Spero Therapeutics, Inc. (NASDAQ:SPRO) Q1 2023 Earnings Call Transcript

Spero Therapeutics, Inc. (NASDAQ:SPRO) Q1 2023 Earnings Call Transcript May 11, 2023

Spero Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.25, expectations were $-0.33.

Operator: Good afternoon, and welcome to the Spero Therapeutics First Quarter 2023 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following the company’s formal remarks, we will open up the call for questions. [Operator Instructions] Please be advised that this call is being recorded, and 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 Ted Jenkins, Vice President, Investor Relations and Strategic Finance at Spero Therapeutics. Mr. Jenkins, please go ahead.

Ted Jenkins: 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 first quarter of 2023. Our press release is available on the Investor page of the Spero 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 SPR720, SPR206 and tebipenem HBr, 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 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 Spero Therapeutics filings with the SEC, including in the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC today. These forward-looking statements speak only as of the date of this conference call, and 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. With that, I’d like to turn the call over to Spero’s Chief Executive Officer, Dr. Ankit Mahadevia.

Please go ahead, Ankit.

Ankit Mahadevia: Thanks, Ted, and thanks to all who are listening. We continue to make strong progress across each of our three late-stage clinical programs last quarter, and believe we have the key components in place to sustainably create value through the advancement of our pipeline. These components include an experienced and talented management team, premier partners across our industry and government, a strong balance sheet and differentiated investigational medicines designed to address clear medical needs and indications with strong commercial prospects. We outlined our clinical programs in detail only six weeks ago on our last earnings call. Given this, we will keep our prepared remarks today brief. After the prepared remarks, we’ll move on to a Q&A session with myself, our Chief financial Officer, Sath Shukla, and our Chief Medical Officer, Dr. Kamal Hamed.

Let me start by discussing our lead seven – SPR720 program, which aims to deliver the first novel oral treatment for non-tuberculous mycobacterial disease or NTM-PD for short serving first line patients. I’m pleased to report that the program continues to advance according to plan. Our Phase 2 proof of concept trial is enrolling with more than 15 active sites currently and top line data anticipated in the first half of 2024. A key goal of the trial is to show SPR720 driving an early microbiological response as a standalone agent versus placebo with the primary endpoint evaluating changes in bacterial load and sputum samples from baseline. We believe pairing a positive result on this primary endpoint with supportive evidence and learning from the trial secondary endpoints will enable us to substantially de-risk the program and move confidently to late-stage development.

In late-stage development, we plan to evaluate SPR720 as part of a combination regimen. Given the limitations of the off-label combinations that are currently a standard of care in first line NTM-PD, we believe our program has the potential to address a clear unmet need. Alongside the progress of our Phase 2 trial, we remain on track with the entire SPR720 program as we perform additional development activities needed to support 720’s advancement towards pivotal late-stage studies. As noted on our last earnings call, these activities include ongoing toxicology work, CMC in quality initiatives, engagement with FDA, and efforts to expand the 720 development program into Japan, where NTM-PD has a sharply increased prevalence relative to other territories.

In addition, we continue to execute on the steps needed to develop and validate relevant patient reported outcomes for NTM-PD. This is to ensure that our primary efficacy endpoints within our future clinical studies are conducted in line with the FDA’s published guidance on developing drugs for this indication. Next, I’ll speak briefly about tebipenem HBr, which is partnered with GSK and being developed as potentially the first oral carbapenem antibiotic for the treatment of complicated urinary tract infections or cUTI. We remained engaged with the FDA regarding a special – potential Special Protocol Assessment agreement for a planned Phase 3 trial. For a Type A Meeting with the FDA conducted last year, positive results from this planned trial together with confirmatory non-clinical evidence of efficacy could be sufficient to support tebipenem HBr’s approval.

We would like to thank the FDA for its constructive engagement and expect to provide an update on the status of the Special Protocol Assessment agreement by mid-year 2023. At that time, we also intend to outline the details of the planned Phase 3 trials design, and the specific regulatory and development activities that may trigger milestones from our GSK agreement. To conclude my section of today’s call, I’ll very briefly touch on SPR206, which is an investigational next generation polymyxin antibiotic being developed to treat multi-drug resistant gram-negative infections. Efforts to advance SPR206 into a Phase 3 trial in participants with hospital-acquired or ventilator-associated bacterial pneumonia are proceeding in line with prior guidance with submission of an IND application expected in the fourth quarter of the year.

I’ll remind those listening that the planned Phase 2 trial will be funded entirely by external non-dilutive sources, highlighting the capital efficient approach being employed to advance our pipeline. With that, I’ll turn over the call to Sath to review our quarterly financial results. Sath?

Sath Shukla: Thank you, Ankit, and good evening to all joining us on the call. It’s my pleasure to report that Spero remains well capitalized and in a strong financial position with $96.3 million in cash and cash equivalence as of March 31, 2023. Based on our current operating plan, we believe our cash and cash equivalents together with other non-dilutive funding commitments will be sufficient to fund our operating expenses and capital expenditure requirements beyond 2024. Turning our attention to our remaining financial results. Total revenues for the first quarter of 2023 were $2.1 million compared with revenues of $2.1 million in the first quarter of 2022. Although, total revenues for the year-over-year comparisons are the same, grant revenue was approximately $493,000 lower for 2023, while collaboration revenue was $493,000 higher due to recognition of revenue related to the GSK transaction.

Research and development expenses for the first quarter of 2023 were $9 million compared with $17 million of research and development expenses for the same period in 2022. This year-over-year decrease was primarily due to lower direct cost related to the tebipenem HBr program, decreased clinical activity related to the SPR206 program and decreased R&D headcount associated with the strategic restructuring announced in May, 2022. General and administrative expenses for the first quarter of 2023 of $7.3 million were lower than the $15.3 million reported in the same period in 2022, primarily as a result of decreased personnel related costs associated with a reduction in headcount in commercial, general and administrative function arising from the May 2022 strategic restructuring and a decrease in professional and consultant fees.

Spero reported a net loss for the first quarter ended March 31, 2023 of $13.3 million or $0.25 per share of common stock compared to a net loss of $32.8 million or $1.01 per share of common stock reported for the same period in 2022. For further details on our financials, please refer to our 10-Q filed with the SCC today. We will now open the call for the Q&A. Operator?

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Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Louise Chen of Cantor. Please go ahead.

Operator: Our next question comes from Ritu Baral of TD Cowen. Please go ahead.

Operator: Our next question comes from Gavin Clark-Gartner of Evercore ISI. Please go ahead.

Operator: [Operator Instructions] Our next question comes from Boobalan Pachaiyappan of H.C. Wainwright. Please go ahead.

Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Dr. Ankit Mahadevia for closing remarks.

Ankit Mahadevia: Thanks, operator. We appreciated the opportunity to provide an update on our recent progress, and we look forward to the continued advancement of all of our programs. Thanks to all listening for your participation today. Have a great evening.

Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.