Q4 2023 Spero Therapeutics Inc Earnings Call
Participants
Michael Wood; Investor Relations; LifeSci Advisors, LLC.
Sath Shukla; President and Chief Executive Officer; Spero Therapeutics Inc
Kamal Hamed; Chief Medical Officer; Spero Therapeutics Inc
Esther Rajavelu; Chief Financial Officer and Chief Business Officer; Spero Therapeutics Inc
Ritu Baral; Analyst; Cowen & Co.,LLC.
Louise Chen; Analyst; Cantor Fitzgerald
Presentation
Operator
Good afternoon, and welcome to the Spero Therapeutics full year 2023 financial results conference call. (Operator Instructions) 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 announcement on the Spero Therapeutics website at www.sperotherapeutics.com. At this time, I would like to turn the call over to Michael Wood, Managing Director at LifeSci Advisors. Mr. Woods, please go ahead.
Michael Wood
Thank you, operator, and thank you all for participating in today's conference call. This afternoon, Spero Therapeutics released financial results and provided a business update for the fourth quarter and full year 2023. The press release is available on our Investors page of the Spero Therapeutics website.
Before I begin, I'd like to remind you that some of the information presented in this conference call contains forward-looking statements based on our current expectations, including statements about the future development and commercialization of tebipenem HBr, as did our seven 20 BR. two i. six and the design initiation, timing, progress and results of the company's preclinical studies and clinical trials and its research development program management's assessment of the results of such preclinical studies and clinical trials, company, cash board and anticipated expenses.
The sufficiency of the 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 Spirit Therapeutics' filings with the SEC, including the Risk Factors section of the annual report on Form 10-K for the year ended December 31st, 2023, filed with the SEC today These forward-looking statements speak only as of the date of this conference call, March 13th, 2024, and the Company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the Company after the date of this call.
Participating today's conference call Sath Shukla, Chief Executive Officer; Dr. Kamal Hamed, Chief Medical Officer; and Esther Rajavelu, our Chief Financial and Chief Business Officer.
With that, I'd like to turn the call over to Spero CEO, Sath Shukla. Sir, please go ahead now.
Sath Shukla
Thanks, Michael, and I thank you all for joining us this afternoon barrel hedge of a productive 2023, it progress across its portfolio of development-stage assets. SBR. seven 20 is now in the latest stages of a proof of concept study in NTMPG., and we are looking forward to reporting top line data, which we expect to do in the second half of this year in Phase three clinical trials. But Jay Burnham HBR is up and running.
We recently received ING. clearance for SVR to six for the treatment of patients diagnosed with hospital acquired or ventilator associated pneumonia. The Company has a strong balance sheet with the financial flexibility to execute on its plans. For me personally, 2023 was a particularly exciting year, and I was honored to take on the CEO role and to be provided with the opportunity to lead a world-class team who share our vision to develop innovative therapies to help patients suffering from serious infections and rare orphan diseases.
Let me begin with SBR. seven 20, which we are developing for nontuberculous mycobacterial pulmonary disease or NTMPG., we are developing SBR. seven 20 to be a first-line oral agent and believe it has exactly the right profile to address the unmet needs in NTMPGNTMPG. is a rare disease, but with a very well identified patient population of approximately 245,000 diagnosed patients in developed markets.
SBR. seven 20 is an oral drug with a novel mechanism of action. It is not exploited by other SOC agents or those in development for NTMPG. and the data we have seen so far from completed in vitro and in vivo studies, there has been no evidence of cross resistance against marketed antibiotics and S. SVR R. seven 20 has demonstrated a low propensity for selection of resistance.
We have shown that it has potency against multiple NTM pathogens and data support is potential for efficacy, safety and tolerability and macrophage penetration. S SVR R. seven 20 has also been granted orphan drug, QIGP. and fast-track designation. The goal of our Phase IIa proof of concept clinical trial is to understand SPR. seven 20s activity in NTMPG. patients and to inform the design of a later stage and longer term trial evaluating SBR. seven 20 in combination with current standard of care agents as a potential first-line oral agent. We believe the commercial opportunity for SBR. seven 20 is compelling from others provide further details on this program in a few minutes.
Turning now to our partner programs. Let me begin with carbapenem HBr, which is partnered with GSK. We are developing TB as potentially the first oral carbapenem antibiotic for the treatment of complicated urinary tract infections or CUTI. We were pleased to announce in January of this year and the Phase three pivotal pure clinical trial is now underway, but the first patient first visit having occurred in the fourth quarter of 2023. During 2023, federal received written agreement from the U.S. FDA for a special protocol assessment or SPA on the design and size of Pivotal POSPI. typically represents a very high level of concordance on the overall protocol design between the FDA and the sponsor. We believe the regulatory aspect with respect to the design of the program have been de-risked substantially.
Moving on to SPR. two or six, which is partnered with Pfizer for European markets. We submitted an ING. for a Phase two clinical trial in half that patients and recently announced that the INT. has been cleared by the FDA, but that I would now like to hand the call over to Dr. Kamal Hamid, who will provide more details on the clinical progress.
Kamal Hamed
Thank you, Sath. I will begin with our SPR. seven 20 program, which we hope will deliver the first oral first-line treatment for NCMPD. as beyond seven. 20 is currently being evaluated in a Phase two A. proof of concept clinical trial. And as Seth mentioned, we are looking forward to sharing top-line data, which we expect to do in the second half of this year. And TMPD. is a debilitating rare infectious lung disease.
There are currently no approved first-line therapies and the current standard of care is a prolonged combination regimen of antibiotics, including azithromycin, S&P tool, Andrew Samson. These have serious tolerability issues and limited effectiveness. The unmet need is for a treatment that has better tolerability and effectiveness, fewer drug-drug interactions as well as shorter treatment duration.
We believe that SPR. seven funding will meet these criteria and if approved, has the potential to establish a new standard AT & TMPD. The Phase IIa clinical trial compares SPR. seven 20 monotherapy versus placebo. It is designed to enroll up to 35 patients was either treatment naive or treatment-experienced, but do not have treatment refractory disease. We currently have 27 active sites that are screening and enrolling patients. The primary endpoint is microbiological response. Specifically, we are measuring this slope change in sputum bacterial burden from baseline to day 56 success on this endpoint with MACSTR. seven 20, the only agent in development.
We are aware of to demonstrate early bactericidal activity in patients with NTM PD. We believe that the positive result was supportive evidence from the trial's secondary endpoints will enable us to move confidently into late-stage development. We are working on additional development activities needed to support SVR seven 20s advancement into late-stage clinical Fourlis. These include ongoing toxicology work CMC initiatives and two Phase one clinical studies in healthy volunteers currently underway, the first to assess and to our promo, the pharmacokinetics of SPR. seven 19, the active moiety of the pro-drug SPR. seven 20 and a bronchoalveolar lavage study. This should give us a better understanding of the extent of drug penetration into the lungs.
The second is to evaluate the effect on the pharmacokinetics of SPR. seven 21 two, administered with azithromycin. And it's obvious for we expect to have results from these studies in the second half of this year as well. Overall, the ongoing studies are expected to provide us with a robust dataset that may inform the registrational path for SPR. seven 20 as first-line treatment for NTMPD.
Now moving on to St. Louis Panama HBR. On January second, we announced first patient first visit and pivot PO. the global pivotal Phase three clinical trial evaluating carbapenem HV. or in hospitalized adult patients with complicated urinary tract infections, including acute pyelonephritis Patients are being randomized one one to receive WPAN. and HB. or at a dose of 600 milligrams orally every six hours or independent filer status and 500 milligrams intravenously, every six hours for a total of seven to 10 days. The primary efficacy endpoint is overall response, which is a composite of clinical and microbiological response at the test-of-cure visit.
The primary analysis for the trial will be an assessment of noninferiority in the microbiological intention to treat population based on a 10% non-inferiority margin target. Enrollment will be approximately 26 hundred, 48 patients with randomization stratified by age baseline diagnoses by ECUTI. or acute pyelonephritis and the presence or absence of urinary tract instrumentation enrollment is expected to be completed in the second half of 2025.
Faro is responsible for execution of the Phase three clinical trial, and GSK will be responsible for submitting the NDA if approved, seven pad MHB. or would allow for treatment of CUTI. in the outpatient setting. It is well established that patients and physicians generally prefer all treatments. So we see carbapenem as a potentially new and unique paradigm shift from the current IV carbapenem standard of care for hard-to-treat pathogens associated with CUTI.
Finally to our SPR. two six program as PR two six is an investigational next-generation poly mixed and harmful Baltic. We are developing to treat multi-drug-resistant gram-negative infections. SPI. two I. six is designed to disrupt the life policy clients out of membrane and gram-negative bacteria, while reducing the nephrotoxicity potential of falling makes sense based on microbiological and in vivo testing, we believe that SPR. two six has the potential to offer a broad spectrum of activity, including against multidrug resistant and extensively drug-resistant strains. It also has potential for an improved safety profile, have reduced nephrotoxicity compared to currently available poly mixes. As Beth mentioned, we announced FDA clearance of the OI&T on February 28th.
With that, I'll turn the call over to Esther to review our quarterly financial results.
Esther Rajavelu
Thank you, Kamal, and good afternoon or evening to all of you joining us on the call today. Bill is well capitalized with $76.3 million in cash and cash equivalents as of December 31st, 2023, as Todd mentioned in December, upon dosing of the first patient in the Phase three headed P clinical trial are qualified for $95 million in development milestones from GSK. It is payable in four equal installments during 2024 and 2025, beginning with the first tranche of $23.8 million that we in the first quarter of 2024.
We estimate that our cash and cash equivalents, together with other non-dilutive funding commitments, will be sufficient to fund our operating expenses and capital expenditure requirements into late 2025.
Now moving on to summarize our GAAP financials. Total revenue for the fourth quarter of 2023 was $73.5 million compared with total revenue of $47.4 million for the fourth quarter of 2022. Total revenue for the year ended December 31st, 23 was $103.8 million compared to $53.5 million for the year ended December 31st, 2022. The revenue increase for the year ended December 31st, 2023 was primarily due to $96.7 million of collaboration revenue recognized related to our agreements with GSK and Pfizer during 23.
Research and development expenses for the fourth quarter of '23 was $16.6 million compared to $15.1 million of R&D expenses for the same period in '22.
Research and development expenses for the year ended December 31st, 23 was $51.4 million compared to $47.6 million for the year ended December 31st, 22. Increases in research and development expenses were primarily due to increased clinical activity during the period related to our ongoing Phase IIa clinical trial of SPR. seven 20. Expenses for the fourth quarter of 23 was $6.4 million compared to $6.5 million of G&A expenses for the same period in 22. This year-over-year decrease was primarily due to changes in personnel-related costs, offset partially by increased professional and consulting fees during the period.
G&a expenses for the year ended December 31st, 23 were $25.6 million compared to $36.5 million for the year ended December 31st, 22, primarily as a result of decreases in both personnel costs and professional and consulting fees.
Fair and reported net income of $51.2 million for the fourth quarter of 23 and a full year net income of $22.8 million for the year ended December 31st, 23, for diluted earnings per share of $0.96 and $0.43, respectively, this compares with the net income in the fourth quarter of 2018 of $26.8 million or $0.55 of diluted earnings per share of common stock and a net loss for the full year ended December 31st, 22 of $46.4 million for $1.23 loss per share of common stock for further details on our financials, please refer to our 10 K filed with the SEC today. With that, we will now open the call for questions. Operator?
Question and Answer Session
Operator
Thank you. We will now be conducting a question and answer session. (Operator Instructions)
Ritu Baral, TD Cowen.
Ritu Baral
Hi, guys. Thanks for taking the question, just a couple from me, but one of them, of course, is a little complicated and may have a few parts. One, simple one, how is enrollment gain seven, 20 going, especially with the halt of enrollment and the competitive program.
And my second question also has to do with seven 20 specifically, I'm interested to know more about the seven, 19 more Bosch study in healthy volunteers. I'm talking to KOLs. One of my concerns around oral NTM compound is access to the site of NTM infection, especially when a patient has cavitation disease. How do you guys think of perfusion and access through the biofilm and sort of just location and activity at the site of infection?
Sath Shukla
And thanks for the question. And for your first item on enrollment, we have said in the past that sites have been open our Train seven of them and they continue to dose patients. And we are continuing to work towards our guidance of top line data in the second half of this year.
For your second question, I'll pass it on to Kamal.
Kamal Hamed
Yes, hello, Ritu. And thank you for the question. In terms of access of the drug to the site of infection, of course, these patients also have pulmonary hygiene as part of the management of this disease. And this also applies to inhaled therapy because inhaled therapy may have a problem with distributing to the site of infection. However, we have demonstrated then hollow fiber infection model as well as in nonhuman primate in monkeys, but we have not disclosed these data in nonhuman primates, lung penetration. And of course, we look forward to having lung penetration data in humans from the Phase one bronchoalveolar lavage study that you have cited.
Ritu Baral
Do you feel that the data on Navy or the access may be different with patients that have Cabot carry back versus from, I guess, less large unitary diseases. So that's a consideration for oral therapy.
Kamal Hamed
No, that's certainly a good question. And honestly, this applies to both oral as well as inhaled forms of therapy. So typically speaking in clinical trials to date, patients with large cavities are E cabinetry disease with cavity cabinetry size larger than two Sana meters have been excluded from the clinical trials because these patients would require much longer treatment duration one, and they may also require surgical treatment besides the medical treatments. So this is a challenge for both our oral as well as inhaled forms of therapy. And these patients are excluded again for these reasons. But the data that we have so far certainly suggests that the drug penetrates to where it needs to get IE. the lungs. And of course, we expect to have data from the bronchoalveolar lavage in the second half of this year, only to corroborate what we know from the hollow fiber in vitro data as well as the nonhuman primate data.
Ritu Baral
Great. Thanks for taking the questions. I'll hop back in the queue.
Operator
Louise Chen, Cantor.
Louise Chen
Hi. Congratulations on the progress this quarter and thank you for taking my questions here. So first question, I had for you was given some of the recent developments in the space. I think one of your competitors reported some data. Your thoughts on the market opportunity for SPR. seven 20 changed at all. And if it's approved, where do you expect it to fit into the treatment paradigm as the space gets a little bit more crowded with development assets and then second question I had for you was on the market opportunity for U.S. tier to oh six. Do you actually plan to move this forward? And if so, what are the next steps here. Thank you.
Sath Shukla
Yes, thanks for asking these and great to hear from you. I'll take the first half of your first question and then defer to come out on the second half of your first question, and I can pick up the tool six question as well. And for a for recent developments, you know, our information is the same as your information. So I can't really comment on what actually has been the case, you know, for another player in the space. But for the size of the market, we haven't actually seen them as competitors per se because as you know, we were in first line, which has a different market of market size than refractory, which is where they were progressing their assets.
So what we used to say before some of these recent data was that we were very excited about the size of the market. And what we say about these recent developments is that we continue to be very excited about the size of the market. What we have communicated internally and externally in light of these recent developments is that our program as potentially the first oral therapy out there. Certainly in first line patients is going to be under a greater evaluation and scrutiny arguably than ever before. And that's a great challenge and an opportunity for the organization as we progress this forward.
And just on that, just see our seven 20 question, if you wouldn't mind rephrasing the second part of your question and I'll pass it on to Kamal.
Louise Chen
Out at the oh, sorry, the two oh six question. The one about the more now --
Sath Shukla
You had another question about seven 22 ROTE on the Vertex is in the line of treatment, I believe.
Louise Chen
Yes, that is correct. Yes. If you if you were to get it approved.
Kamal Hamed
Okay. No, thank you. Thank you, Luis. So I mean, the recent news was certainly unfortunate for patients because patients need newer combination agents that have better tolerability and effectiveness. But having said that, we are targeting a different patient population than the patient population that's targeted by the other ongoing trial with oral therapy that we aim to develop seven 20, as Seth said, as a first-line therapy for treatment-naive patients, our treatment-experienced patients with non-refractory disease.
And as we know this patient segment comprises the majority of patients about 75% of the patient population. And I should note that seven, 20 demonstrated potent activity against MAC, low propensity for selection of resistance and an in vitro resistance development study. We've also proceeded with a Phase two A. study, which is the ongoing clinical trial at this time with the aim to assess the biological effect of STR. seven 20 before we combine it with standard of care agents and later stage Phase IIb three program.
Louise Chen
Okay. And anything on the market opportunity for two or six?
Esther Rajavelu
Yes. Maybe I'll take that, Luis. I think to six presents an interesting opportunity for patients because there's a high degree of unmet need in that patient population. However, we've always commented that we would continue developing that program contingent on non-dilutive sources of funding. As you know, we have a partner with partnership with Pfizer for European markets and with average for China. And we also collaborate with government agencies to obtain funding. And so we're looking at any and all of those sources for continued funding for that program.
Louise Chen
Thank you.
Operator
Thank you. There are no further questions at this time. I would like to hand the call back to Mr. Shukla. Sir, any closing comments.
Sath Shukla
So I'd just like to thank everyone for dialing in today and have a wonderful day.
Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
