Spero Therapeutics, Inc.

Afternoon and welcome to this Paratherapeutics 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 this Paratherapeutics website at www.paratherapeutics.com. At this time, I would like to turn the call over to Ted Jenkins, Vice President, Head of Investor Relations at Sparrow Therapeutics. Mr. Jenkins, please go ahead.

Thank you, Operator, and thank you all for participating in today's conference call. This afternoon, Sparrow Therapeutics released financial results and provided a pipeline update for the third quarter of 2021. Our press release is available on the investor page of the Sparrow 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 tebupenem HBR by the FDA, the timing of the launch of tebupenem HBR, future commercialization, the potential number of patients who could be treated by tebupenem HBR, and market demand for tebupenem HBR generally. Also, expected broad access across payer channels for tebupenem HBR, the expected pricing of WPEN and HBR, and the anticipated shift in treating patients from intravenous to oral administration. Further, the plans for the company's ongoing development of SPR 720, statements about the future development and commercialization of SPR 206, and the potential receipt of milestone payments as well as royalties on potential future sales of SPR 206, the design, initiation, timing, progress, and results of the company's preclinical studies and clinical trials and its research and development programs, management's assessment of the results of such preclinical studies and clinical trial, 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 rewards, and 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 Sparrow Therapeutics' filings with the SEC, including 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. Amkit Mahadevia, Chief Executive Officer, Dr. David Melnick, Chief Medical Officer, Christina Larkin, Chief Operating Officer, and Sap 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. Sparrow's primary focus remains on preparing for an anticipated Tebby Penham HBR commercial launch in the second half of 2022. And I'm pleased to say that over the past month, 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 tebupenem 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 ADAP-PO met its primary endpoint by demonstrating that an all oral regimen of tebupenem HBR was not inferior to an all IV regimen of erdapenem 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 tebupenem HBR towards commercialization. They indicate that positive results from a single well-controlled pivotal trial, such as ADAP-PO, could be sufficient to support the approval of an NDA for tebupenem HBR in the treatment of CUTI, including pyelonephritis. Further, through a pre-NDA meeting, the FDA also previously endorsed the structure and 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 27 October, we anticipate that if 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 ADAP-PO trial was to provide physicians with the confidence needed to prescribe oral tebupenem HBR to CUTI patients who would otherwise receive IV therapy. We therefore designed ADAP-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 tebupenem HBR can provide the convenience of an oral therapy without making compromises on clinical response, safety, or tolerability. If approved, tebupenem 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 tebupenem HBR. Our clinician colleagues have been supportive of the value proposition, and payers have expressed their willingness to cover tebupenem HBR. This bodes well for the over 2 million CUTI patients who could benefit from an oral carbapenem therapeutic. In preparation for 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 Jamie Brady as our Chief Human Resources Officer. Jamie most recently worked in the same position at Unicure, 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 Tebby Penham launch in the second half of next year. In addition to Jamie, 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 Eurovans. where he was responsible for building and executing on 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's well-possessioned for success in his 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 Ceravel Therapeutics, and previously worked in the senior capacity at Sanofi, Biogen, and as 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 720 clinical program. As a reminder, SPR 720 advanced into a Phase 2A clinical trial in patients with non-tubercular mycobacterial disease, or NTM, at the end of last year. The initiation of this trial was supported by positive data from Phase 1 single and multiple ascending dose trials, as well as non-clinical toxicology studies in non-human primates and rodents. Within these studies, multiple subjects and healthy 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 non-human primates. Surprisingly, and in contrast to the positive Phase I sad, mad human experience, unexplained non-human primate mortalities occurred. This led us to pause the Phase IIa clinical trial and promptly notify FDA of these findings. We then subsequently received a clinical hold letter in which the FDA requested additional information from the non-human primate study, including a study report. We completed the non-human primate toxicology study in the third quarter, have finalized the study report, and in line with previous guidance, we initiated engagement with FDA on the data in the fourth quarter. As we've discussed, the SPR 720 data that we've seen to date supports the hypothesis that the observed mortalities were not drug related, but rather study and species specific. This gives us confidence that there is a path forward for the SPR 720 clinical program. This all said, the FDA's view of the data will be an important driver of our activities. We will complete and review our interactions with FDA on the data this quarter and provide an update on the program thereafter. I would now like to briefly highlight our non-diluted 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 de-risks Tebby Penham HBR's anticipated launch by providing $50 million upfront, $50 million upon approval of Tebby Penham 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 important external validation for 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 Sparrow. This royalty will begin in the low double digits, 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 two and a half 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 WPEN and HBR's anticipated launch and work to advance SPR 720 and SPR 206 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 amongst the ever-evolving circumstances of the COVID-19 pandemic. Thanks to their efforts, we have not seen any material impacts 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 Tebby Penham 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 would also see a financial benefit and free up capacity for the 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.