Hello, everyone, and welcome to this afternoon session of the H.C. Wainwright BioConnect conference. My name is Ram Selvaraju, and I'm a Managing Director and Senior Healthcare Equity Research Analyst within Wainwright's Equity Research Division. It's my pleasure to introduce the next company in our series of fireside chats here today, Spero Therapeutics, which trades under the ticker symbol SPRO on the Nasdaq. We cover Spero with a buy rating and $7 twelve-month price target. Joining me today is Satyavrat Shukla, Chief Executive Officer. Sat, it's a pleasure to have you with us.
Thanks for having me, Ram.
So, as some of you in the audience may know, Spero is working within the domain of anti-infectives, across a number of high unmet need disease indications, with a late-stage product candidate currently in pivotal development, partnered with GlaxoSmithKline, GSK. Perhaps that would be the most appropriate place to start. Sat, why don't you provide us with an overview of the market opportunity for Tebipenem HBr, which is the most advanced candidate in Spero's pipeline?
Yeah, certainly, Ram. So Tebipenem is an asset we are progressing in a phase III trial right now for the treatment of complicated urinary tract infections. Complicated urinary tract infections, cUTI, are a leading cause of hospitalizations in the U.S. There's roughly 3 million incidences of cUTI every year, and the trend seems to be going worse. In fact, a recent study demonstrated a 52% rise in hospitalizations from UTI in the 1998-2011 period. So the burden on patients who are in the hospital and the burden on the healthcare system is pretty acute. Now, historically, these types of infections were treated by oral regimens such as trimethoprim, fluoroquinolones, but over time, bacteria have developed resistance to these types of therapies.
So unfortunately, somewhere between 30-35 UTIs now are resistant to multiple drug regimens. Those are MDR bacteria. So what that has led to is a transition from these oral therapies that used to be effective to the usage of carbapenems, which are currently only available in IV formulations. So unfortunately, if your UTI infection becomes complicated and it is not solved by first-line treatments, you are going to be on an IV for several days in a hospital. Right now, these carbapenems are all IV. So Tebipenem, which we are progressing right now, is, to our knowledge, the only oral carbapenem in development, and it has shown activity against Enterobacterales, which is the category of these MDR bacteria. The value proposition for Tebipenem is pretty straightforward.
Historically, antibiotics have struggled in this space because they compete against generics and because they are subject to a hospital reimbursement system. Tebipenem is the only oral carbapenem we know of, so there's no competition from that, region, generic or otherwise. And by keeping patients outside the hospital to begin with, it would avoid, to a large degree, that reimbursement cap. So, so from a commercial perspective, it is a very unusual commercial opportunity within the cUTI space.
It would probably not be inaccurate to say that it is highly desirable to get patients out of the hospital as quickly as possible-
Absolutely.
Given the risk of nosocomial infections and so on and so forth.
Indeed. For exactly to your point, for both patients and the healthcare system itself.
Just to refresh the memories of our audience and also to acquaint some of the folks who may not necessarily have heard about Spero before, this drug has already gone through one pivotal study-
Correct.
and is currently in a confirmatory study designated the PIVOT-PO trial. Can you give us an update on the status of the PIVOT-PO trial and the timeline to potential readout of data?
Yes, certainly. So we announced in January that we had dosed the first patient, and enrollment is continuing today globally. We have guided to completion of that enrollment in the second half of 2025. We have not yet provided granularity on the availability of top-line data, but we'll certainly do so at the appropriate time.
How do you expect the tebipenem competitive landscape to evolve between now and when you expect the PIVOT-PO study to yield data, especially when you consider the fact that within the carbapenem space, as you pointed out, there are no other competing orally bioavailable carbapenem-class antibiotics being developed. But, perhaps give us a broader overview of the competitive landscape in UTI.
Absolutely. So UTI does have assets progressing, certainly oral assets on the early stages and IV assets as well. But to your point, Ram, you know, the unmet need is only going to grow larger over time. So for an oral carbapenem, the competitive landscape, the market landscape will be larger, and competition-wise, there's nothing else in development that we know of. So, this is usually unusual to say for any asset in development, but even within the next couple of years, when we expect the NDA to be submitted to the FDA, if the data are positive, the competitive landscape will continue to favor us, perhaps grow even better.
... Now, I mentioned earlier that this is effectively the subject of a high-profile partnership that you have in place with GSK, which has been in place for an extended period of time already. Of course, GSK is well known for having historically had significant exposure to the anti-infective space. Maybe you can give us a sense of how this partnership is structured and how the logistical responsibilities are divvied up between GSK and Spero.
Absolutely. So from a operational perspective, we are responsible for the execution of the trial and the associated costs for this phase 3 PIVOT-PO trial. GSK is responsible for ex-US development and worldwide commercialization, excluding certain Asian territories held by another one of our partners, Meiji Seika. On an operational basis, we have a joint steering committee with GSK, who are our leading shareholders, that meets frequently on a non-formal basis. Since we are working towards the same objective to get this medicine to patients, we interact with the GSK team extremely frequently.
How much of Spero does GSK currently own?
Approximately 18%.
Now, the pivot PO trial is the subject of an SPA with the FDA, is it not?
That's correct.
What would you say are some of the principal advantages of having this SPA in place, especially given what some of us who have followed the anti-infective space somewhat painfully in previous years may be familiar with, is, you know, in particular, this regulatory agency's penchant for adjusting the goalposts every once in a while. So clearly, having the SPA in place, having a clear understanding with the agency of what the requirements are that need to be hit in this trial, I think must be very useful.
We believe so, Ram, yes. An SPA usually reflects a high degree of concurrence on the certain design elements, adequacy, and acceptability, so between the FDA and the sponsor of this study. So for us, having achieved that SPA last year, we feel that regulatory risk is minimized in progressing this trial. With that said, as with any SPA, it doesn't impose a legally binding obligation on the FDA. It does not guarantee an acceptance of an NDA by an FDA. That's all going to be dependent on data and on the package being put together for the future NDA. But to your point, from a de-risking perspective, it is a very handy tool to have as you progress a transformational study like this.
And in terms of the predictive value of the prior pivotal work that was done with Tebipenem, you know, to what extent would you say there are clear design similarities, endpoint readout similarities between the previous pivotal study and the current pivotal PO trial? How predictive was that previous study, which obviously was positive?
We feel that we can leverage those positive aspects exactly as you referred to them, Ram. The operational execution of running this study, the data that we collected that will be utilized in the package, that will be eventually used for the NDA submission, with both the SPA that we have aligned on, as well as the size of the trial today and the updates we have made incorporating the FDA feedback. So we feel that it is really the best of both worlds. We get to leverage things that we know very well, that are very positive and that have worked, along with a structure that incorporates feedback we have received and even improvements to this trial.
With respect to the commercial implications, you talked earlier about the market opportunity, the positioning of Tebipenem as an oral carbapenem. But maybe, talk about it from a slightly different angle with respect to avoiding the pigeonholing issue that has bedeviled a few other anti-infectives companies being used as the antibiotic of last resort, and why this clearly would not be applicable in Tebipenem's case, primarily because of the oral bioavailability, the potential to get patients out of the hospital.
You have exactly covered the major events and that have bedeviled some launches in the past. So I'll reinforce the 2 drivers that I think are really differentiated for us. The fact that the oral bioavailability ensures that this can be prescribed by a different set of prescribers, including urologists, and in different settings, in a community setting, not just a hospital setting. So by that comparison, and then also by keeping it out of that minefield of generics, we feel that with 3 million incidences every year and with a hospitalization cost of $7,000-$10,000 for the IV carbapenems that are utilized right now, one doesn't need very aggressive assumptions on either market penetration or pricing to see a potentially very attractive opportunity for Tebipenem.
Obviously, Spero is not just about Tebipenem HBr. You have multiple other clinical stage assets, as well as very active discovery work being done. So maybe you can talk a little bit about SPR720, which is currently in development for the treatment of nontuberculous mycobacterial infections. Maybe give us a sense of the size of this market opportunity, what kind of an unmet medical need it embodies, and some of the unique attributes of 720 that you have seen so far.
... Yeah, absolutely. So, the NTM marketplace, nontuberculous mycobacteria, it's a debilitating disease with a five-year all-cause mortality rate of roughly 35%. This is a space with no approved therapies for first-line patients, which are roughly three-quarters of the patient population. Within that space right now, what is usually used are these guideline-based, off-label TB drugs, and these have a history of a lack of efficacy, as well as a lack of safety. What usually happens to many patients who get exposed to these, pathogens that cause NTM, is that they start developing life-altering symptoms, as well as a progressive lung disease and progressive lung damage.
When they go to their physicians, and they look at the efficacy and tolerability profile for the standard of care that's out there right now, roughly one in three patients who are actually put on these regimens right now see no culture conversion at all, so they do not see a benefit. Of the two-thirds who do, they have a 50% relapse rate, and only 50% of patients who are diagnosed are put on these therapies, not only because of that lack of efficacy, but because the tolerability profile is really difficult and challenging for patients. Tolerability from hepatotoxicity, optic neuritis, QT prolongation, GI intolerability, DDI. So the NTM space is a very challenging space if you get diagnosed with one of these rare lung infections.
We speak about the market size, it's roughly 245,000 patients in major markets, the US, EU5, and Japan, and roughly 95,000 of those are in the US. So within that, and certainly in the first-line patients with no approved therapies, we feel that SPR 720, as a potential oral, well-tolerated, and efficacious therapy, could have a real place and potentially be a foundation for combination regimens for our first-line patients going forward.
You have an upcoming readout in the phase II program in the second half of this year. Care to share what you are looking for, what you are hoping to see from that phase II readout, and how this might inform future clinical development and what that could look like?
Yes. So, we do have data coming out in the second half of this year on a proof of concept phase IIa study, where we are testing 500 mg and 1,000 mg of SPR720 as a monotherapy, compared to patients on placebo. The expectation for this trial is to see the standalone effect of this drug, and the data that we'll be collecting will be the microbiological response for patients on this drug compared to patients on placebo. If those data provide a good signal, then along with other data we are collecting, which includes phase I studies, that's in looking at PK in an oral study and in an oral administration study, along with continued safety and tolerability data, that is a data package that we expect to be assembling by the end of this year.
If the signal from that monotherapy data is positive, it will really illuminate the path forward for potentially registration studies.
Is this an indication, you mentioned earlier, you know, the target patient population, clearly over 200,000 patients. Is it an indication in which Spero would consider the possibility of self-commercializing, or is this also an area where ultimately you expect the drug to be partnered?
We haven't talked much about commercial plans, but given the high unmet need, we believe the commercial opportunity to be significant. Spero has demonstrated the ability to ramp up to commercialization, should we so choose, or to find partners, as we have for tebipenem, as in the case of GSK. But the important thing, will, of course, be to get this drug, if approved, to patients in as speedy and efficient a manner as possible, so we will make that decision as we go forward.
Lastly, of course, Spero has its third clinical stage candidate, SPR 206, which is a novel polymyxin-class antibiotic, which is currently in early clinical development. Maybe you can give us an overview of what you see as the need for additional polymyxin-class antibiotics, what specific attributes those bring to the table, as well as what specifically differentiates 206 within this class.
Thank you for the question. So we talked about multi-drug resistant bacteria earlier, and SPR 206 is a next-generation polymyxin. Polymyxins are agents that are used right now more as agents of a last resort for patients who suffer from infections that the CDC has identified as health hazards. Unfortunately, by the time polymyxins are used, they tend to have a nephrotoxicity effect associated with them. So they will usually kill the infection. They will sadly also kill kidney cells for patients. SPR 206 is different in the data we have seen so far, that it could be a polymyxin and have that efficacy, but without the associated nephrotoxicity. And if that profile continues to hold true, then within that space, it could offer another potentially transformative opportunity for the space.
... in the context of the clinical data that's already been generated with 206, maybe you could comment on some of the salient features of the observations that were made in the wake of the release of the data from the phase 1 bronchoalveolar lavage trial, as well as the assessment of the drug in patients with renal impairment?
Absolutely. So as you referred to, Ram, in the BAL trial, we saw lung exposure that was consistent with breakthrough therapeutic levels. And in the renal trial, we saw how dosing may be impacted or adjusted for patients with reduced renal function. So those are really positive data that we would take forward on developing this asset. And that was accompanied also with safety data that, of course, reiterated the necessity for a polymyxin that is efficacious but also safe to use. And so we feel very good about the package as we take this into a potential phase 2 half AB study, for which we have received IND clearance and Fast Track designation as well.
It would be possible for you to conduct that program with the aid of non-dilutive funding. Is that correct?
That is exactly how we have actually funded that program in the past. It has been funded by partnerships with entities such as Pfizer, who are also leading shareholders in the company, and our partner, Everest Medicine in Asia, and from government agencies such as BARDA and NIAID. So that is how we have progressed this asset in the past, and that is indeed the plan going forward as well.
Can you comment on the extent of non-dilutive funding that Spero has managed to attract so far since inception?
Certainly. The GSK deal that you mentioned earlier, to give an example from the biotech and pharma side, has already allowed Spero to qualify for or receive $200 million in the last couple of years since we entered into that deal, with potentially $ hundreds of millions plus royalties to follow if the asset progresses. In addition to GSK and partnerships such as Pfizer, we have brought in $ tens of millions from agencies such as the Department of Defense, BARDA, and NIAID. And so, that continues to be a venue that has proven to be very, very applicable to moving these types of assets forward, and we certainly intend to continue exploring those.
In that context, perhaps you could also give us a sense of where things stand on the legislative front, on Capitol Hill, for example. Historically, there have been a number of noteworthy pieces of legislation that specifically aimed to enhance the development environment, the pull incentives for anti-infective products. One might, in particular, cite the GAIN Act, as well as the promulgation of the Qualified Infectious Disease Product designation. But perhaps you could comment on where things stand today, what pieces of legislation have been put forward so far that you're in particular keeping an eye on, and what the potential ratification of those acts might mean for Spero, in particular, for example, the PASTEUR Act.
Absolutely. So, while we have progressed Spero with no anticipation of legislative change, certainly those would be continue to be very beneficial from a public health perspective, ensuring that, therapies are brought to market, in a high-need context. What, the QIDP designations that you mentioned earlier on, those are beneficial for multiple agents. For us, our assets have QIDP designations, and they do allow for exclusivity and provide incentives for, therapies to come to market. PASTEUR Act has been making its way extremely slowly, on Capitol Hill. If it comes through, it could be another venue to, benefit companies as they struggle to raise capital between approval and revenue generation, for example. But, we cannot count on that.
It's certainly something that'd be great for the space and for public health, and we hope it passes, but for Spero's management and execution, we don't count on it.
Lastly, perhaps you could just update us on the status and strength of Spero's balance sheet and your projected operational runway, as well as the core assumptions underlying your forecast in that regard?
Absolutely. We disclosed a cash balance of $82.3 million as of March 31 this year, and a cash runway until late 2025. During that cash runway, we expect to see multiple catalysts, including the top-line data from our phase 2A NTM program in the second half of this year, and the completion of enrollment for our tebipenem program, which, if successful, would unlock, again, significant economics from GSK. What is baked into that cash runway until late 2025 is nothing conditional. It... What is baked in is the $95 million that we have qualified for when we started pivot deal with GSK. One quarter of that $95 million has been received, and it was reflected in that $82.3 million balance we disclosed.
3 quarters of that is still to come over the next year and change, and that is baked into our cash runway of late 2025.
Great. Thank you very much for sharing the Spero story with us. It's been a pleasure having you with me here on the stage, and thank you to our audience for their attention.
Thanks for having me on.
Thank you. Bye.