quality GSK as well as the FDA all of that engagement and support.
If it's P. O is designed as a global randomized double blind trial that will compare all Debbie panel with intravenous kidney panel and hospitalized adult patients with C U E.
Including acute pyelonephritis.
The primary efficacy endpoint will be overall response based on a composite of clinical cure false microbiological eradication at the test of cure visit.
The primary analysis will be an assessment of mountain POC.
Microbiological intention to treat population.
Based on a 10% margin, which is consistent with FDA guidance for non inferiority studies in this patient population.
The FDA has indicated that the halston and toasted waste of results from pivot T O along with previously completed studies could be sufficient to support approval that'd be kind of them as a treatment for C. U T I, including polymer fibers for limited use and vacation.
As Beth mentioned, we plan to initiate enrollment in the fourth quarter of this year and we'll provide more details including target patient numbers secondary end points and all the relevant information at all at that point or as the study gets does the two clinical trials thoughts golf.
Turning now to our S. P. All seven 'twenty program.
Which aims to deliver the first small well first of all an oral treatment for month to backfill those might go back to the old pulmonary disease or M. T. M. P. D S.
S. P O <unk> 'twenty is currently being evaluated in a phase Iia proof of concept trial. The primary endpoint is slope change and sputum bacterial burden from baseline.
We believe adding a positive result on this endpoint with supportive evidence from the trial secondary end points will enable us to Derisk the program and move confidently into late stage development, and which we intend to evaluate S. P. All seven plenty as part of a combination regimen.
Current standard of care for the empty MPD is prolonged combination therapy, including gloves traditionally used for tuberculosis, and thus have limited effectiveness and poor tolerability.
Given the limitations of these regimens, we believe our program has the potential to address a clear unmet need.
We are currently engaged in a number of additional development activities needed to support S. P. All southern twenties advancement towards late stage clinical studies.
Note that on our last earnings call. These activities include ongoing toxicology work CMC initiatives engagements with the FDA and efforts to expand the S. P. All 720 development program into Japan, where N. P. M. P. D has sharply increased travel months can pass all those studies.
We've also initiated two phase one clinical studies.
Yes.
Supplementary micro kinetics that S. T. All 719, the active moiety that pro drug SPR seven in 'twenty, and a bronco alveolar lavage or B, a L buggy and the second to evaluate the effect on the pharmacokinetics of S. P. All 720, Azithromycin and if.
Yeah tool when co administered in healthy volunteers.
In addition, we continued to execute on the steps needed to develop and validate a relevant patient reported outcomes instrument for MTN P. D. This is to ensure that the primary efficacy endpoint within our future clinical studies is in line with the Fda's public guidance on developing drugs for this.
Occasion.
The trial is expected to enroll up to 35 participants well are the treatment naive or treatment experienced but do not have treatment refractory disease.
And now have approximately 25 active sites that are currently screening or enrolling patients. We are actively engaging with all study sites to ensure that they have the necessary resources.
We have also partnered with a third party C. R O specialized in rare diseases to support study sites and with the lead MTM patient advocacy group M. T. M Y all and we have launched a new Facebook page for patients and physicians videos on our main website as a means of providing further.
Education flawed MTM patients constituents.
With all of that we're generally satisfied with the level of interest and Goldman.
Based on the multitude of complexities faced on newly diagnosed patients with MTN P. D. We believe it is appropriate that we recently updated our guidance with respect to the timing of top line results from this phase Iia trial, which we now expect to announce in the second half of 2020.
Four.
Finally.
Any update on SP at two six program.
<unk> six is an investigational next generation polymyxin handful Baltic with the potential for an improved safety profile.
Had to count the available probably makes sense being developed to treat multi drug resistant gram negative infections. We are currently working to advance S. P. All two of six into a phase II trial in patients with hospital acquired or ventilator associated bacterial pneumonia.
<unk> on track to submit an R&D application in the fourth quarter of this year.
With that I'll turn the call over to Steve to review, our quarterly financial results.
<unk>.
Thank you come all and good evening to all of you joining us on the call Spiro.
Spiro as well capitalized and in a strong financial position with $77 7 million in cash and cash equivalents as of June 32023.
Based on our cash and cash goal eventually as of June 32023, and inclusive of the $30 million development milestone payment to be received from GSK pursuant to our exclusive license agreement.
We believe that our cash runway will be sufficient to fund us into the second half of 2025.
We reported total second quarter revenue was $2 7 million in the second quarter of 2023, compared with revenues of $2 million in the second quarter of 2022.
Revenue was approximately $700000 higher year over year due to revenue recognition associated with the GSK transaction.
Research and development expenses for the second quarter of 2023 were $9 $5 million.
Compared with $8 2 million for research and development expenses for the same period in 2020 to.
Just $1.3 million year over year increase was primarily due to higher direct costs related to the SPR seven 'twenty program.
As well as higher direct costs related to the <unk> and SBR to Us X programs.
These increases were offset by lower R&D head count expenses associated with our strategic restructuring announced in May 2022.
General and administrative expenses for the second quarter of 2023 of $6 $1 million were lower than the $8 $1 million reported in the same period in 2022, primarily as a result of decreased professional and consulting fees due to decreased commercial operation expenses and a decrease in facility related and other costs.
We reported a net loss for the second quarter of 2023.
$9 million or 23 per basic and diluted share of common stock.
Turning to a net loss of $28 $7 million or <unk> 87 per basic and diluted share of common stock reported for the same period in 2022.
For further details on spiro's financials, including results for the six months period ended June 32023.
For you to Spiro its quarterly report on Form 10-Q filed with the SEC today.
Well now open the call for questions operator.
Thank you.
We'll now begin the question and answer session to join the question queue. You May Press Star then one telephone keypad you live here at town acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
The first question comes from Louise Chen with Cantor. Please go ahead.
Okay.
Hi, Congrats on all the progress this quarter and thank you for taking my questions here.
So I want to add.
What else in addition to $7 20 in two out of six my you explore in terms of pipeline do you plan to expand your pipeline beyond these two or do you have enough on your plate today.
At least that I wanted to ask me what is your vision for Spiro and how might you do things differently.
And then in terms of N T. M opportunity was 720, if you do make it to the market. How do you plan to distinguish yourself from entrenched competitors. Thank you.
That's the only.
Thanks Louise for the questions.
In a somewhat out of Florida and jumps off the vision for the company as equal follow age I think really focused on if it Ain't broke don't fix it. They are many many great things that the company has executed in the past and diesel continue to be things that we focus on going forward.
While also progressing our pipeline as it evolves more and more towards a later stage company. So execution is going to become Batam Island.
And that's something that the divestiture of the management team will be a 80 of intense focus for me.
Hi, transitioning from that she is here.
Question actually when we think about the pipeline.
<unk> now had the continued flexibility and balance sheet strength to evaluate business development opportunities as they arise.
We apply a very stringent criteria on these opportunities they have to fit with what we have spent it'll have considered approach in the past a high unmet need and a potentially strong economic and commercial opportunity.
We are evaluating <unk>, an asset that fifth either one of those criteria that won't fit in either the strategic focus for the company, but not with the expertise. We think we have bids here at the company.
So from organizationally.
Find ourselves with the recent management transitions for our management and board members as a place where we can continue to build on past strength, but.
Also refresh ourselves as equal forward. So those are good opportunities with really look forward to.
And on your last question on how we expect to distinguish.
Our assay just VR seven 'twenty in a market with entrenched competitors.
We would start off by noting that in the first line for a N T. M. Right now there aren't any intention competitors. There are no approved therapies and the single approved therapy and as you know is in refractory space, which is in huge advocates and so far.
How we progress the asset we continue to believe that there is significant launch kicked off with Trinity.
Sure as far as auto very tolerated therapy in first line N T M patients.
Advocates. This success are the success of other players in the space, especially in the adjacent refractory space they'll continue to validate that this is a market with significant opportunity, but our ability to go on the first line, we believe set us up with a differentiated profile and.
Hopefully a white space for us to execute on.
Did I answer your question is there anything else you'd like me to elaborate.
Thank you very much Jessica.
Once again, if you have a question. Please press Star then one.
Next question comes from Bill Baldwin bonds, you happen with H C. Wainwright. Please go ahead.
Hi, James This is Bob Allen dialing in for Ron Silver argue congrats on the progress and thanks for taking my questions. So two questions from us so firstly, how especially my complementary pivotal trial.
And then could reach full enrollment.
Yeah, we haven't disclosed that at stated, but what we can tell you is that our colleagues at GSK have set a target to commercialization date for turbine panned out for 2020 six so obviously as you look backwards through E.
A trial readout and then NDA process you can draw your conclusions about the expected length of the trial, but you've also stated in the past is that we expect this trial to be larger than adapt appeal.
To ensure that the clinical data, we would what we would get would be sufficient positive and persuasive to reach approval. So the last trial took roughly nine to 12 months to enroll this will be longer than that but constrained, but the target timeline that we're working towards.
Right.
Great. Thanks for the clarity and then staying in the lane Hollister depend on performing commercially these days in Japan.
It's something that we'd George track on an active basis, because it's in a different indication entirely there just pediatric pneumonia.
And it's been there since 2009, so 14 years and we feel that the performance of that drug in Japan has limited application for a different tablet form and it's entirely different indication a bunch from our from what we know it's going along well at this.
To our understanding millions of patients have been dosed and the drug has performed well.
Okay, Great and then thirdly. This is probably a lengthy question. So please confirm or deny whether meaningful milestone for likely to be fabulous Spiro from GSK. Upon achievement of the following eight enrollment of the first patient into the.
Phase III trial be achievement of 50% enrollment in the.
Phase three trial and see completion of enrollment in this trial.
Well I think on a macro level I can confirm that those are those payments will come through through the beginning duration and ending of the trial, we haven't disclosed.
Very specific timelines and milestones on those with that said therefore becomes self evident over a period of time a win as we continue to report out the company's progress.
As well as the cash influx into the company Yo.
You'll gain a greater visibility into what at what at what achievements trigger these milestones and the timing of those might've students, but beyond that just pushes that this moment in time, we are not providing.
Any deeper data at the moment.
Okay, Great and then do you have any updated market research are epidemiological information with respect to 720 commercial opportunity in the U S. If so what does this show.
Yeah, what we have said in the past is roughly 800000 patients domestically in the U S roughly a quarter of million patients in major markets worldwide that includes Japan, <unk> Kamath pointed out earlier the prevalence is very similar to that of the U S.
That continues to be at least from a top line perspective, our assessment of the market opportunity, whereas <unk> is at least for the cut into our trial and that is in first line patients. They just three quarters roughly of that population. So youre looking at somewhere approaching 200000 patients but that.
Catch opportunity beyond that just like our other stakeholders continue to evaluate are rising and you have more available epidemiological information and probably less information and tracking usually the growth rates in the diagnosis of the disease for future planning purpose.
There's a bunch of at this stage I think are finding is up fairly consistent with what we've reported out before.
Alright, thanks, so much for taking our questions and congrats again.
Thank you always a pleasure.
This concludes.
B happened other caller on the line. The next question comes from Peter Bell with Cowen. Please go ahead.
Please go ahead, hi, guys. Thanks for taking hi, guys. Thanks for taking the question apologize for the poor connection.
I'm going to ask you about the decision to include some <unk>.
Section.
Refractory patients in the phase two can you talk to how it will how it may impact topline data on whether you expect the two groups to behave differently on the primary endpoint.
Or if there's a way to sort of tease apart how do different things to tell you what you need.
Yeah, I think for the trial design, let me defer to commodity to speak to it for a little bit better and I think that I can spend and on the topline data come out would you care to provide an opinion.
Oh sure. Thank you Reeta for the question so as Seth indicated spare though has strategically is strategically pursuing development for first line treatment. So first line treatment. That's mi patients who are treatment naive or treatment experienced but do not have refractory disease and again that's about.
70 odd percent of the patient population. So they can study in treatment naive or treatment experienced patients who do not have refractory disease. So this is the development.
<unk> development path that a spread or is currently pursuing so in this particular slide the me too there's no refractory disease patients who will be in gold as a matter of fact, they are being excluded from the study and as a reminder, this study is.
As a proof of concept.
They'll be a composed of about up to 35 patients.
So there's a distinction between relapsed and refractory.
Please.
Disease course, or at least gosh infectious burden.
These are clear infection is different between those two populations.
It's not that the ability to clear the infection using that drug is necessarily different but just as a reminder, S. P. All 720 is a novel drug and has no cross resistance with other anti Baltics and we do not expect that.
That are in the clinic you know when do you expect that it would work in the clinic for the fact that disease patient touch patients. However, the strategy has been is pursue first line treatment as the third path for development. So given that this is all done.
Ultimate path. So the study will enroll patients who do not have refractory disease.
Only treatment <unk> patients or patients who are treatment experienced but again at all or are not considered to have refractory disease.
Okay. Thanks.
And we have not disclosed development beyond discount phase Iia proof of concept study, but again not to say that that would be a concern that S. P. All 720 with multi work in patients with refractory disease again, there's no cross resistance with existing antibiotics.
But it's just a strategy that's panel has adopted against as opposed to the volatile and fast for first line treatment for us.
Yeah.
This concludes the question and answer session I would like to turn the conference back over to Mr. <unk> for any closing remarks. Please go ahead.
Oh, Thanks, operator, we appreciated the opportunity to provide an update on our recent progress and look forward to the continued advancement of our clinical programs.
Thanks to everybody listening and for your participation today and have a nice evening.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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