Spero Therapeutics, Inc. (SPRO) Q1 2021 Earnings Report, Transcript and Summary

Greetings and welcome to Spero Therapeutics First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Ashley Robinson of Investor Relations.

Thanks Joe and thank you all for participating in today's conference call. Earlier today, Spero Therapeutics released financial results and provided a pipeline update for the first quarter of 2020. If you have not yet seen the press release, it is available on the Investors' page of the Spero Therapeutics' website. Before we begin, I would like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements based on our current expectations including statements about the initiation, timing, and submission to the FDA of an NDA for tebipenem HBr and the potential approval of tebipenem HBr by the FDA; future commercialization, the potential number of patients who could be treated by tebipenem HBr, and the market demand for tebipenem HBr generally; expected broad access across payer channels for tebipenem HBr; the expected pricing of tebipenem HBr, and the anticipated shift in treating patients from intravenous to oral administration; the plans for the company's ongoing development of SPR720; the design, initiation, timing, progress, and results of the company's preclinical studies in clinical trials and its research and development programs; management's assessment of the results of such preclinical studies and the clinical trials; the impact of the COVID-19 pandemic on the company's business and operations; and 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 the filings that the company filed with the SEC including the risk factors section of our quarterly report on Form 10-Q which was filed 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 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 Sath Shukla, Chief Financial Officer. With that, I'd like to turn the call over to Dr. Ankit Mahadevia. Please go ahead.

Thank you, Ashley and thanks to all listening for joining us to discuss our first quarter financial results and our corporate highlights. As we continue to progress through 2021, a major focus for Spero is the advancement of tebipenem HBr towards an NDA filing and the execution of our corporate strategy as we work to transition to a commercial organization. These efforts are supported by the positive Phase 3 ADAPT-PO trial results which we reported late last year. These results showed that the trial's primary endpoint was met with demonstrating that an all-oral regimen of tebipenem HBr is not inferior to an all-IV regimen of ertapenem for the treatment of complicated urinary tract infection or cUTI and acute pyelonephritis or AP. Our previous FDA interactions and written communication indicated that positive results from the single well-controlled pivotal trials such as ADAPT-PO could be sufficient to support the approval of a New Drug Application or NDA for tebipenem HBr in the treatment of cUTI and AP. Today, I'm pleased to report that we recently completed a pre-NDA meeting with the agency and received feedback that was consistent with all of these prior interactions. The FDA has endorsed the structure and form of our planned NDA submission and indicated that the clinical data set and CMC plan that we intend to submit in the NDA package to meet their standards. This positive regulatory interaction, together with the fact that all of the data we need for submission is in our hands, keep us on track to complete the tebipenem HBr NDA submission in the second half of the year as we previously guided. Now, in addition to supporting NDA filing, another important goal of the ADAPT-PO trial was to answer the fundamental question that physicians and payers have regarding an oral version of a powerful IV medicine. And this question is if patients are going to receive oral therapy in place of an IV option, how does the safety and efficacy of the oral agent compare to the IV? We addressed this question by designing ADAPT-PO as the first head-to-head comparison of all-oral versus an all-IV regimen in cUTI. Specifically, we did not include an IV lead in the oral tebipenem HBr arm nor an oral step-down in the IV ertapenem arm as we wanted to provide physicians with direct evidence that we give them the confidence needed to prescribe tebipenem HBr to the millions of cUTI and AP patients who would otherwise receive IV therapy. As we have mentioned before, we believe we have done just now as our data show that tebipenem HBr can provide convenience of an oral therapy without any compromises on clinical response, safety, or tolerability. And based on these compelling data, we believe tebipenem HBr if approved, would be an important treatment option for the over 2 million cUTI and AP patients in the US alone each year who are resistant to current available oral therapies. I should also point out that a potential approval would make tebipenem the only oral carbapenem approved for the treatment of cUTI and AP and we provide patients who currently have no other options outside of IV therapies with a convenient alternative that could prevent and shorten unnecessary hospitalizations. Moving on, I would now like to provide some updates on the SPR720 clinical program. As we discussed, on our last call SPR720 advanced into a Phase 2a clinical trial in patients with non-tuberculous microbacterial disease or NTM at the end of last year. The initiation of this trial was supported by positive data from Phase 1 single and multiple ascending doses as well -- those trials as well as nonclinical toxicology studies in nonhuman primates in rats. Alongside the Phase 2a clinical trial, we were also conducting additional long-term toxicology studies of rats and adult nonhuman primates. In the non-human primate trial, we observed unexplained mortalities which led us to pause the Phase 2a clinical trial while we conducted further analyses. We then promptly notified the FDA of our decision to pause the trial and subsequently received notice of clinical holding request by the agency for a study report from the non-human primate study. I'm pleased to say that since our last earnings call, we have completed the nonhuman primate study, while we are currently analyzing the data and expect to submit the study report to the FDA in the third quarter. While we intend to wait until the FDA has had a chance to review the data and provide us with feedback before we share specific findings from our analyses, what I can say now is that the data we have seen to date supports the hypothesis that the observed mortalities were dosing are species specific rather than drug-related and we'll continue our analysis to finalize that determination. Based on this, we remain confident about SPR720 and we will continue to engage the FDA on the path forward for the SPR720 clinical program. Before handing off the call to David to provide some more detailed updates on our pipeline, I would like to acknowledge the talent and dedication of the Spero team and our partners, which allowed us to successfully execute on our strategy to manage our business amidst the ongoing COVID-19 pandemic. We continue to benefit from the investments in information technology we made early on that enable a fully remote workforce, and notably have not seen any material impacts from the pandemic on our business thus far in 2021. We've been successful in connecting with physicians digitally through our medical affairs efforts, and we've been successful in hiring new talent to help lead a potential launch for tebipenem HBr. Looking forward, we will continue to monitor for potential COVID-related impacts on our business, and we'll work diligently as we have to stay ahead of them. Though COVID-19 hasn't materially impacted our business this year, it has had an impact on how physicians deliver medicines to their patients. Over the past 13-plus months, the importance of treating patients in the community setting has been strongly emphasized, which in turn is accelerating the trend of both physicians and patients, seeking to prevent hospital admissions if possible. Unfortunately, the increasing prevalence of resistance to existing oral therapies for cUTI currently leaves millions of patients with no choice but to be treated with IV therapy often within the hospital. Our conversations with physicians have indicated that if an effective oral option were available for these patients, they would prefer to treat these patients outside of the hospital. This would reduce patient exposure to COVID-19 and other secondary infections, offer a financial benefit to the hospital, entry of capacity for ill patients with no viable alternatives to hospitalization. If approved, we believe tebipenem HBr could offer physicians with such an option. This in turn would address a critical unmet need that has been exacerbated by the pandemic by enabling a shift to the outpatient setting. The pandemic has also highlighted the need for a more comprehensive approach of developed medicines to address current and future infectious threats. We're thrilled that the biotech community is joined with policymakers and government agencies along with major pharmaceutical companies as we develop innovative solutions to the current and the future threats we face. We remain active in these collaborative efforts as shown by our previously discussed partnerships with several agencies, including BARDA, the US Department of Defense and DTRA as well as our relationships with corporate partners and private foundations. Additionally, we recently entered into a new partnership with the National Institute of Allergy and Infectious Diseases or NIAID, which we will discuss further in a few minutes as it relates to supporting our ambitious plans to generate additional data on the utility of tebipenem. With that, I will now hand it over to David to provide a more detailed update on our clinical progress and our pipeline.

Thank you, Ankit. It's a great pleasure to share our pipeline updates today. I'll begin with our lead candidate tebipenem HBr, an oral tebipenem, that's advancing towards an NDA filing that is expected in the second half of the year. This NDA will be supported by the positive Phase 3 data from the ADAPT-PO trial. The trial met its primary endpoint by demonstrating that oral tebipenem HBr is non-inferior to IV ertapenem in the treatment of patients with complicated urinary tract infections including acute pyelonephritis. To provide a brief recap of these data, we saw overall combined clinical and microbiologic response rates of 58.8% for oral tebipenem and 61.6% for IV ertapenem, which met the pre-specified non-inferiority margin of 12.5%. Together with other ADAPT-PO data, these results show that both clinical cure and microbiological eradication rates were comparable between the oral and IV treatment groups at the end of treatment, the test of cure and at late follow-up visits. Importantly, ADAPT-PO also demonstrated that oral tebipenem HBr has a safety and tolerability profile that is comparable to that of IV ertapenem. The type and frequency of adverse events observed were balanced across groups with treatment-emergent adverse events reported in 26% of patients in both arms. The most common treatment-emergent adverse events diarrhea and headache occurred with similar frequency in both groups. With respect to Clostridium difficile infection, no cases were observed in the oral tebipenem HBr arm while three cases were observed in the intravenous ertapenem arm. And fortunately, no deaths were reported across the study. In addition to this robust Phase 3 data set, we now have in hand all of the data from the supporting Phase 1 studies that will be incorporated in the NDA. As discussed by Ankit, we recently completed a pre-NDA meeting with FDA and receive feedback indicating that the format and content of the planned data package that we intend to include in the NDA will be sufficient to support the submission. This keeps us on track to submit the NDA in the second half of this year. In parallel with our efforts regarding the NDA, we also continue to work with our partners to ramp up our CMC capabilities ahead of tebipenem's expected launch in 2022. I should remind everyone that one of these partners is Meiji Seika, who's experienced manufacturing a granular formulation of tebipenem over the past decade will be invaluable as we move forward towards commercialization. I would like to take a moment to talk about what we believe the ADAPT-PO data will mean from a physician's perspective. I'll start by talking specifically about the treatment of complicated UTI. But I'd like to also briefly mention the strong external interest of key opinion leaders for the use of tebipenem HBr to treat other infections providing potential opportunities to explore new indications. With respect to complicated UTI, treatment options have become increasingly limited by antibiotic resistance as well as the safety concerns around the existing oral antibiotics including fluoroquinolones. This often leads to hospitalization of patients for intravenous antibiotic therapy. We specifically designed ADAPT-PO as a head-to-head comparison of an all-oral and all-IV antibiotic regimen to provide physicians with the robust data that would give them the confidence to replace hospital IV therapies with oral tebipenem HBr. We believe that we've accomplished this goal as we have shown that tebipenem HBr can provide the convenience of an oral therapy without making compromises in terms of clinical response safety or tolerability. From a broader perspective, we are excited to report that as we have executed on our medical affairs strategy, we have seen strong external interest in the clinical utility of tebipenem HBr as an alternative to intravenous antibiotic therapy for infections other than UTI. One example is a study design to compare early transition to oral tebipenem HBr versus continued intravenous carbapenem therapy in patients with blood stream infections caused by ESBL-producing bacteria. This trial entitled MERINO-4 is being sponsored by the National Institute of Allergy and Infectious Diseases and the trial is being conducted by the Antibiotic Resistance Leadership Group [ph] or ARLG. The decision of ARLG and NIAID to sponsor and deliver this innovative study provides important external validation for tebipenem HBr's potential to address a critical unmet need and get patients suffering from a variety of infections home from the hospital sooner. In addition, the Phase I bronchoalveolar lavage trial assessing the lung penetration of tebipenem HBr that we started in December has now completed dosing and data analysis is in progress. This important study is funded by BARDA and will set the stage for subsequent BARDA funded studies to evaluate the efficacy of orally administered tebipenem HBr for pneumonic indications. The study has a strong clinical rationale as the granular formulation of tebipenem is approved in Japan for several indications including the treatment of children with pneumonia. Looking forward, we plan on continuing to educate the clinical community on the benefits of tebipenem HBr through publication of a peer-reviewed manuscript reporting the ADAPT-PO trial results in detail. Additionally, we plan to have a presence at four infectious diseases and urology conferences this year, where we will present additional ADAPT-PO data as well as in-vitro surveillance data assessing the activity of tebipenem HBr against the prevalent gram-negative pathogens. Moving on I'd like to provide an update on SPR720, our oral drug candidate in development for the treatment of NTM infections. Earlier this quarter, we announced that the FDA had issued a clinical hold on the Phase IIa dose-ranging trial of SPR720 in NTM pulmonary disease patients. This came after we had notified the agency of our decision to pause this trial as a precautionary measure based on unexplained mortalities observed in a parallel ongoing toxicology study in adult nonhuman primates. In its clinical hold letter, the FDA requested additional information from the non-human primate study including the complete study report. Before moving on to discuss the developments we've seen in this program since our last call, I'd like to reiterate a few key points. First, the observed mortalities did not correlate with either the dose or the duration of SPR720 drug exposure. Further, adult non-human primates are well known to be very challenging to dose, which adds a level of complexity to the analysis. Finally, the findings of this nonhuman primate study are contrary to what we have seen in prior preclinical and clinical studies of SPR720. These prior studies include a single and multiple ascending dose Phase I clinical study, evaluating the safety, tolerability and pharmacokinetics of orally administered SPR720 in healthy adult volunteers. All participants completed the trial and no serious adverse events were reported. Furthermore, we did not observe any remarkable findings in a series of non-clinical GLP toxicology and safety pharmacology studies of SPR720 including IND-enabling 28- and 31-day GLP studies both in non-human primates and rats. In addition, an ongoing form of toxicology study of SPR720 in rats is currently ongoing and without untoward events. Since our last call in March, we have completed the non-human primate study in which we observed the unexplained mortalities. We're currently analyzing these data and preparing the study report. But we do not plan to share specific findings until the FDA has had a chance to review the results and provide feedback. Any determination as to the cause of the mortality including whether it is related to the manner of drug administration via oral gavage, the species or age of the monkeys utilized for the study or if this is a pharmacological effect, we'll follow review of the complete data set from the study by both Spero and FDA. However, what I can say now, and in fact would like to emphasize for all of you listening now is that based on the data we have seen to date, we remain confident that there is a path forward for the SPR720 clinical program. Along these lines, I would like to stress again, that the decision we announced on our last call to discontinue the Phase IIa clinical trial was not – I repeat, not indicative of our opinion regarding the ultimate success of this program. As Ankit mentioned, the data thus far support the hypothesis that the observed mortalities were specific either to the oral gavage dosing method or the species of monkey rather than being related to an off-target pharmacologic effect. The decision to discontinue the trial was a strategic one. It allows us to avoid incurring costs from the trial, while it is on hold and make facilitate potential future adjustments to the Phase II clinical study design following review with the FDA. Looking ahead, we anticipate submitting the study report from the completed non-human primate study to the FDA in the third quarter of 2021. After the agency has had the opportunity to review the data and provide feedback, we will provide an update on SPR720 and our plans regarding its further clinical development. Switching gears now to talk about SPR206, our next-generation IV polymixin agent, that was developed as part of our Potentiator Platform. SPR206 is clearly differentiated compared to the currently available polymixin antibiotics due to its lack of nephrotoxicity at or above the predictive therapeutic dose. This was demonstrated by the Phase I healthy volunteer data that we announced last year. These data showed that the drug was well tolerated at a dose of 300 milligrams daily for 14 consecutive days with no clinically significant changes in laboratory tests, renal function or severe or serious adverse events reported. We believe that SPR206 has the potential to address critical unmet medical needs as it has potent activity against extensively drug-resistant bacterial strains including pseudomonas aeruginosa, Acinetobacter baumannii and carbapenemase-producing Enterobacteriales, all of which are on the WHO priority pathogen list. Looking ahead, we continue to advance SPR206 development with the support of our partners at the Department of Defense and Everest Medicines. In the second quarter of the year, we expect to initiate a Phase I bronchoalveolar lavage clinical trial, assessing the penetration of SPR206 into the pulmonary compartment as well as a renal impairment study. The BAL study and renal impairment study are both important to SPR206, as they will guide usage of the medicine in our target patient population infected with MDR bacterial pathogens. As many of these patients suffer from lung infections, the BAL study will demonstrate the extent to which 206 penetrates lung tissue following dosing. The renal impairment study will guide dosing in the many patients with MDR infections that have reduced kidney function. We expect to report data from the bronchoalveolar lavage and renal impairment studies by early 2022. With that, I will now turn the call over to our Chief Operating Officer, Cristina Larkin, who will provide you with a review of the market opportunity for our pipeline products and detail our strategy for a potential launch of tebipenem HBr. Cristina?

Thank you, David, and good afternoon everyone. Our commercial market access and medical affairs teams have been working hard to prepare for our anticipated launch. And we feel that we are well positioned for success based on the large market opportunity, our focused commercialization strategy and the clinical and economic benefits that tebipenem HBr can provide to both patients and payers for cUTI and acute pyelonephritis. We believe that tebipenem HBr addresses the largest opportunity in the antibiotic market today. In fact, there are approximately two million patients in the US that we believe that are excellent targets for tebipenem HBr if it's approved. Now, our strategy is focused on the community setting and the hospital discharge setting. The community effort initially will focus on urology to keep patients out of the hospital, who have failed previous oral antibiotic therapy or that are resistant to current oral therapy for cUTI. And in the hospital discharge market, our focus will be to help patients get out of the hospital sooner by giving health care providers the ability to discharge patients with cUTI an oral option that has demonstrated noninferiority to the IV ertapenem. Now this value story of potentially avoiding a hospitalization or reducing a hospital stay has resonated with our health care providers and payers in our conversations today. Now, in regards to our strategy to reach these patients, we believe that a specially driven launch focused on urologists and IDs will allow us to capture a significant portion of this very large addressable market that I just discussed. Now the strategy is supported by research showing that this target patient population is typically seen by specialists and tends to be concentrated, allowing us to have a very focused launch. Now as part of this research to inform our commercial efforts, we have interacted more than 200 health care providers and payers, covering about 85% of the payer lives to better understand how tebipenem HBr will fit into the cUTI treatment paradigm. And the feedback that we've received based on these interactions has indicated that if tebipenem HBr is approved, that there's strong interest in these health care providers to use it in both the community and the hospital discharge setting. And payers, has indicated a strong willingness to cover tebipenem. And health care providers and payers indicate the potential for value-based pricing. Now, this is due in large part because of the strong Phase III data, showing that tebipenem HBr can deliver value to all of our relevant stakeholders including patients and health care providers and payers. Now looking forward, we plan to take a phased approach to building out our commercial team. We started with hiring key leadership almost two years ago in our marketing, market access and medical affairs to set our strategy. And over the last year, each of them have added individuals with deep expertise in launching new products in the antibiotics to further build out their organizations. And one group I want to highlight is our medical liaison team that David and Ankit both mentioned and this has been deployed for over a year and they've been out speaking to our key opinion leaders to help build out this early advocacy development. And lastly, our sales force. These will be the last to be deployed and we anticipate that we will wait until we are closer to our approval before we'll start filling out this part of the organization. Now we have a very exciting time ahead of us and we believe that we are well positioned for success. Now, with all of this, I'm going to turn the call over to Sath, who will provide you with a financial update. Sath?

Thank you, Cristina and good afternoon everyone. I'd now like to turn your attention to our overview of Spero's financial results for the quarter ended March 31, 2021. Total revenue for the first quarter of 2021 was $7.3 million, compared with revenues of $1.7 million in the first quarter of 2020. Total revenue for the first quarter of 2021 was higher than the same period in 2020, due to grant revenue received through the BARDA contract for tebipenem HBr. As a reminder, we currently have total committed nondilutive funding from BARDA of approximately $44 million, inclusive of $10 million in funding from the Defense Threat Reduction Agency or DTRA. We have accounted for $27.7 million of committed funding from BARDA as of the end of March 31 and beyond the current commitment there is a second option of $12.7 million that remains exercisable by BARDA. Research and development expenses for the first quarter of 2021, were $18.4 million, compared to $20.4 million of R&D expenses for the same period in 2020. This year-over-year decrease was primarily due to winding down of Phase III activities for tebipenem HBr, offset in part by investment to support the NDA filing for tebipenem HBr. We expect our R&D expenses in 2021 to be consistent relative to 2020. I will note that some of the research and development expenses we expect to incur in 2021, include costs related with the expected tebipenem HBr NDA submission and medical affairs strategy, as well as personnel-related spend to support the pipeline. General and administrative expenses for the first quarter of 2021 of $8.3 million were higher than the $4.1 million reported in the same period in 2020, primarily due to increased professional expenses and personnel costs to support the company's pre-commercial efforts. We expect G&A expenses to increase in 2021 relative to 2020, as we build commercial capabilities and the infrastructure to support the expansion ahead of a potential tebipenem HBr commercial launch in 2022. We reported a net loss for the first quarter ended March 31, 2021 of $19.4 million, or $0.66 per common share, compared to a net loss of $23.3 million or $1.22 per common share reported for the same period in 2020. As of March 31 2021, we had cash, cash equivalents and marketable securities of $115.7 million. We believe that our existing cash, cash equivalents and marketable securities together with our non-dilutive funding commitments will be sufficient to fund operations into the second quarter of 2022 including the submission of the NDA for tebipenem HBr. For further details on our financials, please refer to our 10-Q filed with the SEC today. We would now like to open the call for questions. Operator?

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Ritu Baral of Cowen. Please proceed.

Hi guys. Thanks for taking the question. Good afternoon First question, I guess in your pre-NDA meeting, did any either review issues or potential review issues arise? Other - were there any surprises I guess from your expectations going in or from your questions asked of the agency? And then I have a follow-up.

Yeah. Thanks Ritu for the question. Good to hear from you. In short Ritu, there were no surprises from the pre-NDA discussion. And I reiterate the most important takeaways, which is one on the basis of that meeting we're on track to submit the NDAs per our guidance in the second half of the year. And that the FDA endorsed the structure and form of our planned submission and also the data set and the CMC plan that we've communicated publicly before. So we're pleased with the outcome of that meeting.

Got it. And then I guess this is much more of an existential question. But has, I guess has COVID quarantines, social distancing norms et cetera, et cetera has that changed patterns of resistance in the community as far as you can tell such that it might impact your commercial strategy for tebipenem or have rates of fluoroquinolone resistance or other key resistance patterns pretty much stayed the same?

Yeah. Thanks for the forward-looking question Ritu. The short answer is, no the continued march of fluoroquinolone and extended spectrum beta-lactam resistance continues to pace. We continue to monitor this both -- monitor this both by reviewing public surveillance data as well as doing our own surveillance work under a study called STEWARD. And both of those point to the fact that we continue to have high and increasing levels of resistance to existing oral therapies. And I'd add on as well to keep in mind that the pandemic has accelerated the trend of identifying patients that are most appropriate to see outside of institutional care settings like hospitals and skilled nursing facilities. And so the pandemic has been an accelerant to the understanding that there's a need for good to oral options for these patients.

Got it. I'm going to squeeze one last question in there. Just a clarification, you had mentioned that there may be -- moving to 720 and clarification of the unexplained mortality in the nonhuman primate. You had mentioned that there could be dosing-specific issues along with potential species specific issues. By dosing, are you just particularly referring to the trauma that goes along with oral gavage? Is that like were you talking about dosing methodology rather than like dosing time or level?

Yeah Ritu that's consistent with what we've said in prior public discussions about this. The method of administration to these adult primates can be problematic.

Yeah, great. Thanks for taking all the questions. Appreciate it.

Thank you.

Thank you. Our next question is from Louise Chen of Cantor Fitzgerald. Please proceed.

Hi. Congratulations on all the progress this quarter, and thanks for taking my question. So my first question was, what do you think has driven an increasing interest by large pharma companies in anti-infectives and antifungals? We've seen some notable collaborations with large pharma and then recently saw Pfizer acquire Amplyx. So just curious on your thoughts there and what you're seeing on your side? Second question is how are you going to manage through the resource constraints around COVID that the FDA has experienced? Have you in your interactions with the FDA had any delays in your process forward with your NDA submission? And then last question I had is, how will you ensure that Spero will not face the same challenges that other antibiotic companies have faced in their launch? Thank you.

Thanks Louise. Thank you for the questions. We'll take them in order. So number one is as it relates to the large pharma partnering landscape. And yes we've observed the same trend as well that we're seeing large pharma starting to invest and invest heavily in innovative medicines in our field. There are two drivers of this. One is that the pandemic has been a broad societal reminder of the need for new options for infection. Secondly, several big pharmas have built a portfolio or building a portfolio around the traction they've gained around either COVID-19 therapeutics or vaccines. And finally for the right programs and we've built our pipeline, it makes -- business [ph] opportunities to both address an important value proposition clinically for patients, but also economically for differentiated medicines. And so we've noticed that interest. As it relates to your second question around resource constraints and the impact of the pandemic on FDA, we have not seen that within our collaborative discussions with the agency to date as we look ahead, the FDA continues to be extremely collaborative with us both in our direct interactions as well as recent guidance they've issued on what options they have to be able to continue to meet the needs of patients through the pandemic. I'd also note that they've also released data recently that notes for example that out of 13,500 requests for authorization that they have been reviewing over the past March 2020 to March 2021, 68 of those had some COVID related resource impact. And so, I think both covered by the collaborative relationship that we have, and the guidance of the agency as well as the kind of the focused magnitude of this particular issue. And finally, the fact that we have a leg up and a head start in that the medicine that we've been developing has been on the market in Japan for 10 years, gives us a lot of confidence about the path forward. Now to your third question about, why tebipenem is such a differentiated program in the marketplace. I'll hand that one to Cristina.

Yeah. I think, one of the most important things and we've talked about this in the beginning that. One, I think going to market is that you don't want to compete with generics. And I think you know the one key differentiating feature here is that, we're going after a market for where, we're not looking to compete with generic agents and where these patients are ultimately leading where they are either on the verge of hospitalization or are going to an IV therapy. And that's this opportunity to avoid a hospitalization which offers a clinical and economic advantage or to get patients out of the hospital where there's a strong economic and clinical reason to do that. And I do think that's a key value proposition that we're offering. That doesn't exist today. And I think that's one of the major advantages. I think the second is, is that, the reimbursement model for this antibiotic is going to be different than the other antibiotics that we've seen launch over the last decade, where the primary reimbursement model for a drug like tebi will be outside of the laws of the hospital, even that a hospital discharge patient that we just referenced, will be a patient for where the primary payer will be outside as well as of the hospital. So those are some of the key drivers, I think importantly, that we talk about that will be major differences in other launches that we've seen.

Thank you very much.

Thank you. Our next question is from Kevin DeGeeter of Oppenheimer. Please proceed.

Hey Great. Thanks for taking my questions, and yeah, congrats on all the progress. I guess, really, maybe two questions for me. On 720, I think David mentioned, that there's ongoing rat study. Can you just provide us some context as to when that is anticipated to wrap-up? And any context as to whether, FDA suggested that they would want to see some of that data while making a decision on, how to address the clinical hold around 720? And then, just as we think about, the financial guidance and specifically cash-burn, how should we think about, impact of potential tebipenem pre-launch inventory build, and another kind of pre-launch working capital. Is that sort of factored into 2021 sort of R&D spend, or should we think of any pre-launch inventory abilities being more of a 2022, spend item? Thanks.

Hi. Thanks Kevin. Thanks for the questions. On your first question about, what will need to have a substantive dialogue with the agency, I'll reiterate, what David mentioned which is that by the third quarter, we expect to have everything we need to have a substantive dialogue about the program with the agency. As it relates to your second question, I'll pass it to Sath, to talk about our financials.

Yeah. Thanks, Kevin for the question. Our expectation is most of the inventory build will start much like the larger part of commercial spend, in 2022. 2021 will be laying the groundwork in every facet from personnel to supply. But the majority of that spend will be deferred to a little later again.

Great. Thanks for taking my questions.

Thank you. Our next question is from Esther Hong of Berenberg. Please proceed.

Hi. Thanks for taking my questions and congratulations on everything. So on, SPR720 what would an alternate animal tox will look like? Would you use a different animal species of age or non -- I guess, what would it look like? And then, on -- just in general, on tebipenem HBr, the patent state. I know that you were recently granted a new patent. Can you remind us of the patent state for tebipenem? Thanks.

Thanks. Thanks, Esther for the questions. On your first question, I guess, it's not -- our objective is that, we'll have exactly what we need to have the substantive discussion with the agency by third quarter. We haven't said anything in our public remarks nor do we have an expectation, that we need any alternate studies, beyond the one that we've guided to publicly already. As it relates to your second question, I'll ask -- I'll hand it to Cristina to talk about our patent state.

Sure. So we -- as you recall, and its good memory, we were granted a patent on our crystalline salt form that was issued in January of this year. And that does take us out to 2038. You may recall as well, that we were granted QIDP and that gives us a guarantee of 10 years of exclusivity as well. So those are two areas of patent protection as well. We do also have a patent pending as well, around our formulation patent and that would actually carry us out to 2037. So that's an additional area of added protection for us as well, when issued. So hopefully that will give you some ideas around both, the regulatory protection. And then, also, I think the additional IP protection that carries us out to an extension of 2038, both, in what's been branded and what's pending.

Okay, great. Thanks.

Thank you. Our next question is from Ram Selvaraju of H.C. Wainwright. Please proceed.

Hi. Thanks very much for taking my questions. Just a couple of quick ones here. With respect to SPR206, I was wondering if you could just elaborate on -- once you have the next round of clinical data and conducting the clinical studies that are going to be yielding information in early 2022. If you can just kind of clarify what you expect to be the time frame between the release of those data sets and the initiation of the next round of clinical development, assuming of course that the agent advances to the next stage after these initial studies report out? Thank you.

Yes. Thanks, Ram, for the question. We are -- I'm glad you asked about 206. We continue to see an unmet need for patients that have multi-drug resistant infections. COVID also highlights the need for better antibiotics for patients that are ventilated. These patients get broad spectrum antibiotics. They often have resistance co-infections and we need better options for these ventilated patients, because they often die of bacterial infections as much as they die of what they brought come into the hospital in the first place. And just as a reminder those, Phase 1 studies are important, because they guide us on how to best -- how 206 can be best used to help those patients, in particular, the bronchoalveolar lavage study which will help us see how well 206 gets into lungs, which will be important for the ventilated patients who make up a lot of that patient population. In terms of what's next, what we can say is that, it will be a study in patients with infection to show what 206 can do. We have some data to collect, both from the renal study and the BAL study, which David mentioned, I think before we could be more definitive on the timing of a study start, because the Phase 1 studies will inform the design and the design will inform the timing.

Okay. And with 720, assuming that there isn't anything specific to linked to the drug in the non-human primate toxicology study report. First of all, do you have a sense of how long it might take the agency to review that study report, if they are going to be reviewing any other meaningful dataset, clinical or otherwise, in the context of assessing when it will be appropriate to lift or maintain the clinical hold on 720? And then lastly, assuming that the study report looks clean and that the FDA concurs that it is clean, what would in fact be the next logical clinical development step for 720? Would it be effectively restarting of another Phase 2a trial that follows exactly the same design as the original Phase 2a trial or something else? Thank you.

Yes, Ram, thanks for the question. As it relates to the time line of their response, they have a mandated note to give us a formal response to our interaction 30 days after we have that interaction. So we know that we'll know that at least. In terms of the overall time line of what it will take for their analysis and review and a decision on a restart of a study, that's something that we'll need to have the discussion with the agency as we send them the data. But we know that their history with us thus far has been a collaborative stance and timely responsiveness to our requests. And so, we would expect that that would continue. As it relates to the nature of the study, again, that's dependent on the discussion with FDA. When we kind of -- when David and I both noted that, based on the data to date, we see a specie-specific and dosing-specific explanation that's supported by the data. If the FDA does agree with that, I think that that would be supportive of the type of study that we have already discussed publicly to show what 720 can do as a single agent to drive down disease burden and NTM patients. But again I would caveat that we need to finalize our analysis, as well as have the discussion with the agency to finalize that, but we can certainly comment on what we've seen in the data to date.

Okay. And just one very quick one, regarding tebipenem. Can you give us a sense of when you anticipate being able to disclose the proposed U.S. trade name, where in the process that might occur, between finalizing the NDA submission and actual approval of the drug? Thank you.

That one, I'll hand to Cristina to address.

Sure. Thanks. So there's obviously a couple of different components that one is the trademark component and the other is the FDA acceptance of the name. And so I would tell you that we're in the works of all of that and we will publicly disclose some of that data to be disclosed later -- at a later date.

Thank you.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session and this will conclude today's conference. Thank you for your participation and have a great day.