Spero Therapeutics, Inc. (SPRO) Q4 2024 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Spero Therapeutics Fourth Quarter and Full Year 2024 Earnings 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. Please be advised that this call is being recorded, and a 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 Shai Biran, Senior Director, Investor Relations. Mr. Biran, please go ahead.

Thank you, operator, and thank you all for participating in today's conference call. This afternoon, Spero Therapeutics released financial results and provided a business update for the fourth quarter and full year 2024. The press release is available on the Investor page of the Spero Therapeutics website. Before we begin, I would like to remind you that some of the information presented on this conference call contains forward-looking statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our actual clinical programs, future results, progress, timing, performances or achievements to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties associated with our business and 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 its earnings report on Form 10-K for the year ended December 31, 2024, filed with the SEC today. Joining me on the call today are Esther Rajavelu, our Interim Chief Executive Officer and Chief Financial Officer; and Tim Keutzer, Spero's Chief Operating Officer. There will be a Q&A session following the prepared remarks. I will now turn the call over to Esther to begin.

Thank you, Shai. Good afternoon, everyone, and thank you for joining our full year 2024 earnings and business update call. Spero Therapeutics is a clinical stage biopharmaceutical company focused on identifying and developing novel treatments for rare diseases and multidrug-resistant bacterial infections with high unmet medical need. Our most advanced clinical stage product candidate, tebipenem HBr, is in a Phase 3 trial with the potential to be the first broad-spectrum oral carbapenem to treat adult patients with complicated urinary tract infections, including acute pyelonephritis. These are patients who have limited or no alternative treatment options and would otherwise likely be treated with an IV carbapenem. Spero is co-developing tebipenem HBr with our partner, GSK. Today, we announced that a prespecified interim analysis in the Phase 3 PIVOT-PO clinical trial is expected to be completed in the second quarter of 2025. Our top priority for this year is the continued advancement of the tebipenem program, which, if approved, has the potential to fundamentally change the treatment paradigm for complicated cUTI by offering patients and prescribers a convenient oral treatment option. Next, on to SPR720, our novel gyrase B inhibitor that was in a Phase IIa proof-of-concept study as an oral treatment for nontuberculous mycobacterial pulmonary disease or NTM-PD. The trial was randomized, double-blind, placebo-controlled and enrolled 25 treatment-naive or treatment-experienced patients with nonrefractory NTM pulmonary disease caused by mycobacterium avium complex or MAC infections. The primary endpoint of the study was change in bacterial load and sputum samples from baseline to the end of the 56-day treatment period. Key secondary endpoints included assessments of safety and tolerability, clinical response, PK and certain other measures. Enrollment concluded in July 2024. In October 2024, we completed a planned interim analysis, which included 16 patients who had completed dosing and post-dose follow-up visits. Results from the interim analysis showed that the study did not meet its primary endpoint. While there was some evidence of antimicrobial activity, the treated arm did not show sufficient separation from placebo. In addition, we saw potential dose-limiting safety signals, including 3 cases of reversible grade 3 hepatotoxicity in the high-dose cohort dosed at 1,000 milligrams once daily. We are completing assessment of the full data set of all 25 patients dosed in the trial and plan to determine next steps for the program once that is complete. Lastly, on our pipeline, following a thorough review and reprioritization, we made the decision to discontinue development of SPR206, an IV-administered next-gen polymyxin antibiotic that cleared an IND in 2024 for a Phase 2 trial in hospital-acquired and ventilator-associated bacterial pneumonia. To date, we have made good progress on the Phase 3 trial for our lead asset, tebipenem HBr, and we look forward to completing the prespecified interim analysis next quarter and with our partner, GSK, share an update on next steps for the program. As a reminder, following completion of the tebipenem HBr Phase 3 trial, GSK is expected to assume responsibility for regulatory and commercialization efforts. And if these are successfully pursued, Spero could qualify for about $400 million in contingent milestones, including $25 million when GSK submits an NDA and subsequent milestones based on commercialization and sales ramp. With that, I'll turn the call over to Tim.

Thank you, Esther. I'll begin with tebipenem HBr and the opportunity for this product to address the unmet need in complicated UTI. There are an estimated 3.4 million episodes of complicated UTIs reported annually in the U.S., and they are a leading cause of hospitalizations. Complicated infections, as a reminder, are those that occur in patients who have a structural or functional abnormality of the urinary tract or those requiring catheterization. There can also be comorbidities such as kidney stones or kidney infections. Complicated UTIs are also more likely to be caused by multidrug-resistant or MDR pathogens. If inadequately treated, these can recur frequently or progress to more severe conditions. The current standard of care for many MDR gram-negative infections, including complicated UTIs, is treatment with carbapenems. However, carbapenems are currently only available as intravenous formulations. So they require inpatient admission or outpatient IV therapy, and this adds to the complexity of treatment. The lack of an effective, well-tolerated oral alternative for MDR complicated UTIs means that patients are often subjected to prolonged IV antibiotic use. If approved, we believe tebipenem HBr has the potential to reduce length of hospitalization for patients who transition from intravenous to oral carbapenem therapy. The ongoing Phase 3 trial of PIVOT-PO designed to support regulatory approval is a global randomized, double-blind, double-dummy clinical trial comparing tebipenem HBr to IV imipenem-cilastatin in hospitalized adult patients with complicated UTIs, including acute pyelonephritis. Patients are being randomized 1:1 to receive either tebipenem at a dose of 600 milligrams orally every 6 hours or IV imipenem-cilastatin given as 500 milligrams every 6 hours for a total of 7 to 10 days. The primary efficacy endpoint is overall response, which is a composite of clinical cure and microbiological eradication. This is assessed at the test of cure visit. The primary analysis will assess non-inferiority in the microbiological intent-to-treat population using a 10% margin. Briefly on SPR720, our decision to spend the oral development program in NTM pulmonary disease followed a preplanned interim analysis based on 16 patients in the Phase IIa proof-of-concept trial. We are now in the process of completing analysis of the remaining data from all 25 patients that were dosed in the trial and plan to determine next steps for this program thereafter. I'll now turn the call back to Esther to review the financials.

Thank you, Tim. I'll now walk you through our fourth quarter and full year financials. As of December 31, 2024, Spero had cash and cash equivalents of $52.9 million. We estimate that our existing cash and cash equivalents, together with the remaining $47.5 million in earned and noncontingent development milestone from GSK will be sufficient to fund our operating expenses and capital expenditures into Q2 2026. Total revenue for the fourth quarter of 2024 was $15 million compared with total revenue of $73.5 million for the fourth quarter of 2023. Total revenue for the year ended December 31, 2024, was $48 million compared to $103.8 million for the year ended December 31, 2023. The revenue decrease compared with the prior year period was primarily due to a decrease in collaboration revenue from our agreements with GSK and Pfizer. R&D expenses for the fourth quarter of 2024 were $28.8 million compared to $16.6 million for the same period in 2023. R&D expenses for the year ended December 31, 2024, were $97 million compared to $51.4 million for the year ended December 31, 2023. The increase in R&D expenses year-over-year was primarily due to increased clinical trial activity related to the Phase 3 PIVOT-PO trial for tebipenem HBr. G&A expenses for the fourth quarter of 2024 were $7.1 million compared to $6.4 million for the same period in 2023. This year-over-year increase was primarily due to increased consulting and professional fees in the last quarter of the year. G&A expenses for the year ended December 31, 2024, were $23.7 million compared to $25.6 million for the year ended December 31, 2023, with lower full year '24 expenses primarily due to decreases in personnel-related costs. The company reported a net loss of $20.7 million for the fourth quarter and net loss of $68.4 million for the year ended December 31, 2024. Diluted net loss per share was $0.38 and $1.27 for these periods, respectively. We reported a net income of $51.2 million for the fourth quarter of 2023 and net income of $22.8 million for the year ended December 31, 2023, respectively. Net income per share was $0.96 and $0.43 for these periods, respectively. For further details on our financials, please refer to our 10-K filed with the SEC today. With that, we will now open the call for questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question comes from Gavin Clarke-Gartner with Evercore ISI. Please go ahead.

Hey, thanks for taking the questions. I had a few on the tebipenem interim analysis. Maybe first, does the trial get unblinded if the interim is successful?

If the interim is successful, yes, the interim process is going to be managed by an independent data monitoring committee. And if their recommendation is that we stop the trial or stop enrollment, the management team will be unblinded at that time.

Got it. So if it does get unblinded early, I guess what I'm wondering is, even if the trial is positive early on, on the ITT population, is there any reason to keep running the trial longer in order to narrow some of the error bars for some of the subgroup analyses, like specifically in the ESBL positive population?

Yeah. We can't speculate on that at the moment, given we're blinded and just preparing for the interim analysis. So we'll hopefully be able to respond to that once we've gotten the recommendation from the IDMC.

Got it. What's the alpha spend on the interim?

We'll be spending a small amount of alpha for the prespecified IA. But since this is a prespecified interim, we've accounted for that alpha spend in determining the overall sample size for the study.

Got it. And just my last quick question. Any comments you can make on the bar for success for the interim and when in the trial, it's actually conducted?

So basically, I mean, there are three scenarios that are likely, right? So either the trial meets the primary endpoint with this prespecified interim, which is the 10% non-inferiority margin, and we stop the trial or it fail or we stop the trial for futility or lastly, we continue enrolling.

Got it. That's helpful. Thanks.

[Operator Instructions] The next question comes from Ritu Baral with TD Cowen. Please go ahead.

Hi, guys. Thanks for taking my question. This is Athena Chin on for Ritu Baral. I have a question on 720. As you see it now, what are the potential paths forward for 720? And when can we expect an update? Thank you.

Sure. Hey there. The first step is to complete the data analysis of the full 25 patients dosed in the trial. Once we have the full picture on the data, we'll be in a better position to decide on the best path forward for the program, which may include a reformulation strategy. We have determined that an oral path for NTM-PD is unlikely given the dose-limiting grade 3 tox at the 1,000 mg dose, even though they were reversible once the drug was stopped. So step number one, complete the data analysis on the full 25 patients and then determine next steps.

Understood. Thank you.

This concludes the question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.

Thank you. We have a very excited setup for the year-end, and we're looking forward to completing the interim analysis and providing you an update in the second quarter. Thank you for listening.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.