Synlogic, Inc. (SYBX) on Q1 2021 Results - Earnings Call Transcript
Operator: Good morning and welcome to Synlogic’s First Quarter 2021 Conference Call. Please be advised that this call is being recorded. I would now like to turn the call over to Daniel Rosan, Head of Finance and Investor Relations. Please proceed. Daniel Rosan: Thank you, operator. Good morning and thanks for joining us on today’s conference call. This morning we issued a press release which outlines our first quarter 2021 financial results and additional business updates. The release is available on the Investors section of our website at synlogictx.com. Joining me on this call are Dr. Aoife Brennan, President and Chief Executive Officer; and Dr. Richard Riese, Chief Medical Officer. Other members of the management team, including Interim CFO, Gregg Beloff and the full team will be available during the Q&A. Dr. Aoife Brennan: Thanks, Dan. Good morning, everyone, and thank you for joining us. I’m thrilled to share with you today our financial results from the first quarter of 2021 as well as recent execution and progress across our portfolio. We are executing on our plans to demonstrate the clinical potential of our Synthetic Biotic platform in 2021 with proof of mechanism established in our two lead metabolic programs and strengthened balance sheet. We are well-positioned to deliver proof-of-concept readouts for both SYNB1618 in PKU and SYNB8802 in enteric hyperoxaluria later this year. Since the start of the year, we continued to maintain the rapid pace with which we are developing Synthetic Biotic medicines with the goal of providing meaningful treatments for patients with serious diseases. We are rapidly progressing our metabolic disease pipeline which leverages the ability of our platform to engineer Synthetic Biotic medicines and deliver them safely into the human GI tract to consume a toxic metabolite. We believe that there are a wide variety of disease state for this approach could transform patient’s life. As we plan for late-stage clinical development of our co-lead metabolic programs. Synlogic has made the decision to expand our manufacturing footprint by more than 50% to build expanded fermentation and lyophilization capacity. This build out which will be completed in the second half of the year will enable clinical supply to support the potential late-phase development of SYNB1618 and SYNB8802. Dr. Richard Riese: Thank you, Aoife. I would like to now walk you through the progress across our metabolic portfolio. As Aoife said, we now have demonstrated proof of mechanism in humans from both our lead metabolic programs, PKU and enteric hyperoxaluria, and our studies are executing well. Both programs have the potential to demonstrate proof of concept in 2021. Let me begin with PKU. PKU is an inherited metabolic disease in which children are born without the ability to metabolize phenylalanine or phe. Despite the availability of dietary management and approved treatment, a large proportion of patients struggle to maintain blood phe levels in the target range required to avoid neurocognitive deficits and irreversible neurological damage. Daniel Rosan: Thank you, Richard, and good morning, everyone. This morning, we released our financial results for the first quarter ended March 31, 2021, and I would like to review the highlights of those results with you now. First, I’m pleased to say we strengthened our balance sheet subsequent to the end of the first quarter with the completion of a public offering of 11.5 million shares. Net proceeds from the offering were $32.6 million bringing the company’s cash balance to an approximate $127 million. Now to the quarterly results. Research and development expenses were $11.2 million for the three months ended March 31, 2021, compared to $12.7 million for the corresponding period in 2020. The R&D expense for the three months ended March 31, 2021, consisted primarily of costs related to our collaboration with Ginkgo Bioworks for the optimization of synthetic biotic medicines as well as clinical study activities associated with SYNB1618 and SYNB8802 as well as the ongoing SYNB1891 Phase I study. General and administrative expenses were $3.9 million for the first quarter of 2021 compared to $3.8 million for the same period in 2020. For the first quarter of 2021, the Company reported a consolidated net loss of $15 million or $0.36 per share compared to a net loss of $15.8 million or $0.46 per share for the corresponding period in 2020. We had no revenues in the first quarter of 2021 compared to $0.1 million for the same period in 2020. Revenue was associated with services performed under Synlogic’s collaboration with AbbVie to develop synthetic product medicines for the treatment of inflammatory bowel disease, an agreement which has since been terminated. Now turning to the balance sheet. Synlogic ended the first quarter of 2021 with $94.4 million in cash, cash equivalents, and short-term investments. Under our current operating plan, taking into account both these quarterly results as well as our subsequent financing, we expect our cash and cash equivalents to be sufficient to fund the company through the second half of 2023. This will enable Synlogic to advance clinical programs through important data readouts over the coming months. Thank you for your attention. We look forward to keeping you updated on future calls. I will now turn it over to Aoife to wrap up. Dr. Aoife Brennan: Thank you, Dan. Our team has made tremendous progress across all of our programs both in and outside the clinic. We are executing effectively and with a sense of urgency. We have demonstrated proof of mechanism in human from both of our lead metabolic programs PKU and enteric hyperoxaluria and we look forward to the opportunity to demonstrate proof of concept in both programs later this year. We will now open the call for questions. Operator: Our first question comes from Joseph Schwartz with SVB Leerink. Unidentified Analyst: (Ph) dialing in for Joe. My first one is on SYNB8802. I was wondering if you could describe the Phase Ib urinary oxalate pattern in healthy volunteers that you have observed over the course of the study. I believe that the data released were in a particular time points and specifically, I’m interested in knowing, one, could you describe how the treatment and placebo arm looked over time, and two, was the delta different or the difference between the two arms plateauing or still separating towards the end of the trial. Dr. Aoife Brennan: Great, thanks Julie, this is Aoife here. I think that is a great question for Mr. Riese to answer. So, Richard, do you want to take Julie’s first question and then we can come back to subsequent questions after that. Richard Riese: Sure. The data will be presented in upcoming meetings and we look forward to that. Just a little preview of this, it is a great question. And what we found in terms of the 600 milligram group, which is the data we presented here, was that the placebo group kept increasing their urinary oxalate excretion up until treatment day 2. So there was a little tell even after the run-in period where the placebo group continued to increase. After that it appeared to plateau and both in terms of the placebo expression secretion 24 hour region urinary oxalate as well as the treatment difference between placebo and the 8802 treatment group and we showed the data somewhere about 200 milligram, well, 20 milligram difference and that was plateaued by the end of the treatment period. Unidentified Analyst: Okay. Thank you. Dr. Aoife Brennan: That is it. Thank you, Julie. Unidentified Analyst: Yes. Thank you. And then I guess for SYNB1618 and SYNB8802, we are expecting data both in second half and I was just wondering if you could just help us with the potential order in which we could see the data. Dr. Aoife Brennan: Yes, unfortunately, we don’t yet have full line of sight. They’re really neck and neck in terms of the execution and we have guided to second half of this year for both studies. And as we can kind of progress through the year . Operator: Our next question comes from Lina Kaminski with JonesTrading. Lina Kaminski: So I guess my first question is on 8802. Can you talk a little bit more on kind of your considerations for dose selection for the Phase Ib study? In terms of your expectations on the percent of urinary oxalate lowering in patients based on the 28.6% you saw, considering the baseline in both parts of this study and then I have a follow-up. Dr. Aoife Brennan: Yes, Richard, do you want to take that question up? Daniel Rosan: Aoife, I was just making sure you were back because we lost you for just a moment. But it sounds like you are so we are good to go. Dr. Aoife Brennan: Okay. Thanks. Richard, would you like to handle that question? Dr. Richard Riese: Sure. Of course we are very interested in how the healthy volunteer data will translate into patients who have volunteered and we are also optimistic for a couple of different reasons. First of all, there is precedence by another sponsor that showed that they have to volunteer data translated in terms of treatment effect to patients with enteric hyperoxaluria. And secondly, and most importantly for us, which we believe is potential differentiating effect, a lot of the oxalate in patients with enteric hyperoxaluria is absorbed in the colon, and in the transit time through the colon is much, much longer than the transit time in the upper GI system. Now in healthy volunteers most of the oxalate is absorbed in the upper GI. So our strain gets whenever time that is four or six hours to consume oxalate before it is absorbed whereas in enteric hyperoxaluria patients, where as I said before, there were a lot of the oxalate is taken up by the colon and there is a long transit time in the colon that the strain will have a much longer time to consume oxalate in patients before it is absorbed. In the long and the short of that is our expectation is that we will meet the 28.6% treatment difference between 8802 and placebo in patients with enteric hyperoxaluria and optimize few pointers, we may do even better. That being said, we need to do the experiment and we are in process of doing the experiment right now and we are quite pleased with our enrollment. Lina Kaminski: Got it. Thank you. And I guess the other question is on PKU assets. So how should we be thinking of 1934? Should we be thinking of it eventually categorizing 1618 or is that going to be separate assets that should or may expand the market opportunity? And I guess in terms of maybe you can help us with a little bit of the timing when can we anticipate to see filing or even see it in the clinic. Dr. Aoife Brennan: Yes, thanks, Lina. So just for a little bit of background, when we took 1618 into the clinic, we chose a version of power that was described in the literature. So that is the enzyme that converts phenylalanine into TCA in the bacteria but we weren’t sure that that was the best possible enzyme to choose. So around the time that we initiated the clinical development in 1618, we also undertook a kind of a technology landscaping to see what technologies were available elsewhere that would allow us to determine by whether we could optimize or do better based on the PAL enzyme activity that demonstrated and we are taking forward. So 1934 is the result of work that started some time ago and we have been really pleased both in terms of how we have been able to assess the various technologies that are available to optimize strain activity as well as has the team has been able to kind of make a very nice decision chart, if you will, about moving 1934 as the best of breed, if you will, of all those strains that backdate about to backup forward. We have started IND enabling work, we will certainly provide additional updates as that program moves forward and we would expect it to move very rapidly and to potentially be able to dovetail into the development program at the right time if that seems like the right decision. But it will be very much based on the data from both 1618 as well as how rapidly 1934 progresses. And frankly, how it looks in the clinic and we will make the right decision for the program. And once we have all of the data in hand. So hopefully, that makes sense. Lina Kaminski: Yes, that does. Congrats on the quarter end. Dr. Aoife Brennan: Thanks, Lina. Operator: Our next question comes from Ram Selvaraju with H.C. Wainwright. Unidentified Analyst: Hi, this is on for Ram Selvaraju. So I was just wondering, regarding the Ginkgo Bioworks IPO, what implications might Ginkgo’s going public have for its relationship with the Synlogic and its ability to dedicate more resources to the partnership? Dr. Aoife Brennan: Yes. So obviously, it is a great congrats there in order for our partners at Ginkgo. Our collaboration continues to be very strong, we work with them very actively, and as they develop their platform we will be absolutely looking for ways to apply back to our preclinical programs. And so it is a very exciting I think advancement in terms of the Ginkgo business. Dave is the Chief Scientific Officer here, he’s been most and closely involved with the Ginkgo collaboration. So maybe I will ask Dave to provide some color in terms of how we currently work with Ginkgo on some of the additional preclinical metabolic programs that we are bringing forward in development. Dave, do you want to comment on that? Daniel Rosan: Yes, sure, I would be happy to. Yes, I would echo, definitely congratulations to the Ginkgo team. Yes, they have been great partners up until this point and we are looking forward to continuing to work with them. We work with them really closely on advancing the platform and really contributing to the early stages of our development programs, helping us in optimizing candidates, bringing some resources and capability that we don’t have or need to build in-house. And so it really allows us to focus the team on a lot of the mid to later stage development candidates and really focus on kind of the clinical opportunities. And by working with Ginkgo we think we are really able to feed the pipeline and kind of help build that next stage of asset. So we are looking forward to continuing that and maybe some additional opportunities that will come with their success. So it really should remain status quo and really help impact our pipeline going forward. Operator: Our next question comes from Ryan Mills with Jefferies. Ryan Mills: So just wondering what sort of CapEx is going to be required for the CMC expansion and if this has any implications for your R&D spend moving forward. Dr. Aoife Brennan: Yes, that is a great question. Maybe I will ask Dan or Tony to comment on that. Obviously, hugely exciting advancement for us having access to higher-scale fermentation and lyophilization capability, so that we can move into late stages of development. I think is that is critical as our programs advance. I will ask Dan maybe to comment on the CapEx implications of that and then Tony to provide any additional color if required. So, Dan, over to you. Daniel Rosan: Yes. Thank you, Aoife. So to remind folks, we have a very capital-efficient approach to our manufacturing capability in which we partner with an on-demand clean room provider. So we feel very comfortable that we can make this investment off the strength of the balance sheet. I do think that our burn going forward in 2022 will presumably be incrementally higher due to the cost of late-stage development both clinical trial costs and drug substance and material. But this scale-up will be done in a very capital-efficient way. We are not providing specific guidance but we are talking low single-digit millions not mid or high. It is very much absorbable for a balance sheet and the P&L of our size. And I would welcome Tony sharing a little bit more about the capabilities that this would enable because we see this as a core differentiating investment for our company. Antoine Awad: No. Thank you, Dan. Yes, that is correct. I can add a little bit on the capital. Just as background, as you may have heard previously, we use single-use technologies. The single-use technologies allows efficient scale-up and efficient cost. So for that reason as Dan mentioned, I do agree shouldn’t be that high. The ability to scale up allows us to support the late-stage and maybe even beyond and at this point in time, we are evaluating those capabilities and the ability to support the clinical stage downstream. Operator: There are no further questions, I would like to turn the call back over to Aoife Brennan for any concluding remarks. Dr. Aoife Brennan: So I would just like to finally thank everybody for joining us on today’s call. We are available later today for any follow-up questions and hope everyone has a great day. Thank you. Operator: Ladies and gentlemen, this does conclude the program and you may now disconnect. Have a great day.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.
