Spero Therapeutics, Inc. Q4 FY2021 Earnings Call

Good afternoon, and welcome to the Spero Therapeutics Fourth Quarter and Year-End 2021 Financial Results Conference Call. 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 Ted Jenkins, Vice President, 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 fourth quarter and full year 2021. Our press release is available on the Investor page of the Spero Therapeutics website. Before we begin, I'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements based on our current expectations, including statements about the potential approval of tebipenem HBr by the FDA and the timing thereof. The timing of the launch of tebipenem HBr, future commercialization, the potential number of patients that 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. 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 preclinical studies, clinical trials, and its research development programs. Management's assessment of the results of such preclinical studies and clinical trials. The impact of the COVID-19 pandemic on the company's business and operations, 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 initially 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, including in the Risk Factors section of our annual report on Form 10-K 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 Sat 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 fourth quarter and full year 2021 financial results and corporate updates. Starting with our first lead product candidate, tebipenem HBr. We received a notice from the FDA stating that as part of its ongoing review of our NDA, it has identified efficiencies that preclude the discussion of labeling and post-marketing commitments at this time. This notice is clear that it does not reflect a final decision on the FDA's ongoing review. We note that this comes at the midpoint of the scheduled 6-month review period, which was the planned date to initiate discussions on proposed labeling and, if necessary, any post-marketing requirements and/or commitment requests. There are three months remaining before the application's PDUFA date of June 27. We continue to have an active dialogue with the FDA, and we will continue to collaborate with them on the best path forward for tebipenem as quickly as we can. If this can be done to the FDA's satisfaction, we believe there would be sufficient time to progress labeling and post-marketing commitment discussions within the existing PDUFA time frame, given how early in the review period those discussions were originally scheduled to occur. We expect a late cycle review meeting to occur in the coming weeks, where we will have the opportunity for these continued discussions. Please note that there isn't additional detail regarding the review of the NDA that we can share beyond what we've disclosed today. We seek to understand any issues in greater depth and also since discussions with the FDA are ongoing. Given the timing of our ongoing discussions with the FDA, we will provide an update on or before our next earnings call, and we look forward to doing that as soon as we're able. As a reminder, the NDA package is seeking approval for tebipenem HBr oral tablets for the treatment of complicated urinary tract infections, including pyelonephritis caused by certain microorganisms in adult patients who have limited oral treatment options. We were pleased that the FDA decided to grant this NDA a priority review designation. Upon NDA acceptance, we were initially informed that the FDA may hold an advisory committee as part of the review. As part of our ongoing discussions, the FDA has indicated that an important advisory committee meeting is not needed. Tebipenem, if approved, has the potential to address a significant unmet need, alleviate infections, and help appropriate cUTI patients avoid hospitalizations or transition home faster after IV therapy. We continue to believe in the strength of our application. The foundation of that is our previously announced data from the Phase 3 ADAPT-PO trial. These data showed the trial meeting its primary endpoint as specified in the protocol by demonstrating that oral tebipenem HBr was statistically non-inferior to intravenous tebipenem in the treatment of patients with complicated urinary tract infections or cUTI, and patients with acute pyelonephritis or AP. We are expecting the publication of the ADAPT-PO trial results in a high-impact peer-reviewed journal in early Q2. ADAPT-PO was designed as the first head-to-head comparison of an oral versus IV regimen in cUTI. We believe it shows that tebipenem can provide the benefits of an oral therapy without making any compromises on clinical response, safety, or tolerability. We believe the data from the trial not only supports our NDA but, if approved by the FDA, will potentially provide physicians with the confidence needed to prescribe oral tebipenem HBr to appropriate patients in place of IV therapy. This could be beneficial to patients, healthcare providers, and payers alike by shifting care to the outpatient setting. This, in turn, would free up capacity for those patients with no viable alternatives to hospital treatment, a need that was underscored during the COVID-19 pandemic. An approval for tebipenem HBr would make it the only oral carbapenem available for the treatment of cUTI. We are encouraged by the responses we have received to date from physicians presented with tebipenem's value proposition and by feedback from payers who have expressed their willingness to cover tebipenem HBr, which would notably occur outside of the hospital diagnosis-related group. This bodes well for the cUTI patients who could benefit from an oral tebipenem therapeutic. Now let's turn our attention to SPR720. I'd like to now briefly recap the program's growing momentum. As you may recall, the SPR720 Phase 2a clinical trial in patients with nontuberculous mycobacterial disease, or NTM, was placed on hold by the FDA in February 2021, following a review of data from a nonhuman primate toxicology study in which mortalities with inclusive causality to treatment were observed. At the start of 2022, we announced that the FDA lifted that clinical hold following the submission of a comprehensive study report with detailed analysis from the NHP toxicology study. These analyses supported our hypothesis that the observed mortalities were not drug-related. We are very pleased by the FDA's decision to lift the hold, and we've engaged with the agency to finalize the design and protocol of an upcoming Phase 2 trial, which we expect to begin in the second half of the year. David will speak more about the plans for this study shortly. SPR206, our next-generation product candidate, also received significant milestones last year. We were pleased to engage with Pfizer, entering into a licensing agreement whereby Pfizer received the rights to develop, manufacture, and commercialize SPR206 in ex-U.S. and ex-Asia territories. In tandem with the licensing agreement, Pfizer also made a $40 million equity investment in Spero as part of the Pfizer breakthrough growth initiative. We also announced positive top-line results from the SPR206 Phase 1 bronchoalveolar lavage study. Finally, we successfully completed our trial of SPR206 in renally impaired patients. With the BAL renal impairment data in hand, the program can move forward with ongoing FDA engagement and further clinical development. I would now like to highlight some recent appointments we've made to support the progress we are making in our pipeline. We're thrilled to welcome these individuals who are industry leaders with diverse and complementary skill sets. One of these industry leaders is David Musselman, who joined Spero as SVP Sales and Market Access this past October. David has over two decades of experience in the biotech industry and was most recently responsible for building and executing our events versus product launch as their VP of Specialty sales. We also recently brought on Jamie Brady as our Chief Human Resource Officer. Jamie has spent over 30 years working in senior human resource positions in the life sciences space and has been deeply involved in guiding companies through their transition to commercial organizations. Alongside these additions to our leadership team, we also appointed Cerevel Therapeutics' Chief Corporate Affairs Officer, Kathleen Trigoni, to our Board of Directors. Kathleen has previous experience working at Sanofi, Biogen, and as a professional staff member for the U.S. Congress. We believe this experience, together with her deep understanding of external engagement strategies in the global payer environment, will add important depth and valuable perspective to our Board. We're fortunate to have the support of high-quality investors and a strong financial foundation. This is due, in part, to our two successful capital raises in 2021, both of which added cash to our balance sheet while also providing external validation for our strategy and pipeline. The first of these raises was the $40 million equity investment from Pfizer, as previously mentioned, which was made at a premium and came alongside a licensing agreement for SPR206. A couple of months after receiving this equity investment, we further strengthened our balance sheet by entering into a non-dilutive financing agreement with Healthcare Royalty Partners. This agreement, which is worth up to $125 million, provides $50 million upfront, $50 million on approval of tebipenem HBr for cUTI, and $25 million upon completion of prespecified milestones in a mutual agreement with Healthcare Royalty Partners. With this transaction, we believe we preserved significant financial flexibility while securing revenue streams to support tebipenem HBr's anticipated launch and the advancement of the SPR720 and SPR206 programs. Lastly, I'd like to acknowledge our employees, partners, investigators, and importantly, the patients we serve who made considerable contributions to Spero amidst the ongoing COVID-19 pandemic. Despite the obstacles that came and went during Q4, we continued to achieve significant milestones during the past several months. With that, I'll hand it now over to David to provide a more detailed update on our clinical progress and pipeline.

Thank you, Ankit, and good afternoon to all of you. It's my pleasure to share our pipeline updates with all those listening today. I'll begin by speaking about our lead candidate, tebipenem HBr. I would like to reiterate Ankit's point that our near-term focus will be working with the FDA to continue advancing a path forward towards approval. In parallel with our regulatory efforts and in preparation for potential commercialization, we continue to work to ramp up our CMC capabilities. As part of these efforts, we are working with partners such as Meiji Seika, who have extensive experience manufacturing a granular formulation of tebipenem over the last decade. We believe that this manufacturing experience will be instrumental as we transition to a commercial organization. We are also continuing our work to refine our understanding of the needs of the clinical community and to forge partnerships with external clinicians. We are taking a multifaceted approach here as our medical affairs team has interacted with over 700 infectious disease physicians and neurologists so far, and a majority of the major national and regional health plans. As Ankit noted earlier, we are also expecting and excited about the pending publication of the ADAPT-PO trial results in a high-impact peer-reviewed journal very early in Q2. Our efforts, together with the ADAPT-PO results, have produced strong external interest in tebipenem, including ways in which we could broaden its potential therapeutic impact. One recent example of this interest came in January when Spire was awarded up to an additional $12.9 million by BARDA to support a clinical trial and related activities designed to advance orally administered tebipenem development as a treatment for pediatric patients with complicated UTIs and acute resistant infections. This new funding was a result of BARDA adding and exercising an option to a contract originally awarded to Spero in 2018, which increased the total potential contract value to $59.7 million. In addition to funding, we believe this new option provides important external validation for the clinical utility of tebipenem and is a prime example of how we are building an umbrella of partnerships with thought leaders and government agencies. Another important example of these efforts is the MERINO-4 trial, which is being conducted by the antibiotic resistance leadership group and sponsored by the National Institute of Allergy and Infectious Diseases. This trial, which remains on track to begin dosing this year, is designed to compare early transition to oral tebipenem HBr to continued IV carbapenem therapy in patients with bloodstream infections caused by ESBL-positive gram-negative bacteria. Additionally, we also successfully completed the BARDA-funded Phase 1 trial assessing the penetration of tebipenem HBr into the lung last year, and we anticipate presenting these data in an upcoming medical meeting later this year. I'll now transition to speak about SPR720, our oral drug candidate in development for the treatment of nontuberculous mycobacterial or NTM infections. Since Ankit already spoke about the lift of FDA's clinical hold, I'd like to emphasize our eagerness and planning around getting SPR720 back into the clinic and discuss our development plans and the unmet need we aim to address. Currently, there are no oral antibiotics specifically approved for use in pulmonary NTM disease. This is a rare and devastating orphan indication that affects about 95,000 people in the United States. Treatment with the current standard of care requires prolonged therapy of up to 24 months with a combination of mostly unapproved drugs that are often associated with tolerability and toxicity issues. Through SPR720's clinical development, we aim to show that we can improve the NTM treatment algorithm by providing patients with a convenient and well-tolerated oral therapy. We believe our Phase 1 and preclinical data supports this hypothesis as they demonstrate the favorable tolerability profile of SPR720 at doses where therapeutic activity against a range of NTM species has been demonstrated. Looking forward, we are currently preparing to initiate the SPR720 Phase 1 trial in the second half of this year. We are working to get our CROs up and running and, in parallel, have engaged with the FDA regarding specifics of the study design. While it would be premature to provide specific design elements now, what I can say is that we plan to utilize the design of the discontinued study as a guide but we will incorporate recent FDA guidance that could potentially streamline the path to approval. The key goal of the trial is to build upon prior clinical results, demonstrating SPR720's favorable safety and pharmacokinetic profiles by showing a signal of efficacy in patients with NTM infection. To accomplish this, we intend to include endpoints that measure microbiologic burden as well as clinical outcome measures of how patients feel and function. Turning now to SPR206, our intravenously administered next-generation polymyxin candidate. SPR206 is designed to act directly on gram-negative bacterial infections through its interactions with the bacterial outer membrane and it has demonstrated potent broad-spectrum activity against multidrug-resistant gram-negative bacteria in preclinical studies. We believe SPR206 may offer a safer alternative for patients suffering from serious drug-resistant infections caused by organisms, including drug-resistant Acinetobacter, drug-resistant Pseudomonas, and carbapenemase-producing Enterobacterales as prior Phase 1 results demonstrated a lack of nephrotoxicity at predictive therapeutic dose levels. In contrast, patients suffering from these infections are currently treated with drug combinations that often include older polymyxins that are associated with nephrotoxicity in many patients. Through SPR206's development, we intend to replace these older polymyxins in the treatment paradigm and fulfill the need for a well-tolerated therapy with the potential for efficacy against carbapenem-resistant and other antibiotic-resistant pathogens. Such a therapy could have a wide-ranging impact, as the CDC's 2019 Antibiotic Resistance Threats report estimates 8,500 drug-resistant Acinetobacter cases and 32,600 drug-resistant Pseudomonas infections in the United States every year. This past February, we built upon SPR206's prior clinical results with top-line findings from our Phase 1 bronchoalveolar lavage, or BAL, clinical trial. A key objective of this trial was to assess the lung penetration of SPR206 when administered three times daily at 100 milligrams. This is a critically important metric when you realize that approximately half of the patients infected with multidrug-resistant gram-negative bacteria suffer from lung infections. Results from the trial showed that SPR206 was very well tolerated and achieved lung exposures above its minimum inhibitory concentration for the targeted gram-negative pathogens for the entire 8-hour dosing interval. We are very pleased with these findings, which support the advancement of SPR206 into clinical trials of patients with life-threatening pulmonary infections such as hospital-acquired and ventilator-associated pneumonia. Also, we recently completed the SPR206 Phase 1 renal impairment study designed to inform our dosing strategy for patients with multidrug-resistant infections and reduced kidney function. We're advancing the program forward, having gathered final safety and PK data from our renal impairment study. Final dosage recommendations, including any adjustments for patients with renal impairment, will be developed after the completion of ongoing nonclinical studies and detailed pharmacology analysis. The next step will be to engage with regulators to further our development plan for SPR206. 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, over to you.

Thank you so much, David, and it's a pleasure to be with you this evening to discuss the progress of tebipenem HBr. Our preparation for launch is focused on building a best-in-class commercial organization and creating a launch readiness plan that we believe will be a transformative treatment for cUTI. We continue building our launch plans as we work with the FDA to move forward on the ongoing review process of tebipenem HBr for the treatment of cUTI. There are an estimated 3 million patients annually in the U.S. that could benefit from a new, effective, and safe oral treatment for cUTI. It's been 25 years since we've had a new approved oral therapy to treat these infections, and during the last 10 years, we have seen resistance to E. coli, the most common bacteria for cUTI, increase threefold. We now face a significant health crisis with more than one out of every three cUTI patients in the hospital and one out of every five patients in the community that have limited or no oral options. And this is leading to challenging times for healthcare providers, who, in attempts to avoid hospitalization for their patients, are often cycling most patients through multiple rounds of ineffective or unapproved medications for cUTI. These challenges have made the treatment of cUTI in the outpatient setting one of the most common and problematic infectious disease conditions healthcare providers face today. As we prepare for launch, we are focused on three distinct components: one, ensuring we drive early healthcare practitioner awareness and trial with our urologists, infectious disease physicians, and hospitalists; two, building advocacy and support with key thought leaders and ensuring appropriate use as we look to bring the first oral carbapenem to market; and three, ensuring patient access and affordability. With respect to the healthcare practitioners, we have engaged over 32,000 healthcare providers in the community and hospital setting through our disease state education campaign to raise awareness of the unmet need. We've also completed our profiling and targeting work and confirmed that with our planned sales force of approximately 135 representatives, we can reach hospitals accounting for 50% of carbapenem use in the U.S. and 60% to 70% of fluoroquinolone, cUTI use in the community setting. This concentrated market of urologists and infectious disease specialists provides a platform to have broad reach and frequency in both the community and the hospital. We believe that we have the right resources, including innovative digital approaches and a talented and experienced sales leadership team to drive early adoption among these key specialists while ensuring a competitive share of voice with less capital investment. Now we're often asked about our commercial resilience as access to healthcare providers still has not completely returned to pre-COVID numbers and could play a potential factor in current and future engagement with HCPs. We are building a nimble infrastructure so that our teams can quickly react to customer dynamics in real-time. We are also ensuring we allow for flexibility for these types of engagement with our customers to enable our field team to provide continuity of this support to our clinicians and their office staff. Moving on to the second component of our launch readiness: building our KOL advocacy and demonstrating our commitment to responsible and rational use of tebipenem HBr. We have relied heavily on our key opinion leaders to hear their perspective on balancing the unmet need with the responsible use of introducing the first oral carbapenem to market in the U.S. We have focused significant efforts to responsibly bring an oral carbapenem to the healthcare sector in a manner that directly supports strong antimicrobial stewardship. Tebipenem is well aligned with public health stewardship principles by potentially reducing suboptimal clinical outcomes and unnecessary hospitalizations resulting from inappropriate oral therapy in cUTI patients. Our investment in tebipenem's rational use includes numerous preclinical and clinical studies demonstrating that tebipenem has a low potential for the development of resistance. Extensive pharmacokinetic/pharmacodynamic work supporting optimal dose selection and a gut microbiome study. In addition, we have planned expansive stewardship and appropriate use educational programs. Inclusive of that are patient education tools and identification tools, surveillance tracking to monitor the resistance of tebipenem against other antibiotics, and a concentrated deployment to specialists with a high unmet need for patients. Finally, patient and healthcare provider educational material on appropriate antibiotic use and stewardship principles in both community and hospital settings are all part of these efforts, focused on ensuring the responsible use of all antibiotics, including the new oral carbapenem. The third and final component of our strategy has been ensuring access and affordability. We continue to make progress engaging with our payers through our pre-approval information exchange. Our field account team has had the opportunity to meet with more than 85% of targeted large national and regional payers. The meetings are encouraging and allow us to better understand the information needed to make coverage decisions for novel products like tebipenem. The dialogue with these formulary decision-makers has been consistent with what we have previously heard in market research. They understand the unmet need for an oral carbapenem in cUTI as it would give their members the opportunity to avoid IV treatment, hospitalization, and cycling through ineffective oral therapies. An oral choice also allows for treatment in the community at home, which is a lower cost and potentially safer setting of care for these appropriate patients. Further, payers understand that patients with serious infections like cUTI need access to their prescribed medication quickly. So, as we prepare for our launch, our commercial team has plans in place to ensure that patients can access tebipenem easily, with a focus on services for timely dispensing and patient affordability. In conclusion, we are building a best-in-class commercial organization while finalizing our launch tactics, and we look forward to transforming the way we treat cUTI so that avoiding unnecessary IV therapies and hospitalization or ineffective oral therapies can be a thing of the past. With that, I'll now 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 fourth quarter and full year ended December 31, 2021. Total revenues for the fourth quarter of 2021 were $2.7 million compared with revenues of $1.9 million for the fourth quarter of 2020. The revenue mix was composed of reimbursement for pipeline candidates under collaboration agreements with third parties and grants from various government agencies. Total revenue for the year ended December 31, 2021, was $18.3 million compared to $9.3 million for the year ended December 31, 2020. Total revenue for the full year 2021 was higher than the same period in 2020 due to increased client revenue received from Spero's contracts with the Department of Defense relating to SPR206, BARDA relating to tebipenem HBr, and collaboration revenue from the company's license agreements with Pfizer and Epris Medicines. Research and development expenses for the fourth quarter of 2021 were $17.2 million compared to $13.2 million for the same period in 2020. This year-over-year increase was primarily due to increased direct costs related to SPR206 and an increase in research and development headcount. Research and development expenses for the year ended December 31, 2021, were $64.5 million compared to $67 million for the year ended December 31, 2020, with the decreased expenses due to the completion of significant activities and related costs of the Phase 3 clinical trial for tebipenem HBr, offset by increased start-up costs related to SPR206 and an increase in research and development headcount. Looking forward, we expect research and development expenses to remain relatively flat in 2022 relative to 2021, as we continue to support our pipeline candidates. General and administrative expenses for the fourth quarter of 2021 were $13 million, higher than the $7.5 million reported in the same period in 2020, primarily due to increased headcount and professional fees to support pre-commercial activities and the growth of the business. General and administrative expenses for the full year ended December 31, 2021, were $41.7 million compared to $21.4 million for the year ended December 31, 2020, with increased expenses in 2021 compared to 2020 due again to increased headcount and professional fees to support pre-commercial activities and the growth of the business. Looking forward, we expect that general and administrative expenses will increase in 2022 relative to 2021 as we continue to build our commercial capabilities and expand our infrastructure for a potential tebipenem commercial launch. We reported a net loss for the fourth quarter and year ended December 31, 2021, of $29.2 million and $89.8 million or $0.90 and $2.91 per common share, respectively. The net loss for the same periods in 2020 were $18.6 million and $78.8 million or $0.68 and $3.52 per common share, respectively. As of December 31, 2021, we had cash, cash equivalents, and marketable securities of $146.4 million. Based on current projections, Spero believes that its existing cash, cash equivalents, 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 second half of 2022. This forecast includes the $50 million in upfront proceeds received under the revenue interest financing agreement with Healthcare Royalty Partners and the additional $50 million milestone payment payable under such financing agreement upon approval of tebipenem HBr in 2022. If the upfront proceeds from Healthcare Royalty Partners and the additional $50 million milestone payments payable under such financing agreement are excluded, Spero should have sufficient funding into the fourth quarter of 2022. For further details on our financials, please refer to our 10-K filed with the SEC today. We would now like to open the call for questions.

The first question today comes from Louise Chen with Cantor. Please go ahead.

So I had a few questions on the FDA update. Just curious what kind of deficiencies in general? I know you can't talk about specifics, could preclude discussion of labeling and post-marketing requirements. Secondly, how much interaction have you had with the FDA since you received this notice? And the third question is, what are the most likely potential outcomes when you get your update on or before May 2022?

Louise, thanks so much for the question. We completely understand and empathize with the interest in going deeper into the substance of the review. As we mentioned on the call, right now, we're not going to be able to go much deeper into those questions for two main reasons. One is that our ongoing dialogue with the FDA will give us an opportunity to seek to understand better what the topics at hand are in front of us. And secondly, we do want to protect the integrity of ongoing FDA discussions. What our commitment will be is as those discussions happen, and we highlighted the late cycle review meeting in the coming weeks, we will commit to providing a deeper update no later than the next earnings call, which should be in mid-May.

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

Is it accurate to say that you are aware of the areas of concern based on the FDA's communication so far? If that's the case, how much clarity or understanding do you currently have regarding these issues? Do you feel prepared to start addressing them, or do you need significantly more information from the FDA before you can begin? I also have a few follow-up questions.

Yes. Thanks, Ritu, for the question. I would say, and we've said this in prior earnings calls that we continue to have frequent and active interaction with our colleagues at the FDA. It's one of the benefits of priority review. I would say that we continue to engage with them on a variety of subjects within the NDA application as the process has gone on. One of the reasons why we'll commit to the coming weeks to provide a deeper update is that we do need to seek a deeper understanding as we do have substantive dialogue with the FDA. We do address and discuss with them in real time. But again, we won't be able to go much deeper here because we do want to seek to understand more deeply one. And second, because this is the subject of ongoing dialogue, we want to respect that process and then come back and give you updates at the appropriate time.

Got it. So it sounds like you need more over the following weeks to even start addressing the deficiencies. Like you can't start in April, essentially? Is that fair?

No. I would say that, like I said, we have engagement with the agency on a variety of topics. We engage with them in real time. We do need more information for me to give all of you a more comprehensive picture of where we are and what the next steps are. Further, as we build that understanding, again, we want to be respectful of the ongoing dialogue we have with the agency. So rest assured, we're working on the problem. As soon as we can say more and have a fuller picture, we will tell you more.

Got it. In the last couple of months, have you submitted any new data or any requested analyses? Was the full safety update recently submitted?

I mean, thanks for that question as well. Like I said, we've had a very productive and collaborative engagement with the FDA, where we continue to correspond with them on the basis of the data that we've submitted. We won't go much deeper into the minute mechanics of the back-and-forth. At the same time, as you've noted, we are having that collaborative discussion. We are working the problem. We will have more clarity to give you a comprehensive picture as we've done in the coming weeks.

Got it. And in the meantime, I guess, are you planning any change in commercial prep spend for Q2 in the meantime?

Well, I think you heard from Cristina and from me, we're continuing to invest to prepare for the pre-commercial activities that we're undertaking and thinking about launch should tebipenem be approved.

But has the rate of that changed at all or certain, I guess, aspects of the prep. Have they been sort of postponed or anything like that?

We have outlined the key priorities for preparing for launch, which include educating clinician colleagues about the unmet need following the tebipenem submission, engaging with our payers, and planning how to deliver tebipenem to clinicians once it is approved. All of these activities are ongoing, and we are continuing to invest in them.

The next question comes from Esther Hong with Berenberg. Please go ahead.

So first question is what typically occurs during a late-cycle review just generally? And then is that where at some point? And how would that shift in terms of where your discussions are with the FDA?

Yes, that's a great question. Thanks for asking it, Esther. I think one point that you're alluding to is that our PDUFA date is in late June, and we're sitting here in late March. We are about halfway through the planned review period. You make an important point that that late-cycle review meeting is another opportunity for us to engage with the agency on the topics that we've continued to be engaging with them on during the review period. So what I want to emphasize from our prior remarks is that we are in a deliberative and collaborative phase with our colleagues and agencies, not in a decisional phase. That continued dialogue, including the late-cycle visit, gives us an opportunity to continue to work with them collaboratively to find the right path forward.

The next question comes from Ram Selvaraju with H.C. Wainwright. Please go ahead.

This is Matt representing Ram at H.C. Wainwright. We were wondering what new market research, if any, might be presented to the investment community prior to the tebipenem HBr PDUFA date later this year.

Thanks for the question. I will pass that to my colleague, Cristina Larkin, who can best answer that.

Yes. Thanks for the question, Ram. We've actually conducted quite a bit of market research as it relates to the product, some of which is related to our targeting and understanding more about market dynamics, and some of which is attitude and trial usage market research where we can ascertain readiness to prescribe tebipenem when it's available. All of that data continues to reinforce for us the high unmet need that we observe and the interest in utilizing tebipenem for appropriate patients. The full access to all that data as we get closer to launch, I think our plan is we will be able to share more of our commercialization plans as we get closer to the PDUFA date.

Okay, great. And are there likely to be any other regional partnerships signed near-term involving elements of the pipeline? And can you refresh us on the current activities Pfizer is undertaking with SPR206?

Great question. So on the first point, strategically, as we've mentioned in prior calls, we are committed to focusing on preparing for the tebipenem launch in the U.S. and will continue to explore the right partners to help us commercialize tebipenem ex-U.S. As for the rest of the pipeline, as you rightly noted, we have great partners in Pfizer and Everest, and we will look for the right partners for SPR720. As it relates to the activities that Pfizer is collaborating with us on, firstly, as we mentioned, they've made an equity investment in the company that supports our overall activities. Secondly, they are providing thoughtful, collaborative efforts on the ongoing development of SPR206, and certainly, their investment in the ongoing milestones helps us support those ongoing activities as well as our colleagues at NIH and the Department of Defense, which gives us the opportunity to advance a variety of activities for SPR206 on non-dilutive financing, including a Phase 2 study.

The next question comes from Kevin DeGeeter with Oppenheimer. Please go ahead.

Maybe one on SPR720. I appreciate the update and David's comments regarding the study to kick off in the second half of 2022 being based, first of all, off of the probable 720 design. But plus some fee incorporation of recent FDA guidance on wondering whether you could expand on specific aspects of that FDA guidance that you will be looking to capture in the upcoming Phase 2 SPR720 program.

Thanks, Kevin, for the question. David, I'll pass the question to you.

Yes. We're very excited about getting SPR720 back into patients. We worked hard with the FDA in collaboration to lift the clinical hold, and in the end, the project has a clear bill of health. So we're moving forward. I think if you want to hint about the structure of that study, I'd refer you to the clinical trials listing for the prior trial; it will look somewhat similar in design. We will potentially take advantage of the fact that we now have a longer duration of toxicology coverage to extend the duration of that study. I think, importantly, it gives us an opportunity to not only look at microbiologic endpoints, but FDA has become extremely interested in clinical outcome measures as endpoints for NTM studies, and the Phase 2 study that we plan will assess a number of different approaches to that problem.

Great. Really helpful. And then with regard to the next $50 million potential draw under the royalty financing structure. Can you remind us whether tebipenem HBr needs approval by a specific time to exercise that next $50 million tranche or whether under different timelines to approval scenarios access to that drug changes?

Yes. Thanks for the question, Kevin. This is Sath. Tebipenem requires approval by the end of the year to qualify for that additional $50 million tranche, and I think that's been disclosed and that's what I would say.

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

Thank you, operator, and thanks to all that have joined us today. We look forward to the continued advancement of our pipeline, and we'll keep everyone updated as we go.

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