Synlogic Inc (SYBX) 2022 Q2 法說會逐字稿

Good morning. Welcome to Synlogic's Second Quarter 2022 Conference Call. (Operator Instructions). I would now like to turn the call over to Andrew Funderburk of Kendall Investor Relations. Please proceed.

Thank you, operator. Good morning, and thank you for joining us on today's conference call. This morning, we issued a press release, which outlines our second quarter of 2022 financial results and additional business updates. The release is available on the Investors section of our website at www.synlogictx.com. Joining me on this call are Dr. Aoife Brennan, President and Chief Executive Officer; Molly Harper, Chief Business Officer; David Hava, Chief Scientific Officer; and Michael Jensen, Chief Financial Officer. Other members of the management team will be available during the Q&A. During the call, Aoife will provide a review of this quarter's highlights. Molly will provide additional detail for the clinical programs. David will discuss our earlier-stage programs and collaborations, and Michael will provide a financial overview. Following our prepared remarks, we will open the call for questions. As we begin, I 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 statements as a result of various factors, including those described under the heading 'Forward-Looking Statements' in Synlogic's press release from earlier today or under the heading 'Risk Factors' in Synlogic's most recent Form 10-K or in later filings with the SEC. Synlogic cautions you not to place undue reliance on any forward-looking statements. Now I would like to turn the call over to Aoife.

Thanks, Andrew. Good morning, everyone, and thank you for joining us. I am happy to share updates today on our recent progress, the financial results for the second quarter of 2022, and upcoming milestones. This is an exciting time for Synlogic and the synthetic biotic platform. For our most advanced program in PKU, in the second quarter, we announced that we received a positive opinion on orphan drug designation from the European Medicines Agency, or EMA, for SYNB1618 for the treatment of PKU. This is an important step for our program as the EMA's opinion reflects the recognized need for new treatments of PKU.

In the remainder of 2022, we expect 3 clinical data readouts from 3 different programs. These include for the PKU program, the Phase II data readout and Phase III candidate confirmation. FRISSINB-1353 is synthetic biotics designed to consume a thionine as a potential treatment for homocystinuria or HCU, finding from the recently initiated Phase I healthy volunteer study, and finally, for SYNB8802, a potential treatment for enteric hyperoxaluria, we also expect to share proof-of-concept data.

We recently recognized SYNB1353 is our third program to enter the clinic in less than 2 years, reflecting the advantages of synthetic biotics SYNB1353, built on technical as well as regulatory synergies and the promise of this platform of biotherapeutics based on synthetic biology. SYNB1353 entered the clinic within just 1 year of being named as a candidate. As was done for SYNB8802 and SYNB1934, the FDA waived the traditional preclinical toxicology package for SYNB1353, recognizing the transferable findings of using the E.coli missile chassis. Moving beyond the clinical pipeline, I am excited to announce the newest addition to the Synlogic pipeline, SYNB2081 for gout.

Gout is a well-known and often debilitating form of inflammatory arthritis causing intense joint pain and limited range of motion due to excessive levels of uric acid. Patients remain underserved, especially those who are intolerant of or refractory to available therapies. We are excited to advance SYNB2081, our second competitive biotics developed through our partnership with Ginkgo Bioworks. And finally, it was a pleasure to share earlier that Brendan St. Amant has been appointed to Synlogic's General Counsel and Corporate Secretary.

As discussed on our last call, trial readiness activities are underway for the start of our Phase III study for the PKU program in the first half of 2023. This builds on Phase II interim analysis and proof-of-concept data shared last fall, demonstrating in PKU patients SYNB1618's strong activity and reduction in plasma C, the amino acid PKU patients are unable to metabolize and become neurotoxic at high Phe levels. In parallel with the proof-of-concept readers, we confirmed even greater potency with next-generation SYNB1934, while establishing the safety bridge at a Phase I head-to-head study. Since then, we have progressed SYNB1934, such that it is now the presumed Phase III candidate. However, that will be confirmed after assessing the SYNB1934 experience in PKU patients from the Phase II study to be shared later this year.

Looking ahead to the Phase II data, we have an opportunity to remind this audience of the endpoints we use to confirm drug activity. For all of our programs, we look for multiple endpoints that are specific to the synthetic biotic to assess if they are working as intended. For PKU, our synthetic biotic is designed to metabolize in the GI tract. To measure this effect in a more precise and controlled way, we provide label free or D5C as part of the test meal at baseline and then again after treatment in the study. This is the primary endpoint for the Phase II SynPheny trial.

We are also assessing the impact of our synthetic biotic on fasting plasma Phe levels as well as TCA and CASM and HA in urine metabolic byproducts, which can only be produced if our strain is effectively consumed in feed. We also look forward to sharing data from evaluation as a monotherapy but also as an adjunct to secrete or coupon. With that, I will pass the call over to Molly to provide a bit more perspective on the significance of this positioning and our differentiation in PKU, as well as some further color on our HTE program. Molly?

Thank you, Aoife. Aoife has described how our Phase II design reflects our positioning in PKU, targeting the more severe patients who, in the case of PKU, are also a large majority of the patient population. This includes both monotherapy and adjunctive patients. The more mild patients with PKU are often described in terms of BH4 or Kuvan responsiveness. However, even these patients, in spite of responding to and benefiting from Kuvan, often have Phe levels far above desired levels. These patients present an opportunity for adjunctive treatment.

The large majority of PKU patients in the US and Northern Europe are considered to have classical PKU. These are the patients with higher Phe levels who did not respond to Kuvan and for whom Palynziq is not an option. We find tremendous appreciation for the potential of an oral nonsystemic approach like Synlogic. This is the currently untreated patient population who present an opportunity for our approach as monotherapy. Synlogic's program positioning, which you see shown here in the middle is for these more severe patients, who are currently untreated or in need of additional Phe lowering as an adjunct.

Turning now to SYNB1353, which as Aoife noted, recently entered the clinic in healthy volunteers. We shared that this program builds on disease-state synergies. Since as an inborn error of metabolism, there is a direct overlap between HCU and PKU in terms of PIs, KLLs, and connected patient communities. In terms of the kinds of disease management, patients with HCU also must live with restrictive diets that are considered even more onerous and challenging than those for PKU and to reduce the risk of impaired cognitive function or developmental disabilities.

In addition, however, elevated homocysteine levels in HCU presents significant risk of devastating and acute systemic complications, including thromboembolism and stroke, skeletal weakness and associated fracture, as well as lens dislocation. But like PKU, the current standard of care for HCU leaves the need for a new approach, an approach that is orally administered without systemic absorption and associated risks and also conducive to both monotherapy or an adjunctive or combination treatment approach.

Today's standard of care is the generic betaine known as the brand name Cystadane, which has been generic for decades, does not alleviate dietary restrictions, and often leaves further need for homocysteine reduction. Current options in development are injectable enzyme replacement therapies, from speaking with KLLs, clinicians, and patients, we have heard consistently the excitement for an oral option, particularly one with the profile of an engineered probiotic and we are excited about moving this program forward. At this point, I would like to turn the discussion over to David to provide a bit more context regarding our upcoming data readouts, as well as our newest drug candidate.

Thanks, Molly. It is a pleasure to review this exciting time for our pipeline, as it both advances and has added a new drug candidate. Molly and Aoife have both touched upon our upcoming data readouts in PKU and HCU. We are also looking forward to proof-of-concept data in support of SYNB8802, designed to consume oxalate in the GI tract and reduce risk of recurrent kidney stones and related renal complications in patients with enteric hyperoxaluria. SYNB8802 is being evaluated in 2 studies: one in patients with Roux-en-Y gastric bypass surgery, who have elevated absorption of oxalate to evaluate whether SYNB8802 can lower urinary oxalate in those patients.

There is a second ongoing Phase I study to the SYNB8802 program to continue to build our clinical dataset in patients with Roux-en-Y gastric bypass. This is an inpatient setting study, where we can collect diet data as well as high-quality 24-hour urine and fecal samples. We believe that the combination of parameters assessed will support proof-of-concept for this patient population. It is also my pleasure to share that we have named an additional program in our metabolic pipeline, SYNB2081, a synthetic biotic designed to consume uric acid in the GI tract, with the goal of lowering systemic uric acid levels for the treatment of gout.

As Aoife mentioned, this is our second drug candidate through our partnership with Ginkgo Bioworks. We are tremendously excited about the opportunity to add another much-needed option to the gout treatment repertoire, which remains quite limited today by current treatments, which are limited in terms of safety, efficacy, or the patient experience. I will now turn things over to Michael to review our financial results.

Thanks, Dave, and good morning, everyone. Earlier this morning, we released our financial results for the second quarter ending June 30, 2022, and I am pleased to review the highlights of those results with you now. Revenue was $0.2 million for the second quarter of 2022, consistent with the same period in 2021. Revenue was from our collaboration with Roche for the discovery of a novel synthetic biotic for treatment of inflammatory bowel disease. For the second quarter of 2022, the company reported a consolidated net loss of $15.7 million compared to a consolidated net loss of $15 million for the corresponding period in 2021.

Turning to the balance sheet, Synlogic ended the second quarter of 2022 with $106.8 million in cash, cash equivalents, and marketable securities compared to $120.5 million as of March 31, 2022. Under our current operating plan, we expect that our cash will take us into 2024 and enable Synlogic to advance our clinical programs through multiple important data readouts across the metabolic portfolio. Thank you for your attention, and we look forward to keeping you updated on future calls. I will now turn the call back over to Aoife to wrap things up.

Thank you, Michael. This is an exciting period for Synlogic, as we advance to 3 anticipated data readouts in the coming months and a Phase III initiation in the first half of 2023. We are well positioned with a strong balance sheet to advance these important programs and are in the fortunate position of having funds available to support us well into 2024. I am very pleased with all of our progress and the commitment of our entire team to advance promising therapies to patients in need of new treatment options. We will now open the call for questions.

(Operator Instructions). Our first question comes from the line of Joori Park from SVB Securities.

The first one is on your PKU franchise. So, another company recently lowered their sales guidance for their PKU franchise citing that PKU treatment centers have not bounced back from the pandemic. I know you mentioned labor shortages on your earnings call last quarter. So, I am wondering if you are still detecting some challenges in rolling Symphony and if internal expectations on the market opportunity have been adjusted based on the recovery rate observed from the other company.

Thanks Jerry, this is Aoife. I can say that our guidance for the RMI arm 2 is unchanged. We plan to have data later this year. Regarding the market dynamics in PKU, maybe I will pass the call over to Molly to make some comments. We have obviously been observing other products and learning from them, and she can provide you with a little bit more color there.

Thanks for the question. So, in terms of the other products, what we have generally heard from the clinicians there is that the interest in new therapies and alternative therapies that provide a different profile is extremely strong. And in every single patient appointment they are having, they are talking about not just what is available but also options in development. So, while clinicians across categories in different treatment categories are seeing different pieces of return to "normal" including seasonality considerations, what is guiding the excitement and the opportunity that is the foundation of our program really has not changed, and if anything, as we engage with the community is just getting stronger and stronger.

Okay. That's helpful, and then maybe continuing on the enrollment theme. I know it is very early, but are you anticipating major differences in your Phase III enrollment versus Phase II that could affect the enrollment rate. I am wondering if you are just expecting it to be faster or slower or about the same based on your experience in Phase II.

Yes, great question. I think there are a couple of things that are going to be very different Joori for the Phase III program compared to Phase II program. Number one thing is that we will have a lot more sites. So, we anticipate going to multiple countries and regions and having a full difference in terms of the number of sites that we will be using to enroll the trial will obviously be bigger, but I think spreading a broader geographic nest will certainly help us in terms of achieving the required enrollment rates. I think the second component is that there are going to be big differences in terms of the study design.

So, these patients with PKU are very interested in having access to a therapy beyond just 2 weeks of a Phase II study. That is some of the feedback that we have received, as we have been enrolling Phase II is that the patients are interested in maybe Phase III where they have the opportunity to participate in an open-label extension study and have that opportunity if they benefit from treatment to be able to continue until the product is approved. That is very similar to lots of rare diseases. That is always a key concern for patients in enrolling. They do not want to have potential benefits and then have to discontinue the product, and I think the hurricane that is going to be very different between the Phase II and the Phase III is that the Phase III will obviously be a lot less intensive in terms of the commitment and work required for patients and sites.

Our Phase II study is very data rich. There are lots of endpoints. Patients have multiple visits to the clinic for meal tests and other things, and that is obviously a big burden for patients. It pays off because they get these nice biomarker endpoints, and while we are learning about the program that makes perfect sense, but as we move to Phase III, I think the burden for sites and for patients will be a lot lower because we will really be focusing in on the plasma Phe lowering as the primary endpoint with less frequent visits and with a much less intensive visits in terms of blood draws and other assessments. So, I think those are the kind of key factors, and the good news is we have other studies, other Phase III trials to base our enrollment projections on. So, when we come to that point, and they are providing guidance around Phase III enrollment rates and things like that, we have some precedent to go by for those kinds of data points.

Okay. Great. That's very helpful. And then maybe finally, if I could just squeeze one more in. How should we think about age playing a role in Phe reduction? My understanding is Kuvan Phase III trial included children and adults, and on the other hand, your Phase II trial is enrolling 18 and up, and I know that the platforms are different, but I guess the question is, are you anticipating or expecting a difference in Phe lowering based on age.

Yes. So, I think that's a great question. I think number one thing, in terms of pediatric product development, Kuvan was a little bit of a (inaudible) because it had been used clinically in Japan and when BioMarin filed the initial I&D. So, we did have some chemical data and safety and efficacy and exposure, but in general, the agency like you to demonstrate safety and some probability that patients will benefit before you start enrolling those who are less, who are below the age of consent essentially.

Our plan would be to continue to work with the FDA to be able to broaden and enroll those younger patients in a step-wise manner based on the data that we are gathering in the Phase II study because we do recognize that the pediatric patients are key segment for us with big unmet need and obviously lifeline consequences. So, we will be moving as quickly and as aggressively as possible to get those patients on study. I think in terms of the endpoint with the pediatric patients, there is no reason from a biology perspective why pediatric patients will respond differently to adults in terms of Phe lowering. One thing that is different in the pediatric patients is maybe the endpoint needs to be different.

Often, particularly the young kids, who under very tight parental control will often have baseline lower Phe levels. And in those patients, maybe the endpoint needs to be protein liberalization as in how much additional natural protein can be added to their diet rather than just looking at the lowering because some of the parents with kids who are very obsessive and monitoring Phe levels very frequently and really keeping the diet very tightly controlled. So, there may be differences just in terms of kind of the right endpoints in the various populations as we mark them on the age group, but we are absolutely thinking about pediatric development as part of our overall clinical development plan and I see that there is a tremendous opportunity in that particular segment for our candidate.

Our next question comes from the line of Mark Breidenbach from Oppenheimer.

Just a few from us. First of all, when can we expect you to announce the finalized Phase III protocol details? Or are you going to have to kind of wait until next year for that? And can we assume the trial is being designed with the intention to support registration in more than one geography, maybe both US and Europe?

Second question on PKU is whether or not you are going to be relying on your in-house manufacturing capabilities to support the study, and if you have clearly spelled out the list of CMC requirements from the FDA for drug product that is going to be used in Phase III and beyond. So those 2 questions on PKU, and then maybe one on the new program in (inaudible). I guess I am just wondering if you would expect SYNB2081 to have any impact on uric acid production from endogenous sources or maybe even on renal excretion of uric acid, or would this product only reduce uric gas to derived from dietary sources.

Great. Yes. Thanks so much, Mark, for your questions. For the first one, in terms of the Phase III design, we plan to have an end of Phase II meeting with the FDA, where we will get final alignment on the specific design before we disclose that externally. I think that is the prudent thing to do and ditto the manufacturing requirements. We have had a lot of good discussions with them as we have been going through development around our CMC and particularly our analytics for our products and have very good alignment and a good collaborative discussion with them. We do not foresee any major showstoppers there based on the back and forth that we have had to date, but obviously, the final agreement comes with the end of Phase II meeting minutes. And as soon as we have those in hand, we will be sharing the overall study design as well as the overall feedback from FDA with the investment community.

I think the other component of your question is about global regulatory. We do see a lot of opportunity for this product. There are about 55,000 patients with PKU globally, about 17,000 of those are in the US. So, there is clearly a big unmet medical need, a large PKU population and I think some interesting commercial opportunity ex-US, in some of those geographies. So we are, as you've seen with our announcement of our EMA orphan designation.

We are actively pursuing ex-US regulatory alignment. Having said that, the most important thing for us is speed to BLA in the US. So, we are engaging but also maintaining focus on initiating our Phase III study as quickly as possible and do not want to compromise our speed or success with FDA in trying to get global alignments for PKU. And then on the final PKU question about manufacturing. I think we have Tony on the line. Maybe I will ask him to explain in more detail what our plans are for manufacturing the Phase III and material for the trial, Tony?

Yes. Thank you. So, I think the first point you mentioned in terms of regulatory correspondence to the FDA, we have had positive support of CMC regulatory correspondence. We constantly are going back and forth, and that is on a good path. So, the question, I think, on manufacturing and supporting the Phase III, we have made concrete progress in extent the plan, so we have product to supply for the Phase III, and that comes from what I describe as maybe 3 different pieces. First piece is the optimizer process, both to allow for higher yields by improvement of cell densities, but we also have scaled up.

The second piece is that we have completed expansion and renovation of the suite or our manufacturing facility to allow us to support the next level of scale up for the scaled-up process, and we have also completed tech transfer into the suite, and we are really getting ready now for the future GMP activities to support the Phase III. So, the combination of the scale, the improved process cell densities that allows for high yield, the fact that we have expanded our suite, all of these pieces come together to allow us to support the Phase III, and we will provide material and support production of material for the Phase III from our current suite. Does that answer your question?

It does.

I was not forgetting that, Mark. I think we have David Hava on the line who can maybe explain some of the biology. We have done some really elegant work in research to elucidate the role of gut in in gout, and we look forward to sharing that at a future academic meeting, but maybe David can give you some of the high points today.

Yes, I'd be happy to do, as you just said, I think understand the biology and uric acid kind of metabolism and distribution has been a big component of advancing this program forward. I think for many of the metabolites we are interested in, there are multiple pools to draw on, right? There is the obviously diet component. That is true for the immunoacids to oxalates. I think that is also true for uric acid. There are also pools of many of these metabolites that recirculate from the systemic compartment into the gut and then back out as kind of a circulation pathway.

And we have described that for phenylalanine and methionine as a potential pool to also access. We also think that happens with uric acid, and so that comes from some literature, some older literature that has really highlighted a gut component in the metabolism of just endogenous uric acid and then clearance from that compartment, and so, we do think that there will be the ability of the bug to access some of that pool as well, and we have some of our own data in both rodents and non-hemoprimates that support that. So, it's likely to be both compartments, this is kind of the short answer to your question.

(Operator Instructions). Our next question comes from the line of Raghuram Selvaraju from H. C. Wainwright.

This is Mitchell on for Ram. I wanted to ask, you were talking about on the enrollment rate for PKU Phase III versus Phase II. It could be a little less intensive because in Phase II, you are collecting a lot of data, it is going to be very data rich. Could you talk about any differences that you could expect? Anything you would leave out on a lot of data that is going to be very data rich. Could you talk about any differences that you could expect? Anything you would leave out on the Phase III design versus Phase II in terms of that data in terms of like biomarker collection and others, what might we see more in the Phase II that we potentially wouldn't get to see in the Phase III.

Yes. So good question, Mitchell. This is Aoife. So, in the Phase II study, we really wanted to do the most efficient design possible that helps us understand whether this product could be effective in lowering Phe in PKU patients. We think based on the data we announced last year that we were successful in that. I think the date is very internally consistent. We had multiple biomarkers, all arrows pointing the same way. So, we know based on those data and are hoping to kind of further confirm that later this year, that the product can work. I think the Phase III study is now going to evaluate and kind of sharpen up the clinical profile for this product, and there is going to be multiple learnings from the Phase II that we will take forward into the Phase III design.

The 2 most important components, I think, from my perspective as a drug developer are the proportion of patients who are going to respond, the proportion of the PKU patients who are going to have a response, and then what's going to be the Phe lowering in that responder population. I think those are the real critical endpoints, and that is a much easier endpoint. It's a blood sample that can be taken every couple of weeks for plasma, there is no need for new tests, overnight fasting, intensive multiple timepoint daily curves like we are doing in Phase II. I think the second component is just making sure that we optimize the tolerability profile of the product.

As you have mentioned before, we have GIAEs, we have learned a tremendous amount from all of our programs in terms of how to best manage and mitigate. What we have seen is that those they either very individual, and I think allowing people to titrate up to the right dose and find the right dose for them, is going to be a really important component of our Phase III study design. So, I think both efficacy components as well as tolerability components, and I think overall we see tremendous promise based on the learnings from Phase II that we can really optimize that Phase III design to be as informative as possible and also have a good enrollment rate by having it low burden for patients and precise.

I would now like to turn the conference back to Aoife Brennan for closing remarks.

I would just like to close by thanking everyone for joining us today for the call. We look forward to a busy second half of this year, and thank you so much for your attention.

This concludes today's conference call. Thank you for participating. You may now disconnect.