Good day, everyone, and thank you for standing by. Welcome to the Spero Therapeutics Second Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the call over to Ted Jenkins, Vice President, Head of Investor Relations at Spero Therapeutics. Mr. Jenkins, please go ahead, sir..

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 in the second quarter of 2021. Our press release is available on the Investors page of the Spero Therapeutics website.

Before we begin, I'd like to remind you that some of the information contained in the news release and on this conference call contain forward-looking statements based on our current expectations, including statements about the initiation, timing and submission to the FDA of an NDA for tebipenem HBr and the potential approval of tebipenem HBr by the FDA; future commercialization, the potential number of patients who could be treated by tebipenem HBr and market demand for tebipenem HBr generally; expected broad access across payer channels for tebipenem HBr; the expected pricing of tebipenem HBr and the anticipated shift in treating patients from intravenous to oral administration; the plans for the company's ongoing development of SPR720; statements about the future development and commercialization of SPR206 and the potential receipt of milestone payments as well as royalties on potential future sales of SPR206; the design initiation, timing, progress and result of the company's preclinical studies and clinical trials and its research and development programs; management's assessment of the results of such preclinical studies and clinical trials; the impact of the COVID-19 pandemic on the company's business and operations; the company's cash forecast and anticipated expenses; the sufficiency of its cash resources and the availability of additional nondilutive funding from governmental agencies beyond any initial funded awards.

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' filings with the SEC, included in the Risk Factors section of our quarterly report on Form 10-Q filed today.

These forward-looking statements speak only as of the date of this conference call, and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the company after the date of today's release and call. Participating in today's call are Dr. Ankit Mahadevia, Chief Executive Officer; Dr.

David Melnick, Chief Medical Officer; Cristina Larkin, Chief Operating Officer; and our Chief Financial Officer, Sath Shukla. With that, I'd like to turn the call over to Dr. Ankit Mahadevia. Please go ahead, Ankit..

Thank you, Ted, and thanks to all for joining us today to discuss our financial results and corporate highlights. As we continue to progress to the back half of 2021, we remain focused on preparing for the upcoming tebipenem HBr NDA filing and executing on our corporate strategy as we work to transition to a commercial organization.

I'm pleased to say that our efforts around these interrelated goals have continued to advance on track. On our last call, we shared that we had accumulated all of the data necessary for our NDA submission for tebipenem.

Since then, we have been performing all of the required analysis and drafting sections of the NDA, both at the study and summary levels. We've seen sustained progress on these fronts, and we're confident that we'll submit the NDA in the fourth quarter.

This is in line with the guidance provided on our last earnings call for an expected NDA submission during the second half of this year. Our efforts around tebipenem HBr are supported both by our strong clinical data and our positive regulatory interactions with FDA.

The positive Phase III ADAPT-PO trial results reported late last year showed that the trial's primary endpoint was met with data demonstrating that an all-oral regimen of tebipenem HBr is noninferior to an all-IV regimen of ertapenem for the treatment of complicated urinary tract infection, or cUTI, and acute pyelonephritis, or AP.

Now our previous FDA interactions and written communication indicate that positive results from a single well-controlled pivotal trial such as ADAPT-PO could be sufficient to support the approval of an NDA for tebipenem HBr in the treatment of cUTI and AP.

Additionally, through a feedback we received from our pre-NDA meeting, the FDA endorsed the structure and form of our planned NDA submission and indicated that the data set and CMC plan that we intend to submit in the NDA package meet their standards.

We are confident that our tebipenem HBr program will continue to advance its plan as we move through the second half of '21 and into 2022.

Based on our positive clinical data and ADAPT-PO's rigorous design, we believe that, if approved, tebipenem HBr will be an important physician treatment option for possibly over 2 million cUTI and AP patients in the U.S. alone who are resistant to currently available oral therapies.

ADAPT-PO was designed as the first head-to-head comparison of an all-oral versus an all-IV regimen in cUTI specifically to provide a robust result that would give physicians confidence to prescribe tebipenem HBr to cUTI and AP patients, who would otherwise be required to 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 any compromises on clinical response, safety or tolerability. If approved, tebipenem HBr will become the only oral carbapenem available for the treatment of cUTI and AP.

It's ability to effectively replace IV therapy for these patients could prevent and shorten unnecessary hospitalizations, delivering value to the patient and economic benefits to the health care providers and payers. This has led payers to express their willingness to cover tebipenem HBr, which bodes well as we work towards potential launch.

I would now like to provide some updates on the SPR720 clinical program. As a reminder, SPR720 advanced into a Phase II clinical trial in patients with nontuberculous mycobacterial disease, or NTM, at the end of last year.

The initiation of this trial was supported by positive data from Phase I single and multiple ascending dose trials as well as nonclinical toxicology studies in nonhuman primates and rodents. Within these studies, multiple subjects were dosed and no severe or serious adverse events were observed.

As the Phase IIa trial was being conducted, however, we also simultaneously engaged in an additional longer-term toxicology study in non-human primates. Surprisingly and in contrast to the positive Phase I SAD/MAD human experience, unexplained NHP mortalities were observed.

This led us to prudently pause the Phase IIa clinical trial and promptly notify the FDA of this important dynamic. We then subsequently received the clinical hold letter in which the FDA requested additional information from the nonhuman primate study, including the study report.

As we discussed on our last call, we have since completed the nonhuman primate study and continue to analyze the data. We expect to complete the requested study report in the third quarter as planned. With this information in hand, we will continue to engage the FDA on a full response to their clinical hold letter in early Q4.

We will give an update on these discussions following FDA's written comment and direction as to our specific findings from the nonhuman primate study. Until then, I will reiterate the data we have seen to date that support the hypothesis that the observed mortalities were not drug-related, but rather dosing and specie specific.

This gives us confidence that there is a path forward for the SPR720 clinical program. But of course, we must complete our interactions with FDA before a final determination can be made. I would also now like to briefly highlight the recent exciting developments that occurred around SPR206, our next-generation polymyxin product candidate.

And then David can speak in more detail about the program. We were thrilled to announce that we entered into a licensing agreement with Pfizer around this asset, pursuant to which Pfizer receives the rights to develop, manufacture and commercial SPR206 in ex-U.S. and ex-Asia territories.

In exchange for these rights, Spero is eligible to receive up to $80 million in development and sales milestones with high single-digit to low double-digit royalties on net sales.

In tandem, with the licensing agreement, Pfizer also made a $40 million equity investment in Spero as part of the Pfizer breakthrough growth initiative, a program focused on funding innovative science to meet patient need.

This investment, which was made at a premium to market, provides important capital, which we intend to use in preparation for the potential approval and launch of tebipenem HBr as well as to support ongoing clinical development of SPR720 and SPR206.

The equity investment and licensing agreement provide important external validation from an industry leader and support our broader corporate strategy and pipeline development of anti-infectives for patients with unmet need. Further, the Pfizer transaction speaks to our ability to execute on our business development objectives.

It is also representative of a recent uptick in interest and investment activity around product candidates with the potential to address the rising rate of antimicrobial resistance, or AMR.

For instance, Pfizer with -- along with more than 20 leading pharmaceutical companies, contributed to the formation of the AMR Action Fund, which aims to invest over $1 billion in antibiotic development by 2030.

Pfizer has also already committed $100 million to this fund and recently acquired Amplyx Pharmaceuticals and Arixa Pharmaceuticals, both of which have been focused on anti-infectives.

This activity, along with the efforts of other major pharmaceutical companies, government agencies and policymakers, is increasing the dynamism of the antimicrobial development ecosystem.

Spero continues to remain active in the collaborative efforts of this ecosystem as shown by our recent deal with Pfizer, our relationships with other corporate partners and private foundations and our partnerships with several government agencies, including BARDA, the U.S.

Department of Defense, the Defense Threat Reduction Agency and the National Institute of Allergy and Infectious disease. Before handing the call off to David, I'd like to reiterate Spero remains well equipped to continue executing on our objectives, even amongst the ever-evolving circumstances of the COVID-19 pandemic.

While our business has not been materially impacted by COVID-19 in 2021, the pandemic is highlighting the value of replacing IV therapies that are often administered in the hospital setting with an at-home oral option. We believe that tebipenem HBr, if approved, could provide such adoption and enable a shift in care to the outpatient setting.

This would provide value to patients, health care providers and payers alike because it would reduce patient exposure to COVID-19 and other secondary infections. Further, hospital would also see a financial benefit and free up capacity for seriously ill patients with no viable alternatives, the hospitalization.

I will now hand it over to David to provide a more detailed update on our clinical progress and our pipeline..

Thank you, Ankit, and good afternoon, everybody. It's my pleasure to share our pipeline updates with you today. I'll begin by speaking briefly about our lead candidate, tebipenem HBr, an oral carbapenem that is advancing toward an NDA filing expected for the fourth quarter.

To provide a recap of what has brought us to this point, we reported top line data showing that our Phase III ADAPT-PO trial met its primary endpoint in September. We also continue to work to complete the back-end activities for our suite of Phase I studies, which are designed to support the NDA.

These activities included locking the study databases, analyzing these data sets and finalizing the clinical study reports. As we previously disclosed in December 2020, these Phase I activities were delayed slightly due to the pandemic, though we were able to quickly adapt and have not seen any further delays during 2021.

We have since completed all of these activities, and we are now focused on procuring the required integrated analyses and drafting sections for the NDA submission. Given the straightforward nature of these activities, we are fully on track to submit the NDA in the fourth quarter.

In parallel with our efforts regarding the NDA, we also continue to work with our partners to ramp up our CMC capabilities ahead of tebipenem's expected launch during 2022.

I should remind everyone that one of our partners is Meiji Seika, whose experienced manufacturing a granular formulation of tebipenem over the past decade will be invaluable as we move toward commercialization.

Before I move on to speak about 720 and SPR206, I'd like to take a moment to talk about our strong clinical data supporting tebipenem HBr and what we believe it means from a physician's perspective.

The increasing prevalence of resistance to existing oral therapies for complicated UTIs as well as safety concerns related to some of the existing oral therapies, such as the fluoroquinolones currently leaves millions of patients with no choice but to receive intravenous antibiotic therapy, which often requires hospitalization for IV access.

ADAPT-PO's rigorous design allowed us to show that physicians treating cUTI and AP patients could replace hospital IV therapies with oral tebipenem HBr, without making any compromise on clinical response, safety or tolerability. By doing this, we believe we have positioned ourselves to see high uptake of tebipenem HBr after approval.

Beyond cUTI, the ADAPT-PO data have also generated strong external interest from key opinion leaders on the use of tebipenem HBr to treat other infections, providing potential opportunities to explore new indications. One example of this external interest is embodied by the MERINO-4 trial that I mentioned at the time of our last call.

This is being sponsored by the National Institute of Allergy and Infectious Diseases and is being conducted by the antibiotic resistance leadership group.

As a reminder, MERINO-4 is designed to compare the early transition to oral tebipenem HBr with continuation of intravenous carbapenem therapy in patients with bloodstream infections caused by ESBL-positive bacteria.

In addition, we have completed data analysis from the BARDA-funded Phase I bronchoalveolar lavage trial, which assesses the lung penetration of tebipenem HBr, and we plan to present these data at an upcoming medical meeting.

This study will set the stage for subsequent BARDA-funded studies to evaluate the efficacy of orally administered tebipenem HBr for pneumonic indications. This study has strong clinical rationale as the granular formulation of tebipenem is approved in Japan for several respiratory indications, including the treatment of children with pneumonia.

Looking forward, we plan on continuing to educate the clinical community about tebipenem HBr through publication of a peer-reviewed manuscript reporting the ADAPT-PO trial results. These results will or have been discussed at 5 infectious diseases and urology conferences by the end of the year, including the upcoming AUA meeting.

At these conferences, we intend to present additional ADAPT-PO data as well as the in-vitro surveillance data assessing the activity of tebipenem HBr against the most important gram-negative pathogens.

I'd now like to move on to speak briefly about -- excuse me, SPR720, our oral drug candidate that we're developing for the treatment of NTM infection, nontuberculous mycobacterial infections. Ankit recapped the events that led to the program's clinical hold during his portion of the call.

So rather than repeat what he said, I'll just emphasize a few additional points. Most importantly, the mortalities observed in the nonhuman primate study that led to the hold did not correlate with either the dose nor with the duration of SPR720 drug exposure.

Further, adult nonhuman [indiscernible], the animals in this study, are known to be extremely challenging to dose, which adds a level of complexity to the analysis of the study. Finally, the findings from this nonhuman primate study are contrary to what we have seen in prior preclinical and clinical studies of SPR720, as Ankit outlined earlier.

While we won't be sharing any specific findings from the nonhuman primate study until the FDA has provided us with feedback on the data, I'd like to again emphasize that based on the data we have seen to date, we remain confident that there is a path forward to the SPR720 clinical program.

These data continue to support the hypothesis that the observed mortalities were specific either to the oral gavage dosing method or to the species of monkeys in the study rather than related to an off-target pharmacologic effect.

Along these lines, I'd also like to reiterate a point that we have made on our last 2 earnings calls, which is that our previously announced decision to discontinue the Phase IIa clinical trial was not, I repeat not, indicative of our opinion regarding the ultimate success of the SPR720 program.

Rather, it was a strategic decision that allowed us to avoid incurring costs from the trial while it's on hold and that may facilitate potential future adjustments to the clinical trial design as required by FDA.

Looking ahead, we expect to complete the study report from the recently completed primate study in the third quarter and to engage the FDA thereafter early in Q4.

After we receive feedback from the agency regarding their review of these data and our full response to the clinical hold letter, we will provide an update on our clinical development plans for 720 moving forward.

Switching gears now to discuss SPR206, which is our intravenously administered next-generation polymyxin product candidate, which is designed to act directly on grand negative bacterial infections through the molecules interactions with the bacterial outer membrane.

SPR206 has demonstrated potent broad-spectrum activity against gram-negative bacteria, including the extensively drug-resistant variants that have emerged as a major problem in both the hospital and community setting.

We believe that SPR206 will offer a safer alternative for patients suffering from serious drug-resistant infections, including drug-resistant Acinetobacter, multi-drug resistant pseudomonas and carbapenemase producing enterobacteriales with the greatest unmet need currently exists in the antibiotic formulary.

Today, patients suffering from these infections are treated with a drug combination, which frequently includes a carbapenem or BLBLI antibiotic, usually in combination with Polymyxin B or colistin. Treatment with these older polymyxins is associated with nephrotoxicity in many patients.

What clearly differentiates SPR206 compared to colistin and the other polymyxin antibiotics is our Phase I SAD/MAD data showing a lack of nephrotoxicity at or above the predicted therapeutic dose.

We thus believe SPR206 could replace colistin and Polymyxin B in the currently prescribed antibiotic combination regimens and provide an alternative option for patients while producing a significantly reduced risk of kidney injury.

This would address a crucial unmet need as the CDC's 2019 antibiotic-resistant threats report estimates 8,500 drug-resistant Acinetobacter deaths and 32,600 drug-resistant Pseudomonas infections in the United States per year.

We saw significant progress around our SPR206 program in the second quarter, highlighted by 2 exciting collaborations that provide external validation to the potential SPR206 offers for patients with serious gram-negative infections. First is the investment and licensing agreement with Pfizer that Ankit mentioned earlier.

We believe Pfizer and Everest Medicines, who you may recall, has rights to develop, manufacture and commercialize SPR206 in China and other select Asian countries are ideal partners to ensure patient access to SPR206 globally when approved.

Additionally, their teams bring a wealth of expertise in antibacterial drug development and regional specific experience with foreign regulatory agencies and quality control standards that will be invaluable as we finalize a pivotal clinical development program for SPR206.

We were also awarded up to $23 million by the National Institute of Allergy and Infectious Diseases, or NIAID, to support the clinical development of SPR206 in the second quarter.

Approximately $2.1 million is initially available from the award, which provides funding for pharmacokinetic/pharmacodynamic studies to aid in dose selection, manufacturing process development, clinical microbiology and support for our initial regulatory interactions.

If fully exercised, we would receive an additional $21.3 million over 5 years, which will provide funding for a broad range of additional activities, including a Phase II clinical proof-of-concept study in patients with the range of target pathogens and target indications.

In addition to this funding, the award provides yet another point of external validation for SPR206 from a well-regarded external entity. Looking ahead, we continue to advance SPR206's development with the support of our partners at the Department of Defense, Everest Medicines and most recently, Pfizer and NIAID.

Participant dosing recently commenced in the Phase I bronchoalveolar lavage clinical trial, assessing the penetration of SPR206 into the pulmonary compartment with the data from the trial expected by early next year.

Given that many of our target patients for SPR206 suffer from lung infections, we believe that these data could represent a key inflection point for our SPR206 program.

We also recently began dosing patients in our renal impairment study of SPR206, which will guide dosing in the many patients with MDR gram-negative infections that have reduced kidney function. Data from this study are also on track to be reported by early 2022.

With that, I'll turn the call over to our Chief Operating Officer, Cristina Larkin, who will provide you with a review of the market opportunity for our pipeline products and detail our strategy for the launch of tebipenem HBr. Thanks..

Thank you, David, and good afternoon, everyone.

As we move closer to tebipenem HBr's potential approval, the work that we have done continue to support that this is a specially driven launch that will be focused on urologists and IVs and that the strategy will allow us to still capture a significant portion of the approximately 2 million cUTI patients in the U.S.

that we believe are the right targets for tebipenem HBr, if approved. And of the 2 million patients, there is a great opportunity in both the community and the hospital discharge market by providing a great clinical and value story.

And in the community setting, tebipenem HBr may prevent or reduce the frequency of hospitalizations for patients who have failed previous oral therapies or who are resistant to current oral cUTI therapy.

And in the hospital discharge setting, tebipenem HBr could give health care providers the ability to discharge cUTI patients sooner, providing both a clinical and economic advantages to switching to oral therapy.

Now whether it's the potential of keeping patients out of the hospital or getting them home sooner, tebipenem HBr has the opportunity to deliver value to all of the relevant stakeholders, including patients, health care providers and payers.

And this is the value that all of our stakeholders continue to share with us through our advisory boards, market research and all of our industry interactions. So let's pivot discuss how we're preparing our go-to-market plans. We continue to take a phased approach to building out our launch teams.

In our market -- our marketing and our market access and our medical affairs teams have been in place for well over a year, building and executing our go-to-market strategy.

Our medical liaison team has been out building some early key opinion advocacy within the antibiotic and cUTI space with a focused effort on infectious disease physicians and neurologists. We've also been engaging payers and building our health economic messaging.

And lastly, we've also launched our digital-first strategy, and this includes our customer engagement, which combines with personal and nonpersonal interaction. Our digital personal engagement has been launched via our MSL team and has allowed us to utilize the hybrid approach to engage our customers.

In our nonpersonal, unbranded digital efforts has launched earlier this year and includes an unbranded website called cutievolution.com, targeting HCPs, or health care providers, to educate them on the burden of cUTI on the health care providers, the patients and the health care system overall and the need for new oral outpatient therapy.

And finally, as it relates to our plans on building our sales organization, we'll look to bring on our sales leadership on first and then we'll plan to wait until we're closer to our approval to build out our sales team.

And as we look ahead, we'll continue to plan for the potential approval and launch, and we remain encouraged by the positive feedback from all of our stakeholders regarding tebipenem and its overall value proposition. And with that, I'll turn the call over to Sath, who will provide you with a financial update..

Thank you, Cristina, and good afternoon, everyone. I'd now like to turn your attention to our overview of Spero's financial results for the quarter ended June 30, 2021. Total revenues for the second quarter of 2021 were $5.1 million compared with revenues of $1.7 million in the second quarter of 2020.

The difference was primarily due to an increase in clients' revenue received from the DoD contract for SPR206 and the BARDA contract for tebipenem HBr and collaboration revenue from our licensing agreements with Pfizer and Everest Medicines.

Research and development expenses for the second quarter of 2021 were $14.5 million compared with $15.7 million for the same period in 2020.

This year-over-year reduction was primarily due to a decrease in expense driven by completion of significant activities in Phase III clinical trial for tebipenem HBr, partially offset by expenses from Phase I clinical trials to support an anticipated NDA filing for tebipenem HBr and clinical costs incurred for Phase I valve and RRF clinical trials for SPR206.

We expect R&D expenses in 2021 to be consistent relative to 2020, and I will note that some of the R&D expenses we expect to incur this year include costs related to the expected tebipenem HBr NDA submission and medical affairs strategy as well as personnel-related spend to support the pipeline.

General and administrative expenses for the second quarter of 2021 of $9.2 million were higher than the $4.5 million reported in the same period in 2020, primarily due to increased professional expenses and personnel costs to support the company's pre-commercial efforts.

We expect G&A expenses to increase in 2021 relative to 2020 as we build commercial capabilities and the infrastructure to support the expansion ahead of the potential tebipenem HBr commercial launch in 2022.

We reported a net loss for the second quarter ended June 30, 2021, of $18.6 million or $0.63 per common share compared to a net loss of $17.5 million or $0.85 per common share reported for the same period in 2020. As of June 30, 2021, we hedged cash, cash equivalents and marketable securities of $99.2 million.

This balance does not include the proceeds from the $40 million equity investment made by Pfizer, which were received subsequently to the quarter's end.

Including this investment by Pfizer, we believe that our existing cash, cash equivalents and marketable securities, together with our non-dilutive funding commitments, will be sufficient to fund operations into the fourth quarter of 2022. For further details on our financials, please refer to our 10-Q filed with the SEC today.

We would now like to open the call for questions.

Operator?.

[Operator Instructions]. And we'll go first to Ritu Baral with Cowen..

This is Lyla on for Ritu, and congrats on the progress.

And maybe just on the 720 program, aside from the completed nonhuman primate study, can you just remind us if there is any additional preclinical toxi data that were also requested as part of the data package to the FDA? And what is the real gating factors, so to speak, remaining for submitting the study report?.

Lyla, thanks for the question. The primary focus point for the FDA discussion is the toxicology data we've referenced in prior earnings calls. And so the cadence here after is, as we mentioned, we are preparing -- analyzing the data and preparing the report for submission with FDA.

And really, the cadence after that is to engage in the discussion with them, have the discussion and then receive the requisite minutes of the discussion, and we plan to do that as expeditiously as possible..

Got it. And then just maybe as a quick follow-up.

Do you plan -- what's kind of the time line for announcing those updates? Will you announce to The Street when you submitted the data package? Or do you plan to just wait until you have maybe the minutes in hand?.

Yes. As David mentioned, we'll plan to have the discussion and get the minutes so we can give everybody the appropriate context. And so we'll wait until the minutes are back..

We'll go next to Louise Chen with Cantor..

So my first question to you is what gives you confidence in a strong launch and uptake for tebipenem HBr? I know you went through a lot of details on the call.

But maybe if you could address how you'll be different from some of the other companies that have launched antibiotics in the space? And then secondly, what are your thoughts on the PASTEUR Acts and other initiatives to improve reimbursement for antibiotics? Do these only help hospital drugs or could they be a benefit to you as well? And then just last question here on OpEx first and fourth quarter versus what you spent in the second quarter? Just trying to make a sense of how OpEx will look throughout the remainder of the year?.

Thanks, Louise, for the questions. I will start with your question on PASTEUR. Then I'll hand it to Cristina to talk about how our launch will be differentiated based on the differentiation of tebipenem, and then I'll hand it to talk Sath to about OpEx.

So as it relates to PASTEUR, as we mentioned, the antimicrobial ecosystem has really started to percolate in a very interesting way, both with partnering activity, including with us as well as -- activity on the policy front as well as on the public financing front, including with us.

We are -- as we look holistically at the field, we believe that our pipeline, because we've chosen it in a way that treats the maximal patient unmet need and also gives us the maximal chance at commercial viability, we do not need incentives to be able to be successful with medicines like tebipenem.

However, we think that acts like PASTEUR, which would provide a very large 9-figure payment to companies developing drugs that treat unmet needs in AMR, we think that's great for the field. We think it'd be a shopping arm for the ecosystem, and we think it's beginning to gain some momentum on the hill. So very big fans of it.

I think it's good for the ecosystem. I think it's very good for patients, and it could be additive and beneficial to tebipenem. However, we don't need it in order to be successful, and that's how we've set up the entire pipeline.

I think that's a good segue to Cristina, who can talk more about why tebipenem will be successful in the current commercial environment and policy environment..

Yes. Thanks, Ankit. And I'll just tag on to I think one of the comments that you had made, and I think you stated on the reimbursement side, which I think is a really important part.

If you remember, too, that many of the current launches that we've seen have been primarily based on the hospital environment and the DRG payment system is certainly one of the main reasons why many of these drugs have a cap their successes because of the way that these drugs are reimbursed.

Tebipenem, because of the benefit that we've seen both in the community and the hospital switch therapy market, is that this drug will be primarily paid as a pharmacy benefit and not under the hospital DRG system. And that's a key differentiating advantage that we see in the market. I think that's one.

The second is that when we looked at the landscape of where tebipenem will be best suited for is that what we see is we don't want to compete with generics and that becomes another key part of the value story.

When we talk about where tebipenem will be best suited is that it's really -- and that's the way we constructed the trial design was not to compete with generics and the real alternative here is when physicians are having to turn to IV treatment.

And the fact that we've been able to demonstrate in our Phase III trial equivalent to IV or noninferiority to IV or tebipenem is a real advantage, and that's what we've heard through our market research and through our data of the ability to deliver the convenience of an oral, but being able to show noninferiority to an IV product is one of the key advantages.

And to date, we're the only product that has ever been able to deliver that level of evidence, especially at launch, if ever. And so those are 2 real key differentiators. And then the last one I would mention is that for the primary audience that we're looking to go after, as I mentioned, is not only just infectious disease physicians but urologists.

And that is another key differentiation, I think, in the type of physician that we're looking to target at launch..

Okay. And Louise, I can answer your question on the ramp for OpEx for the remainder of the year. I think, as I mentioned earlier for R&D, 2H, we expect to be roughly even with 1H R&D -- 1Q R&D numbers were a little bit higher than 2Q.

But on average, I think that's what you can expect, at least for the remainder of the year sort of trending EBITDA, the overall first half. And then for G&A and commercial, we'll certainly continue to, as Cristina referred, take a phased approach to continue to build out our capabilities. So you'll see a bit of a ramp.

Our disclosed cash runway now is into 4Q 2022. If you just did a burn rate from the last couple of quarters, you could tell that the cash flow, they might be a quarter or so longer than that.

And the reason for the 4Q 2022 is that sort of phased ramp on the commercial and G&A OpEx, which for your estimation purposes, you could probably assume will be somewhat linear, maybe a little slower on the start off and then building more into the first half of 2022.

So the cash flow on the guidance and our bond rates, you can see the trend in what we expect our OpEx to be..

We'll go next to Kevin DeGeeter with Oppenheimer..

Maybe one on 206. So can you just clarify following the completion of the BAL and the renal impairment study, since the expectation to go into a treatment setting. And as we think about Acinetobacter market positioning, some sponsors have looked at sort of a refractory polymyxin B colistin population.

Would you also look to go in patients that had failed those therapies going a bit earlier in the treatment landscape make more sense for 206, given the product profile?.

Kevin, thanks very much for the question. Your sense is correct that after we've received data from the BAL and the renal impairment studies, we will begin planning for both in collaboration with NIAID, Pfizer and Everest advancing 206 into Phase II study in patients.

You're also right that given the broad utility of 206 for patients with resistant infections, we do have several options in front of us in terms of how we trial what 206 can do.

That is a discussion that we want to continue to progress both with our partners, but also as we continue to have discussions with both the opinion leaders we collaborate with and ultimately the regulators. So more on that as we get closer to that event.

But I think your point is worth emphasizing that 206 has utility, not just an Acinetobacter for those patients that have limited options, but also in pseudomonas, which is a larger population of patients that need as well as Enterobacteriales patients who have resistance to existing therapeutic options.

Further, I'll note that in typical clinical practice, polymyxins are often used in combination with other standard of care therapies because these patients are really in dire straits and need as many options as they can get. So we do have options in terms of the clinical usage of 206, and we'll make those choices as we get closer to that..

Great. And then maybe just as a follow-up question or a separate question on tebipenem. As we think about the progression of medical education over the next 12 months or so prior to launch, should we think about a relative emphasis on IV week and traditional infectious disease conferences or you called out in the prepared script.

Your expectation with regard to your presentation at AUA and more urology-centric meetings? Just kind of where do you think an early adoption you have the opportunity the most impactful in that co-education?.

Yes. Absolutely, Kevin. We have a very robust medical affairs and medical education strategy, and it's a point worth emphasizing that we are targeting those clinicians we aim to partner with. And so as David mentioned, as we think about it, there are really 3 things that we're hoping to amplify in the medical discourse.

Number one is the therapeutic opportunity and unmet need, and we are doing that both with our infectious disease colleagues but also at meetings like the American Urological Association because, as Cristina mentioned, we will be partnering with both types of clinicians as we get tebipenem to patients.

Secondly, both in the medical education realm and otherwise, we are developing data and publishing it that speaks to the value that tebipenem brings to the health care system, and that is both for the clinicians who are very sensitive to these economics as well as our colleagues in the payer community.

And then finally, we will find the right venues to continue to, as David mentioned, generate and share data on the utility of tebipenem, not just in cUTI, but in other settings, the MERINO-4 setting that David had mentioned is one example. So we're taking a holistic approach.

We're both interacting with our urology colleagues as well as our IV colleagues and also keeping an eye to the value arguments that are really resonant as we talk to payers..

We'll go next to Esther Hong with Berenberg..

So regarding potential expansion opportunities of tebipenem HBr and specifically pneumonia, can you discuss what's been observed with granular tebipenem, which is approved in Japan for pneumonia in children?.

Yes. Thanks, Esther, for the question. If we first -- I'll first zoom out to 100,000 feet. As we think about our data generation activities clinically for tebipenem they come in 2 flavors. The first flavor is we've had a groundswell of interest from the clinician community to trial tebipenem in patient populations that matter to them.

MERINO-4 is a good example where the KOL community came to us and said that you have to try this in bacteremic patients, and we're working with them. The second aspect is on a more formal indication basis, we're taking a stepwise strategy.

So to your question, we are undertaking the bronchoalveolar lavage work as the first step to understanding how tebipenem can work in patients with lung infection.

To your point, the granules that were approved by our partner Meiji Seika in Japan 10 years ago, have extensive experience in respiratory indications, both upper respiratory as well as in pneumonia. And we've seen that, that data suggests that tebipenem can be effective and as well as achieve lung penetration.

And so we'll be -- in coming medical meetings, we'll be excited to share what our tebipenem tablets can do with the prescriber community..

And we'll go next to Ram Selvaraju with H.C. Wainwright..

Firstly, I was wondering if we could circle back to the utility of tebipenem in bloodstream infections? And if you could just comment on whether the usage paradigm, the dosing regimen, the length of treatment in that specific context might be meaningfully different from the lead label indication that you're seeking approval for?.

Thanks, Ram, for the question. I'll pass that question to David, who can address the utility of tebipenem in bacteremia patients..

Yes. The short answer to that question is no. The dosing regimen that we plan to run in MERINO-4 will be identical to that and ADAPT-PO. And there are 2 lines of evidence to support that.

First of all, there was a substantial subpopulation of patients with bacteremia included in the ADAPT-PO study population, and those patients did quite well on tebipenem. And remember, this was initial therapy with tebipenem, there was no need in IV therapy. So that gives us confidence. Second line of evidence is the PK/PD.

As we've discussed with you in the past, we have chosen a dosing regimen that provides extremely robust coverage and has pharmacodynamic equivalents to intravenously administered carbapenem. So for those two reasons, we don't plan any change in the dosing regimen..

Okay.

And can you just comment on whether you believe that in that specific indication, tebipenem would compete against ceftobiprole, which is currently in late-stage clinical development or if you think that effectively, since these are clearly 2 different classes of antibiotics that they would essentially complement one another?.

Yes. Ram, thank you for that question. Yes. So thanks for the question, Ram. In a sense, tebipenem, we think of the utility of tebipenem is following the utility of other carbapenems like an ertapenem, for example, which was our comparator in the trial. And carbapenem has a unique spectrum. It has a lot of gram-negative activity.

And that's really the realm in which we think about it is that for example, in cUTI and AP patients that otherwise are required to take carbapenems like erta have tebi as an oral option. And really, that's the frame that we'll think about as we go into studies in patients and other indications..

Okay. Just to add, [indiscernible] cephalosporin is not active against ESBL-producing organisms and therefore, would not work in MERINO-4..

Couple of quick questions on the 206 market opportunity.

Can you frame for us what you think the likely market opportunity is in terms of total addressable market size in the Pfizer territories, please?.

I'll pass that question over to Cristina..

Yes. I think what we see -- without giving the exact numbers, but what we do see in terms of resistance rates to the common pathogens for what 206 and David, I think, shared the spectrum of activity, which 206 is quite broad in terms of activity against Acinetobacter carbapenem-resistant Enterobacteriaceae and pseudomonas.

And I think that's what makes this compound very unique is it's an ability to have coverage against the 3 big bugs in terms of the largest problems that we see across institutions, not only here in the United States, but that exist in Europe and the rest of world.

And so without giving you exact numbers, what I would say that those are the three biggest bugs and the 3 biggest problems that we see in institutions today..

And then just one last point of clarification.

What do you anticipate the FDA to classify with respect to the tebipenem NDA at this juncture with regard to the assignation of a review period?.

Ram, just to make sure I clarify the thinking.

Are you asking what we expect the review period to be once submitted?.

That's correct..

Yes. So tebipenem has received fast track designation and fast track provides for an overall 8-month review period, which is a 6-month review plus 2-month validation..

And that concludes today's question-and-answer session. I'd like to turn the conference back over to today's presenters for any additional or closing remarks..

Thank you, operator, and I appreciate everyone for joining us today. We look forward to the continued advancement of our pipeline, and we'll keep everyone updated along the way. Thanks, again..

And that concludes today's conference. Thank you for your participation. You may now disconnect..