Synlogic Inc (SYBX) 2021 Q4 法說會逐字稿

Good morning. Welcome to Synlogic's Fourth Quarter and Full Year 2021 Conference Call. (Operator Instructions) Please be advised that this call is being recorded. I would now like to turn the call over to Andrew Funderburk of Kendall Investor Relations. Please proceed.

Thank you, operator. Good morning, and thanks for joining us in today's conference call. This morning, we issued a press release, which outlines our fourth quarter and full year 2021 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 fourth quarter highlights and recent progress, including an update on our lead program in PKU and Molly will share her perspective on the opportunity to address the medical need and provide a meaningful additional therapeutic option to patients with PKU. Dave will discuss our earlier-stage programs and collaborations, and Michael will provide a financial overview. Following our prepared remarks, we will open the call for questions.

As we begin, I'd like to remind everyone that comments made 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 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 statement.

Now I'd like to turn the call over to Aoife.

Thanks, Andrew. Good morning, everyone, and thank you for joining us. I'm thrilled to share with you today updates on our recent progress as well as our financial results from the fourth quarter and full year of 2021. In 2021, the Synlogic team achieved dramatic progress across the portfolio, proof of concept with our lead program for phenylketonuria or PKU and commitment to advance to Phase III initiation this year. Proof of mechanism in enteric hyperoxaluria with SYNB8802, a research collaboration with Roche in inflammatory bowel disease, and our second drug candidate for a rare metabolic lead -- disease with SYNB1353 for homocystinuria, or HCU.

We are now advancing a pipeline of clinically differentiated already administered drug candidates for metabolic and immune diseases, all based on the advantages of our reproducible proprietary product engine. We are continuing this momentum in 2022 with expected Phase III initiation of our PKU program in the second half of this year. SYNB1353 is expected to have healthy volunteer data by year-end, and we're also looking forward to proof-of-concept patient data from our enteric hyperoxaluria program.

Given our positive results in September 2021, we were able to complete a successful round of financing. We have a strong balance sheet with $136.6 million in cash and equivalents, sufficient to carry us into 2024 and well past this sequence of upcoming milestones.

We strengthened the Synlogic team throughout 2021. Today, I'd like to welcome our new CFO, Michael Jensen. Michael brings an impressive financial and operational background from biopharma and healthcare companies across therapeutic categories and through commercialization. An asset as we progress our programs into late-stage development and through registration. I'd also like to thank Gregg Beloff, who has served as our interim CFO during a critical stage for the company.

Let's ground ourselves in the vision and breakthrough science that's behind our recent progress. From our inception our of Tim Lu and Jim Collins' Lab at MIT, Synlogic was founded on the premise of a new paradigm in biotherapeutics based on the application of synthetic biology to medicine. In just 6 years, we have created a product engine producing potentially transformative drug candidates based on validated mechanisms for the treatment of metabolic and immune diseases.

These synthetic biotics share similar safety profiles due to a lack of systemic absorption or colonization, the convenience of oral delivery, flexible titration, reversibility via rapid GI clearance, and applications across rare and common diseases.

I'd like to review our lead program in PKU, as we advance into Phase III and towards commercialization. A majority of patients with PKU today remain untreated or undertreated due to limitations of current options in both safety and efficacy. With 2 FDA-approved drugs, PKU has a derisked path to registration with fee reduction used as an acceptable endpoint for full approval, as well as precedent for Phase III study design and related considerations. People with PKU in the U.S. and around the world are diagnosed at birth and treated by a small specialist community, presenting [an accessible] patient population.

In September of last year, our Phase II proof-of-concept data showed the potential profile that could meet the PKU communities need for efficacious, safe, oral option, and one that could be used both as monotherapy and adjunctive treatment. We are eager to continue to advance this program forward towards commercial pivotal studies.

I'd like to now hand the call over to Molly to expand upon what makes our approach so potentially meaningful in PKU.

Thank you, Aoife. In the U.S. alone, there are approximately 17,000 patients with PKU, making it a large rare disease population. Despite 2 approved treatments, a large majority of patients remain untreated. This is surprising, but understandable given the limitations of today's treatment options.

Sepiapterin or Kuvan is a standard of care that is tried by all PKU patients at age 2. Its response rate is approximately 20% to 30% of the PKU population. Responders tend to have mild forms of PKU. This leaves the more severe majority untreated. For those who do respond and take Kuvan, their Phe levels often remain well above targets, presenting an opportunity for adjunctive treatment.

Note that with these limitations and 20% or less penetration globally, Kuvan was a $500 million business before it went generic in 2020. The large untreated patient population reflects the nonresponders to Kuvan for whom the other approved therapy, Palynziq is also not a viable option, usually due to safety concerns.

Palynziq is a self-administered injectable. The risk of life-threatening anaphylactic reactions at any time, occurring in 10% of patients has limited uptake. The boxed warning and restrictive REMS program require patients to carry auto-injectable epinephrine at all times, challenging given the neuro cognitive and executive functioning deficits of PKU.

In short, the vast majority of people with PKU need new treatment approaches, whether as monotherapy or an adjunctive option. Synlogic's approach for PKU fits with these needs. Synlogic designed its drug candidate to consume Phe in the GI track without risk of colonization or systemic absorption and associated AEs. In September 2021, we announced that the Phase II interim analysis for SYNB1618 achieved the targeted mean Phe reduction of 20% in an all-comers analysis, which was twice what Kuvan had achieved in its pivotal study. We also saw a strong 50% response rate as 4 of the 8 patients met or exceeded the target for response.

In parallel, we shared that the healthy volunteer head-to-head bridging study confirmed that SYNB1934 has potential for greater efficacy. The product presentation being studied and expected for commercialization is a lyophilized powder provided in a sachet and taken with meals 3 times a day. We are excited to be advancing a potentially effective, safe, convenient and oral monotherapy, an adjunctive option.

In summary, this is a tremendously exciting potential product profile for a patient population that has been waiting too long for new treatment options.

I'd like to hand the call back to Aoife to discuss the PKU program's path forward to Phase III.

Thank you, Molly. Let's review where we're going this year with our PKU program and how it reflects many of the specific advantages of the Synlogic approach. Last fall, after achieving proof of concept with SYNB1618 in an interim analysis of the Phase II study, we committed to advancing our program to Phase III this year. Having reviewed these data, we made 2 important changes to the study to ensure that we had all of the information we needed from the study to initiate a Phase III trial.

Firstly, we added a second arm for SYNB1934 based on the data from healthy volunteers showing higher potency of that product candidate. Secondly, we amended the inclusion criteria to allow patients who are on treatment with sepiapterin, but continue to have uncontrolled blood Phe levels, to participate enabling evaluation of adjunctive use potential. We set out to complete the first arm of SYNB1618 and to enroll the second arm and are looking forward to sharing that Phase II data in the first half of this year.

So what are we hoping to see from that data set? We've already determined that our activity in PKU meets our criteria to advance into late phase development, but there are still a couple of questions to answer. Number one, candidate selection, or which strain will we take forward? As you've seen in healthy volunteers, SYNB1934 had greater activity at a given dose compared to SYNB1618, confirming that higher activity in PKU patients will help clarify the choice of strain.

Two, the potential for adjunctive use. how do patients who are on sepiapterin, but continue to have high blood Phe levels responds to the addition of our therapeutic candidates. This will help us understand whether these patients could be included in a Phase III trial.

Thirdly, what is the likely effect size or efficacy profile, ultimately for our product in PKU patients. As a reminder, we were thrilled with the results seen in the interim analysis, just seeing the same or greater would, of course, be very positive. We are particularly focused, as we shared earlier, on the response rate or the proportion of patients who have a meaningful reduction in blood Phe levels and the mean reduction in that group.

Data from both arms of SynPheny will help inform these expectations. Pending answers to these questions will conduct an end of Phase II meeting with the FDA, which will allow us to confirm the specifics of study plans, including timing and other considerations prior to initiating Phase III. It's important to note that needed bridging studies have been completed, an arm 2 experience of SYNB1934 in PKU patients represents the final step needed to advance to Phase III. We expect our time lines to be the same for either candidate.

As with all drug development, great science and data is necessary, but not sufficient to get new products to patients. A regulatory path to a licensed product is also critical. In addition to the collaborative relationship we have established with regulators, there are a number of other attributes in our favor, including, in PKU, the precedent of 2 FDA-approved drugs support use of a single registrational study and Phe reduction as an endpoint for full approval.

Secondly, our platform fits within the FDA's framework for live biotherapeutic products. The FDA is also familiar with E. Coli Nissle, the chassis for our drug candidates, given that it has over 100 years of safety use in humans.

Thirdly, in addition across our programs, our manufacturing is based on fermentation and lyophilization, well-established manufacturing approaches unlike those of other new modalities.

And finally, from a product perspective, both strains have been extensively studied in healthy volunteers with multiple strain-specific biomarkers. In the interim analysis of the SynPheny trial, these biomarkers confirm the mechanism of action in PKU patients and resulted in a meaningful and significant reduction in blood Phe.

In summary, the path ahead is both derisked and exciting as we advance a PKU biotherapeutic for those who need it most.

I'll now turn it over to Dave to discuss our other promising clinical and preclinical pipeline programs. Dave?

Thanks, Aoife. I'd now like to talk about our program for homocystinuria, SYNB1353. SYNB1353 is Synlogic's second rare metabolic disease targeted drug candidate, entering the clinic this year for homocystinuria, or HCU. HCU patients have a deficiency in the metabolism of another amino acid, homocystine, and as a result, have elevated blood homocystine levels. This can cause intellectual disability and also can result in thromboembolism, presenting as strokes in individuals in their teens and 20s. There is a need for treatment -- new treatment options for which our approach could be a strong fit.

Our approach with SYNB1353 is to consume methionine, a precursor to homocystine. We have promising preclinical data from nonhuman primates and mouse models showing that we're able to lower blood homocystine levels. We expect to enter the clinic this year with results in healthy volunteers by the end of this year. That will be another important milestone for us as a company as we build a pipeline of assets and diseases caused by inborn errors of metabolism.

SYNB1353 is highly synergistic with the PKU program. In addition to leveraging our platform, people with HCU are treated at the same sites by the same clinicians as PKU patients. We apply learnings from the PKU program and build upon the relationships that we have established through that work for HCU patients.

Moving beyond the rare metabolic portfolio, our next program with milestones this year is SYNB8802, being developed for enteric hyperoxaluria. Enteric hyperoxaluria is a chronic progressive disease caused by an underlying GI disorder that causes patients to absorb too much oxalate from their diet. That buildup of oxalate crystallizes in the kidneys, causing crystal and stone formation, which manifests as severe pain and may require intervention to pass the stone.

There is an established and linear relationship between oxalate levels and stone formation. Over time, the oxalate crystals and stones damage the kidneys, leading to irreversible kidney damage, with major implications for morbidity and mortality. There is no FDA-approved treatment for this disease. The drug candidate SYNB8802 consumes oxalate and produces a harmless metabolite called formate in the GI tract lumen.

Our specific approach enables oxalate to be consumed throughout the GI tract, extending the duration of activity and efficacy potential compared to other modalities addressing the same target. We presented data last year that we view as promising proof of mechanism, showing that we can reduce urinary and fecal oxalate levels in a dose-dependent manner in healthy volunteers that were on a high oxalate diet to model enteric hyperoxaluria. Given the established relationship between oxalate levels and stone formation, we expect this to translate into clinically meaningful benefit.

We are now moving forward with a portion of the study 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.

Turning now to our early-stage in-house pipeline. The progress of both the PKU and HOX programs have derisked our platform, especially when focused on consuming GI-based metabolites. This allows us to expand our focus to other areas, including metabolic diseases like gout and also to larger diseases such as IBD. We look forward to sharing updates about these programs as they advance through development.

We have 2 collaborators, which reflects the strength of our product engine. The Ginkgo Bioworks collaboration resulted in the SYNB1353 clinical candidate. We also established a collaboration with Roche last year to develop products for inflammatory bowel disease. We've already achieved the first prespecified research milestone within this collaboration.

I'll 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 fourth quarter and full year ending December 31, 2021. I'm pleased to review the highlights of those results with you now.

Revenue was $0.6 million for the fourth quarter of 2021. There was no revenue for the same period in 2020. Revenue in 2021 was due to the recently initiated collaboration with Roche for the discovery of a novel synthetic biotic for treatment of inflammatory bowel disease or IBD. For the fourth quarter of 2021, the company reported a consolidated net loss of $15.1 million or $0.21 per share, compared to a consolidated net loss of $14.6 million or $0.39 per share for the corresponding period in 2020.

Turning to the balance sheet. Synlogic ended the fourth quarter of 2021 with $136.6 million in cash, cash equivalents and marketable securities, compared to $100.4 million as of December 31, 2020. Under our current operating plan, we expect that our cash will take us into 2024 and enable Synlogic to advance our clinical programs through the 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.

Thanks, Michael. I'm extremely pleased with all the progress we've made across our programs. Our team is pushing forward with great urgency to advance these therapies with the goal of bringing meaningful new treatments to patients. 2022 will be a busy year for us with several important milestones across our expanding portfolio. We're looking forward to the readout of our SynPheny-1 study in PKU in the first half of the year, which will help inform the final candidate selection for our Phase III study that we expect to initiate in the second half of this year. We also expect to have the first human data for our HCU program in the second half of this year as well, and we're anticipating patient proof-of-concept data for our enteric hyperoxaluria program.

In addition, we're fortunate to be well funded to bring all these milestones to fruition with a strong balance sheet to support our work. 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. In your opening remarks, you mentioned that you're more focused on a responder analysis than the overall mean reduction for your PKU program. But unlike other approved drugs that makes sense to look at a responder analysis because the mechanism is likely to have a greater degree of response among a subset of patients, your PKU program seems like it should work more uniformly. So just wanted to get your thoughts on why you have a more focus on a responder analysis than the overall mean reduction?

Yes. Thanks, Joori. I'll make some remarks and then hand it over to Molly, because I think the response to your question is really looking forward to commercialization and the label and the product profile, which is really defined by the category and what physicians and what information they use about the product to determine whether or not to prescribe that product for a given patient. Of course, we'll continue to report all data as we have.

But I think as we look forward to kind of the commercialization and hopefully, following a successful Phase III to launch, it's important that we start to talk and speak in language that's familiar to the prescriber and patient population.

And I think this is very much ingrained in this category. That it's really the percent responders and the percent reduction within those responders that really define this class and these products. And I'll hand it over to Molly to speak from the commercial perspective and why that's the case and why we think it's important from a benchmarking perspective to use similar endpoints and language to outline the results of our trials. Molly?

Thanks, Aoife, and thanks for the question. So it's a great question. And it's interesting, because we -- as Aoife outlined, we do have 2 approved drugs in this category, which is a real advantage from a precedent setting, but also in terms of looking to existing labeling. And to your point, it's really interesting that the 2 approved drugs, while completely different mechanisms, it couldn't be further apart, but they do have quite a similarity in terms of how their registrational or pivotal studies were done to set up for promotion and then what's [seen in the label]. So both of the -- both of those approved drugs have been studied and are outlined in their USPIs in terms of responder analysis.

So that's independent of mechanism and it's a precedent that was said. And I think it just speaks to the importance in this category given the unmet need and given the individual needs of each patient, just to really understand when a drug works for a given patient, how well does it work? So it's really about following that precedent from a regulatory standpoint and a promotional standpoint, which obviously had gone through a lot of consideration and deliberation.

Okay. Great. And then we noticed the change in the threshold for your responder analysis in your corporate deck. I think it now reads at least 20%, which is down from 30%, you referenced previously. So I would just love to get your thoughts on the change and what are the reasons for the change? And if you can just put it into context for us.

Yes. So we had -- we had all -- I don't remember that we had ever defined responder based on 30% -- [lowering my] and I can be wrong here and somebody else on the call can correct me, we had always defined responders at least 20% blood Phe reduction. There is a little bit of variability across different products in PKU in terms of how responder is determined. But the 20% is the number we kind of prespecified is clinically meaningful based on discussions with patients and with prescribers. And that, to my memory, has been consistent throughout. So apologies if we caused any confusion there, but that 20% has always been kind of what we thought of as clinically meaningful.

Okay. Great. And then if I could just squeeze one more in. Based on what you've seen so far, SYNB1934 appears to be more active than 1618. I was just wondering if you could just elaborate on the trajectory of the 2 agents over time relative to each other. For example, did you see 1934 to be consistently more active than 1618? Or did you see the reduction accelerate over time?

Yes. So how we determined the superiority from an activity perspective of 1934 versus 1618 is we've defined your back in vitro, preclinically in vivo, there was a consistent 2x greater activity at a similar dose of 1934 compared to 1618. We then went one step further and we evaluated it in a head-to-head study in healthy volunteers where the same patient received a dose of 1618 and then washed out, and received the same dose of 1934.

And in every single patient in that healthy volunteer crossover, 1934 resulted in greater biomarker production. And the mean -- when we compared the ratio at each individual patient level, the mean of that ratio was 2x.

So across every piece of data that we've collected, be it preclinical or clinical and healthy volunteers, seen a consistent finding, and that's 2x greater activity based on biomarker production. We've absolutely no reason, from a biological perspective, to think that, that would change over time. And we believe that it's based on the underlying changes that we've made to the PAL enzyme to make it more active. And certainly, it's been consistent, and we expect to see consistent data in the PKU patients once we evaluate it later in the first half. Does that make sense?

Our next question comes from Mitchell Kapoor with H.C. Wainright.

The first one, I just wanted to ask how much better you think 1934 could potentially look versus 1618 with respect to the reduction in blood Phe levels? And what would constitute a meaningful difference?

So I think, first of all, I'd say that we were really happy with 1618 when we looked at the first data on the first 8 patients with PKU, seeing that we got a mean 20% reduction, which is 2x the standard of care, based on the all-comers analysis. We believe really shows that this mechanism is working. The strain is consuming Phe (inaudible) in the GI tract and its resulting in a significant reduction in blood Phe levels.

Now around the same time, we had this healthy volunteer data showing that there was 2x activity. So we know that 1934 is only going to be better then 1618, based on the activity in biomarker data.

So we think we're in a very good position in terms of having 2 candidates that are potentially viable to move into Phase III. It's really, at this stage, a decision on which of those candidates we're taking forward more than a kind of a binary decision about whether or not we're moving forward into Phase III. So I think we'll look at the data.

We're expecting to see more activity for 1934, similar to what we saw in healthy volunteers. And the expectation is that, that would be the strain going forward. But until we see the biomarker data, it's going to be hard to make that decision.

Okay. And then have you received any formal feedback from the FDA that no additional development work would be necessary with the newer strain? And if not, when would you expect to get that formal confirmation?

Yes. So we have not had our end of Phase II meeting yet, but we have been working very collaboratively with the FDA [throughout] development of both products. And when we moved forward with 1934 into the clinic, based on the fact that there's really only 5 base pair differences, it's 99.9% identical, these are same chassis. It's really the same enzyme. It's producing the same product.

We were able to move 1934 very rapidly without doing any preclinical toxicology work. For instance, based on the fact that it really has a very, very similar safety profile. So based on that, we're able to move forward into a healthy volunteer study and generated some head-to-head data very, very quickly.

Once we have our end of Phase II meeting, obviously, that will define what the Phase III study looks like. But our expectation is that we've completed all toxicology work and have a very robust human data set. Once we've completed the second arm of SynPheny, but until we have that end of Phase II meeting, as you know, it's -- we're -- it's not 100% guaranteed, but we feel we're in a very good position based on our conversations to date.

(Operator Instructions) Our next question comes from Keay Nakae with Chardan.

Yes. Thank you for EH. Are you experiencing any challenges in enrolling the patients in that study?

So the -- thanks, Keay, for your question. So the study enrolling. We are on track to meet our guidance, which is to establish proof of concept for that strain this year. It's been a challenging time for all clinical studies, I think, and we have to adapt, but we are seeing good activity at the site and are pleased with our progress. And at this stage, we feel that we're in a good position to meet our guidance for the trial. So I think it's a credit to the team that we've been able to push through some of the external challenges with COVID and other things. It's been a tough year to be in clinical research, as you can imagine.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Aoife for closing remarks.

Great. Well, thanks so much, everyone, for joining us this morning on the call. And it would be remiss if I ended without wishing everyone a happy St. Patrick's Day. Thank you all. Bye-bye.

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