Spyre Therapeutics, Inc. (NASDAQ:SYRE) is a preclinical stage biotechnology company that has recently reshaped its business to focus on developing next-generation therapeutics for patients living with inflammatory bowel disease (IBD), including ulcerative colitis (UC) and Crohn's disease (CD). Through a strategic acquisition, the company has acquired a promising pipeline of novel and proprietary monoclonal antibody (mAb) product candidates that have the potential to address unmet needs in IBD care.

Business Overview

Spyre Therapeutics was previously known as Aeglea BioTherapeutics, Inc. and underwent a corporate rebranding in November 2023. The company was formed in 2013 and was initially focused on developing enzyme-based therapeutics for rare metabolic diseases. However, in April 2023, the company announced that it would be exploring strategic alternatives to maximize shareholder value, leading to a significant restructuring of the business.

On June 22, 2023, Spyre acquired the assets of a privately held biotechnology company, Spyre Therapeutics, Inc. (Pre-Merger Spyre), through a reverse triangular merger. This transformative acquisition has allowed Spyre to pivot its focus towards the development of a pipeline of mAb product candidates for the treatment of IBD.

Through the acquisition, Spyre gained the option to license intellectual property rights related to four research programs from Paragon Therapeutics, a joint venture between Fairmount Funds Management LLC and FairJourney Biologics. Spyre has since exercised the option for two of these programs, SPY001 and SPY002, and is currently in the process of finalizing the respective license agreements.

SPY001 - Anti-α4β7 mAb

Spyre's most advanced product candidate, SPY001, is a highly potent, highly selective, and humanized monoclonal antibody designed to bind selectively to the α4β7 integrin. This integrin plays a key role in regulating the migration of lymphocytes to the gut, where they contribute to the inflammatory process in IBD. By blocking the interaction between α4β7 integrin and MAdCAM-1, SPY001 aims to reduce the recruitment of lymphocytes to the gut, leading to a decrease in inflammation.

Preclinical studies have demonstrated that SPY001 exhibits similar potency and selectivity as vedolizumab, a currently marketed mAb for the treatment of IBD, while also incorporating a half-life extending modification that results in a more than three-fold increase in half-life compared to vedolizumab in both transgenic mice and non-human primates. This extended pharmacokinetic profile could potentially enable less frequent administration of SPY001 compared to existing mAb therapies.

Spyre is on track to initiate a first-in-human (FIH) study for SPY001 in the second quarter of 2024, with interim data from the Phase 1 healthy volunteer study expected by the end of 2024. If successful, SPY001 would then advance to Phase 2 and, potentially, Phase 3 clinical studies to support global regulatory submissions and commercial approval.

SPY002 - Anti-TL1A mAb

Spyre's co-lead program, SPY002, consists of two highly potent, highly selective, and fully human mAb candidates designed to bind to tumor necrosis factor-like ligand 1A (TL1A). TL1A is a protein that plays a role in regulating the immune system and is elevated in the gut tissue of individuals with IBD. By neutralizing TL1A, the SPY002 candidates have the potential to modulate the immune response in IBD patients, potentially reducing disease activity and promoting mucosal healing.

Preclinical studies have demonstrated that the SPY002 candidates exhibit subnanomolar potency in cellular assays and extended pharmacokinetic half-lives of more than two to three-fold relative to competitor molecules in clinical development that do not incorporate half-life extending modifications. Spyre expects to submit an Investigational New Drug (IND) or equivalent foreign regulatory submission and enter a Phase 1 FIH study in healthy volunteers for one or both of the SPY002 candidates in the second half of 2024, with interim data from the Phase 1 study expected in the first half of 2025.

Other Pipeline Programs

In addition to SPY001 and SPY002, Spyre's pipeline includes several other early-stage programs, including SPY003 (anti-IL-23 mAb), SPY004 (novel mechanism of action mAb), SPY120 (combination of SPY001 and SPY002), SPY130 (combination of SPY001 and SPY003), and SPY230 (combination of SPY002 and SPY003). The company is actively advancing these programs through preclinical development and plans to exercise its option to acquire the intellectual property rights for the SPY003 and SPY004 programs in the near future.

Financials

For the fiscal year ended December 31, 2023, Spyre reported annual revenue of $886,000, annual net loss of $338,790,000, annual operating cash flow of -$99,910,000, and annual free cash flow of -$99,910,000. The company's financial performance during this period was primarily driven by its research and development efforts, as it worked to advance its pipeline of IBD-focused product candidates.

In the first quarter of 2024, Spyre reported a net loss of $43,857,000, with research and development expenses of $34,928,000 and general and administrative expenses of $12,846,000. The company's cash, cash equivalents, and marketable securities totaled $484,641,000 as of March 31, 2024, providing a strong liquidity position to support its ongoing operations and development activities.

Liquidity

As of March 31, 2024, Spyre had an accumulated deficit of $808,271,000 and cash, cash equivalents, marketable securities, and restricted cash of $485,000,000. Based on current operating plans, the company has sufficient resources to fund operations for at least one year from the issuance date of the financial statements.

Spyre has been successful in raising significant capital to support its operations and development activities. In June 2023, the company completed a private placement of Series A Preferred Stock, raising approximately $197.3 million in net proceeds. In December 2023 and March 2024, the company raised an additional $169.1 million and $168.8 million, respectively, through the issuance of Series B Preferred Stock.

These capital raises, combined with the company's strong liquidity position, provide Spyre with the financial resources necessary to advance its pipeline of IBD-focused product candidates through preclinical and clinical development.

Risks and Challenges

As a preclinical stage biotechnology company, Spyre faces several risks and challenges that investors should be aware of. The drug and/or device development process is inherently uncertain, and the company's development approach is unproven. The preclinical evidence that supports Spyre's proposed development program is preliminary and limited, and the company has not yet tested any product candidate in humans.

Additionally, Spyre's pipeline is focused on a single therapeutic area, IBD, which exposes the company to concentration risk. The failure of one or more of its product candidates could have a significant impact on the company's overall performance.

The company also faces competition from other biotechnology and pharmaceutical companies developing treatments for IBD, some of which may have greater resources and more advanced product candidates in their pipelines.

Outlook

Despite the risks and challenges, Spyre Therapeutics presents an intriguing investment opportunity in the preclinical biotechnology space. The company's acquisition of Pre-Merger Spyre and the subsequent expansion of its pipeline into IBD have positioned it as a promising player in a therapeutic area with significant unmet needs.

With a strong balance sheet, a pipeline of novel mAb candidates, and a clear focus on advancing its programs through clinical development, Spyre appears well-equipped to capitalize on the potential of its IBD-focused approach. As the company continues to execute on its strategic priorities, investors will be closely watching for key milestones, such as the initiation of the FIH study for SPY001 and the progression of its other pipeline candidates.

Conclusion

Overall, Spyre Therapeutics represents a compelling opportunity for investors seeking exposure to a preclinical biotechnology company with a differentiated approach to addressing the challenges of inflammatory bowel disease.