Synlogic, Inc. (SYBX) on Q2 2022 Results - Earnings Call Transcript
Operator: Good morning. Welcome to Synlogic's Second Quarter 2022 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 Funderburk of Kendall Investor Relations. Please proceed. Andrew Funderburk: Thank you, operator. Good morning, and thank you for joining us on today's conference call. This morning, we issued a press release, which outlines our second quarter 2022 financial results and additional business updates. The release is available on the Investors 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 first quarter highlights. Molly will provide additional details for the clinical programs. 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 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 statements as a result of various factors, including those described under the heading Forward-Looking Statements in Synlogic's press release from earlier today 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 statements. Now I'd like to turn the call over to Aoife. Aoife Brennan: Thanks, Andrew. Good morning, everyone, and thank you for joining us. I'm happy to share update today on our recent progress, the financial results for the second quarter of 2022 and upcoming milestones. This is an exciting time for Synlogic and the synthetic biotic platform. For our most advanced program in PKU, in the second quarter, we announced that we received a positive opinion on orphan drug designation from the European Medicines Agency or EMA for SYNB 1618 for the treatment of PKU. This is an important step for our program and the EMA's opinion reflects recognized need for new treatments of PKU. In the remainder of 2022, we expect three clinical data readouts from three different programs. These include for the PKU program, the Phase II data read out and Phase III candidate confirmation. For SYNB 1353 is synthetic biotics designed to consume timing as a potential treatment for homocystinuria or HCU, findings from the recently initiated Phase 1 healthy volunteer study and finally for SYNB8802 a potential treatment for entire hyperoxaluria, we also expect to share proof of concept data. We recently recognize SYNB 1353 as our third program to enter the clinic in less than two years, reflecting the advantages of Synthetic biotics. SYNB 1353, built on technical as well as regulatory synergies and promise of this platform of biotherapeutics based on synthetic biology, SYNB 1353, entered the clinic within just a year of being named as a candidate as was done for SYNB 8802 and SYNB 1934, the FDA raised the traditional preclinical toxicology package for SYNB 1353, recognizing the transferable findings of using the chassis. Moving beyond the clinical pipeline, I'm excited to the newest addition to the Synlogic pipeline SYNB2081 for gout. gout is a well-known and often debilitating form inflammatory arthritis cause the intense joint pain and limited range of motion due to excessive levels of uric acid. Patients remain underserved, especially those who are intolerant of or refractory to available therapies. We are excited to advance SYNB2081, our second synthetic biotic developed through our partnership with Ginkgo Bioworks. And finally, it was a pleasure to share earlier that Brendan St. Amant has been appointed Synlogic's General Counsel and Corporate Secretary. As discussed on our last call, trial readiness activities are underway for the start of our Phase III study for the PKU program in the first half of 2023. This builds on Phase II interim analysis and proof of concept data shared last fall, demonstrating in PKU patients SYNB1618 strong activity and reduction in plasma Phe, the amino acid PKU patients arenât able to metabolize and becomes neurotoxic at high levels. In parallel with the proof of concept readout, we confirmed even greater potency with next generation SYNB 1934, while establishing the safety bridge at a Phase 1 head-to-head study. Since then, we've progressed, SYNB 1934 such that it is now the presumed Phase III candidates. However, that will be confirmed after assessing the SYNB 1934 experience in PKU patient from the Phase II study to be shared later this year. Looking ahead to the Phase II data, we have an opportunity to remind this audience of the endpoint we use to confirm drug activity. For all of our programs, we look for multiple end points that are specific to the synthetic biotic to assess if they're working as intended. For PKU, our synthetic biotic is designed to metabolize Phe in the GI tract. To measure this effect in a more precise and controlled way, we provide labeled Phe or D5 Phe as part of a test meal at baseline and then again, after treatment in the study. This is the primary endpoint for the Phase II symphony trial. We are also assessing the impact of our synthetic biotic on fasting plasma fee levels, as well as TCA in plasma and HA in urine, two metabolic byproducts, which can only be produced if strain is effectively consuming Phe. We also look forward to sharing data from evaluation as a monotherapy, but also as an adjunct to . With that, I'll pass the call over to Molly to provide a bit more perspective on the significance of this positioning and our differentiation in PKU, as well as some further color on our HCU program. Molly? Molly Harper: Thank you, Aoife. Aoife has described how our Phase II design reflects our positioning in PKU. Targeting the more severe patients who in the case of PKU are also a large majority of the patient population. This includes both monotherapy and adjunctive patients. The more mild patients with PKU are often described in terms of BH-4 or responsiveness. However, even these patients in spite of responding to and benefiting often have fee levels, far above desired levels. These patients present an opportunity for adjunctive treatment. The large majority of PKU patients in the US and Northern Europe are considered to have classical PKU. These are the patients with higher fee levels who did not respond to and for whom balancing is not an option. We find tremendous appreciation for the potential of an oral non-systemic approach like Synlogic. This is the currently untreated patient population who present an opportunity for our approach as monotherapy. Synlogic program positioning, which you see shown here in the middle, is for these more severe patients who are currently untreated or in need of additional fee lowering as an adjunct. Turning now to SYNB 1353, which is Aoife noted recently entered the clinic in healthy volunteers. We've shared that this program builds on disease state synergies. Since as an inborn era of metabolism, there is a direct overlap between HCU and PKU in terms of PIs, KOLs, and connected patient communities. In terms of the current disease management, patients with HCU also must live with restrictive diets that are considered even more onerous and challenging than those for PKU, and to reduce the risk of impaired cognitive function or developmental disabilities. In addition, however, elevated homocystinuria in HCU presents significant risk of devastating and acute systemic complications, including thrombo-embolism and stroke, skeletal weakness and associated fracture, as well as lens dislocation, but like PKU, the current standard of care for HCU leaves a need for a new approach, an approach that is orally administered without systemic absorption and associated risks, and also conducive to both monotherapy or an adjunctive or combination treatment approach. Today's standard of care is the generic vaccine known as a brand name, which has been generic for decades does not alleviate dietary restrictions and often leaves further need for homocystin reduction. Current options in development are injectable and replacement therapies. From speaking with KOLs, clinicians and patients, we have heard consistently the excitement for an oral option, particularly one with the profile of an engineered probiotic and we are excited about moving this forward. At this point, I'd like to turn the discussion over to Dave, to provide a bit more context regarding our upcoming data readouts, as well as our newest drug candidate. Dave Hava: Thanks Molly. It is a pleasure to review this exciting time for our pipeline as it both advances and has added a new drug candidate. Molly and Aoife have both touched upon our upcoming data readouts in PKU and HCU. We are also looking forward to proof of concept data in support of SYNB 8802, designed to consume oxalate in the GI tract and reduce risk of recurrent kidney stones and related renal complications in patients with enterotypes. SYNB 8802 is being evaluated in two studies, one in patients with Roux-en-Y gastric bypass surgery who have elevated absorption of oxalate to evaluate whether SYNB 8802 can lower urinary oxalate in those patients. There is a second ongoing Phase I study to the SYNB 8802 program to continue to build our clinical data set in patients with Roux-en-Y gastric bypass. This is an inpatient setting study where we can collect diet data as well as high quality, 24-hour urine and fecal samples. We believe that the combination of parameters assessed will support proof of concept for this patient population. It is also my pleasure to share that we've named an additional program in our metabolic pipeline, SYNB 2081, a synthetic biotic designed to consume uric acid in the GI tract, with the goal of lowering systemic uric acid levels for the treatment of gout. As Aoife mentioned, this is our second drug candidate through our partnership with Ginkgo Bioworks. We are tremendously excited about the opportunity to add another much-needed option to the gout treatment repertoire, which remains quite limited today by current treatments, which are limited in terms of safety, efficacy or the patient experience. I'll now turn things over to Michael to review our financial results. Michael Jensen: Thanks Dave, and good morning, everyone. Earlier this morning, we released our financial results for the second quarter ending June 30, 2022. And I'm pleased to review the highlights of those results with you now. Revenue was $0.2 million for the second quarter of 2022, consistent with the same period in 2021. Revenue was from our collaboration with Roche, for the discovery of a novel synthetic biotic for treatment of inflammatory bowel disease. For the second quarter of 2022, the company reported a consolidated net loss of $15.7 million compared to a consolidated net loss of $15 million for the corresponding period in 2021. Turning to the balance sheet, Synlogic ended the second quarter of 2022 with $106.8 million in cash, cash equivalent and marketable securities compared to $120.5 million as a March 31, 2022. Under our current operating plan, we expect that our cash will take us into 2024 and enable Synlogic to advance a clinical program through multiple 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 Aoife to wrap things up. Aoife Brennan: Thank you, Michael. This is an exciting period for Synlogic as we advance to three anticipated data readouts in the coming months and a Phase III initiation in the first half of 2023. We're well-positioned with a strong balance sheet to advance these important programs and are in the fortunate position of having funds available to support us well into 2024. I'm very pleased with all of our progress and the commitment of our entire team to advance promising therapies to patients in need of new treatment options. We will now open the call for questions. Operator: Our first question comes from the line of Joseph Schwartz from SVB Securities. UnidentifiedAnalyst: Stallion for Joe. Thank you for taking our questions. The first one is on your PKU franchise. So another company recently lowered their sales guidance for their PKU franchise citing that PKU treatment centers have not bounced back from the pandemic. And I know you mentioned labor shortages on your earnings call last quarter. So I'm wondering if you're still detecting some challenges enrolling Symphony, and if internal expectations on the market opportunity have been adjusted based on the recovery rate observed from the other company. Aoife Brennan: Thanks Julie. This is Aoife. I can say that our guidance for the arm II data is unchanged. We're planning to have data later this year. Regarding the market dynamics in PKU, maybe I'll pass the call over to Molly to make some comments on -- we've obviously been observing other products and learning from them and she can provide you with a little bit more color there. Molly Harper: Hi there. Thanks for the question. So in terms of the other products, what we've generally heard from the clinicians there is that the interest in new therapies and alternate therapies that provide a different profile is extremely strong. And in every single patient appointment they're having, they're talking about not just what's available, but also options in development. So, well, clinicians across categories in different treatment categories are seeing different paces of return to, quote unquote, normal including a seasonality considerations, what's guiding the excitement and the opportunity that's the foundation of our program really hasn't changed. And if anything, as we engage with the community is just getting stronger and stronger. UnidentifiedAnalyst: Okay. That's helpful. Thank you. And then maybe continuing on enrolment theme, I know it's very early, but are you anticipating major differences in your Phase III enrolment versus Phase II that could affect the enrolment rate? I'm wondering if you're just expecting it to be faster, slower or about the same based on your experience in Phase II. Aoife Brennan: Great question. I think there are a couple of things that are going to be very different, for the Phase III program compared to Phase II program. Number one thing is that we'll have a lot more sites. So we anticipate going to multiple countries and regions and having, a method of full difference in terms of the number of sites that we'll be using to enrol and the trial will obviously be bigger, but I think spreading a broader geographic net will certainly help us in terms of achieving the required enrolment rate. I think the second component is that there are going to be big differences in terms of the study design. So these patients with PKU are very interested in having access to therapy, beyond just two weeks of a Phase II study. And that's some of the feedback that we've received as we've been enrolling Phase II is that these patients are interested in maybe Phase III, where they have the opportunity to participate in an open label extension study and have that opportunity if they benefit from treatment to be able to continue until the product is approved. That's very similar to loss of rare diseases. That's always a key concern for patients in enrolling. They don't want to have potential benefits and then have to discontinue the product. And I think the third thing that's going to be very different from between the Phase II and the Phase III is that the phase three will obviously be a lot less intensive in terms of the commitment and work required for patients and sites. Our Phase II study is very data rich. There's lots of endpoints. Patients have multiple visits to the clinic for meal test and other things and that's obviously a big burden for patients. It pays off because we get these nice biomarker endpoints and while we're learning about the program that makes perfect sense. But as we move to Phase III, I think the burden for sites and for patients will be a lot lower because we'll really be focusing in on the plasma fee lowering as the primary endpoint with less frequent visits with much more, less intensive visits in terms of blood draws and other assessments. So I think those are the, the kind of key factors and the good news is we have other, studies other Phase III trials to base our enrolment projections on. So when we come to that point and they're providing guidance around Phase III enrolment rates and things like that, we have some precedent to go by for those kinds of data points. UnidentifiedAnalyst: Okay, great. That's very helpful. And then maybe finally, if I could just squeeze one more in; how should we think about age in fee reduction? My understanding is Phase III trial included children and adults. On the other hand, your Phase III trial is enrolling 18 and up, and I know that the platforms are different but, I guess the question is, are you anticipating or expecting a difference in fee lowering based on age. Thank you very much. Aoife Brennan: Yeah. So I think that's a great question. I think number one thing in terms of pediatric product development, Kuvan was a little bit of an outlier because it had been used clinically in Japan when filed the initial IND. So it did have some clinical data and safety and efficacy and exposure, but in general, the agency like you to demonstrate safety and some probability that patients will benefit before you start enrolling those who are less true or below the age of consent essentially. And our plan would be to continue to work with the FDA to be able to broaden and enrol those younger patients in a step manner and based on the data that we're gathering in the Phase II study, because we do recognize that the pediatric patients are key segment for us with big unmet need and obviously lifelong consequences. So we'll be moving as quickly and as aggressively as possible to get those patients on study. I think in terms of the endpoint with the pediatric patients, there's no reason from a biology perspective, why pediatric patients will respond differently to adults in terms of fee lowering. One thing that is different in the pediatric patients is maybe the endpoint needs to be different. Often particularly the young kids who are under very tight parental control will often have baseline lower fee levels and in those patients, maybe the endpoint needs to be protein liberalization as in how much additional natural protein can be added to their diet, rather than just looking at the lowering. Because, some of these parents with kids who have very obsessive are monitoring fee levels very frequently and really keeping the diet very tightly controlled. So there may be differences just in terms of the, kind of the rise end point in the various populations as we've marked down the age group. But, we're absolutely thinking about pediatric development as part of our overall chemical development plan and see that there's a tremendous opportunity in that particular segment for, for our candidates. Operator: Our next question comes in the line Mark Breidenbach from Oppenheimer. Mark Breidenbach: Thanks for taking our questions. Just a few from us. First of all when can we expect you to announce the finalized Phase III protocol details? Are we going to have to kind of wait until next year for that? And can we assume the trial's being designed with the intention to support registration in more than one geography, both, maybe both US and Europe. Second question on PKU is whether or not you're going to be relying on your in-house manufacturing capabilities to support the study. And if you have clearly spelled out the list of CMC requirements from the FDA for drug products, that's going to be used in Phase III and beyond. So those two questions on PKU and then maybe one on the new program in gout, I guess I'm just wondering if you would expect 2081 to have any impact on uric gas production from endogenous sources or maybe even on renal excretion of uric acid, or would this product only reduce uric acid derived from dietary sources? Thanks so much for taking the questions. Aoife Brennan: Great. Yeah. Thanks so much, Mark, for your questions. For the first one, in terms of the Phase III design, we plan to have an end of Phase II meeting with the FDA where we'll get final alignment on the specific design before we disclose that externally, I think that's the prudent thing to do. So the manufacturing requirements, we've had a lot of good discussions with them as we've been going through development around our CMC and particularly our analytics for our products and have very good alignment and a good collaborative discussion with them. We don't foresee any major show stoppers there based on the back and forth that we've had to date, but obviously the final agreement comes with the end of Phase II meeting minutes. And as soon as we have those in hand, we'll be sharing the overall study design, as well as the overall feedback from FDA with the investment community. I think the other component of your question is about global regulatory. We do see a lot of opportunity for this product. There are about 55,000 patients with PKU globally, about 17,000 of those are in the US. So there is clearly a big unmet medical need, a large PKU population. And I think some interesting commercial opportunity ex-US in some of those geographies. So we are, as you've seen with our announcement of our EMA orphan designation, we're actively pursuing ex-US regulatory alignment. Having said that's the most important thing for us. It's speed to BLA in the US. So we are engaging, but also maintaining focus on initiating our Phase III study as quickly as possible. And don't want to compromise our speed or success with FDA in trying to get global alignment for PKU. And then on the final PKU question about manufacturing, I think we have Tony on the line. Maybe I'll ask him to explain in more detail what our plans are for manufacturing, the Phase III material for the trial. Tony? Tony Awad: Yeah. Thank you. I think the first point you mentioned in terms of regulatory correspondence with the FDA, we've had positive support of CMC regulatory correspondence. We constantly are going back and forth and that's on good path. So the question I think on manufacturing supporting the Phase III, we've made concrete progress in executing the plan. So we have product to supply for the Phase III, and that comes from what I described as maybe three different pieces. First piece is we optimize our process both to allow for high yield within by improving our cell densities. But we also have scaled up. The second piece is that we have completed expansion renovation of the suite for our manufacturing facility to allow us to support this next level scale up or the scaled up process. And we've also completed tech transfer into the suite. And we're really getting ready now for the future GMP activities to support the Phase III. So the combination of the scale, the improved process cell densities that allow for high yield, the fact that we've expanded our suite, all these pieces come together to allow us to support the Phase III, and we will provide material and support production of material for the Phase III from our current suite. Does that answer your question? Mark Breidenbach: It, it does. Thank you. Aoife Brennan: Yes. I wasnât forgetting that Mark. I think we have Dave Hava on the line who can maybe explain some of the biology, we've done some really elegant work in research to elucidate the role of gut in gouts. And we look forward to sharing that at a future academic meeting, but maybe Dave can give you some of the high points today. Dave Hava: Yeah, I'd be happy to do that. Yeah. As you just said, I think understanding the biology and uric acid kind of metabolism, and distribution's been a big component of advancing this program forward. I think for many of the metabolites we're interested in there are multiple pools to draw on, right? There's the obviously diet component. That's true for the immuno acids oxalate. I think we think that's also true for uric acid. There are also pools of many of these metabolites that recirculate from the systemic compartment into the gut and then back out as kind of recirculation pathway and we've described that for methionine as a potential pool to also access. We also think that happens with uric acid and so that comes from some literature, some older literature that's really highlighted a gut component in the metabolism of just endogenous uric acid and clearance from that compartment. And so we do think that there'll be the ability of the bug to access some of that pool as well. And so that -- and we have some of our own data in both road and the non-human primates that support that. So it's likely to be both compartments is kind of the short answer to your question. Mark Breidenbach: All right, thanks so much for that clarification and good luck with everything. Take care. Operator: Our next question goes in the line of Raghuram Selvaraju from H.C. Wainwright. Mitchell Kapoor: Hi everyone. This is Mitchell on for Ram. Thank you for taking our questions. Wanted to ask you were talking about on the enrolment rate for PKU for Phase III versus Phase II. It could be a little less intensive because in Phase II, you're collecting a lot of data. It's going to be very data rich. Could you talk about any differences that you could expect, anything you would leave out on this a lot of data that's going to be very data rich. Could you talk about any differences that you could expect, anything you would leave out on the Phase III design versus Phase II in terms of that data, in terms of like biomarker collection and others, what might we see more of in the Phase II that we potentially wouldn't get to see in the Phase III? Aoife Brennan: Yeah, so good question, Mitchell. This is Aoife. So in the Phase II study, we really wanted to do the most efficient design possible that helped us understand whether this product could be effective in lowering fee and PKU patients. We think based on the data we announced last year that we were successful in that I think the data is very internally consistent. We had multiple biomarkers, all arrows pointing the same way. So we know based on those data and are hoping to kind of further confirm that later this year that the product can work. I think the Phase III study is now going to evaluate and kind of sharpen up the clinical profile for this product. And they're going to be multiple learnings from the Phase II that will take forward into the Phase III design. The two most important components I think from my perspective as a drug developer are the proportion of patients who are going to respond the proportion of the PKU patients who are going to have a response, and then what's going to be the fee lowering in that responder population. I think those are the real critical endpoint and that's the much easier endpoint it's a blood sample that can be taken every couple of weeks for plasma. There's no need for Neo tests overnight fasting intensive, multiple time point daily curves like we're doing in Phase II. I think the second component is just making sure that we optimize the tolerability profile of the product. As you've mentioned before, we have GIAEs. We've learned a tremendous amount from all of our programs in terms of how to best manage and mitigate. What we've seen is that those AEs are very individual. And I think allowing people to titrate up to the right dose and find the right dose for them is going to be a really important component of our Phase III study design. So I think both efficacy components, as well as tolerability components and I think overall, we see tremendous promise based on the learnings from Phase II that we can really optimize that Phase III design to be as informative as possible, and also have a good enrolment rate, by having it low burden for patients and foresight. Operator: Thank you. I would now like to turn the conference back to Aoife Brennan for closing remarks. Aoife Brennan: I'd just like to close by thanking everyone for joining us today. For the call, we look forward to busy second half of this year. And thank you so much for your attention. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.SYBX Ratings Summary
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Synlogic, Inc. (NASDAQ:SYBX) shares were trading 3% lower Friday afternoon following the company’s Q4 results.
The company has several clinical updates on deck for 2022— starting with initial results for SYNB1934 in PKU in the first half of the year—which is expected to inform a product candidate selection for a planned pivotal trial in the second half of the year.
With shares trading near cash, analysts at Oppenheimer see an attractive buying opportunity ahead of upcoming readouts.
