Spero Therapeutics, Inc. Q1 FY2023 earnings call

Spero is making strong progress across its three late-stage clinical programs. The SPR720 program's Phase 2 proof of concept trial is enrolling with over 15 active sites and top-line data expected in the first half of 2024, aiming to show early microbiological response as a standalone agent. Tebipenem HBr, partnered with GSK, is in engagement with the FDA regarding a Special Protocol Assessment agreement, with an update expected by mid-2023. SPR206's Phase 3 trial preparation for hospital-acquired or ventilator-associated bacterial pneumonia is on track with an IND application submission expected in the fourth quarter of 2023, funded by external non-dilutive sources. The company has an experienced management team, premier partners, a strong balance sheet, and differentiated investigational medicines. It is also engaged in R&D activities such as toxicology work, CMC and quality initiatives, engagement with the FDA, and developing patient reported outcomes for NTM-PD.

In the first quarter of 2023, Spero Therapeutics had total revenues of $2.1 million, identical to the first quarter of 2022. Grant revenue in 2023 was approximately $493,000 lower, while collaboration revenue was $493,000 higher due to the GSK transaction. Research and development expenses in the first quarter of 2023 were $9 million, compared to $17 million in the same period of 2022, mainly due to lower direct costs related to the tebipenem HBr program, decreased clinical activity for the SPR206 program, and a reduction in R&D headcount. General and administrative expenses in the first quarter of 2023 were $7.3 million, lower than the $15.3 million in the same period of 2022, primarily because of decreased personnel-related costs and professional fees. Spero reported a net loss of $13.3 million or $0.25 per share of common stock in the first quarter ended March 31, 2023, compared to a net loss of $32.8 million or $1.01 per share in the same period of 2022.

SPR720's Phase 2 trial top-line data is anticipated in the first half of 2024. Tebipenem HBr is expected to provide an update on the Special Protocol Assessment agreement by mid-2023. SPR206's IND application submission is expected in the fourth quarter of 2023.

Forward-looking statements may not materialize as expected. Clinical trial results may not be positive. Progress of collaborations could be affected. Uncertainties exist in regulatory approvals and market acceptance of products.

Q: Hi, congratulations on all the progress this quarter, and thanks for taking my questions. So I wanted to ask you about SPR720, what you think the competitive advantages are of your product and what gives you confidence in a positive readout. And then second question I wanted to ask you is, if you could remind us again of some upcoming potentially positive inflection points where you could receive payment from GSK, that would be helpful.

A: Great. Thanks, Louise for the questions. I can start with the SPR720 landscape and then Sath can cover the inflection points that come from our GSK collaboration. So in terms of why we’re excited about SPR720. Remember that, when we think about patients with NTM, there’s two types. First is the 75% of patients that we aim to serve first with SPR720 that are early in their disease journey. These patients typically fail the therapies that they’re on 75% of the time, and in fact, when they’re diagnosed, half of them choose not to go on therapy at all. So SPR720 provides an opportunity. One, it’s oral or current approved therapies for NTM patients or not. Second is that our Phase 1 data as well as our tox data to date suggest it’s a well-tolerated drug and that has the potential to be a preferred option for these patients. And then finally, in our in vivo and in vitro models show, we’ve demonstrated that SPR720 has the potency to address a large range of NTM pathogens, which is what these patients need. And I’ll pass it to Sath to answer your question about GSK inflection points.

Q: Thank you.

A: Yes. Thanks for asking, Louise. So as we get into the SPA process and then expect to report that out in the middle of the year along with details on the trial design, we’ll be able to give you much greater clarity on the milestones from GSK. But I would just lay the groundwork by reiterating that we expect the $150 million in development milestones to come through as you put in our external communication through the duration of the Phase 3 and the NDA submission process. So if you were to assume that we expect to get milestones to jumpstart the trial and those will be more than sufficient to initiate the trial on its rollout. And then milestones coming in between to continue progression of that trial over the period of that trial you would be accurate. But for the specific breakdowns at this moment in time, I would guide you to, again, that $150 million top line figure, but with the expectation that it’ll be spread through the trial period, we’ll pay for the trial, and we’ll be able to give you more details on it in the upcoming months.

Q: Can you review for us what you think the most important secondary end points are? And specifically, how they might feed into what you’re thinking about for the pivotal endpoint, especially, given the additional, I wouldn’t call it clarity, but the additional information on how ARIKAYCE may be approaching its frontline PRO primary endpoint.

A: Thanks for the question, Ritu. I’ll pass that one to Kamal to address.

Q: Yes.

A: Yes. Thank you, Ankit. Thanks, Ritu, for the question. So just as a reminder, I mean, this is a Phase 2a proof-of-concept study. The primary objective of the study is to demonstrate the activity of SPR720. So secondary objectives include safety, tolerability, PK, and again, first things first, this is study to demonstrate the activity of SPR720. And while we in parallel continue to develop our PRO for to be used in the Phase 2b/3 program, we are exploring some domains of well established PRO instruments in the proof-of-concept study, the ongoing Phase 2a study. So we are exploring this as secondary or exploratory objectives, and certainly these would help inform the PRO development besides the specific PRO development work, which has started with the PRO content validation study.

Q: And if you think forward, Ankit, you mentioned the QUAL-B as a respiratory domain PRO scale. Are you guys also thinking about adding a fatigue scale, like the PROMIS as well? Do you think that’s sort of a – as a complimentary element to what FDA wants to see?

A: That’s correct, Ritu. I mean, if when patients were – patients and clinicians alike, when they were surveyed in terms of what’s important in terms of feel and function sign symptoms, those three things stand out, cough, shortness of breath and the third one is fatigue. And to your point, absolutely fatigue will be an important domain that will be assessed in the studies. As a matter of fact, PROMIS scale will be used and we are also exploring assessment of fatigue even in the ongoing Phase 2a study.

Q: Could you just help us think through the frontline ARIKAYCE data coming next quarter? Specifically I’m wondering how you see the read through to 720 development plan and whether that may influence your decision to pursue a frontline or refractory subsequent trial.

A: Yes. Thanks, Gavin for the question. Yes, we’ll start with perhaps the last component first, which is that we see frontline treatment as the highest unmet need in NTM and that’s for two reasons. One is just from a numbers perspective. There are more frontline NTM patients that have no approved therapies than there are refractory. Second as well, if you look at how patients behave there, half of them choose not to be treated, not – because they’re not symptomatic, but because the agents that exist do not work for them. And finally, as we think about the pathophysiology of the disease, if we’re trying to measure, feel and function type of endpoints, it’s physiologically more relevant for patients who can recover that lung function relative to those who have chronic inflammatory lung damage. So we think that that first line treatment is an important place for 720 to go, although it does have the microbiological potential for refractory. Now turning to the Insmed data that’s coming to the best that we understand, they’ll be looking at variants of the QUAL-B in the PROMIS, and it was nice to see Griffith at all data around the QUAL-B will be looking to see how the full complement potentially stands up. I will say two things. One is that, ARIKAYCE is a different drug. And number two, there’s no guarantees on how fulsome the disclosures from our colleagues will be. And so we’ll take what we can get and we’ll certainly incorporate that into our learnings as we do our own PRO development work within the context of the Phase 2a, but also in the context of other clinical work that we aim to do ahead of starting pivotal studies.

Q: Can you provide any additional color with respect to enrollment progress and when you’d expect this to be completed?

A: Yes. To answer the first question, we reiterate our guidance that we’re on track for trial data, first half 2024, and you can refer to our prior comments in terms of the progress of site openings, but we won’t go deeper than that.

Q: Are there any details of the pivotal Phase 3 protocol that you can disclose at this time? Maybe on a high level some of the maybe notable differences within this protocol and the one that you used in ADAPT-PO trial?

A: Yes. Big picture, Boobalan. Thanks for the question. We – as we’ve stated before that the sequence will be that we’ll be working to receive the SPA agreement, then we’ll disclose details of the trial as well with that as Sath mentioned, we’ll disclose the details of the milestones that are due to us at GSK.

Q: Has Pfizer indicated any interest in expanding geographic rights to 206, maybe in the context of your existing partnership? Maybe, if so, under what terms?

A: Well, and I’ll say that we’ve enjoyed our collaboration with Pfizer and benefited from their expertise and perspective. We look forward to continuing that partnership. And certainly if you know, and as and when we think about the U.S. rights for 206, we’ll explore that more.