Spero Therapeutics, Inc. Q3 FY2021 Earnings Call

Good afternoon, and welcome to the Spero Therapeutics Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the company’s formal remarks, we will open the call up 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 this time, I'd like to turn the call over to Ted Jenkins, Vice President, Head of Investor Relations at Spero Therapeutics. Mr. Jenkins, 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 pipeline update for the third quarter of 2021. Our press release is available on the Investors 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, including statements about the potential approval of tebipenem HBr by the FDA; the timing of the launch of tebipenem HBr, future commercialization, the potential number of patients who could be treated by tebipenem HBr, and market demand for tebipenem HBr generally; also, 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. Further, the plans for the company's ongoing development of SPR720; statements about the future development and commercialization of SPR206, and the potential receipt of milestone payments as well as royalties on potential future sales of SPR206; the design initiation timing, progress and results of the company's pre-clinical studies and clinical trials and its research and development programs; management's assessment of the results of such pre-clinical studies and 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; the sufficiency of its cash resources and the availability of additional non-dilutive funding from governmental agencies, beyond any initial funded awards. Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in Spero Therapeutics' filings with the SEC, included in the Risk Factors section of our quarterly report on Form 10-Q 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 are Dr. Ankit Mahadevia, Chief Executive Officer; Dr. David Melnick, Chief Medical Officer; Cristina Larkin, Chief Operating Officer; and Sath Shukla, our Chief Financial Officer. With that, I'd like to turn the call over to Dr. Ankit Mahadevia. Please go ahead, Ankit.

Thank you, Ted, and thanks to all for joining us today to discuss our third quarter financial results and our corporate highlights. Spero's primary focus remains on preparing for an anticipated tebipenem HBr commercial launch in the second half of 2022. I'm pleased to say that over the past months we've achieved key milestones to advance our efforts towards this important goal. Chief among these milestones was our recent submission of an NDA package, seeking approval for tebipenem HBr tablets for the treatment of complicated urinary tract infections, including pyelonephritis caused by susceptible microorganisms. A key part of this NDA package is the positive data set from our Phase III ADAPT-PO clinical trial. These data showed that the ADAPT-PO met its primary endpoint by demonstrating that an all-oral regimen of tebipenem HBr was non-inferior to an all-IV regimen of ertapenem for the treatment of complicated urinary tract infection or cUTI and acute pyelonephritis or AP. Previous FDA interactions and written communications support our efforts to advance tebipenem HBr towards commercialization. They indicate that the positive results from single well-controlled pivotal trials such as ADAPT-PO could be sufficient to support the approval of an NDA for tebipenem HBr in the treatment of cUTI, including pyelonephritis. Further, through a pre-NDA meeting, the FDA also previously endorsed the structure in the form of our recent NDA submission. The agency indicated that the data set and CMC plan that are now included in the package meet FDA submission standards. Given our submission date of October 27, we anticipate that if the FDA's initial two-month review during this filing period is successful, the formal NDA review clock will start at the end of the year with a PDUFA date six months from that point, or in mid-2022. In addition to supporting our NDA submission, another key goal of the ADAPT-PO trial was to provide physicians with the confidence needed to prescribe oral tebipenem HBr to cUTI patients who would otherwise receive IV therapy. We therefore designed ADAPT-PO as the first-ever head-to-head comparison of an all-oral versus an all-IV regimen in cUTI. Thanks to this rigorous design, we believe we have achieved our goal as data show that tebipenem HBr can provide the convenience of an oral therapy without making compromises on clinical response, safety, or tolerability. If approved, tebipenem HBr would become the only oral carbapenem available for cUTI patients. It has the potential to deliver value to patients, healthcare providers, and payers. This value includes avoidance of IV therapy, reduction or elimination of hospital stays, and better healthcare resource utilization overall. We are encouraged by the response to date to the potential of tebipenem HBr. Our clinician colleagues have been supportive of the value proposition and payers have expressed their willingness to cover tebipenem HBr. This bodes well for the over two million cUTI patients who could benefit from an oral carbapenem therapeutic. In preparation for the commercial launch, we recently made some key hires that have added important experience and depth to our leadership team. These hires include the addition of Jimmy Brady as our Chief Human Resources Officer. Jimmy most recently worked in the same position at UniQure and he has over 30 years of Senior Human Resources Leadership experience within the life science space. He's been deeply involved in guiding companies through their transition to commercial organizations, and we believe his expertise will serve us well as we continue to build our team in preparation for an anticipated tebipenem launch in the second half of next year. In addition to Jimmy, we further strengthened our leadership team by adding David Musselman as Senior Vice President Sales and Market Access. We believe David's talent and expertise will be invaluable to our commercial prospects. He's worked in the pharmaceutical and biotech space for over 23 years and has extensive experience in urology and in launching drugs. He most recently served as Vice President of Specialty Sales at EuroVan, where he was responsible for building and executing their first product launch. David also spent 13 years at Astellas, where he was the area Vice President responsible for leading a team of 275 sales professionals. We're thrilled to have him on board, and we believe he is well positioned for success in this new role. Along with these additions to our leadership team, we also appointed Kathleen Tregoning to our Board of Directors. Kathleen is currently the Chief Corporate Affairs Officer at Cerevel Therapeutics and previously worked in senior capacities at Sanofi and Biogen, as well as being a professional staff member for multiple committees in the United States Congress. She has extensive executive and public policy experience, as well as a deep understanding of external engagement strategies in the global payer environment. I'd like to now provide some updates on the SPR720 clinical program. As a reminder, SPR720 advanced into a Phase IIa clinical trial in patients with nontubercular microbacterial disease or NTM at the end of last year. The initiation of this trial was supported by positive data from Phase I single and multiple ascending dose trials, as well as nonclinical toxicology studies in nonhuman primates and rodents. Within these studies, multiple subjects in LD volunteers were dosed, and no severe or serious adverse events were ever observed. As the Phase IIa trial was being conducted, however, we were also simultaneously engaged in an additional longer-term toxicology study in nonhuman primates. Surprisingly and in contrast to the positive Phase I SAD/MAD human experience, unexplained nonhuman mortalities occurred. This led us to pause the Phase IIa clinical trial and promptly notify the FDA of these findings. We then subsequently received a clinical hold letter in which the FDA requested additional information from the nonhuman primate study, including the study report. We completed the nonhuman primate toxicology study in the third quarter and have finalized the study report. In line with previous guidance, we initiated engagement with the FDA on the data in the fourth quarter. As we've discussed, the SPR720 data that we've seen to date supports the hypothesis that the observed mortalities were not drug-related, but rather study species-specific. This gives us confidence that there is a path forward for the SPR720 clinical program. That said, the FDA's view of the data will be an important driver of our actions. We will complete and review our interactions with the FDA on the data this quarter and provide an update on the program thereafter. I would now like to briefly highlight our non-dilutive revenue interest financing agreement executed during the quarter with Healthcare Royalty Partners worth up to $125 million. This agreement preserves our financial flexibility and further derisks tebipenem HBr's anticipated launch by providing $50 million upfront, $50 million upon approval of tebipenem HBr in cUTI, and $25 million upon completion of a pre-specified commercial set of milestones and mutual agreement with Healthcare Royalty Partners. Additionally, we believe this agreement provides an important external validation for our commercial prospects and development pipeline, given Healthcare Royalty Partners' extensive due diligence process and successful track record. In exchange for their investment, Healthcare Royalty Partners will receive a tiered royalty on applicable revenue generated by Spero. This royalty will begin in the low double-digits and decrease to the low single-digits upon completion of certain annual revenue thresholds and phase out completely once the aggregate amount paid to Healthcare Royalty Partners is 2.5 times the total investment amount funded. We believe these are favorable transaction terms that will preserve our financial flexibility and upside as we move towards tebipenem HBr's anticipated launch and work to advance SPR720 and SPR206 through clinical development. Lastly, before I hand it off to David, I'd like to recognize the hard work of our employees, our partners, and our investigators, which allowed us to have a successful quarter amidst the ever-evolving circumstances of the COVID-19 pandemic. Thanks to their efforts, we have not seen any material impact from the pandemic this year. What the pandemic has done, however, is highlight the value of replacing IV therapies that are often administered in a hospital setting with an at-home oral option. We believe that tebipenem HBr, if approved, could provide such an option and enable a shift in care to the outpatient setting. This would provide value to patients, healthcare providers, and payers alike as it would reduce patient exposure to COVID-19 and other secondary infections. Hospitals will also see a financial benefit and free up capacity for seriously ill patients with no viable alternatives to hospitalization. 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 my pleasure to share pipeline updates with you today. I'd like to start by first thanking all those who made the recent tebipenem HBr NDA filing possible with strong emphasis on the patients who participated in our clinical trials. This is a landmark achievement for Spero, and we look forward to working closely with the FDA throughout the review process. Alongside our regulatory efforts, we also continue to work with external partners to ramp up our CMC capabilities ahead of tebipenem's expected launch in the second half of 2022. These partners notably include Meiji Seika, whose experienced manufacturing and oral granular formulation of tebipenem over the last decade will be invaluable as we move forward toward commercialization. We are also continuing our work to educate the clinical community on the utility of tebipenem HBr and the potential benefits it could provide to healthcare providers, payers, and patients. A peer-reviewed manuscript reporting the ADAPT-PO trial results has been provisionally accepted, and we expect publication in the first quarter of 2022. Spero also attended IDWeek at the IDWeek conference in late September with 23 poster presentations, showcasing in-vitro and in-vivo studies of tebipenem HBr and highlighting additional research on the epidemiology and management of complicated urinary tract infections. Beyond cUTI, ADAPT-PO data have also generated strong external interest from the medical community on the use of tebipenem HBr to treat other infections. For example, tebipenem HBr is being evaluated in the MARINA-4 trial, which is being conducted by the antibacterial resistance leadership group and sponsored by the National Institute of Allergy and Infectious Diseases. As a reminder, this trial is designed to compare early transition to oral tebipenem with continued intravenous carbapenem therapy in patients with bloodstream infections caused by ESBL-positive bacteria. We anticipate that patients will start dosing in this study during 2022. We have also successfully completed the BARDA-funded Phase 1 bronchoalveolar lavage trial, assessing the lung penetration of tebipenem HBr, and we anticipate presenting these data at an upcoming medical meeting. These studies are part of a broader umbrella of building partnerships with our clinical colleagues. As part of this, our Medical Affairs team has interacted with over 500 infectious diseases physicians and urologists to date. Shifting gears, I will now speak briefly on SPR720, our oral drug candidate in development for the treatment of NTM infections. Since Ankit already spoke about the events that led to the program's clinical hold, I'll just emphasize a few additional points now, rather than repeating what you just went over. First, the observed mortalities in the nonhuman primate study that led to the hold did not correlate with either the dose or with the duration of SPR720 drug exposure. Further, adult nonhuman primates are known to be very challenging to dose, which adds a level of complexity to the analysis. Finally, the findings from this nonhuman primate study are contrary to what we have seen in prior pre-clinical and clinical studies of SPR720. While we aren't going to disclose the specific findings from the nonhuman primate study until the FDA has given us their written feedback on the data, I will once again emphasize that based on all of the results we have seen to date, we remain confident that there is a path forward for the SPR720 clinical program. These data continue to support the hypothesis that the observed mortalities were not related to an off-target pharmacologic effect, but rather were specific either to the oral dosage method. I'll again reiterate a point I've made several times in the past, which is that our previously announced decision to discreet fully during the hold was not indicative of our opinion regarding the ultimate success of the SPR720 program. Rather, it was a strategic decision to cut costs from the trial while it's on hold and that may facilitate potential future adjustments to the Phase 2 clinical trial design. Looking ahead, we recently completed the full study report as requested by the FDA. Once our FDA interactions and our internal review are complete, we will provide the market with an update on the SPR720 program. I'll now move on to discuss SPR206, our intravenously administered next-generation polymyxin product candidate. SPR206 is designed to act directly on the gram-negative bacterial infections through its interactions with the bacterial outer membrane. SPR206 has demonstrated potent broad spectrum activity against gram-negative bacteria including extensively drug-resistant variants. Through SPR206's clinical development, we hope to provide patients suffering from serious drug-resistant infections such as drug-resistant Acinetobacter, drug-resistant pseudomonas, and carbapenemase-producing enterobacteriaceae with a safer alternative compared to the current standard of care. Today, patients with these infections are prescribed a drug combination that generally includes a carbapenem or beta-lactamase inhibitor antibiotics along with polymyxin B or colistin, despite these older polymyxins being associated with considerable nephrotoxicity in many patients. In contrast, data from our Phase 1 trial of SPR206 show a lack of nephrotoxicity at or above the predicted therapeutic dose. This clearly differentiates SPR206 compared to colistin and other polymyxin antibiotics and supports the hypothesis that SPR206 could replace colistin in the currently prescribed regimens and provide an alternative option for patients with significantly reduced risk of kidney injury. This would address a crucial unmet need as the CDC's antibiotic resistance threats report estimates 8,500 drug-resistant acinetobacter cases and 32,600 drug-resistant pseudomonas infections in the United States each year. Looking ahead, we continue to advance SPR206's clinical development with the support of several highly regarded partners including Pfizer, Everest Medicines, the Department of Defense, and the National Institute of Allergy and Infectious Diseases. We have completed dosing in our Phase I bronchoalveolar lavage clinical study, which assesses the penetration of SPR206 into the pulmonary compartment and which remains on track for release data in early 2022. Given that many of our target patients for SPR206 suffer from lung infections, we believe that these data could represent a key inflection point for this program. In parallel, our ongoing Phase I renal impairment study of SPR206 is also progressing as planned. Data from this study, which will guide dosing in the many patients with multi-drug-resistant infections that have reduced kidney function are also expected 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 the launch of tebipenem HBr.

Thank you, David and good afternoon, everyone. As we move closer to tebipenem HBr's potential commercialization, we continue to focus on being launch-ready, including building out our launch team. As Ankit mentioned, we recently hired David Musselman as SVP of Sales and Market Access. David has experience in building field-facing teams, has been through multiple launches, and has extensive experience in the urology space. Now David and the other commercial leaders are focused on three pillars that will ensure launch readiness: our field force deployment, our market access strategy and execution, and our branded and unbranded HCP marketing campaign. In fact, we've already deployed our disease awareness campaign, which is our first initiative in our digital-first plan. This includes an unbranded website, which is cutievolution.com. Now the site is an important tool to educate healthcare providers on the burden of cUTI and the resistance trends to currently available oral treatment options for cUTI. As we look ahead, we continue to prepare for a specialty-driven launch focused on urologists and infectious disease physicians. This strategy will allow us to capture a significant portion of the approximately 2 million cUTI patients in the US that we believe are appropriate for treatment with tebipenem HBr if approved. There is a substantial opportunity in both the community and the hospital discharge market to convey a clear and compelling story about tebipenem's potential clinical and economic benefits. In the community setting, tebipenem could potentially keep patients who have failed previous oral antibiotics or who are resistant to current oral cUTI therapy out of the hospital. In the hospital discharge setting, tebipenem could give healthcare providers the ability to discharge cUTI patients sooner, highlighting the clinical and economic advantages of switching to oral therapy. The impact of cUTI in either setting can have a meaningful impact for both the patient and their family. This was highlighted recently when it was disclosed that former President Bill Clinton was hospitalized for a complication associated with a urinary tract infection. President Clinton's experience highlights the example of the millions of patients impacted by cUTI annually and the important role antibiotics can play in helping patients get back home and back to their families. This has become especially important in a COVID-19 environment, where avoiding the hospital or getting home sooner from the hospital is a priority for everyone, especially the patients. This is why we continue to be so excited about tebipenem HBr's potential to keep patients out of the hospital or get them home sooner, and it has a tremendous opportunity to deliver value to all of our relevant stakeholders, including healthcare providers, payers, and most importantly, our patients. We believe we are poised for an exciting time ahead and look forward to continuing our efforts to plan for tebipenem's much-anticipated potential approval and commercial launch. With that, I'll turn the call over to Sath, who'll provide you with a financial update.

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 September 30, 2021. Total revenues for the third quarter of 2021 were $3.1 million, compared with revenues of $4 million in the third quarter of 2020. The revenue decrease was primarily due to a decrease in qualified expenses incurred under the BARDA contract for tebipenem HBr, partially offset by an increase in funding under our DoD agreement relating to SPR206. Research and development expenses for the third quarter of 2021 were $14.4 million, compared to $17.7 million for the same period in 2020. This year-over-year decrease was primarily due to the completion of significant activities in the Phase 3 clinical trial for tebipenem HBr and decreased spending associated with the clinical hold on the Phase 2a clinical trial for SPR720, offset partially by increased clinical study costs for SPR206 and an increase in personnel costs associated with additional research and development headcount. As we have stated earlier in the year, we expect our full-year R&D expenses in 2021 to be consistent relative to 2020. I will note that we expect fourth quarter R&D expenses to be more like our first quarter, as opposed to the lower spend in Q2 and Q3, as we ramp up CMC activities and implement our medical affairs strategy to support a potential launch of tebipenem HBr in 2022. General and administrative expenses for the third quarter of 2021 of $11.2 million were higher than the $5.3 million reported for the same period in 2020, primarily due to an increase in headcount in our commercial and general and administrative functions, as well as an increase in professional and consulting fees to support potential commercialization of tebipenem HBr. Consistent with prior quarters this year, we expect G&A expenses to continue to increase in the fourth quarter 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 third quarter ended September 30, 2021 of $22.5 million, or $0.70 per common share, compared to a net loss of $18.9 million, or $0.86 per common share reported for the same period in 2020. As of September 30, 2021, we had cash, cash equivalents, and marketable securities of $123.4 million. Based on current projections, Spero believes that this existing cash, cash equivalent, and marketable securities, together with committed funding from its BARDA contract and other non-dilutive funding commitments, will be sufficient to fund its operating expenses and capital expenditure requirements into the fourth quarter of 2022. This forecast does not include either the $50 million in upfront proceeds from the HealthCare Royalty Partners revenue interest financing agreement nor the additional $50 million milestone payment for potential approval of tebipenem HBr in 2022. These additional measures of liquidity, if approval for tebipenem is achieved in 2022, should provide Spero with sufficient funding into the second half of 2022. 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 up for questions.

Thank you. We'll now take our first question from Ritu Baral of Cowen. Your line is open. Please go ahead.

Good afternoon guys. Thanks for taking the question. I have two important ones and then I'll hop back in the queue. One can you give us a little more detail on the CMC inspection status of the Japanese plant that will be the primary source of commercial material? Is that currently GMP-certified and recently expected, or do you anticipate some flexibility surrounding inspections just given the pandemic? And then I have a question on current resistance rates. Go ahead. I'll ask it later.

Yes. Great. Thanks for the question. Hi Ritu.

Hi.

Yes. So we have been building the CMC supply chain with our partner Meiji Seika for several years. As a reminder, Meiji Seika has been producing tebipenem HBr for its own uses for commercial sale for nearly a decade. So we have a lot of confidence in the standards at which that plant has developed. As we think about the impact of the pandemic and the FDA put out a publication earlier this year noting that a small minority of applications were impacted by inspection-related delays during the heart of the pandemic. They then followed up with a publication talking about their ability to use data requests, video review, and other methods to complement their ability to have in-person inspections, which we do know they have resumed overseas as well. So we have a lot of confidence in Meiji. They've been manufacturing to a high standard for many years, and we believe that as the pandemic has transitioned, the FDA has also used all available tools to navigate the inspection work ahead of them.

Can you discuss the current resistance rates? Have they been impacted by pandemic restrictions or hospital policies? Has the pandemic had a positive or negative effect on those rates?

Thanks for the question. The resistance rates to fluoroquinolones is something we've tracked for some years both using external sources like JMI, but also our own surveillance efforts through a program called Steward. We've noticed that those resistance rates have continued to increase year-over-year and that's continued unabated relative to the pandemic. So, the same fundamentals where we've seen a lot of fluoroquinolone usage currently in years past leading to resistance continues, and the pandemic has made the case that we should be treating more patients outside of the hospital. It hasn't impacted the fundamental microbiological problem causing all of this, and that continues to increase.

Great. Thanks so much. I'll hop back in the queue.

Thank you. We'll now take our next question from Louise. Your line is open, please go ahead.

Hi, thanks for taking my questions here. So, first question I have for you is how are you thinking about manufacturing for tebipenem here? Can you give us the latest update? And how much product will you have at launch? And then in terms of the market opportunity for SPR206, can you elaborate more on that? And what you think the peak sales potential could be for that product? Thank you.

Louise, I think we're having some technical difficulties. Do you mind restating the question?

Yes, sure. Okay. So, my questions for you were first of all, can you give us an update on the manufacturing for tebipenem and how much product you're going to have at launch? And then what is the market opportunity for the SPR206 product? And how should we think about peak sales potential here?

Yes. Thanks for the question. Can you hear me now?

Yes.

Great. Okay. So the manufacturing, as we had mentioned, we have been working with Meiji Seika, our partner, since we began developing tebipenem. Meiji Seika has been manufacturing tebipenem for commercial sale for nearly a decade. In partnership with them, we have our supply chain set up with them, and we're confident in their abilities moving forward and their ability to manufacture tebipenem to continue manufacturing tebipenem at a high scale. In terms of how much product we'll have on hand, it's our intention to have sufficient product in excess of what we're considering for our launch trajectory. As we get closer to launch, we'll provide further detail about what those expectations are. In terms of the market opportunity for 206, we are excited about the program, and I'll pass it over to Cristina to comment further about the potential we see in the program.

Thanks, Ankit. We've not really guided to what those peak year sales numbers look like, but I think as David highlighted, what you see is an important contribution to these highly resistant strains that we see in the hospital setting for Acinetobacter, Pseudomonas, and even carbapenem-resistant Enterobacteriaceae. As you look across that spectrum of what the CDC reports as well as looking at data from hospital-related infections, you'll see that this is a quite broad opportunity. It's important to put into perspective that we see resistance in the hospital continues to grow. We see it as a great opportunity. However, we've not guided to peak year or sales numbers for SPR206 as of yet.

Thank you. We'll now take our next question from Ram of H.C. Wainwright. Your line is open. Please go ahead.

Thank you so much for taking my questions. Firstly, on the commercial front with tebipenem, can you give us some additional color on how you're seeing the overall market access picture evolving in the context of the potential launch? And, in particular, if you've seen any notable evolution in your thinking in the overall environment that you anticipate from the perspective of gross to net? Thank you.

Thanks Ram for the question. Christina, I'll hand that to you to cover for Ram.

Great. Thanks Ram for the question. We've actually done quite a bit of market access work to date, speaking both on the payer side and also through some fairly extensive market research. A couple of important findings is that we're getting a really great reception on behalf of our payers. They do see the value in preventing a hospitalization; for many terms those patients currently in hospitals are often being sent to post-acute care centers or home infusion. All of these are costly for the payer, and they see the value in tebipenem. We've guided that we think we will get broad coverage around the compound. We've received very positive feedback so far from our payers due to that value story and the trial we conducted against IV therapy. I think the second part is you asked about gross to net. We've not guided on this yet. What I would say is that as you look at payer mix in general, we see it being about 50-50 split between government and commercial pay. That's the best I could guide you right now on gross to net.

No that's helpful. Also, as an adjunct to that, I was wondering if you can provide us with any additional information regarding the commercialization of tebipenem in Japan by Meiji Seika. And if that has any new read-through for you folks as you look towards the potential launch in the U.S.?

Yeah Ram, thanks for the question. Just as a reminder, tebipenem is marketed in Japan for pediatric respiratory infections. It's a decision they've made based on the resistance environment that exists in Japan today and the existence of another cUTI medication in their portfolio. So for those reasons, over the years, tebipenem has become an important part of Meiji’s portfolio. We don't see much read-through to the adult cUTI market in the U.S., given the different indications they're targeting.

Okay. And then lastly with respect to SPR720. I was just wondering if you now have kind of an updated timeline when you anticipate the drug might return to active clinical development and if you could just walk us through what the gating items might be there?

Yes. Ram, thanks for that question as well. As we mentioned on the call, the first step was to complete the tox study, which we did in the third quarter. The second step, which we're in the middle of now, involves engaging the FDA, submitting, and discussing the data while receiving written comments. After that, we can apply their feedback to determine our future protocol. We're in the middle of all that right now, and as we progress, we'll have an update for you. After that, we will share more specifics about the timing of when we might be able to get back online.

We'll now take our next question from Esther of Berenberg. Your line is open. Please go ahead.

Hi, thanks for taking my questions. Congratulations on the submission of the NDA. Just wanted to ask about SPR206 and the BAL study. I wanted to get your expectations and additional details on what those results might mean for next steps. Thanks.

Yes. Thanks for the question on 206, Esther. We're excited about that SPR720 and tebipenem. The important part of the BAL study is that it helps us understand how 206 gets into lung tissue, which is important since many patients we're trying to help with 206 have lung infections. The ability to show that 206 can penetrate the lungs in the right concentration is an important inflection point for 206. We'll be looking at lung penetration and how this might impact patient outcomes.

We'll move on to our next question from Bret at BTIG. Your line is open. Please go ahead.

Thank you for your question. I appreciate it. You are clearly focused on tebipenem for complicated UTI. However, as you consider other potential uses beyond complicated UTI, could you provide an idea of the timeline for evaluating those possibilities? Thank you.

Yes. Thanks so much for the question. We note the utility of tebipenem outside of cUTI. For example, we went head-to-head against ertapenem, and there are many uses for ertapenem outside of cUTI. We are taking a step-wise approach to exploring that. We completed dosing of our bronchoalveolar study, which is the first step in seeing what tebipenem can do to help patients with lung infections. Another example is looking at tebipenem's potential in bloodstream infections, through our work with ARLG. We're taking a step-wise approach to other indications. For instance, we'll explore tebipenem's effect on skin and soft tissue penetration as a precursor to its utility in mixed wound infections, like diabetic foot infections. Additionally, we've been looking at potential for tebipenem in prostatitis, examining its penetration into prostate tissues as the first step. Putting this all together, we're taking the first steps in exploring tebipenem's potential in relevant infections, then prioritizing these together with our clinician colleagues for future indication-based studies.

Thank you. We'll now take our next question again from Ritu of Cowen. Your line is open. Please go ahead.

You guys mentioned a few of the additional Phase IIb studies that you're conducting and presenting at medical meetings. Maybe you could give us more color on whether these are Spero-sponsored or investigator-sponsored tebipenem studies? Do you think some of these might be most useful for the commercial effort? And when might we see them? Thank you.

Yes, Ritu, thanks for the question. I think it's a great opportunity to build off of the prior question. We believe all of those use cases—such as lung infections for tebipenem as shared through the BAL study, wound infections examined through skin and soft tissue PK studies, and prostate infections brought to light by our urologists—are commercially relevant applications where there are patients to assist outside of tebipenem. Another significant application is bacteremia, which will be explored by our colleagues and partners at ARLG. In terms of timing, David mentioned the first bolus of data regarding the BAL study. Our intention with these studies is to utilize upcoming medical meetings—whether ID or urology meetings—to showcase our data, and as these studies are completed, we will communicate their completion and share findings during appropriate medical gatherings.

Got it. Thanks for taking the follow-up.

It appears there are no further questions at this time. I'm handing it back over to you for any additional or closing remarks. Thank you.

Thank you, operator, and I appreciate everyone's time for joining us today. It's been a very productive quarter, and we look forward to the continued advancement of our pipeline. We'll keep everyone updated along the way. Thanks very much.

Thank you, ladies and gentlemen. This concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.