Synlogic, Inc.

Good morning. Welcome to Synlogic's fourth quarter and full year 2021 conference call. At this time, all participants are in a listen-only mode. There will be a question and answer session at the end of this call. Please be advised that this call is being recorded. I would now like to turn the call over to Andrew Funderburg of Kendall Investor Relations. Please proceed.

Thank you, Operator. Good morning, and thanks for joining us in today's conference call. This morning, we issued a press release which outlines our fourth quarter and full year 2021 financial results and additional business updates. The release is available on the investor section of our website at www.synlogictx.com. Joining me on this call are Dr. Aoife Brennan, President and Chief Executive Officer, Molly Harper, Chief Business Officer, Dave Hava, Chief Scientific Officer, and Michael Jensen, Chief Financial Officer. Other members of the management team will be available during the Q&A. During the call, Aoife will provide a review of fourth quarter highlights and recent progress, including an update on our lead program in PKU. And Molly will share her perspective on the opportunity to address the medical need and provide a meaningful additional therapeutic option to patients with PKU. Dave will discuss our earlier stage programs and collaborations, and Michael will provide a financial overview. Following our prepared remarks, we will open the call for questions. As we begin, I'd like to remind everyone that comments made today may include forward-looking statements made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date hereof and are subject to numerous factors, assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including those described under the heading Forward-Looking Statements, Instant Logics Press Release from Earlier Today, and or under the heading Risk Factors in Synlogic's most recent Form 10-K, or in later filings with the SEC. Synlogic cautions you not to place undue reliance on any forward-looking statement. Now, I'd like to turn the call over to Aoife.

Thanks, Andrew. Good morning, everyone, and thank you for joining us. I'm thrilled to share with you today updates on our recent progress, as well as our financial results from the fourth quarter and full year of 2021. In 2021, the Synlogic team achieved dramatic progress across the portfolio. Proof of concept with our lead program for phenylketonuria, or PKU, and commitment to advance to Phase III initiation this year. Proof of mechanism in enteric hyperoxyluria with SynB8802, a research collaboration with Roche in inflammatory bowel disease, and our second drug candidate for a rare metabolic disease with SYNB1353 for homocystinuria or HCU. We are now advancing a pipeline of clinically differentiated, orally administered drug candidates for metabolic and immune diseases, all based on the advantages of our reproducible proprietary product engine. We are continuing this momentum in 2022, with expected phase three initiation of our PKU program in the second half of this year. CINB 1353 is expected to have healthy volunteer data by year end. And we're also looking forward to proof of concept patient data from our enteric hyperoxaluria program. Given our positive results in September 2021, we were able to complete a successful round of financing We have a strong balance sheet with $136.6 million in cash and equivalents, sufficient to carry us into 2024 and well past this sequence of upcoming milestones. We strengthened the Synlogic team throughout 2021. Today, I'd like to welcome our new CFO, Michael Jensen. Michael brings an impressive financial and operational background from biopharma and healthcare companies, across therapeutic categories and through commercialization, an asset as we progress our programs into late-stage development and through registration. I'd also like to thank Greg Beloff, who has served as our interim CFO during a critical stage for the company. Let's ground ourselves in the vision and breakthrough science that's behind our recent progress. From our inception out of Tim Liu and Jim Collins' lab at MIT, Synlogic was founded on the premise of a new paradigm in biotherapeutics based on the application of synthetic biology to medicine. In just six years, we have created a product engine producing potentially transformative drug candidates based on validated mechanisms for the treatment of metabolic and immune diseases. These synthetic biotics share similar safety profiles due to a lack of systemic absorption or colonization. the convenience of oral delivery, flexible titration, reversibility via rapid GI clearance, and applications across rare and common diseases. I'd like to review our lead program in PKU as we advance into phase three and towards commercialization. A majority of patients with PKU today remain untreated or undertreated due to limitations of current options. in both safety and efficacy. With two FDA-approved drugs, PKU has a de-risk path to registration, with fee reduction used as an acceptable endpoint for full approval, as well as precedence for Phase III study design and related considerations. People with PKU in the US and around the world are diagnosed at birth and treated by a small specialist community presenting an accessible patient population. In September of last year, our phase two proof of concept data showed a potential profile that could meet the PKU community's need for an efficacious, safe oral option, and one that could be used both as monotherapy and adjunctive treatment. We are eager to continue to advance this program forwards towards commercial pivotal studies. I'd like to now hand the call over to Molly to expand upon what makes our approach so potentially meaningful in PKU.

Thank you, Aoife. In the U.S. alone, there are approximately 17,000 patients with PKU, making it a large rare disease population. Despite two approved treatments, a large majority of patients remain untreated. This is surprising but understandable given the limitations of today's treatment options. Ciproptarin or Kuvon is a standard of care that is tried by all PKU patients at age two. Its response rate is approximately 20 to 30% of the PKU population. Responders tend to have mild forms of PKU. This leaves the more severe majority untreated. For those who do respond and take KUVAN, their fee levels often remain well above targets, presenting an opportunity for adjunctive treatment. Note that with these limitations and 20% or less penetration globally, KUVAN was a $500 million business before it went generic in 2020. The large untreated patient population reflects the non-responders to KUVAN for whom The other approved therapy, Palinzec, is also not a viable option, usually due to safety concerns. Palinzec is a self-administered injectable. The risk of life-threatening anaphylactic reactions at any time occurring in 10% of patients has limited uptake. The boxed warning and restrictive REMS program require patients to carry autoinjectable epinephrine at all times. challenging given the neurocognitive and executive functioning deficits of PKU. In short, the vast majority of people with PKU need new treatment approaches, whether as monotherapy or an adjunctive option. Synlogic's approach for PKU fits with these needs. Synlogic designed its drug candidates to consume fee in the GI tract without risk of colonization or systemic absorption and associated AEs. In September 2021, we announced that the phase two interim analysis for CINDI 1618 achieved the targeted mean fee reduction of 20% in an all-comers analysis, which was twice what KUVAN had achieved in its pivotal study. We also saw a strong 50% response rate as four of the eight patients met or exceeded the target for response. In parallel, we shared that the healthy volunteer head-to-head bridging study confirmed that CINB 1934 has potential for greater efficacy. The product presentation being studied and expected for commercialization is a lyophilized powder provided in a sachet, and taken with meals three times a day. We are excited to be advancing a potentially effective, safe, convenient, and oral monotherapy and injunctive option. In summary, this is a tremendously exciting potential product profile for a patient population that has been waiting too long for new treatment options. I'd like to hand the call back to Aoife to discuss the PKU program's path forward to phase three.

Thank you, Molly. Let's review where we're going this year with our PKU program and how it reflects many of the specific advantages of the Synlogic approach. Last fall, after achieving proof of concept with CIMB 1618 in an interim analysis of the Phase 2 study, we committed to advancing our program to Phase 3 this year. Having reviewed these data, we made two important changes to the study to ensure that we had all of the information we needed from the study to initiate a phase three trial. Firstly, we added a second arm for CINB 1934 based on the data from Healthy Volunteers showing higher potency of that product candidate. Secondly, we amended the inclusion criteria to allow patients who are on treatment with saproterin but continue to have uncontrolled blood fee levels to participate, enabling evaluation of adjunctive use potential. We set out to complete the first arm of CINB 1618 and to enroll the second arm and are looking forward to sharing that phase two data in the first half of this year. So what are we hoping to see from that data set? We've already determined that our activity in PKU meets our criteria to advance into late-phase development, but there are still a couple of questions to answer. Number one, candidate selection, or which strain will we take forward? As we've seen in healthy volunteers, SYNB 1934 had greater activity at a given dose compared to SYNB 1618. Confirming that higher activity in PKU patients will help clarify the choice of strain. Two, the potential for adjunctive use. How do patients who are on saproterin but continue to have high blood fee levels respond to the addition of our therapeutic candidates? This will help us understand whether these patients could be included in a phase three trial. Thirdly, what is the likely effect size or efficacy profile ultimately for our product in PKU patients? As a reminder, we were thrilled with the results seen in the interim analysis. So seeing the same or greater would, of course, be very positive. We are particularly focused, as we shared earlier, on the response rate or the proportion of patients who have a meaningful reduction in blood fee levels and the mean reduction in that group. Data from both arms of Symphony will help inform these expectations. Pending answers to these questions will conduct an end-of-Phase II meeting with the FDA, which will allow us to confirm the specifics of study plans, including timing and other considerations, prior to initiating Phase III. It's important to note that needed bridging studies have been completed, and Arm 2 experience of SYNV1934 in PKU patients represents the final step needed to advance to Phase III. we expect our timelines to be the same for either candidate. As with all drug development, great science and data is necessary, but not sufficient to get new products to patients. A regulatory path to a licensed product is also critical. In addition to the collaborative relationship we have established with regulators, there are a number of other attributes in our favor, including In PKU, the precedent of two FDA-approved drugs support use of a single registrational study and fee reduction as an endpoint for full approval. Secondly, our platform fits within the FDA's framework for live biotherapeutic products. The FDA is also familiar with E. coli NISL, the chassis for our drug candidates, given that it has over 100 years of safety use in humans. Thirdly, in addition, across our programs, our manufacturing is based on fermentation and lyophilization, well-established manufacturing approaches, unlike those of other new modalities. And finally, from a product perspective, both strains have been extensively studied in healthy volunteers with multiple strain-specific biomarkers. In the interim analysis of the Symphony trial, these biomarkers confirmed the mechanism of action in PKU patients and resulted in a meaningful and significant reduction in blood fee. In summary, the path ahead is both de-risked and exciting as we advance a PKU biotherapeutic for those who need it most. I'll now turn it over to Dave to discuss our other promising clinical and preclinical pipeline programs. Dave.

Thanks, Aoife. I'd now like to talk about our program for homocystinuria, CINB1353. CINB1353 is Synlogic's second rare metabolic disease targeted drug candidate, entering the clinic this year for homocystinuria, or HCU. HCU patients have a deficiency in the metabolism of another amino acid, homocysteine, and as a result have elevated blood homocysteine levels. This can cause intellectual disability and also can result in thromboembolism, presenting as strokes in individuals in their teens and 20s. There is a need for new treatment options for which our approach could be a strong fit. Our approach with CINB1353 is to consume methionine, a precursor to homocysteine. We have promising preclinical data from nonhuman primates and mouse models showing that we're able to lower blood homocysteine levels. We expect to enter the clinic this year with results in healthy volunteers by the end of this year. That will be another important milestone for us as a company as we build a pipeline of assets and diseases caused by inborn errors of metabolism. CINB 1353 is highly synergistic with the PKU program. In addition to leveraging our platform, people with HCU are treated at the same sites by the same clinicians as PKU patients. We apply learnings from the PKU program and build upon the relationships that we have established through that work for HCU patients. Moving beyond the rare metabolic portfolio, our next program with milestones this year is CIMB 8802, being developed for enteric hyperoxyluria. Enteric hyperoxyluria is a chronic progressive disease caused by an underlying GI disorder. that causes patients to absorb too much oxalate from their diet. That buildup of oxalate crystallizes in the kidneys, causing crystal and stone formation, which manifests as severe pain and may require intervention to pass the stone. There is an established and linear relationship between oxalate levels and stone formation. Over time, the oxalate crystals and stones damage the kidneys, leading to irreversible kidney damage. with major implications for morbidity and mortality. There is no FDA-approved treatment for this disease. The drug candidate CYMB8802 consumes oxalate and produces a harmless metabolite called formate in the GI tract lumen. Our specific approach enables oxalate to be consumed throughout the GI tract, extending the duration of activity and efficacy potential compared to other modalities addressing the same target. We presented data last year that we view as promising proof of mechanism, showing that we can reduce urinary and fecal oxalate levels in a dose-dependent manner in healthy volunteers that were fed a high oxalate diet to model enteric hyperoxaluria. Given the established relationship between oxalate levels and stone formation, we expect this to translate into clinically meaningful benefits. We are now moving forward with a portion of the study in patients with Roux-en-Y gastric bypass surgery who have elevated absorption of oxalate to evaluate whether CINB-8802 can lower urinary oxalate in those patients. Turning now to our early stage in-house pipeline, the progress of both the PKU and HOCS programs have de-risked our platform, especially when focused on consuming GI-based metabolites. This allows us to expand our focus to other areas, including metabolic diseases like gout, and also to larger diseases such as IBD. We look forward to sharing updates about these programs as they advance through development. We have two collaborators which reflect the strength of our product engine. The Ginkgo Bioworks collaboration resulted in the CINB 1353 clinical candidate. We also established a collaboration with Roche last year to develop products for inflammatory bowel disease. We've already achieved the first pre-specified research milestone within this collaboration. I'll now turn things over to Michael to review our financial results.

Thanks, Dave, and good morning, everyone. Earlier this morning, we released our financial results for the fourth quarter and full year ending December 31st, 2021. I'm pleased to review the highlights of those results with you now. Revenue was 0.6 million for the fourth quarter of 2021. There was no revenue for the same period in 2020. Revenue in 2021 was due to the recently initiated collaboration with Roche for the discovery of a novel synthetic biotic for treatment of inflammatory bowel disease or IBD. For the fourth quarter of 2021, The company reported a consolidated net loss of 15.1 million or 21 cents per share compared to a consolidated net loss of 14.6 million or 39 cents per share for the corresponding period in 2020. Turning to the balance sheet, Synlogic ended the fourth quarter of 2021 with 136.6 million in cash, cash equivalents and marketable securities compared to 100.4 million as of December 31st, 2020. Under our current operating plan, we expect that our cash will take us into 2024 and enable Synlogy to advance our clinical programs through the important data readouts across the metabolic portfolio. Thank you for your attention, and we look forward to keeping you updated on future calls. I will now turn the call back over to Eva to wrap things up.

Thanks, Michael. I'm extremely pleased with all the progress we've made across our programs. Our team is pushing forward with great urgency to advance these therapies with the goal of bringing meaningful new treatments to patients. 2022 will be a busy year for us with several important milestones across our expanding portfolio. We're looking forward to the readout of our Symphony 1 study in PKU in the first half of the year, which will help inform the final candidate selection for our Phase 3 study that we expect to initiate in the second half of this year. We also expect to have the first human data for our HCU program in the second half of this year as well. And we're anticipating patient proof of concept data for our enteric hyperoxaluria program. In addition, we're fortunate to be well-funded to bring all these milestones to fruition with the strong balance sheet to support our work. We will now open the call for questions.

If you'd like to ask a question at this time, please press the star, then the number one key on your touch-tone telephone. To withdraw your question, press the pound key. Our first question comes from Joseph Schwartz with SVB Lyric.

Hi, I'm Julie for Joe. Thank you for taking our question. In your opening remark, you mentioned that you're more focused on a responder analysis than the overall mean reduction for your PKU program. But unlike other approved drugs, that makes sense to look at a responder analysis because the mechanism is likely to have a greater degree of response among a subset of patients. Your PKU program seems like it should work more uniformly. So I just wanted to get your thoughts on why you have a more focused on a responder analysis than the overall mean reduction.

Yeah, thanks, Jury. I'll make some remarks and then hand it over to Molly because I think the response to your question is really looking forward to commercialization and the label and the product profile, which is really defined by the category and what physicians and what information they use about a product to determine whether whether or not to prescribe that product for a given patient. Of course, we'll continue to report all data as we have, but I think as we look forward to kind of the commercialization and hopefully following a successful phase three to launch, it's important that we start to talk and speak in language that's familiar to the prescriber and patient population. And I think this is very much ingrained in this category, that it's really the percent responders and the percent reduction within those responders that really define this class and these products. And I'll hand it over to Molly to speak from the commercial perspective and why that's the case and why we think it's important from a benchmarking perspective to use similar endpoints and language to outline the results of our trials. Molly.

Thanks, Aoife. And thanks for the question. It's a great question. And it's interesting because we, as Aoife outlined, we do have two approved drugs in this category, which is a real advantage from a precedent setting, but also in terms of looking to existing labeling. And to your point, it's really interesting that the two approved drugs, while completely different mechanisms, it couldn't be further apart, but they do have quite a similarity in terms of how their registration or pivotal studies were done to set up for promotion and then what's seen in the labels. So both of those approved drugs, have been studied and are outlined in their USPIs in terms of responder analyses. So that's independent of mechanism, and it's a precedent that was set. And, you know, I think it just speaks to the importance in this category of, you know, given the unmet need and given the individual needs of each patient, just to really understand when a drug works for a given patient, how well does it work, So it's really about following that precedent from a regulatory standpoint and a promotional standpoint, which obviously, you know, had gone through a lot of consideration and deliberation.

Okay, great. Thank you. And then we noticed a change in the threshold for your responder analysis in your corporate deck. I think it now reads at least 20%, which is down from 30% you referenced previously. So we'd just love to get your thoughts on the change, and what are the reasons for their change, and if you can just put it into context for us.

Yeah, so we had, we had all, I don't remember that we had ever defined responder based on a 30% lowering my, and I may be wrong here, and someone else on the call can correct me, we had always defined responders at least 20% blood fee reduction. There is a little bit of variability across different products in PKU in terms of how responder is determined. But the 20% is the number we kind of pre-specified as clinically meaningful based on discussions with patients and with prescribers. And that, to my memory, has been consistent throughout. So apologies if we cause any confusion there, but that 20% has always been kind of what we thought of as clinically meaningful.

Okay, great. And then if I could just squeeze one more in. Based on what you've seen so far, SINB 1934 appears to be more active than 1618. I was just wondering if you could just elaborate on the trajectory of the two agents over time relative to each other. For example, did you see 1934 to be consistently more active than 1618, or did you see the reduction accelerate over time? Thank you very much.

Yeah, so how we determined the superiority from an activity perspective of 1934 versus 1618 is we've defined your back in vitro preclinically in vivo. There was a consistent 2x greater activity at a similar dose of 1934 compared to 1618. We then went one step further and we evaluated it in a head-to-head study in Healthy Volunteers where the same patient was received a dose of 1618, and then washed out and received the same dose of 1934. And in every single patient in that healthy volunteer crossover, 1934 resulted in greater biomarker production. And the mean, you know, when we compared the ratio at each individual patient level, the mean of that ratio was a 2x. So across every piece of data that we've collected, be it preclinical or clinical and healthy volunteerists, We've seen a consistent finding, and that's a 2x greater activity based on biomarker production. We have absolutely no reason from a biological perspective to think that that would change over time. And we believe that it's based on the underlying changes that we've made to the PAL enzyme to make it more active. And certainly it's been consistent, and we expect to see consistent data in the PKU patients once we evaluate it later in the first half.

Does that make sense?

Yes. Thank you very much. Our next question comes from Mitchell Kapoor with HC Wainwright.

Hi, everyone. Thank you for taking the questions today. The first one, just wanted to ask, you know, how much better you think 1934 could potentially look versus 1618 with respect to the reduction in blood fee levels, and what would constitute a meaningful difference?

So I think, first of all, I'd say that we were really happy with 1618 when we looked at the first data from the first-day patients with PKU. Seeing that we got a mean 20% reduction, which is 2x the standard of care based on the all-comers analysis, we believe really showed that this mechanism is working. The strain is consuming female in the GI tract, and it's resulting in a significant reduction in blood fee levels. Now around the same time we had this Healthy Volunteers data showing that there was 2x activity. So we know that 1934 is only going to be better than 1618 based on the activity and biomarker data. So we think we're in a very good position in terms of having, you know, two candidates that are potentially viable to move into phase three. And it's really at this stage a decision on which of those candidates we're taking forward. more than a kind of a binary decision about whether or not we're moving forward into phase three. So, you know, I think we'll look at the data. We're expecting to see more activity for 1934, similar to what we saw in healthy volunteers. And, you know, the expectation is that that would be the strain going forward. But until we see the biomarker data, it's going to be, you know, hard to make that decision.

Okay. And then have you received any formal feedback from the FDA that no additional development worked? would be necessary with the newer strain? And if not, when would you expect to get that formal confirmation?

So we have not had our end of Phase II meeting yet, but we have been working very collaboratively with the FDA throughout the development of both products. And when we moved forward with 1934 into the clinic, based on the fact that there's really only five base pair differences, it's 99.9% identical, We use the same chassis. It's really the same enzyme. It's producing the same product. We were able to move 1934 very rapidly without doing any preclinical toxicology work, for instance, based on the fact that it really has a very, very similar safety profile. So, you know, based on that, we were able to move forward into a healthy volunteer study and generated some head-to-head data very, very quickly. Once we have our end of phase two meeting, obviously that will define what what the phase three study looks like. But our expectation is that we've completed all toxicology work and have a very robust human data set once we've completed the second arm of symphony. But, you know, until we have that end of phase two meeting, as you know, it's, you know, it's not 100% guaranteed, but we feel we're in a very good position based on our conversations today.

Thank you very much. Appreciate it.

As a reminder, if you'd like to ask a question at this time, that is star, then 1. Our next question comes from Keena Kay with Chardon.

Yes, thank you. For EH, are you experiencing any challenges in enrolling the patients in that study?

Thanks, Kay, for your question. So the study is enrolling. We are on track to meet our guidance, which is to establish proof of concept for that strain this year. You know, it's been a challenging time for all clinical studies, I think, and we've had to adapt. But we are seeing, you know, good activity at the sites and are pleased with our progress. And at this stage, you know, feel that we're in a good position to meet our guidance for the trial. So, you know, I think it's a credit to the team. that we've been able to push through some of the external challenges with COVID and other things. It's been a tough year to be in clinical research, as you can imagine.

Okay. That's all I have.

Great. Thanks, Kay.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Eva for closing remarks.

Great. Well, thanks so much, everyone, for joining us this morning on the call. And it would be remiss if I ended without wishing everyone a happy St. Patrick's Day. Thank you all. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.