Spero Therapeutics, Inc. (SPRO) Q1 2020 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Spero Therapeutics First Quarter 2020 Earnings Conference Call and Corporate Update. [Operator Instructions]. The conference is being recorded. [Operator Instructions].I would now like to turn the conference over to Sharon Klahre, VP of IR and Strategy, please go ahead.

Great. Thank you, operator, and thank you all for participating in today's conference call. Earlier today, Spero Therapeutics released financial results and provided a pipeline review for the first quarter ended March 31, 2020. If you have yet to see the press release, it's available on the Investor page of the Spero Therapeutics website.Before we begin, I'd like to remind you that some of the information contained in the news release and on this conference call contain forward-looking statements based on our current expectations. Such forward-looking statements are not a guarantee of performance, and the Company's actual results could differ materially from those contained in the statements. Several factors that could cause or contribute to these differences are described in detail in Spero Therapeutics' filings with the SEC. These forward-looking statements speak only as of the date of this press release and 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 release and call.Participating in today's call from Spero are Dr. Ankit Mahadevia, Chief Executive Officer; Dr. David Melnick, Chief Medical Officer; Cristina Larkin, Chief Operating Officer; and Steve DiPalma, Interim Chief Financial Officer.With that, I'd like to turn the call over to Dr. Ankit Mahadevia. Please go ahead.

Thank you, Sharon, and good morning, everyone. This is our first time posting a quarterly call and business update. So thank you for joining us. It's a very exciting time for Spero with our Phase III trial for tebipenem HBr now fully enrolled and top line data expected in the third quarter. If successful, this study will set us up on a path for a potential regulatory approval for our most advanced product.Joining me on the call today is Dr. David Melnick, our Chief Medical Officer, who will discuss recent progress with tebipenem HBr as well as providing a pipeline update. Cristina Larkin, our Chief Operating Officer, will talk about the commercial opportunities for the lead assets. And Steve DiPalma, our interim CFO, will discuss the financials.Let me start with the clinical progress we've made on all of our pipeline programs since the start of 2020. I'll begin with our lead candidate, tebipenem HBr. Tebipenem HBr is an oral carbapenem. Our Phase III clinical trial, known as ADAPT-PO, is investigating tebipenem HBr for the treatment of complicated urinary tract infections and pyelonephritis. The trial is now fully enrolled with over 1,370 patients in the trial, and we continue to anticipate reporting top line results from the trial in the third quarter of 2020. We believe that the ability to treat cUTI with an effective oral agent rather than currently used IV therapies would represent a dramatic improvement in the standard of care, one that would benefit patients, payers and physicians alike.In January, we reported the FDA granted orphan drug designation for oral SPR720, a medicine for the treatment of nontuberculous mycobacterial, or NTM, infection. This designation is given to drugs that treat a rare disease affecting fewer than 200,000 persons and that provides certain benefits and incentives for the drug development. In January, we also reported positive Phase I results for our IV next-generation polymyxin agent that was developed as part of our Potentiator Platform, and that is SPR206. The data support its advancement into additional clinical trials in conjunction with our partners at the Department of Defense and Everest Medicines. On the financial front, we strengthened our cash position in the first quarter through a successful rights offering that closed on March 5th where we generated net proceeds of approximately $29.5 million. Proceeds from this offering extended our runway into the first quarter '21 and will support advancement of our antibiotic and rare disease pipeline.Now I'd like to shift focus a bit and share with you our thoughts on COVID-19 and how we are managing the business in the current environment. First, we'd like to say that the safety of our patients, collaborators and employees is our top priority. We continue to monitor the situation as we look to initiate clinical trials in the second half of 2020. We monitor the number of COVID-19 cases nationwide as well as regulations, policies and risk mitigation strategies in the jurisdictions and at the centers where we are conducting and plan to conduct our trials. These data make us comfortable with our current estimates, and our guidance remains unchanged for our pipeline.In the case of ADAPT-PO, the Phase III trial that's now completed enrollment, we were very fortunate to have already been at the latter end of enrollment when COVID-19 cases began to accelerate. We closely monitor the situation in enrolling countries, and we're able to guide enrollment to a successful conclusion. In addition, we continue to expect that the 720 Phase II clinical trial in patients with NTM disease will begin in the second half of this year. We arranged for our employees to have the capability to work from home early, which has minimized any business disruptions due to COVID 19.Now shifting gears, there are -- at 100,000 feet, there are a number of key strategic takeaways from the COVID-19 pandemic as it relates to our pipeline. Now more than ever, there's a push for patients to stay out of the hospital if it isn't essential to be admitted. Physicians do not want to expose patients to secondary infections, including COVID-19. And they don't want the hospital to lose money or take up a hospital bed treating a complicated UTI that could be better treated outside of the hospital if there was an effective oral available.In addition, the pandemic highlights the importance of having anti-infectives available when they're needed for primary infections or infections secondary to COVID-19. While Spero isn't reliant on government incentives to further develop these important medicines, we have had the opportunity in developing these medicines that benefit from our partnerships with several agencies, including BARDA, the Department of Defense and DTRA.During the pandemic physicians are gaining comfort using remote medicine and are looking for frustration-free methods to access care and medicines for their patients. Oral medicines that don't need to be managed through the formulary are an attractive option. Our ADAPT-PO trial that evaluates head-to-head oral tebipenem HBr versus IV ertapenem is designed to give physicians the confidence to prescribe tebipenem HBr without compromising outcomes.Now to provide some more in-depth discussion on Spero's pipeline and clinical trials, I'll hand it off to our Chief Medical Officer, Dr. David Melnick.

Thank you, Ankit, and good morning, everybody. I'd like to begin with our lead candidate, tebipenem HBr, which, as Ankit mentioned, we are developing for the treatment of complicated urinary tract infection. We recently completed enrollment into our single pivotal Phase III trial for tebipenem HBr, a clinical study that we have named ADAPT-PO. We remain on target to report top line results from ADAPT-PO in the third quarter of 2020. ADAPT-PO is a noninferiority trial comparing our drug head-to-head versus the IV carbapenem that is most commonly used to treat complicated urinary tract infections caused by drug-resistant pathogens.Over 1,370 patients were successfully enrolled into the trial, and they were randomized on a 1:1 basis, treatment with oral tebipenem HBr or intravenously administered ertapenem for 7 to 10 days. We enrolled a greater number of patients into the study than our original plan of 1,200 patients in order to ensure that we maintained the statistical power of this study following an assessment of the response and evaluability rate at the 70% enrollment point.The primary end point is overall response rate, which is defined as the combination of clinical cure and microbiological eradication of the infecting pathogen at the test-of-cure visit in the microbiological intent-to-treat population. The primary end point, test-of-cure, will be assessed 17 to 21 days after the first dose of study drug, and patients will be followed for a total of up to 27 days for a late follow-up assessment.Importantly, there is no IV lead-in in the oral tebipenem arm. This allows the trial to clearly demonstrate the critical value proposition for oral tebipenem, that is, the ability to treat serious antibiotic-resistant infections without the confounding presence of prior intravenous antibiotic therapy. If the trial was successful and tebipenem HBr is approved, then physicians would be able to prescribe an oral antibiotic for complicated UTI in place of intravenous therapy.That would allow a shift in care from the inpatient to the outpatient setting. This is an approach that is demonstrated to be effective for the treatment of other serious bacterial infections such as endocarditis, skeletal infections and gram-negative bacteremia. And it will give clinicians the option to treat serious urinary tract infections caused by antibiotic-resistant pathogens with an oral antibiotic, a capability that now doesn't exist.Tebipenem HBr is unique in that it is the only carbapenem that has significant oral bioavailability. We know that with approximately 60% bioavailability, we can deliver drug levels to plasma and the site of infection that allow treatment with an oral agent alone. In our Phase I trial as well as in the interim look at pharmacokinetics in our Phase III trial, we demonstrated that drug levels sufficient to treat complicated UTI were delivered.Activity in complicated UTI is also supported by Phase II studies previously conducted by our Japanese partner, Meiji Seika. These studies demonstrated comparable response rates through efficacy as compared to intravenous antibiotics. Tebipenem HBr as a powder form has been marketed in Japan for over 10 years. So we were fortunate to have a significant published safety database with which to answer the body of knowledge that we generated on this molecule.Turning now to SPR720, which is targeted for the treatment of infections caused by nontuberculous mycobacterial, or NTM. As you know, we announced positive results from our Phase I trial in December 2019. Results from that trial demonstrated that in healthy patients, doses of up to and including 1,000 milligrams were safe and well tolerated over 14 days of repeated dosing. So we have a good safety profile coming out of the Phase I trial at dose ranges that we believe will produce clinical efficacy in NTM patients based on our in vitro and animal NTM infection studies. We met with the FDA in early May and obtained guidance on our overall clinical program.We will be able to share more on these discussions after we receive the written minutes. But right now, I can say that we feel quite comfortable that there is a path with the regulators to move forward on SPR720, and we continue to anticipate submitting an IND in the second half of 2020. Subject to FDA acceptance of the IND, we plan to initiate a dose-ranging Phase IIa clinical trial evaluating SPR720 in patients with pulmonary NTM disease in the second half of the year, which is another important milestone for our pipeline and for our company. As I have shared previously, our current plan is that the Phase IIa trial will be designed as a monotherapy trial.We expect to enroll NTM patients who are treatment inexperienced, with the goal of assessing safety and tolerability as well as pharmacokinetics and early microbiological response. If the results are positive, SPR720 would be the only agent shown to drive an early microbiologic response in NTM pulmonary disease as a stand-alone agent compared to placebo.Turning now to SPR206. In January, we presented positive Phase I data for 206, demonstrating that the drug was well tolerated up to a total of 300 milligrams daily for 14 consecutive days in healthy volunteers. Adverse events in this study were mild to moderate, and there were no reported serious or severe adverse events. Importantly, there was no evidence of nephrotoxicity. And there were no clinically significant changes in laboratory tests observed during the study. Based on these data, we intend to conduct further clinical trials in conjunction with our partners at NIAID and Everest Medicines. And we continue to anticipate beginning a Phase I bronchoalveolar lavage study in healthy subjects in the second half of 2020.I will now turn the call over to Cristina Larkin who will provide you with a review of the market opportunity for our pipeline products.

Thank you, David, and good morning, everyone. There are 3 common themes across our 2 lead assets. First, they are large unmet need markets where there are no generic alternatives. In fact, cUTI and NTM are the largest market in infectious disease today. Second, they have a strong value message directed at health care providers, payers and patients.Finally, we expect that they will be reimbursed outside of the hospital.Let's start with tebipenem HBr and the complicated urinary tract infection or cUTI market. As Ankit discussed earlier, now more than ever with COVID-19, the benefit of keeping patients out of the hospital is clear, and cUTI is no exception. In the U.S. for patients with UTIs that are resistant, recurrent and that have failed prior treatment, there is an increasing number of unnecessary hospitalizations annually in the U.S., and cUTI patients are staying longer in the hospital, not because they're sicker but because of a lack of effective oral options. And these increases appear to be linked to the increased emergence of resistance to currently available oral therapies. And these trends are impacting more than 2 million patients a year in the U.S. alone. Undeniably the largest unmet need market in infectious disease today.Currently, as David mentioned, the gold standard to treat these patients are carbapenems. But today, they are only available in an IV formulation. This is why we are excited by the commercial opportunity for tebipenem HBr. It has the potential to be the first oral carbapenem approved in the U.S. And from the patient and the health care provider perspective, orals are absolutely preferred, not only because of their convenience but to avoid the complications from an IV. And from a payer perspective, the opportunity to reduce total cost of care by reducing hospitalizations or helping with early discharge in the hospital are significant benefits. And all of this provides a great value foundation for a commercial launch following regulatory approval that can benefit all stakeholders: the health care provider, the payer and, most importantly, the patient.Now let's shift gears to our pipeline. The second largest opportunity in infectious disease is NTM for which we'll be studying oral SPR720. NTM is a rare orphan disease with a patient population of less than 200,000 in the U.S. NTM is a chronic, debilitating disease, and treatment is often recommended for 9 to 12 months. There is a significant unmet need for the more than 75% of nonrefractory NTM patients for which there are no FDA approved therapies. Oral SPR720, therefore, has the potential to fill a significant unmet need for many of these patients.I'm now going to turn the call over to Steve who's going to provide you with a financial update.

Thank you, Cristina, and good morning, everyone. I'll provide an overview of Spero's financial results for the quarter ended March 31, 2020.The first quarter 2020 reimbursement under our nondilutive funding contracts, reported as revenue on our income statement, totaled $1.7 million. This was lower than the $7.7 million that we reported in the first quarter of 2019 due to lower funding for tebipenem HBr received under Spero's contract with the Biomedical Advanced Research and Development Authority, or BARDA, due to the timing of qualified tebipenem HBr expenses incurred during the first quarter 2020. I would also note that the first quarter 2019 included a $3 million upfront payment associated with our Everest Medicines license agreement, which we entered into in January 2019.In February 2020, we announced that BARDA exercised its first contract option to an additional $15.9 million in committed funding. This exercise brings the total committed funding under BARDA to $44.0 million to nondilutive funding, inclusive of $10 million in funding from the Defense Threat Reduction Agency, or DTRA.For the first quarter of 2020, R&D expenses were $20.4 million compared to $9.5 million for the same period last year. The increase was primarily due to greater spending on tebipenem HBr program, partially offset by lower spending on SPR720 and the Potentiator Platform. While we expect higher R&D expense in 2020 relative to 2019, I would note that our largest single component of R&D expense is the ADAPT-PO Phase III trial, which we initiated in the first quarter of 2019, and for which we expect top line data in the third quarter of 2020.General and administrative expenses were $4.1 million for the first quarter compared to $3.9 million for the same period last year. The increase in G&A expenses was primarily due to increased headcount. We continue to expect G&A expense to increase in 2020 relative to 2019, primarily due to additional headcount and professional fees and infrastructure required to support tebipenem HBr as it advances towards potential regulatory approval and prepare for a possible launch of tebipenem HBr.Our net loss for the quarter ended March 31, 2020, was $23.3 million or $1.22 per share compared to $5.1 million or $0.29 per share during the same period in 2019. Increase in net loss was attributed primarily to the increase in the Company's activity mostly related to the clinical trials.As of March 31, 2020, Spero had cash, cash equivalents and marketable securities of approximately $88.8 million, which included net proceeds of approximately $29.5 million from our rights offering, which closed on March 5, 2020. We continue to estimate that our existing cash and investments are sufficient to fund our clinical and business operations into the first quarter of 2021, including through the filing of an NDA for tebipenem HBr. For further details on our financials, including comparisons for the quarters ended March 31, 2020, and March 31, 2019, I refer to our 10-K filed with the SEC today.That concludes my review of the Company's financial results. I'd like to open the call for questions. Operator?

[Operator instructions] The first question comes from Ritu Baral with Cowen. Please go ahead.

My first question, and I'll keep myself to two. The first question is how are you envisioning the sales force, the commercial force, for tebipenem and if you have sort of high-level views on the number of touch points, the commercial call points, the types of doctors that you would target with that force. And my follow-up question on 720 for NTM. Could you go into maybe a little more detail into what you're hoping to see from a Phase IIa frontline monotherapy? Can you talk about where you feel the efficacy bar is versus standard of care just because, in the review of the literature, culture conversion and standard of care has sort of this very, very wide error bars, depending on which article you look at, and tolerability has such a big part in it. Given that background, where is the bar for your Phase IIa data for 720?

Ritu, this is Ankit. Thanks so much for your question. On your first one on the go-to-market strategy for tebipenem, I will pass that question to Cristina Larkin, and then I can address your second question on the goals for the NTM study. So I'll hand the ball over to you, Cristina, first.

Thanks, Ankit. Ritu, it's nice to hear your voice. First, I'll say that our plan right now is that we are doing some market preparation work to commercialize in the United States. It's really where our expertise is, and we'll look to partner ex U.S. I think, as you know, there's a couple of important features about tebipenem that make our strategy a little different than prior antimicrobial launches.First, the drug will be looked, be primarily reimbursed outside the hospitals, so much of our market preparation work is around the reimbursement landscape. Secondly, as you mentioned, the specialists that primarily would be looking to prescribe this are urologists, and that's some of the work that we've done already. And I think the last part is we have done some targeting work around understanding a bit more about where the focus could be for our launch.What I would say is that we're going to be looking at taking a staged approach to our launch by focusing on our largest valued markets first and then looking to expand over time. I will state that it is a highly concentrated market. And our sales force would potentially be incrementally larger than other antimicrobial sales teams, but it would still be a very focused launch.I would think about it as a very specialist-driven launch focused on urology and ID that have practices with high second-line oral use or outpatient IV prescribing and high-resistance zip codes. Right now, the team is actively working on this go-to-market strategy. And we, simultaneous to this, are also working on business development discussions. Because of our broader prescriber base, it does broaden our reach for potential future collaborations.

And Ritu, thanks for the second question on the go-to-market strategy for the trial strategy for NTM. So big picture, we're taking a stepwise approach to 720 development. And the goals of this upcoming Phase II study are severalfold. One, as we headed out of Phase I, we were excited to have a safe and well-tolerated medicine in normal healthy volunteers. The intent of the Phase II 28-day study is, number one, to show the safety, PK and tolerability in NTM patients.And secondly is to assess 720 as a single agent for early microbiological response. And that would be, a win for the Phase II study would be showing that 720 can drive an early microbiological response while being safe and well tolerated with PK relative to placebo. I think the standard of care in general serves, as you know, patients inconsistently. And really the win for the Phase II study is showing that 720 on its own can drive a microbiological response. We know that patients that respond, microbiologically respond early, number one. Number two is when there isn't a tolerability confounding variable, we know that these patients feel better as we drive an early microbiological response. So those are the goals of the study.

And microbiological response, you're talking about like agar plate culture conversion. Or is there a different measure that we should be thinking about?

So, and we'll go into more granularity as the year goes on, but we will be looking at different measures of microbiological burden. Again, it's a 28-day study. So we'll be looking at the directional change relative to placebo. So the serial culture conversion that we look at for, in historical studies may not be as relevant, but we're looking for a change in that bacterial burden over time.

So some sort of range of culture-forming units as you look, as you try to assess the amount of bacteria in the lung?

That's right. The fundamental thing we're looking for is can 720, at the doses that we believe to be safe and well tolerated, drive a change in the microbiological burden in NTM patients, which is the critical thing that needs to be done to drive better outcomes for patients.

Is it fair to say that subsequent trials would then be combination therapy trials further exploring that?

So we'll continue to be more granular about how we think about the development pathway going forward as we get the minutes back from the FDA meeting. In general, we would expect that combination therapy would be a next step. But again, it's really critical that we show that 720 can drive an outcome on its own. There really hasn't been agents that have been able to show that consistently, and that would be a big win for 720.

The next question comes from Louise Chen with Cantor.

First question I had for you is, how will reimbursement for tebipenem be different from other antibiotics? And then do you have any thoughts on pricing just yet? If not, maybe just qualitative, if you could speak to how you're thinking about it from a value proposition perspective. And then the market opportunity for SPR720 in NTM. Can you elaborate a little bit more on that? What's on the market currently to treat NTM? And where will you fit into the treatment paradigm?

You're welcome, Louise, and nice to hear from you. For the first question, it's a very short answer. Tebipenem is reimbursed outside of the hospital, either by commercial retail payers or by Medicare Part D, and that's a very important distinction from many antibiotics that we've looked at historically and an important reason why we see such a broad market opportunity. As it relates to our thoughts on downstream pricing, I will hand that question off to Cristina. And then for your final question, as it relates to the standard of treatment for NTM, I will hand that question to David. So perhaps, Cristina, you can start with our views on the total addressable market and how price fits into that.

Yes. I think as we had mentioned, Louise, that it's about a 2 million to 3 million patient population that we're looking to treat. If you think about the total urinary tract infection market in total, there is somewhere between 11 million to 12 million patients that have UTIs in the United States in total. So we're looking to target still the largest UTI market in the United States. From a pricing perspective, to get back to your question, we've not yet finalized our pricing research as of yet. So I can't definitively give you an answer on the number, and it will certainly be something that we will give you a more definitive answer moving forward. But I think if you look at past launches in the antimicrobial space in the retail sector, there have been somewhere in a range that might give you an idea of somewhere between a $350 price all the way up to somewhere around $500. That gives you an idea.

This is David Melnick. In terms of the current standard of care for the treatment of nontuberculous mycobacterial infections, it consists of prolonged combination therapy generally greater than a year, with generally a 3- or a 4-drug combination that includes a macrolide, rifamycin and frequently with ethambutol or an aminoglycoside. Because the therapy is complicated and poorly tolerated and because the response rate is not very good with the current standard of care, intervention is generally limited to patients who have relatively advanced disease, and these patients frequently have fixed lung injury, so that it's hard in the setting of that tissue injury to demonstrate substantial clinical benefit. The plan for NTM, for SPR720 is to devise a regimen approach that will be better tolerated and, therefore, suitable for earlier intervention in nonrefractory patients who don't have advanced tissue injure.

The next question comes from Stephen Willey with Stifel.

And congrats on completing enrollment in ADAPT. Just -- and I'm sorry if I missed this, but can you maybe just talk about kind of the trigger that upsized the trial, I guess, from around 1,200 to 1,370. I know that, that was indicated, I think, in the prepared comments that there was some assessment of the response and evaluability rate at the 70% enrollment point. So I guess, can you speak to what you needed to see at that point in time in order to not enroll or to not upsize the trial? And then I guess, just given some of the COVID concerns here over the course of the past few months, can you maybe just kind of speak a little bit to your confidence in patient follow-up here throughout the the latter part of the trial, specifically your ability to capture data points in these patients at follow-up?

Steve, it's good to hear from you. I'll take the second question first. As we have reiterated on our guidance on data delivery, we've taken into account the logistics necessary to fully clean and complete the data set. And I think much as we noted about enrollment, the really good news is that we've made considerable progress on that already pre-COVID, and we're very confident going into our third quarter '20 guidance on the data question post-COVID. On the second question on trial sizing, I will hand that to David. And David, if you could answer Steve's question, please.

You bet. The change in the total enrollment into the trial was based on a preplanned assessment of the evaluability rate for the primary analysis population, which is the microbiological ITT. This was performed as defined in the protocol at the 70% enrollment rate. And the purpose, and we routinely to do this, is to ensure that we have an adequate number of patients in that primary analysis population to maintain the full statistical power of the study at 90%. And based on that analysis, we decided to top up the study with some additional enrollment to ensure that, that was the case.

And then I guess as we look at 206, it's a little bit, I guess, kind of disconnected from your -- I guess, the overarching theme with respect to defining an avenue to reimburse these drugs outside of the hospital, et cetera, et cetera. We know that funding is in place there. There's obviously Everest Medicines on the partnership side. But I guess, how far have you continue to push 206 as kind of a Spero-funded program? Or is this just something that you continue to look at until funding dries up? Or would just be kind of curious as to what your thoughts are.

Yes. Thanks for the question, Steve. We really like the profile of 206. It's -- what our team has been able to do is develop a medicine that has a therapeutic index but also a broad spectrum that you just don't see in patient. You note the prioritization of the program, and we're very fortunate that both with the National Institutes of Health, Department of Defense and Everest Medicines that we're able to advance 206 beyond Phase I into its next clinical studies. I think our general philosophy on 206 has always been to work with partners around the world to continue to advance that medicine just because it's the right thing to do for patients. And I'll note that we have a very strong track record across the pipeline of continuing to collaborate on our entire pipeline, whether that's BARDA with tebipenem or it's the Gates Foundation with 720 as we advance further into the clinic. So I'd be -- I continue to guide that we'd have that strategy going forward and continue to work with a variety of partners, both private and public around the world to advance 206.

And maybe just lastly, kind of bigger picture. Obviously, just given COVID, there's a lot of focus here on just pandemic preparedness. Just kind of wondering how you're now thinking about whether or not COVID, in the context of that concern, is a tailwind or a headwind for the antibiotic space, in the sense that you now have a lot of these agencies, which have historically funded antibiotic development all really now seem to kind of have their eyes squarely focused on pandemic. Do you see that as being maybe a little bit disruptive to antibiotic funding over the course of the next couple of years? Or do you think that, that kind of continues as planned?

Yes. Thanks, Steve, for the question. At 100,000 feet, you see major tailwinds as it relates to the response for COVID-19, and there's a couple of layers to that. The first layer is very directly with our particular pipeline. As we noted earlier in our remarks, now more than ever, we are looking for ways to treat ill patients outside of the hospital whenever possible. Prior to COVID, there was financial toxicity as well as the risk of nosocomial infections when a patient was admitted and they did not need to be. I think the presence of COVID in our hospitals has only amplified that. And we hear from clinicians every day about the necessity of having powerful medicine where you can treat a patient outside of the hospital. That's number one.And then as we get to a macro perspective, I will note a couple of things. Number one is that in the setting of COVID specifically, secondary infections are an important and dangerous aspect that COVID patients have to deal with. I think secondly is that it is forcing our society globally to take a look comprehensively at the investments that we need to make to prevent the next future pandemic because we all know that future pandemics would come, and they may not be coronavirus next time.And so what we've seen is a comprehensive evaluation of the investments needed as a society to be able to be better prepared for the next pandemic. And in fact, the COVID crisis has accelerated those types of discussions. Legislation such as Pasture and DISARM are things that have become further amplified.And so I would expect a couple of things. Number one is that treating patients outside of the hospital will continue to be more important than ever. And number two is we're taking a broader macro look at the importance of good infectious disease infrastructure, and policymakers are following suit. So it's a very important time for us to be part of that.

The next question comes from Kevin DeGeeter with Oppenheimer.

My first question is on 720. In the Phase I healthy volunteers dose escalation work, it seems you have a therapeutic window of somewhere between 500 megs and 1,000. Should we think about the IIa as likely including two dose levels, a high and a low dose? Or do you think it would be informative to look at more than two doses sort of within that dose range?

Kevin, thanks for the question, and good to hear from you. We will continue to be more granular about the specifics of that broader Phase II design as we go in a future public forum. I think for our precedent, we're very confident about the path forward around the broad parameters that we've communicated previously. And as we get further regulatory written guidance, we'll continue to be more definitive. For now, I would say that the way that we've communicated the treatment dose is the way that we currently plan, and we'll continue to refine that in the future public forum.

Sure. No, absolutely, fair enough. And there has been some work done in, for other indications, oncology and a few others, we've seen a survey work that seems to suggest a shift in prescribing habits related to COVID-19 from IV to appropriate oral alternatives. If one thinks about the infectious disease landscape, are you familiar with any data sets that that may capture more quantitatively what we are hearing anecdotally in terms of a preference for oral therapies, recognizing that cUTI may not be the right population to think about to capture that kind of data.

Yes. So Kevin, thanks for the question. The good news is even pre-COVID, there's some pretty stark quantitative justification for why it makes sense to treat a cUTI patient in the hospital, and I'd guide the listeners of this call to our investor presentation where we quantify the financial toxicity associated with admission when one isn't required. It just makes financial sense to do so, COVID or no COVID.In terms of the quantitative ability to review what COVID is doing for inpatient admissions, that literature is starting to emerge. One example that we know of is outside of cUTI, and that is correspondence in the New England Journal about the behavior of Italian physicians in terms of treating their patients with acute coronary syndrome. So we are seeing, emerging in the medical literature, that conditions that really have historically been treated in the hospital not being treated there because of the barriers that COVID places on both capacity as well as the risk benefit. And we'll see that data continue to emerge as well.

The next question comes from Esther Hong with Janney.

So on tebipenem HBr, assuming there's positive data, what steps remain before filing the NDA? What type of review period do you anticipate? And if there's a short review period, could we expect a launch next year? And then separately, I wanted to ask about a study listed on clinicaltrials.gov to assess the effect of omeprazole on tebipenem HBr and specifically the reasons behind that study.

Thank you, Esther. So for the first question, I'll note that an NDA package consists of several important components. There are, there is the Phase III pivotal study there are the CMC data and documentation, and then there were ancillary studies, as you note. And with all of that in mind, we continue to reiterate our guidance around a first quarter '21 NDA filing, consistent with our capital runway. We are, we do have Fast Track designation, and we haven't commented publicly about the pathway to launch beyond there. But with those 2 pieces in mind, there's sort of a thought process behind that. As it relates to the specifics of the second question, I'll hand it to David to answer that question about the omeprazole.

Yes. Specifically, we want to ensure that changes in gastric pH will not change the absorption of tebipenem HBr from the gut. The drug is extremely well absorbed, as we've mentioned before, 60% oral bioavailability. And there has been a prior study looking at the impact of gastric pH that was done by our Japanese partner, Meiji Seika, it did not show a major effect. But we want to confirm that, that is the case so that we can have appropriate labeling. We don't think that there'll be an interaction, but we need to confirm it.

Can I just ask what that data was by Meiji?

Yes. It was a drug-drug interaction study that looked at individual administration of a tebipenem pivoxil and oral administration in conjunction with antacids. And that study showed only a very minor change in the PK of absorption, absorbed compound with coadministration. We are looking now at the protein pump antagonists -- or proton pump antagonists.

The next question is from Ram Selvaraju with H.C. Wainwright.

Firstly, on the commercial front, I was just wondering if you could perhaps elaborate on the profile of the ideal sales rep that you would want on the tebipenem detail and if you have a sense of whether it would be most appropriate to go with a sales force that kind of uniformly has prior anti-infective promotional experience and if there are specific antibiotic drugs that you would, in particular, be looking for them to have had prior experience with that you feel would position them most optimally to do a solid job detailing tebipenem as and when it gets approved.

Thanks, Ram, for the question. I'm going to hand that question over to Cristina.

Ram, thanks for the question. So I think it goes back to where we're looking to see where tebipenem is going to be primarily prescribed. And I think that will be both in the community and as a drug that will be utilized to get patients home and out of the hospital. So we'll have a place both in getting patients to go home and stay home. And so the ideal representative, while certainly a prior antimicrobial experience is certainly, I think, a benefit, I also think that there is some experience that we could gain from having someone who's had prior experience in urology offices, which is going to be a primary target for us, and having some prior experience and relationships in those offices, which is where we're going to have a very important place for prescribing our drug. So is there a prior experience of a product that I would point you to? Not yet, but I think it's a really great question. And we'll certainly give you guys more insights into that profile of sales representative as we proceed towards launch.

Great. And then on 720, I was just wondering if you could provide us with some perspectives on what may lie ahead beyond the Phase IIa, assuming the Phase IIa is positive. For example, if you come out of the Phase IIa with a very clear answer to the question of what the optimal dose is, would you be able to move into something that looks like a pivotal study? And if that's the case, would you be able to potentially get to the finish line with a single such study? Or would you need to run 2 of them? Just trying to get a sense of what the clinical development path is going to look like for 720 after the Phase Iia.

Thanks, Ron, for the question. They are important questions. And I would just note that we will be more granular about our thoughts on that as we get the complete written documentation from our discussions with regulators and get closer to the beginning of our Phase II study.

Okay. And then lastly, on 206, I just wanted to get additional clarity on whether you expect the bronchoalveolar lavage Phase I trial as well as the renal impairment study to kind of wrap up the Phase I stage of development for this agent or if you think there's going to be any additional work that would be needed before you move into sort of more direct assessment of its efficacy profile.

Yes. Ram, thanks for the question there as well. It's our expectation that those 2 trials are the ones necessary as precursors for patient studies.

[Operator Instructions] The next question comes from Jason Gerberry with Bank of America. Please go ahead.

This is Chi on for Jason. Just a couple of quick follow-up from me on the tebipenem Phase III study. Might be helpful if you could remind the audience whether these trial subjects are getting treated in the inpatient and outpatient setting. And I guess a follow-up on the COVID response, have you seen any -- have you run into any missing or delays in data capture yet?

Yes. Chi, thanks for the question. And specifically, for efficiency and for operational considerations, patients are dosed with tebipenem HBr in our study as inpatients, and then they are discharged and then returned back for their follow-up visits. And on your second question in terms of data and COVID-19, we have been fortunate on a couple of fronts, firstly, that a lot of that data capture and collection is behind us and that, secondly, across a 95-center trial, as COVID has gone on, we've been able to work with sites that continue to be open for business in specific jurisdictions. And so we're very comfortable as we incorporate all of that into our guidance in terms of what we'll be able to deliver in the third quarter.

The next question is from Ritu Baral with Cowen. Please go ahead.

Just a couple of housekeeping questions on ADAPT-PO. What is the noninferiority margin for the powering?

So we had a pre-Phase III meeting with the FDA where we agreed on a 10% in our margin.

10%. Got it. And how has compliance been with, I guess, with the treatment just because it is a TID dosing?

So, in the context of the trial, compliance is excellent because these patients are inpatients and they were observed as they take their medicine. I think to the broader question for acute medications, there's quite a bit of literature of that a 3 times-a-day administration compliance is actually quite good as things go to chronic where there's differences between, for example, three times a day and twice a day.

Got it. And can you -- back to 720 for a second, can you remind us what the -- preclinically, what the dose-limiting tox there was and what the most common tolerability effects seen -- what the most common tolerability effects were seen in the Phase I healthy volunteer study?

Ritu, thanks so much for the question. I'll hand that to David to answer.

Yes. For -- preclinical toxicology studies were done in nonhuman primate and in rat. Nonhuman primate, it was GI tolerability issues. And in the rat, dosing went to -- in the highest dose in the 31-day GLP study, there was some evidence of very high doses of renal toxicity and hepatic effect.

Got it. And then in the patients in the Phase I?

In Phase I, the drug was quite well tolerated. Again, the side effects for all are mild, a few moderate intensity, no severe or serious adverse events, and it was GI.

GI again. And GI, is that like nausea or vomiting or diarrhea? And can you talk about the grades at all?

In the single dose, it was predominantly nausea and vomiting. In multiple doses above 1,000 milligrams, it is episodic diarrhea.

And grades, sorry, like mild, moderate, severe.

I'm sorry -- say again, please?

The grades, mild, moderate or severe for the nausea and vomiting?

They were mild, occasional moderate, no severe.

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

Thank you, operator. We're excited by the progress we've made by the potential that our pipeline has to meet significant unmet patient needs. These needs are more pressing than ever in this new normal. And I invite everybody to join us at our next webcast presentation where we'll elaborate further in a public forum, and that is the Bank of America Conference on May 13th at 1:00 p.m. And thanks so much again for your thoughtful questions, and please contact us for any follow-ups.

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