Spero Therapeutics Q3 2023 Earnings Call Transcript

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November 13, 2023

There are 7 speakers on the call.

Operator

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 and a replay will be available. You can find information on the replay and further information related to today's announcements on the Sparo Therapeutics website at sparotherapeutics.com.

Operator

At this time, I would like to turn the call over to Ted Jenkins, Vice President, Investor Relations and Strategic Finance at Sparrow Therapeutics. Mr. Jenkins, please go ahead.

Speaker 1

Thank you, operator, and thank you all for participating in today's conference call. This afternoon, Sparrow Therapeutics released financial results and provided a pipeline update for the Q3 of 2023. Our press release is available on the Investor page of the Sparrow 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 wdenham HBR, SVR-seven twenty, SVR-two zero six and the design, initiation, timing, progress and results of the company's preclinical studies and clinical trials and its research and development programs management's assessment of the results of such preclinical studies and clinical trials the company's cash forecast and anticipated expenses and the sufficiency of its cash resources. Such forward looking statements are not a guarantee of performance and the company's including in the Risk Factors section of our quarterly report on Form 10 Q for the quarter ended September 30, 2023 filed with the SEC today.

Speaker 1

These forward looking statements speak only as of the date of this conference call, November 13, 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 Satishukla, President and Chief Executive Officer Doctor. Kamal Hamed, our Chief Medical Officer Steve DePalma, our Interim CFO and Treasurer and although not having a speaking part today, I would also like to welcome special guest in attendance, Ms. Esther Rajuvelu, Sparo's new Chief Financial Officer and Chief Business Officer.

Speaker 1

With that, I'd like to turn the call over to Sparo's Chief Executive Officer, Seth Shukla. Please go ahead, Seth.

Speaker 2

Thanks, Ted, and I thank you all for joining us this afternoon. 2023 has been a year of progress and execution for Spire. There are a number of achievements across Clinical, regulatory and financial related fronts. Each of our late stage assets is moving forward. We have an experienced management team in place and a strong balance sheet, positioning us well to deliver on our Let me begin with teripenem HBR, which we have partnered with GSK and which we are developing as potentially the first Oral carbapenem antibiotic for the treatment of complicated urinary tract infections or CUTI.

Speaker 2

We were very pleased to announce on July 31st that we had received written agreement from the U. S. FDA under a Special Protocol Assessment or SBA on the design and size of our planned Phase 3 trial, PIVOT PO. And SBA typically represents a very high level of concordance on the overall protocol design between the FDA and a sponsor. So we believe the regulatory aspects with respect to the design of the program have been derisked substantially.

Speaker 2

Enrollment in Pimit for you that pay first patient first visit is expected to begin in the current quarter And Kamal will touch on additional details in a few minutes. We also received a $30,000,000 Cash payment from GSK during the quarter in consideration for qualification of an additional double pit milestone as per 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 of up to $120,000,000 in remaining development milestones, Up to $150,000,000 in potential commercial milestones based on first commercial sales,

Speaker 3

Up to $225,000,000

Speaker 2

in potential sales based milestones and low single digit to low double digit tiered royalties if sales exceed $1,000,000,000 on net product sales of tevapenem HBR in all territories, except Japan and certain other Asian countries. Overall, we are very excited by our partnership with GSK. In addition to progress on teripenum HBR, we continue to move our other assets forward. The Phase 2a proof of concept clinical trial for SBR-seven twenty continues patient enrollment and dosing with 26 sites having been initiated. SPR-two zero six, our investigational next generation polymyxin, Continues to be on track for a Phase 2 IND in this current quarter, funded by grant and other non dilutive funding.

Speaker 2

As a recap for the management changes that came into effect on August 1, which were described on our last quarterly call, I was proud to take on the role of the company's President and CEO on that date and my predecessor and co founder of Spiro, Doctor. Ankit Mahadevia transitioned to become Chairman of the Board of Directors. The prior Chairman, Doctor. Milan Deshpande, has remained on the Board as an independent Director and another Board member, Doctor. Patrick Wink, was appointed Lead Director.

Speaker 2

I would also like to highlight the recent appointment of Esther Rajuvelu as Chief Financial Officer and Chief Business Officer, effective last week, November 6. Esther has a strong track record in Corporate Finance from both Industry and Wall Street and brings expertise in growth strategy, Investor Relations, Financing and M and A. We are very excited to have her join the team, and I would like to formally welcome her to Spiro. 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 Doctor.

Speaker 2

Kamal Hamed, who will provide more details on the clinical programs.

Speaker 3

Thank you, Seth. Our immediate priority is to commence enrollment and dosing of patients in PIVOT PO, Our Phase 3 study to evaluate oral teripenum in adult patients with CUTI, including acute pyelonephritis. PIVOT PO is a global, randomized, double blind, pivotal Phase 3 clinical trial of oral tebipenem versus intravenous imipenem in hospitalized adult patients with CUTI including acute pyelonephritis. Patients will be randomized 1 to 1 To receive tabipenem 600 milligrams orally every 6 hours or imipenem 500 milligrams intravenously every 6 hours for a total of 7 to 10 days. The primary efficacy endpoint will be overall which is a composite of clinical and microbiological response at the test of cure visit.

Speaker 3

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 2,648 patients with randomization stratified by age, Baseline diagnosis, I. E. CUTI or acute pyelonephritis and the presence or absence of urinary tract instrumentation. This study is covered by an SPA agreement, which we announced in late July, as Seth mentioned.

Speaker 3

The FDA indicated that positive and persuasive results from PIVOT PO along with previously completed studies could be sufficient to support approval of tebipenem as a treatment for CUTI including pyelonephritis for limited use indication. Again, enrollment is expected to begin soon and we will make an announcement when we have enrolled and dosed the 1st patient. Turning now to our SPR-seven twenty program, which we hope will deliver the 1st novel first line oral treatment for non tuberculosis mycobacterial The primary endpoint is slope change in sputum bacterial burden from baseline. We believe that the positive result on this endpoint, together with supportive evidence from the trial's secondary endpoints will enable us to move confidently into late stage development. NTMPD 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.

Speaker 3

Given these limitations, we believe SPR-seven twenty 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 who are either treatment naive or treatment experienced, but do not have treatment of factory disease. We currently have 26 active sites that are screening and enrolling patients. We continue to actively engage with all study sites to ensure they have the necessary resources. We've also partnered with the lead NTM Patient Advocacy Group, NTM IR, as well as with a 3rd party CRO specialized in rare diseases to support study sites.

Speaker 3

We expect to announce top line data from this study in the second half of twenty twenty four. We are currently engaged in many additional development activities needed to support SPR-seven twenty's advancement into late stage clinical studies. These activities include ongoing toxicology work, CMC initiatives, engagement with the FDA and efforts to expand the SPR-seven twenty development program into Japan, where NTMPD has a higher prevalence compared to other territories. There There are also 2 Phase 1 clinical studies underway. The first to assess in a bronchoalveolar lavage or BAL study and the second to evaluate the effect on the pharmacokinetics of SPR-seven twenty when co administered with azithromycin and ethambutol in healthy volunteers.

Speaker 3

We're also working to develop a relevant patient outcomes instrument for NTNPD, 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 published guidance on developing drugs for this indication. There was also a recent paper published on NTNPD and the potential role of SPR-seven twenty, which I would like to highlight. The lead author was Doctor. Kevin Winsorpe of Oregon Health and Science University and it was published in the October 20th edition of Expert Review Anti Infective Therapy. The article discusses the increasing prevalence of NTMPD and how the management of this disease 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.

Speaker 3

The authors review the encouraging in vitro and preclinical data supporting SPR-seven twenty, Specifically, SPR-seven twenty's ability to demonstrate its activity against the main agents causing NTNPD, Mycobacterium avium complex and Mycobacterium abscessus. You can find a link to the publication in the earnings press release we issued today or in the Publications and Post section of our corporate website. I would encourage those interested to read it. Finally, some brief comments on our SPR206 program. SPR206 is an investigational next generation polymyxin being developed to treat multidrug resistant gram negative infections.

Speaker 3

We are currently working to advance SPR206 into a Phase 2 trial in patients with hospital acquired or ventilator associated bacterial pneumonia. We remain on track to submit an R and D application by year end. With that, I'll turn the call over to Steve to review our quarterly financial results. Keith? Thank you, Kamal, and good evening to all

Speaker 4

of you joining us on the call. Veru is well capitalized with a strong financial position of $93,800,000 in cash and cash equivalents as of September 30, 2023. This includes the $30,000,000 milestone we announced on our last earnings call, which has now been received as part of the tepidum HPR license agreement with GSK. We believe that our cash and cash equivalents will be sufficient to fund the company into the second half of twenty twenty five. We reported total 3rd quarter revenues of $25,500,000 compared with revenues of $2,000,000 in the Q3 of 2022, a $23,500,000 increase compared to the prior year period.

Speaker 4

It was primarily a result of the 23,200,000 dollars of collaboration revenue related to the license agreement with GSK. Current revenue was $2,100,000 in the Q3 of 2023 compared to $900,000 in the same period in 2022. Research and development expenses for the Q3 of 2023 were $16,400,000 compared with $7,400,000 in and research and development expenses for the same period in 2022. This $9,000,000 year over year increase was primarily due to the higher direct costs related to the temipenem HBR and SBR-seven twenty programs. These included increased clinical Activity related to the our ongoing Phase 2a trial of SPR-seven twenty as well as startup clinical activities and increased preclinical activities related to the planned Phase 3 trial of tebipenem HBR.

Speaker 4

General and administrative expenses for the Q3 of 2023 The $5,700,000 were lower than the $6,600,000 reported in the same period in 2022. This year over year decrease was primarily a result of decreased personnel related costs as well as lower facility and other related expenses, offset in part by an increase in professional and consulting fees. An impairment expense was incurred in the Q3 of 2023 As the company concluded that it no longer had need for the commercial manufacturing capacity for tevipenem HBR provided under a service agreement with Xavier LifeTech Corporation, An impairment expense of $5,300,000 was recorded as the company fully impaired the long term asset related to the Xavier service agreement. We reported a net loss for the Q3 of 2023 of $3,200,000 or $0.06 per basic and diluted share of common stock compared to a net loss of $11,700,000 or $0.33 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 9 month period ended September 30, 2023, I would refer you to Spiro's quarterly report on Form 10 Q filed with the SEC today.

Speaker 4

This completes today's 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.

Operator

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Speaker 5

Thank you for taking my questions here. So wanted to ask you a few. First, could you give us more color on the 120,000,000 and development milestones from GSK as the Phase 3 program progresses? Secondly, how are you thinking about peak sales potential of tebipenem? And then lastly, Esther, congratulations and welcome to the new role.

Speaker 5

Just curious how you think about things a little bit differently than prior management what you're bringing to the company here? Thank you.

Speaker 2

So, Louise, this is Sat. I can take your first two questions. Esther won't be speaking today, but we can line up that question for you separately. For your first question of the $120,000,000 in development 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 we are planning on a target commercialization date With our GSK partners of 2026, we expect those development milestones to come in over the next 2 years to fully fund the trial.

Speaker 2

Did that answer your question? Or was there anything that further that you wanted to know?

Speaker 5

Yes, that's good. And how does that Happen, is it based on certain milestones you hit in the trial or something like that or it's just basically amortized through the course of the trial?

Speaker 2

So we should be able to give you some further clarity on that sometime soon. But the expectation is that it's not expense reimbursement or a performance measure for the milestones. As the trial progresses, as it continues to progress, We expect to be able to qualify for and obtain those milestones.

Operator

Okay. Thank you.

Speaker 2

Moving to your second question about peak sales for chevypenum, I think we have always considered that chevypenum has the potential To reach blockbuster status because given the high prevalence of CUTI patients, if you don't need very aggressive assumptions on Expected penetration or pricing to see the value proposition for oral carbapenem. This is something where we expect the commercial and economic opportunity to be commensurate with these Scientific improvement and therefore we have high hopes for commercial performance if and when the drug is approved.

Operator

Thanks. Thank you. Our next question comes from the line of Boo Balian Pattiyanathan with H. C. Wainwright.

Operator

Please proceed with your question.

Speaker 6

Hi, this is Boobalan. Thanks for taking my questions and congrats on the progress. So couple from us. So as you think about advancing 206 into Phase 2, Can you discuss the regulatory path forward in the hospital acquired or ventilator associated bacterial pneumonia indication? So we wanted to know what the efficacy bar for sextas would look like.

Speaker 6

And in this indication particularly, do you think you need to establish Similar or better safety and efficacy related to standard of care or is efficacy differentiation enough to drive the uptake? And more broadly, again, sorry, it's a long list of questions. How do you see 206 feeding into the competitive landscape in this indication?

Speaker 2

Hi, Bhagavad. Could you repeat the last question one more time, please? You cut out.

Speaker 6

Yes. The last question was how do you see 206 fitting into the competitive landscape?

Speaker 3

Yes. Thanks, Boo, for the questions. In terms of indication HAP I mean this is an area of great unmet medical need and this is what we are targeting as far as the indication. Other indications such as complicated urinary tract infection, there's no medical need for a polymyxin at this point in time. And certainly, when we talk about bacteremia, that's also a challenge because there's No indication that's approved, a bacteremia indication for gram negative infections.

Speaker 3

Therefore, the indication of hospital acquired 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. So we expect to demonstrate safety superiority because SPR-two zero six was specifically designed To reduce nephrotoxicity. So it's designed to reduce exposure in the kidneys and therefore as a result Nephrotoxicity, because it's been demonstrated that if you reduce cytotoxicity in the kidneys As well as exposure in the kidneys, this would be would result or be associated with reduced nephrotoxicity. And so therefore, as a consequence, again, while we would be demonstrating efficacy, we do expect to see benefit on the safety side specifically with respect to nephrotoxicity.

Speaker 3

Now in terms of the competitive landscape, As you know, there have been beta lactam, beta lactamase inhibitors that have been recently developed and are being used, but we also know from the field that there is emerging resistance to these beta lactam, beta lactamase inhibitors. And polymyxins can be used for treatment of very difficult to treat gram negative infections caused by Acinetobacter or And these polymyxins are highly toxic. And therefore, if you could substitute with a Newer generation polymyxin that is safer on the kidneys Then clearly that would be that need, but it is again hospital acquired bacterial pneumonia ventilator associated bacterial pneumonia in the hospital.

Speaker 6

Can you discuss the regulatory path forward in this indication?

Speaker 2

Yes. We haven't given that guidance yet, Bhubal. And if you'll bear with us as we get through the IND, then of course, we plan to give out Greater clarity on that path

Speaker 3

forward. And again, to be submitted by year end. And with that in that IND, the Phase 2 IND enabling study Will be clearly reviewed and discussed with FDA. And as Sat said, we will be disclosing more details as time goes along.

Speaker 6

Thanks for the clarity. And then if I can add one more. So with respect to the PIVOTIVO study, one of the exclusion criteria is create an adherence. I see that you're excluding patients with less than or equal 30 minutes per minute. Can you discuss the top process behind using this metric as an

Speaker 1

Can you repeat the first part of that question please?

Speaker 6

Yes. So in the PIVOT TO PIVOT study, One of the exclusion criteria is creating in clearance, CRCI, of less than or equals 30 mills per minute. So I would like to understand the thought process behind using this metric as an exclusion criterion in this indication.

Speaker 3

Okay. So I mean, we're 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 according to creatinine clearance, But not for drafting clearance that's less than 30 mills per minute.

Speaker 6

All right. Thank you so much for taking our questions.

Operator

Thank you. And that concludes our question and answer session. I will now turn the call back over to Mr. Shukla.

Speaker 2

Thank you, operator. Also many thanks to all listening and for your participation today. Have a nice evening.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Earnings Conference Call
Spero Therapeutics Q3 2023
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