Q3 2023 Spero Therapeutics Inc Earnings Call
Okay.
Good afternoon.
And welcome to the Spero Therapeutics third quarter 2023 financial results Conference call. At this time all participants are in a listen only mode. Following the company's formal remarks, we will open the call for questions. Please be advised that this call is being recorded.
The replay will be available you can find information on the replay in further information related to todays announcements on the Spero therapeutics website at Spero Therapeutics dotcom.
At this time I would like to turn the call over to Ted Young and.
Vice President Investor Relations and strategic finance at Spero 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 third quarter of 2023, our press release its available on the Investor page of <unk> 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 at the time of each BR.
720 <unk>.
<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 anticipates expenses and the sufficiency of cash resources such forward looking statements are not a guarantee of performance and the companys actual results.
Could differ materially from those contained in such statements.
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 September 32023 filed with the SEC today.
These forward looking statements speak only as of the date of this conference call November 13th 2023.
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 <unk>, President and Chief Executive Officer, Dr Kumar for Matt.
Our Chief Medical Officer, Steve Dipalma, our interim CFO, and treasurer, and although not having a speaking part today I would also like to welcome our special guests in attendance, Mr. Rajeev, Hulu Sparrows, New Chief Financial Officer, and Chief business Officer with that I'd like to turn the call over to <unk>, Chief Executive Officer, Seth Fuqua. Please go ahead Sir.
Thanks, Ted and I. Thank you all for joining us this afternoon.
2023 has been a year of progress and execution such data.
A number of achievements across clinical regulatory and financial related funds.
Each of our late stage assets is moving forward.
We have an experienced management team in place and a strong balance sheet positioning us to deliver on our mission to develop differentiated medicines for patients with orphan diseases.
And serious multi drug resistant bacterial infections.
Let me begin with <unk>, which we have partnered with GSK in which we develop being as potentially the first oral cobre, Panama antibiotic for the treatment of complicated urinary tract infections or <unk>.
Hi.
We were very pleased to announce on July 31st.
We had received reached an agreement from the U S. FDA under a special protocol assessment or SBA.
On the design and size of our planned phase III trial <unk> appeal.
And SBA typically represents a very high level of concordance on the overall, particularly design between the FTE and a sponsor.
We believe the regulatory aspect with respect to the design of the program had been derisked substantially.
Enrollment in <unk> B.
First patient first visit is expected to begin in the current quarter.
<unk> touch on additional details in a few minutes.
We also received a Hershey mother, and daughter cash payments from GSK during the quarter.
In consideration for qualification of an additional debit back months too.
As part of our GSK agreement.
In addition to this payment.
We are also eligible to receive the following additional milestone or royalty payments under our agreement.
These comprise up.
Up to $120 million and remaining development milestones.
Up to $150 million.
Potential commercial milestones based on first commercial sales.
Up to $225 million and potential sale sales based milestones and.
Low single digit to low double digit tiered royalties if sales exceed $1 billion on.
Our net product sales of <unk> H B audit in our territories.
Japan and certain other Asian countries.
Overall, we are very excited by our partnership with GSK.
In addition to progress on tape endometrial, we continue to move our other asset coverage.
The phase Iia proof of concept clinical trial for Spi 2020 continued patient enrollment and dosing with.
With 26 sites, having been initiated.
Spi two six.
Our investigational next generation Polymyxin continues to be on track for our phase II <unk> in this current quarter.
<unk> founded by Gwen and other non diluted funding.
As a recap for the management changes that came into effect on August one which were described on our last quarterly call.
Im proud to take on the role of the company's president and CEO on that date.
And my predecessor, and cofounder of <unk>, Dr. <unk> transition to become chairman of the board of directors.
Higher chairman Dr. Miller disbanded.
That remains on the board as an independent director.
And another board member Dr. Patrick Link was appointed lead director.
I would also like to highlight the recent appointment of <unk> as Chief Financial Officer, and Chief Business Officer effective last week November 6th.
<unk> has a strong track record in corporate finance from both industry and Wall Street, and brings expertise and growth strategy Investor relations financing and M&A.
We are very excited to have her join the team and I would like to formally welcome her to sparrow.
I also want to take this opportunity to thank Steve Depalma.
Who has served as our interim CFO and treasurer during our recent management transition.
I would now like to hand, the call over to Dr. Commodity <unk>, who will provide more details on the clinical programs.
Thank you south our immediate priority is to commence enrollment and dosing of patients in pivot P. O. Our phase III study to evaluate oral tablet panel in adult patients with <unk>, including acute pyelonephritis.
<unk> is a global randomized double blind pivotal phase III clinical trial of oral <unk> panel versus intravenous Emmy, Panama and hospitalized adult patients with <unk>, including acute pyelonephritis pace.
Patients will be randomized one to one to receive <unk> 600 milligrams orally every six hours or Ami Pan on 500 milligrams intravenously every six hours for a total of seven to 10 days.
The primary efficacy endpoint will be overall response, which is a composite of clinical and microbiological response at a test of cure visit.
The primary analysis for the trial will be an assessment of non inferiority in the microbiological intention to treat population based on a 10% non inferiority margin.
The trial is designed to enroll approximately 2600 48 patients with randomization stratified by age baseline diagnosis R E T oi or acute pyelonephritis and the presence or absence of urinary tract instrumentation.
This study is covered by an S. P. A agreement, which we announced in late July as Sam mentioned, the FDA indicated that positive and persuasive results from pivots P. O along with previously completed studies could be sufficient to support approval of Debbie Panama as a treatment for <unk>.
Including pyelonephritis or limited use indication.
Again enrollment expected to begin soon and we will make an announcement when we have enrolled and dosed the first patient.
Turning now to our SPR 720 program, which we hope will deliver the first mobile first for an oral treatment for non tuberculosis mycobacteria pulmonary disease or N T. M. P. D S.
<unk> 720 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 that the positive result on this endpoint together with supportive evidence from the trial secondary end points will enable us to move confidently into late stage development.
N T M. P. D is a debilitating rare infectious lung disease and the current standard of care is a prolonged combination regimen of drugs that have limited effectiveness and poor tolerability.
Given these limitations, we believe SPR 720 has the potential to address a clear unmet need and establish a new standard of care.
The trial is expected to enroll up to 35 participants with auto treatment naive or treatment experienced but do not have treatment refractory disease.
We currently have 26 active sites that are screening and enrolling patients. We continue to actively engage with all spot decides to ensure they have the necessary resources. We've also partnered with the lead MTM patient advocacy group N T M IR as well as with a third party CRM, who specialized in rare disease.
He says to support study sites.
We expect to announce announce top line data from this study in the second half of 2024.
We are currently engaged in many additional development activities needed to support S. B, all 700, Twenty's advancement into late stage clinical studies.
These activities include ongoing toxicology work.
PMC initiatives engagement with the FDA and efforts to expand the SPR 720 development program into Japan, where N. T. M. P. D has a higher prevalence compared to other territories.
There are also two phase one clinical studies underway.
The first to assess and to a pull on the pharmacokinetics of S. P. All 719, the active moiety of the pro drug SPR 720, and it Bronchoalveolar lavage or B a L study.
And the second to evaluate the effect on the pharmacokinetics of SPR seven 'twenty when co administered with Azithromycin and its family of tool in healthy volunteers.
We're also working to develop a relevant patient reported outcomes instrument or N T. M. P D.
Which will lead to an increase in confidence that the primary efficacy endpoint within our future clinical studies will be in line with the Fda's public guidance on developing drugs for this indication.
There was also a recent paper published on N T MPD and the potential role of <unk> 720, which I would like to highlight the lead author ballpark that Kevin Winthrop of Oregon Health and Science University and it was published in the October 20th addition of extra to use anti infective therapy.
The article discusses the increasing prevalence of N T MPD and how the management of this disease has been challenging today only half of diagnosed patients begin therapy with the current guideline regimen and only 18% or so are still able to maintain treatment after 12 months.
The authors reviewed encouraging in vitro and preclinical data.
Poor thing SPR, seven 'twenty, specifically, SPR 700, twenty's ability to demonstrate its activity against the main agents, causing N T. M. P D Mycobacterium avium complex and micro bacterium obsesses.
You can find the length of the publication in the earnings press release, we issued today or in the publications and posters section of our corporate website I would encourage those interested to read it.
Finally, some brief comments on our S. P. R. Two six program.
SPR two six is an investigational next generation polymyxin ample Baltic with a potential for an improved safety profile of reduced natural toxicity compared to count the available Pollo makes sense being developed to treat multi drug resistant gram negative infections.
We are currently working to advance SPR two six into a phase II trial in patients with hospital acquired ventilator associated bacterial pneumonia.
We remain on track to submit an R&D application by year end with that I'll turn the call over to Steve to review our quarterly financial results.
Thank you Tamara and good evening to all of you joining us on the call.
Everyone's well capitalized with a strong financial position of $93 $8 million in cash and cash equivalents as of September 32023.
This includes a 30 million dollar milestone we announced on our last earnings call, which has now been received as part of the <unk> license agreement with GSK.
We believe that our cash and cash equivalents will be sufficient to fund the company into the second half of 2025.
We reported total third quarter revenues of $25 5 million.
Compared with revenues of $2 million in the third quarter of 2022.
A $23 $5 million increase compared to the prior year period.
Primarily result of the $23 $2 million of collaboration revenue related to the license agreement with GSK.
Grant revenue was $2 $1 million in the third quarter of 2023 compared to <unk> $9 million in the same period in 2022.
Research and development expenses for the third quarter of 2023.
Were $16 $4 million compared with $7 $4 million in research and development expenses for the same period in 2022.
This $9 million year over year increase was primarily due to higher direct costs related to the <unk> <unk> and SBR 720 programs.
These included increased clinical activity activity related to the ongoing phase Iia trial of SPR 720.
As well as startup clinical activities increased preclinical activities related to the planned phase III trial of <unk> <unk>.
General and administrative expenses for the third quarter of 2023 of $5 $7 million were lower than the $6 $6 million reported in the same period in 2022.
Year over year decrease was primarily result of decreased personnel related cost as well as lower facility and other related expenses.
Offset in part by an increase in professional and consulting fees.
The impairment expense was incurred in the third quarter of 2023 as the company concluded that it no longer had need for the commercial manufacturing capacity for <unk> provided under a service agreement with save your life Tech Corporation.
An impairment expense of $5 $3 million was recorded as the company fully impaired to long term asset related to the safety or service agreement.
We reported a net loss for the third quarter of 2023 of $33 2 million or six cents per basic and diluted share of common stock.
Net loss of $11 7 million or <unk> 33 per basic and diluted share of common stock reported for the same period in 2022.
Further details on spiro's financials, including results for the nine month period ended September 32023, and refer you to Spiros quarterly report on Form 10-Q filed with the SEC today.
This completes todays formal comments from our Q3 report.
I'd like to turn the call back to the operator, if there are any questions from those on the line.
Thank you.
We'll now be conducting a question and answer session.
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One moment, please while we poll for questions.
Thank you.
Our first question comes from the line of Louis Chen with Cantor Fitzgerald. Please proceed with your question.
Okay. Thank you for taking my questions here. So wanted to ask you a few first could you give us more color on the $120 million and development milestones from GSK as the phase III program progresses.
Secondly, how are you thinking about peak sales potential of heavy penalty and then lastly, sir congratulations and welcome to the new role just curious how you think about things a little bit differently than prior management teams and what you're bringing to the company here. Thank you.
So Louise this is that I can take your first two questions <unk> will.
We will be speaking today by JV can lineup that question for you separately.
First question of the $120 million in Dellapenna milestones the expectation is that they come in through the duration of the trial and so we expect those milestones over the next couple of years.
As you are planning on a target to commercialization date with Iga escape partners of 2026, we expect those development milestones to come in over the next two years to fully fund the trial.
Did that answer your question or was there anything.
Further that you wanted to look.
Yes, that's good.
And how does that happen is it based on certain milestones.
The trial or something like that or basically amortized through the course of the time.
So we should be able to give you. Some further clarity on that sometime soon but the expectation is that it's not a expense reimbursement or a performance.
Measure for the milestones as the trial progresses as it continues to progress and we expect to be able to qualify for and obtain those milestones.
Thank you.
Moving to your second question about peak sales for <unk> I think we have always considered that <unk> has the potential to reach blockbuster status.
Given the high prevalence of Gi patients.
Need very aggressive assumptions on expected depth penetration.
Our pricing to see the value proposition for the oral cobre Panama there.
There's something there we expect the commercial and economic opportunity.
Commensurate with these scientific I improvement and therefore, we have high hopes for commercial performance, if and when the drug is approved.
Thanks.
Thank you.
Our next question comes from the line of Valeant Paci, often with H C. Wainwright. Please proceed with your question.
Hi, This is Bob Allen, Thanks for taking my questions and congrats on the progress.
So a couple from us.
As you think about advancing towards six into phase two can you discuss the regulatory path forward in the hospital acquired ventilator associated bacterial pneumonia indication.
We wanted to know what the efficacy bar for collections look look like and in this indication, particularly do you think you need to establish similar or better safety and efficacy relative to standard of care or is efficacy differentiation enough to drive the upper.
<unk>.
And more broadly okay, sorry, it's a long list of questions. How do you see fitting into the competitive landscape in this indication.
Sorry could you repeat the last question on which I am pleased you've got out.
Yeah, I'd say the last question was how do you see towards six fitting into the competitive landscape.
Okay.
Yes, thanks for the questions.
In terms of indication hops up I mean, this is an area of great unmet medical need and this is what we are targeting as far as the Ah indication.
Other indications such as complicated urinary tract infection.
There's no medical need for a polymyxin derivatives.
At this point in time and certainly when we talk about back to India. That's also a challenge because there's no indication that's approved vaccine that indication for Gram negative infections. Therefore, the indication of hospital at Quad bacterial pneumonia ventilator associated.
Bacterial pneumonia is the area of great unmet medical need and therefore makes great sense for us to pursue in terms of differentiation efficacy versus safety.
Clearly we have to demonstrate efficacy there, but our expectation is that we would demonstrate safety benefit.
Do we expect to demonstrate safety superiority because SPR two six was specifically designed to reduce natural toxicity. So it's designed to reduce exposure in the kidneys and therefore as a result net.
Natural toxicity, because its been demonstrated that if you reduce.
And we and.
Cytotoxicity in the kidneys as well as exposure in the kidneys this would be.
The result will be associated with reduced natural toxicity and so therefore as the.
Can sequence again, while we would be demonstrating efficacy, we do expect to see a benefit on the safety side, specifically with respect to neurotoxicity now in terms of the competitive landscape.
As you know that been.
Beta lactam beta lactam Ace inhibitors that had been recently developed and are being used but we also know from the field that is emerging resistance to these beta lactam beta lactam Ace inhibitors.
And Paul It makes sense all count the used for treatment of very difficult to treat gram negative infections caused by bacterial pseudomonas and these Paul it makes sense or highly toxic and therefore, if you could substitute with newer generation polymyxin that is has.
The.
<unk> further on the kidneys than then clearly that would be that need but it is again hospital acquired bacterial pneumonia ventilator associated bacterial pneumonia in the hospital.
Can you discuss the regulatory path forward.
In this indication.
Yeah, we haven't given that guidance, yet bouba, if you'll bear with us as we get through the <unk>. Then of course, we plan to give out a greater clarity on that path forward.
And again do I mean, as we've disclosed the R&D is expected to be submitted by year end and with that and that on the page two R&D, enabling studies will be clearly reviewed and discussed with FDA and as Scott said, we will be disclosing more details.
Time goes along.
Thanks for the clarity and then if I can add one more so with respect to the pivotal study one of the exclusion criteria is creatinine clearance.
I see that you're excluding patients with less than or equal to 30 miles per minute.
Can you discuss the thought process behind using this metric is an exclusion quite Jamie. Thank you.
Can you repeat the first part of that question. Please.
Yeah. So in the pivotal field study one of the exclusion criteria is created and clearance.
Let's see I Oh.
Our equals 30 minutes per minute.
So I would like to understand the thought process behind using this metric as an exclusion criterion and this indication.
Okay.
No.
I mean, we are excluding patients with severe renal impairment because for patients with mild or moderate renal impairment, we have dose adjustment.
And therefore these patients will be allowed into the study and we have a.
Dosing scheme in terms of adjusting our coatings to creatinine clearance, but not for adapting clearance less than 30 miles per minute.
Alright. Thank you so much for taking our question.
Thank you.
And that concludes our question and answer session I will now turn the call back over to Mr. Schott glass.
Thank you operator, or so many thanks to our listening and for your participation today.
Have a nice evening.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Okay.
Okay.
Okay.
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