Synlogic Inc (SYBX) 2021 Q1 法說會逐字稿

Good morning and welcome to Synlogic's First Quarter 2021 Conference Call. (Operator Instructions) 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.

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.

During the call, Aoife will provide a review of first quarter highlights and recent progress. Richard will provide an update on our metabolic portfolio and our lead programs in phenylketonuria and enteric hyperoxaluria, and I will summarize our financial results for the quarter. Following our prepared remarks, we will open the call for your questions.

As we begin, I would 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 statement as a result of various factors, including those described under the 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.

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 2 lead metabolic programs and a 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 continue to maintain the rapid pace of which we're 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 states for this approach could transform patients' lives.

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 buildout, 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.

By building a fully integrated internal process development and manufacturing infrastructure, Synlogic will be able to respond quickly to the needs of our clinical program and ensure the rapid progress of our pipeline. Completion of the buildout this year sets us up for a rapid transition to late-stage development of our metabolic portfolio after potential proof-of-concept readouts in the second half of 2021.

Since our announcement that SYNB8802 has achieved proof of mechanism in human with dietary hyperoxaluria, we now have 2 metabolic programs, SYNB1618 in PKU and SYNB8802 in enteric hyperoxaluria, that has demonstrated the ability to consume a toxic metabolite within the human gastrointestinal tract. Both programs have done so at levels that have the potential to be clinically meaningful in patients with disease. And in both cases, we have clinical trials ongoing in patients to demonstrate impact on critical end points with the readouts expected later this year.

With our candidate in PKU, we have previously demonstrated that our lyophilized formulation of SYNB1618 was able to consume phenylalanine in the GI tract of healthy volunteers. We are currently evaluating this strain in adult PKU patients in an ongoing Phase II study we call SynPheny-1. This trial continues to enroll well, and we're delighted to see so much patient- and investigator-driven interests.

We continue to hear from patients and caregivers that a safe oral therapy which reduces plasma Phe levels by consuming Phe in the GI tract would be a welcome addition to the market. While SYNB1618 has been progressing in the clinic, SYNB1934 is also moving through IND-enabling activities. SYNB1934, which was developed using a novel directed evolution approach from SYNB1618, has demonstrated enhanced activity compared to SYNB1618 in preclinical models of Phe consumption. We will provide additional updates as this strain progresses towards the clinic.

SYNB8802 is our other lead metabolic program. It's designed to consume the toxic metabolite oxalate in the GI tract in patients with enteric hyperoxaluria, a leading cause of oxalate nephropathy and recurrent kidney stones for which there are no approved therapies. We placed healthy volunteers on a high oxalate diet and increased the urinary oxalate levels thereby inducing dietary hyperoxaluria and demonstrated robust and dose-responsive urinary oxalate reduction relative to placebo. Coming only 15 months after we nominated SYNB8802, these data demonstrate the speed and power of the Synthetic Biotic platform. We're moving rapidly towards clinical proof of concept in patients with enteric hyperoxaluria. Part B of the Phase I study is enrolling well. This study gives us an opportunity this year to demonstrate what very well may be the most clinically attractive profile for patients suffering from enteric hyperoxaluria.

We're taking the learnings from our co-lead metabolic programs and applying them to novel approaches to address other inherited and acquired metabolic disorders. Together with our partner at Ginkgo Bioworks, we're advancing our Synthetic Biotic platform across multiple metabolic disorders and inflammatory conditions such as IBD. We continue to make good progress on this exploratory and pre-clinical work, and we'll share additional updates over the course of the year.

Our immuno-oncology portfolio also continues to advance. We shared an update on our SYNB1891 program in immuno-oncology at the recent American Association for Cancer Research Annual Meeting and continue to enroll both monotherapy and combination therapy arms of the Phase I study. Data from both arms will continue to be reported over the course of 2021.

Our team has done a tremendous job executing across multiple programs. This resilience and teamwork has allowed us to set the stage for multiple meaningful readouts in 2021. Thanks to our careful capital stewardship and recent financing event capitalized by a high-quality syndicate of institutional vectors, all milestones occur well within our cash window.

In summary, 2021 has already been an incredibly exciting year for the company. We now have demonstrated proof of mechanism in humans from both of our lead metabolic programs, PKU and enteric hyperoxaluria. And the opportunity to demonstrate proof of concept in both programs is later this year.

Now let me turn the call over to Richard to share progress on the metabolic program. Richard?

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. Through our conversations with patients, caregivers and advocates within the PKU community, it's increasingly clear to us that both current and emerging treatment options continue to leave too many patients behind. A safe, tolerable, reversible, and oral therapy would be welcomed.

Synlogic's approach to PKU is simple and intuitive. It is well understood that reducing the dietary consumption of phenylalanine reduces plasma Phe levels in patients with classical PKU. Our approach is to build on the biology to introduce a synthetic biotic medicine into the GI tract which is specifically designed to consume Phe and produce the measurable biomarker, TCA, HVA. SYNB1618 has shown promising activity. We have demonstrated the ability to consume Phe in the GI tract most recently in our solid oral bridging study in healthy volunteers which we shared an update on at the American College of Medical Genetics Annual Meeting.

The next step is to understand how the consumption of Phe in the GI tract in PKU patients will impact plasma Phe levels. To answer that question, we have initiated a Phase II SynPheny-1 study at multiple sites across the U.S. All sites are active and are currently enrolling well. Patient interest is robust with the option for at-home, virtual or in-clinic registration. The goals of SynPheny-1 Phase II proof-of-concept study are to demonstrate the potential of SYNB1618 to lower blood Phe in adult PKU patients and validate our pharmacodynamic model, to better understand the relationship between the production of strain biomarkers and plasma Phe lowering for SYNB1618.

Remember the patients from SynPheny have no therapeutic options. They're ineligible, inappropriate for or unresponsive to Kuvan or pegvaliase. These patients are left behind by current therapies. The study is powered to detect 20% reductions in Phe. PKU patients and investigators tell us that 20% Phe reductions in an oral, tolerable and reversible therapeutic which is effective for Kuvan non-responders would be a welcome treatment option.

Following up on the success of SYNB1618, we continue with the development of SYNB1934 and evolved synthetic biotic medicine in the PKU portfolio. SYNB1934 is progressing through IND-enabling studies and has the potential to strengthen our PKU franchise by enabling higher levels of Phe consumption, lower dosing or both. The willingness of advocates, caregivers and patients to engage with us and other sponsors is critical to advancing new treatment options for this devastating disease. We would like to thank them for their participation.

Let me now provide an update on our Phase I study of SYNB8802 for the treatment of enteric hyperoxaluria which continues to advance in Part B of the study in patients following promising results in healthy volunteers. Enteric hyperoxaluria is a devastating condition with no treatment options in which dangerously high levels of urinary oxalate lead to progressive kidney damage and oxalate nephropathy. It also occurs as a result of a primary insult to the bowel such as inflammatory bowel disease, short bowel syndrome or as a result of surgical procedures such as Roux-en-Y bariatric weight-loss surgery.

If left untreated, the dangerously high levels of urinary oxalate cause recurrent kidney stone formation, nephrocalcinosis and progressive damage resulting in chronic kidney disease. Since oxalate is present in many healthy foods, enteric hyperoxaluria is almost impossible to control with diet alone. That means these patients are at risk for serious kidney complications.

As you know, we have demonstrated SYNB8802 proof of mechanism in a dietary hyperoxaluria study. We are now moving to Part B of that study in which SYNB8802 will be evaluated for the potential to lower urinary oxalate in enteric hyperoxaluria patients. Let me walk you through both parts of this study.

The primary outcome of Part A of the Phase I study was safety and tolerability, with the results used to select a dose for further study in patients with enteric hyperoxaluria in Part B of the trial. We completed dosing of 5 cohorts in Part A of this study. In the efficacy analysis, the clinically meaningful percent change from baseline in urinary oxalate was 28.6% lower compared to placebo at the 3e11 live-cell dose. This dose was well tolerated and will be used in Part B of the study.

Similar to our other programs, we did not observe any systemic toxicity. There are no SAEs, or serious adverse events, at any dose. Adverse events were generally mild to moderate, GI related and transient. We found that a dose ramp where patients take a single dose in the first day, 2 doses in the second day and 3 doses in the third day significantly improved the tolerability profile. SYNB8802 is a non-colonizing, non-reproducing strain and clears some subjects after the cessation of dosing. We examined the ability of SYNB8802 to lower urinary oxalate levels in the dietary hyperoxaluria model in healthy volunteers.

Let me spend a moment on this slide because it is an important one. Here, we present the change in urinary oxalate from baseline relative to placebo within each dosing cohort across both dietary regimens. The 600-milligram dietary oxalate regimen is on the left, and the one in which subjects consume 400 milligrams of dietary oxalate is on the right. In both cases, subjects were treated with multiple ascending doses of SYNB8802.

We were thrilled to see substantial urinary oxalate lowering at multiple dose levels under both dietary regimens and across multiple dosing cohorts. This consistent result in a dose-responsive manner is very encouraging. The lower bound of the 90% confidence interval did not cross 0 for the 1e11, 3e11 and 6e11 dose levels. These data indicate to us our robust and reproducible results.

I am now going to focus on the dose level. We have chosen to move forward to Part B of the study in patients with enteric hyperoxaluria due to Roux-en-Y gastric bypass surgery. These patients will have dangerously high level of urinary oxalate due to their underlying gastrointestinal condition. We have chosen the dose of 3e11 live cells for Part B of the trial. We believe this dose could provide a clinically meaningful reduction in these dangerously high urinary oxalate levels for this population.

At the 3e11 dose, we observed the tolerability profile similar to the E. coli Nissle probiotic with only transient GI side effects. This dose resulted in a 28.6% reduction in urinary oxalate relative to the placebo group. At the end of the dosing period, the urinary oxalate level in the placebo group was 58.1 milligram compared to 40.1 milligram in the treated group. If we assume based on existing literature that approximately 10% of the dietary oxalate is absorbed systemically and excreted in the urine, these data suggest that healthy volunteers treated with SYNB8802 had urinary oxalate levels equivalent to only a 400-milligram diet despite being on a stable 600-milligram diet. The clinical implications of this finding are very exciting as we move into patients.

Now let me turn to what we will learn from Part B of this study, which we are now executing on and have multiple sites enrolling as we speak. We will assess the urinary oxalate lowering potential of SYNB8802 via crossover design in patients with enteric hyperoxaluria following Roux-en-Y gastric bypass surgery. We believe that this patient population is an attractive one to conduct a clinical study because it is relatively homogeneous and easy to identify, yet also translationally relevant with other sponsors demonstrating relatively consistent results between Roux-en-Y patients with enteric hyperoxaluria and patients with other underlying bowel insults.

The regulatory and clinical path in this indication is relatively straightforward with significant precedents by sponsors in related diseases such as primary hyperoxaluria for the importance of urinary oxalate as one critical end point. We will continue to work closely with regulatory authorities as we develop our clinical strategy. Our initial efficacy assessments will evaluate clinically relevant reductions in urinary oxalate levels, and feedback from our key investigators suggests greater than a 20% lowering in patients would be meaningful.

Lowering dangerously high levels of urinary oxalate is the only way to reduce the risk of disease progression and reduce or eliminate oxalate nephropathy. We are pleased that SYNB8802 has demonstrated the potential to lower urinary oxalate levels in healthy volunteers with induced dietary hyperoxaluria. We are looking forward to advancing the program rapidly into patients and providing additional data this year. As we go forward with both of our lead programs in PKU and enteric hyperoxaluria, I will come back to you with more information as the studies unfold.

Now let me hand the call over to Dan to briefly run through our financial results. Dan?

Thank you, Richard, and good morning, everyone. This morning, we released our financial results for the first quarter ended March 31, 2021, and I'd 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 3 months ended March 31, 2021, compared to $12.7 million for the corresponding period in 2020. The R&D expense for the 3 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 biotic 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.

Thank you, Dan. Our team has made tremendous progress across all of our programs both in and outside the clinic. We're executing effectively and with a sense of urgency. We've 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 Instructions) Our first question comes from Joseph Schwartz with SVB Leerink.

I'm Joori 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 point, 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 2 arms plateauing or still separating towards the end of the trial?

Great. Thanks, Joori. This is Aoife here. I think that's a great question for Richard to answer. So Richard, do you want to take Joori's first question and then we can come back to subsequent questions after that.

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 tail 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 excretion, secretion -- 24-hour secretion 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.

Does that answer your question, Joori?

Yes. Yes. And then I guess for SYNB1618 and 8802, we're 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.

Yes. Unfortunately, we don't yet have full line of sight. They're really neck and neck in terms of the execution, and we've guided to second half of this year for both studies. And as we can kind of progress through the year

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Our next question comes from Lina Kaminski with JonesTrading.

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.

Yes. Richard, do you want to take that question up?

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're good to go.

Okay. Thanks. Richard, would you like to handle that question?

Sure. Of course, we're very interested in how the healthy volunteer data will translate into patients, with healthy volunteer, and we're also optimistic for a couple of different reasons. First of all, there is precedence by another sponsor that showed that the healthy 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 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 whatever time that is 4, 6 hours -- 4 to 6 hours to consume oxalate before it's absorbed, whereas in enteric hyperoxaluria patients, where a lot -- 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.

And 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 the optimistic viewpoint is we may do even better. That being said, we need to do the experiment, and we're in process of doing the experiment right now. And we're quite pleased with our enrollment.

Got it. And I guess the other question is on PKU assets. So how should we be thinking of 1934? Should we be thinking of it as eventually cannibalizing 1618? Or is that going to be a separate asset 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.

Yes. Thanks, Lina. So just for a little bit of background, the -- when we took 1618 into the clinic, we chose a version of PAL that was described in the literature. So that's 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 of 1618, we also undertook a kind of a technology landscaping to see what technologies were available out there that would allow us to determine whether we could optimize or do better based on the PAL enzyme activity that the strain we're taking forward.

So 1934 is the result of work that started some time ago, and we've been really pleased both in terms of how we've been able to assess the various technologies that are available to optimize strain activity as well as how 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 they develop to back up forward.

We have started IND-enabling work. We'll 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'll make the right decision for the program once we have all of the data in hand. So hopefully, that makes sense.

Yes, that does. And again, congrats on the quarter.

Thanks, Lina.

Our next question comes from Ram Selvaraju with H.C. Wainwright.

Hi, this is [Muzz] 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?

Yes. So obviously, it's a -- great congrats are 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'll be absolutely looking for ways to apply back to our preclinical programs. And so it's a very exciting, I think, advancement in terms of the Ginkgo business. Dave is the Chief Scientific Officer here. He's been most closely involved with the Ginkgo collaboration. So maybe I'll 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're bringing forward in development.

Dave, do you want to comment on that?

Yes. Sure, I'd be happy to. Yes, I'd echo definitely congratulations to the Ginkgo team. Yes, they've been great partners up until this point, and we're 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're really able to feed the pipeline and kind of help build that next stage of asset. So we're 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.

Our next question comes from Brian Mills with Jefferies.

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.

Yes, that's a great question. Maybe I'll 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 critical as our programs advance.

I'll ask Dan maybe to comment on the CapEx implications of that and then Tony to provide any additional color required. Dan, over to you.

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're not providing specific guidance, but we're talking low single-digit millions, not mid or high. It's 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.

Thank you, Dan. Yes, that's 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 it 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're evaluating those capabilities and the ability to support the clinical stage downstream.

There are no further questions. I'd like to turn the call back over to Aoife Brennan for any concluding remarks.

So I'd just like to finally thank everybody for joining us on today's call. We're available later today for any follow-up questions and hope everyone has a great day. Thank you.

Ladies and gentlemen, this does conclude the program, and you may now disconnect. Have a great day.