Greetings, and welcome to Spero Therapeutics Fourth Quarter and Full Year 2020 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today's call Sharon Klahre. Thank you. You may begin.

Great. Thank you, operator, and thank you all for participating in today's conference call. Earlier today, Spero Therapeutics released financial results and provided a pipeline update for the fourth quarter and full year 2020. If you have not yet seen the press release, it's available on the Investor page of the Spero Therapeutics website. Before I begin, I'd like to remind you that some of the information contained in this press release and on this conference call contain forward-looking statements based on our current expectations, including statements about the initiation, timing and submission to the FDA and the NDA for tebipenem HBr and the potential approval of tebipenem HBr by the FDA future commercialization, potential number of patients, who could be treated by tebipenem HBr and the market demand for tebipenem HBr generative; expected broad access across payer channels for tebipenem HBr; the expected pricing for tebipenem HBr and the anticipated shift from intravenous to oral administration; the design, initiation, timing, progress and results of the company's preclinical studies and clinical trials and its research and development programs; management assessment of the results of such preclinical study and clinical trials, the impact of COVID-19 pandemic on the company's business and operations, and the company's cash forecast and anticipated expenses and the sufficiency of its cash resources. 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 filing 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 from Spero are Dr. Ankit Mahadevia, Chief Executive Officer; Dr. David Melnick, Chief Medical Officer; Cristina Larkin, Chief Operating Officer; and Sath Shukla, Chief Financial Officer. With that, I would like to turn the call over to Dr. Ankit Mahadevia. Please go ahead Ankit.

Thank you, Sharon, and good evening everyone. I am very much looking forward to an exciting year ahead, and I'm pleased to have the opportunity today to review our progress and provide some updates. Our primary focus remains tebipenem HBr's advancement towards commercialization following the positive ADAPT-PO Phase 3 trial results that we reported last September. These results showed that the trial met its primary endpoint with data demonstrating that all oral regimen of tebipenem HBr is non-inferior to an all IV regimen of ertapenem for the treatment of complicated urinary tract infections, or cUTI, and acute pyelonephritis, or AP. We chose the design ADAPT-PO as the first head-to-head comparison of an all-oral and all-IV regimen in cUTI specifically to provide a robust result that would give physicians the confidence to prescribe tebipenem HBr to the millions of cUTI and AP patients who would otherwise receive IV therapy. We believe we have done just that as our data show that tebipenem HBr can provide the convenience of an oral therapy without making any compromises on clinical response safety or tolerability. Based on our previous FDA interactions and written communication, positive results from this single well-controlled pivotal trial could be sufficient to support the approval of a new drug application, or NDA, for tebipenem HBr. We continue to expect to make an NDA submission to FDA for tebipenem HBr for the treatment of cUTI and AP in the second half of 2021. We feel comfortable with this guidance, which we believe accounts for the possibility of COVID-19 related delays, given that the Phase 3 and all supportive Phase 1 trials have been completed. If approved tebipenem HBr would be the first new oral therapy for cUTI in 26 years. And the first oral carbapenem antibiotic approved for cUTI and AP. Tebipenem…

Thank you, Ankit. I'm very happy to share our pipeline updates today. Let me begin with our lead candidate tebipenem HBr and oral carbapenem for which we've reported positive Phase 3 data in September. The Phase 3 clinical trial entitled ADAPT-PO met its primary endpoint demonstrating that oral tebipenem HBr is non-inferior to IV ertapenem in the treatment of patients with complicated urinary tract infections, including acute pyelonephritis. The primary endpoint was met with an overall that is a combined clinical and microbiologic response rate of 58.8% for oral tebipenem HBr and 61.6% for intravenous ertapenem meeting the pre-specified non-inferiority margin of 12.5%. These and other ADAPT-PO data, which were presented in an oral late-breaker presentation at IDWeek last October show that both the clinical cure and microbiological eradication rates were comparable between the treatment groups at the end of treatment, at test-of-cure and at the late follow-up visits. ADAPT-PO also showed that tebipenem HBr had a compelling safety and tolerability profile, which was similar to that of intravenously administered ertapenem. Both the type and frequency of adverse events were well balanced across the treatment groups with treatment-emerging adverse events reported in 26% of patients in both treatment arms. The most commonly observed treatment emergent adverse events were diarrhea and headaches, which were of similar frequency in both arms. There were no cases of clostridium difficile infection observed in the tebipenem HBr group, which compares to three cases observed in the ertapenem arm of the study, unfortunately, no deaths were reported across the treatment arms. Now, I'd like to take a moment to reiterate an important point that we've made in the past, which is that we believe that these ADAPT-PO results mean to positions on an important advance in the treatment of patients with complicated UTI. The continued emergence…

Thank you, Dave, as I'm happy to detail some of the great work our commercial, market access and medical affairs teams are doing to prepare for the tebipenem HBr, much anticipated launch. First, let me begin by saying that our conviction around the large opportunity for tebipenem HBr remains strong and it is supported by two separate date analytic projects. First, we conducted a claims study of diagnosed CPI patients in of U.S., which indicated there are roughly 2.7 million prescriptions written annually where tebipenem HBr could be a potential replacement. Now, these patients are either receiving multi rounds of oral therapies or receiving a second line IV therapy, such as a carbapenem or Zosyn, and thus could be a candidate for a new oral treatment option. I think it's important that the market opportunity is also similarly split between the community and the hospital discharge market. Second, week examined data on current IV carbapenem use. The data show more than 100% increase in IV carbapenem use over the last six years plus UTI. And a significant portion of that growth is on the outpatient setting. Now these data support the need for, and the broad opportunity for new oral carbapenem. And we also continue to gather more information regarding our targeted prescribers. And in the community setting, urologists are the largest treaters of the second line UTI patients. And in the hospital setting, IVs are the largest treaters. And this data further reinforcs our prior findings; this is going to be especially driven launch with a focus on urology and IV. We've also engaged more than 200 healthcare providers and payers that cover 85% of the payer lives, together their thoughts on how tebipenem HBr will fit into the cUTI treatment paradigm. And these conversations have consistently confirmed that…

Thank you, Cristina, good evening, everyone. I will provide an overview of Spero's financial results for the quarter and full year ended December 31, 2020. But first as this is my first Spero call, I will take a moment to introduce myself. I joined Spero in January 2021 as Chief Financial Officer; and most recently I was the Chief Financial Officer at Biopharm Oncology, another NASDAQ created Biotech Company, and prior to that, I was at Vertex Pharmaceuticals there over a seven-year period, I served as their Head of Commercial Forecasting and Analytics, and then their Vice President and Global Head of Corporate Finance. I'm excited to have joined Spero's management team at this juncture in the company's projector and I'm pleased to meet you all today. Turning now to our financial update, total revenue for the fourth quarter 2020 of $1.9 million was lower than the $3.6 million for the same period in 2019. Total revenue for the full year ended December 31, 2020 was $9.3 million compared to $18.1 million for the full quarter ended December 31, 2019. Total revenue for the fourth quarter and full year 2020 was lower than the same period in 2019 due to lower reimbursement and Spero's contract with the Biomedical Advanced Research and Development Authority, BARDA were qualified tebipenem HBr expenses, as well as lower collaboration revenue. As a reminder, we currently have total committed non-dilutive funding from of approximately 44 million inclusive of $10 million in funding from the Defense Threat Reduction Agency, DTRA. We have accounted for $21.4 million of committed funding from BARDA as of the end of December 31st and beyond the current commitment; there is a second option of $12.7 million that means exercisable by BARDA. Research and development expenses for the fourth quarter 2020 of $13.2…

Thank you. [Operator Instructions] Our first question comes from Ritu Baral with Cowen & Company. Please proceed with your question.

Hi guys. Thank you for taking the question and thanks for the update. This is Lyla on for Ritu. Maybe just really quickly when do you estimate you will be able to submit the study report for the pre-clinical data for 720 programs to the FDA? And then maybe as a quick follow-up, since you're discontinuing the Phase 2a study, does that mean you become unblinded to the data and are you planning to potentially release any of that early data to the public? Thank you.

Good evening, Lyla, and thanks for the question. The first question was the potential timing of our discussions with FDA. So we're going to take a step wise process, and so as we've noted, we'll submit the study report to FDA and we'll have that additional dialogue. What we've done in the meantime, as we've taken steps to expedite the process, and that includes looking to accelerate data collection and delivery wherever possible from these toxicology studies and stopping the current Phase 2 study will facilitate that restart trend downstream. In terms of the timing, just because these are dependent on ongoing discussions with FDA, I can't provide details at this time, but as those details become clear, we will communicate that to the street. Thank you for the question.

Yes. Also maybe just on the unblinding of the Phase 2a, do you have access to that data since you're discontinuing?

Yes. Thank you for that question. That is something that we're going to further assess as we look at the data and collaborate with FDA and certainly as we learn more and we put the pieces together, we'll be communicating that in a public forum at a later time.

Gotcha. Okay. Thank you very helpful.

Our next question comes from Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Hi, thank you for taking my questions here. So first question I had for you is; how do you think about the pricing for tebipenem HBr? I know you talked about value based pricing, but I guess what would the cost to the patient be, and then how accessible will this drug be upon launch? And then can you give more color on your launch preparations when you'll be building out the sales force, marketing and all of that? And then last question is just more color on this SG&A increase year-over-year. Just curious with the magnitude could be, and if you can't say a number maybe that could dovetail on the launch preparation for tebipenem and what you're building there? Thank you.

Thanks Louise for the questions. I'll direct the first two questions on pricing and access and launch prep to Cristina. And then I'll direct the final question on SG&A build to Sath. But first to Cristina, I'll hand those first two questions to you.

Yes, thanks Louise. As it relates to pricing, we really haven't guided to our exact price yet. What we've said is that we expect a range between that 350 to 500 per day is or reasonable assumption. I think we'll guide more as we learn more information. I think that guides to the next point that you made, which is what the patient out-of-pocket expense. I think certainly as we understand more about the pricing that will guide exactly what that number will be. I think through that payer engagement, as we had indicated, I think the early information that we've gotten is that we have gotten certainly really strong acceptance or knowledge from our payer. We do expect that the early read that we've gotten is that they believe that we're going to get broad coverage to the compound. They believe this is because we have strong Phase 3 evidence and it is addressing this unmet need. And this is giving value to the payers. So that's the best evidence that we have today. The second question you ask about is when we're looking to build out our sales force and the rest of the organization. Right now our plan around the field force is that we would look to build out the sales team at the time of approval, but the rest of the organization as we are looking, and right now we have a medical affairs, market access and our marketing team, those leadership roles we believe that building out those capabilities first is how we're deploying. We do have a medical liaison team that is out speaking to customers and the same way we do have a market access team that has been deployed.

And on that last question, Louise, this is Sath. I can just say that the G&A expense ramp such as there will be, they'll indeed be tied to exactly the prioritized spend for enabling a strong launch. Beyond that we will continue to be very mindful as you can imagine on the G&A side of spent. On the overall spenders as you heard just say for our cash runway into 2Q 2022, if you're back into the numbers, you'll see that we are essentially forecasting relatively flat spend compared to recent fund rates. So while the G&A expense is expected to go up somewhat, we expect that the decline in R&D spend will make our total spend relatively flat.

Okay. Thank you very much.

Our next question comes from Kevin DeGeeter with Oppenheimer. Please proceed with your question.

Hey, guys. Thanks for taking my questions. Maybe to start on 720, first if I heard you correctly, Ankit, you mentioned potentially accelerating certain findings or certain work on toxicology to provide a little more granularity on what steps, if any you can take to accelerate the learning and the exchange with FDA and in terms of next steps on 720, assuming a constructive resolution with FDA, should we expect the next clinical trial experience to be in healthy volunteers or continuing on in patients with NTM?

Good evening, Kevin. Thank you for the questions. To your first question in terms of how we're trying to expedite our time to resolution of our dialogue on the hold. We are working on multiple fronts, as we've mentioned. I think number one as it relates to the data generation, we're working closely with our CRO to make sure that the study itself is conducting in efficient manner as possible, as well as the reporting of that data comes to the team in real time and that we can continue our discussions with FDA on an ongoing basis. And so we've had a good collaborative relationship, both with the group running the study, as well as with our colleagues at FDA in terms of the cadence of having these dialogues. And then we'll continue to expedite as best as we can. To your second point on what future clinical work may look like? We are in the process right now of assembling and analyzing ongoing data from this study. And a lot of that will depend on the nature of the dialogue that we ultimately continue to have with FDA. So we do not have the full picture or the full data yet there, but as we do we will communicate that publicly.

Great. And then my follow-up question is on tebipenem and specifically you highlighted the importance of the IVs in hospital and then urologists in the community setting. And I'm wondering, what the best analog for a recent launch in this space is in terms of interplay between ID and urologists? I think we're kind of more accustomed to seeing an interplay between ID and maybe your GP in the outpatient community setting. Just how do we think about the importance of the ID and sort of informing attitudes in the urology community?

Thank you for the question. I will pass that one to Cristina.

Thanks, Kevin. I think there's two parts here. I think it depends on the setting of care. What we do know is that IDs play a really important role in the hospital. And what we certainly know is that they're a key influencer in that hospital arena, in the community setting from looking at the influence that the urologist has in these second-line treaters they are showing up in our claims data in addition to our research as experts in treating urinary tract infections. I wouldn't consider them antibiotic experts, but they are important treaters within the urinary tract. And I think they have expressed great interest in utilizing tebipenem, which I think gives us great confidence that there will be an important early advocate for the compound, which as I think is great news for us. Is there an analog I can point you to, to the exact launch that we're about to embark on, not where there is an interplay between urology and ID except if I was going to go back to the fluoroquinolones more than two decades ago.

No, completely fair and I appreciate you're taking my questions. Thanks so much.

Our next question comes from Esther Hong with Berenberg. Please proceed with your question.

Hi. So thanks for taking my question. As we get closer to NDA submission for tebipenem HBr and potential approval next year, I wanted to know if you could remind us the precedent of FDA approvals based on a single well controlled study. I think it's more common than realized, but I wanted to get your thoughts. Thanks.

Thank you, Esther, for the question. I'll pass that one to David.

Yes, there is a well-defined pathway, which is laid out in the FDA guidance regarding the development of drugs for urgent unmet need that clearly allows for a single trial approval. There perhaps from my experience a good example is the development of ceftazidime-avibactam, which was initially approved based on Phase 2 data, pending Phase 3 results. Some of the additional BLI studies have been approved based on a single indication based trial sometimes with supporting resistant pathogen data. There is no analog in the oral antibiotic space because no one has successfully developed a Gram-negative oral antibiotic in recent years.

Esther, there are five different compounds that have actually had the single pivotal trial pathway as David had mentioned, Fetroja, Recarbrio, Zemdri, Vabomere and Avycaz all were single trial pivotal trials that went through that single pathway based on that unmet need.

Very helpful. Thank you.

Our next question is from Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Hi, thanks very much for taking my questions. I'll start with just one on tebipenem. I was wondering if you could comment on your thinking regarding assuming tebipenem gets approved, what kinds of post-marketing post-approval studies or real-world data collection could you effectively undertake to bring in so as to enhance the value proposition of tebipenem still further and broaden its reach?

Ram, good evening and thanks for that great question. It is something that's – a focus of ours. We are focused on maximizing the value for tebipenem and cUTI. We do believe this is the largest unmet need in infectious disease today. Beyond that in terms of how we create value, we see several avenues in terms of how we continue to build the data story for tebipenem. First, we are contemplating larger and more formal trials and different infections in the future and we'll guide to that when we have a more solid plan. Beyond the Phase 3 ADAPT-PO study, which is quite powerful in its own right, we're building the case for a utility of tebipenem in two ways as we continue our work in 2021. First, we're laying the groundwork for possible future studies through our clinical plan. As an example, as David mentioned, we're conducting a Phase 1 bronchoalveolar lavage trial to assess the lung penetration of tebipenem, which would be important should be advanced tebi in pneumonia. And secondly just given the profile of tebipenem, we've had significant interest from investigators to initiate studies with tebipenem and we'll expect several investigator sponsored studies to initiate that will give clinicians more information on tebipenem HBr and its utility. And as David mentioned, you should expect us to be active at the medical meetings communicating that story.

Very helpful. And then on 720 just two points of clarification. So firstly, I think in the press release, there was some language relating to the possibility that based on findings or FDA recommendations, the dosing regimen employed in whatever the next clinical trial is as and when clinical development resumes could be different from the dosing regimen that you originally intended to employ. Can you just kind of drill down on that and give me a sense of how the new dosing regimen might differ from the original dosing regimen in order to take account of whatever recommendations the FDA might hand you? I understand that speculation at this point, but just give me some scenario.

Yes, thanks, Ram for the question. As you rightly note the specifics of what will be next for SPR720 are dependent on the data we continue to generate and the dialogue that we will have with FDA, and we do not have those specifics today. And when we do, we will certainly communicate that in the right public forum, just as a matter of historical precedent, what we mean when we say that we might see adjustments to the trial just historically when agents have come up hold, sometimes you will see adjustments to elements of the protocol such as inclusion or exclusion criteria monitoring or potentially something about the dose in terms of what specifically in-store for 720, we have more work to do as well as more conversations to have with our colleagues at FDA to bottom that out. And when we do, we'll be communicating that.

Just to add one…

I'm sorry, go ahead.

Just to add one point that the dosing in the toxicology study of the adult primates is being done by oral gavage dosing that is the medication is administered through a tube that's introduced into the esophagus. It's completely unrelated to the way that dosing has done in human beings. So that the concern may be that it is this dosing procedure that is the problem in the toxicology study. And that would not imply any change in dosing or dose regimen in humans.

And just to clarify, in all of the evidence you have seen to date, there is no direct indication that there is any issue with the dosing regimen that you originally promulgated for use in humans. First of all, there's still no overt indication relative to when you originally made the announcement of the FDA clinical hold notification and – versus where we are now. There is still no overt indication that we can definitively point to a drug-related effect. Is that correct?

Yes, Ram, let me review the evidence that we have. I think that as we've noted before we have prior rat primate studies, as well as normal healthy volunteer studies up to 14 days as well as an ongoing rat chronic toxicology study that suggest the same things that we felt when we opened up the Phase 2 study. What we know to date is consistent with the fact that there could be dosing related species specific or drug related hypotheses, the data to date continues to suggest that those hypotheses are relevant. And as we get more data, we'll continue to confirm that with FDA. So, the data that we have continues to support the viability of those hypotheses.

Thank you.

We have reached the end of the question-and-answer session. At this time, I'd like to turn the call back over to management for closing comments.

Thank you, operator. And I appreciate everyone's time for joining us today. I invite everyone to join us at our next webcast presentation at the Oppenheimer Healthcare Conference on March 16, 2021. Have a great evening.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.