Business Overview and History
Spero Therapeutics, headquartered in Cambridge, Massachusetts, is a multi-asset, clinical-stage biopharmaceutical company focused on identifying and developing novel treatments for rare diseases and multi-drug resistant (MDR) bacterial infections. The company's diverse pipeline includes product candidates targeting a range of therapeutic areas, showcasing its commitment to address significant unmet medical needs.
Spero Therapeutics was founded in 2013 with the goal of developing innovative therapies to treat rare diseases and combat the growing threat of antibiotic resistance. In its early years, the company focused on acquiring and developing product and technology rights, building its intellectual property portfolio, and conducting research and development activities for its product candidates. During this time, Spero did not have any products approved for sale and had not generated any revenue from product sales.
In 2016, Spero entered into a licensing agreement with Vertex Pharmaceuticals for the development of SPR720, an oral agent targeting nontuberculous mycobacterial (NTM) pulmonary disease. This partnership highlighted the company's strategic approach to building a diverse pipeline through collaborations and acquisitions. The agreement with Vertex was an important milestone for the young company as it sought to advance its pipeline of product candidates.
The following year, in 2017, Spero further expanded its portfolio by acquiring the rights to tebipenem HBr, an investigational oral carbapenem antibiotic, and SPR206, an innovative intravenously administered polymyxin, through licensing agreements with Meiji Seika Pharma and PBB Distributions Limited, respectively.
Over the next several years, Spero continued to build out its pipeline, entering into additional licensing and collaboration agreements to support the development of its lead candidates. The company also secured funding from various government agencies, such as BARDA and NIAID, to help advance its programs.
Despite the progress, Spero faced challenges common to many clinical-stage biopharmaceutical companies, including the need to continue securing additional financing to fund its operations and the inherent risks and uncertainties associated with drug development. The company worked to navigate these obstacles as it sought to bring its novel therapies closer to potential regulatory approval and commercialization.
Today, Spero's pipeline consists of three mid- to late-stage clinical assets: tebipenem HBr, SPR206, and SPR720. The company's relentless focus on addressing unmet medical needs in rare diseases and antimicrobial resistance has positioned it as a key player in these important therapeutic areas.
Financial Overview
Spero Therapeutics has a history of consistent revenue growth, driven primarily by its various government and industry collaborations. In 2020, the company reported total revenue of $258,000, followed by a significant increase to $48.58 million in 2021. This upward trend continued in 2022, with Spero reporting total revenue of $96.73 million. In 2023, the company maintained its strong performance with total revenue of $96.73 million.
However, the company has yet to achieve consistent profitability. In 2020, Spero's net loss was $78.28 million, followed by a net loss of $89.76 million in 2021. The company showed improvement in 2022 with a net loss of $46.42 million, and in 2023, Spero reported a net income of $22.81 million, marking its first profitable year.
The most recent quarter (Q3 2024) saw a decline in revenue to $13.47 million, compared to $25.47 million in Q3 2023, representing a year-over-year decrease of 46.8%. This decrease was primarily attributed to lower collaboration revenues in the quarter. The net loss for Q3 2024 was $17.15 million.
Liquidity
Spero's cash position has been a notable strength, with the company ending 2022 with $109.11 million in cash and cash equivalents. As of September 30, 2024, Spero had cash and cash equivalents of $76.3 million. The company's current ratio and quick ratio both stand at 2.68, indicating a strong ability to meet short-term obligations. The debt-to-equity ratio is relatively low at 0.0519, suggesting a conservative approach to leverage.
Spero anticipates receiving three remaining tranches of development milestone payments from GSK in the approximate amount of $24 million every six months. The company estimates that its existing cash and cash equivalents, along with expected collections from its collaboration receivables and other non-dilutive funding commitments, will be sufficient to fund its operating expenses and capital expenditures into mid-2026.
Recent Developments and Outlook
In the first quarter of 2024, Spero announced that the U.S. Food and Drug Administration (FDA) had cleared the Investigational New Drug (IND) application for SPR206, allowing the company to advance the asset into a Phase 2 clinical trial in patients with hospital-acquired or ventilator-associated bacterial pneumonia (HABP/VABP). This milestone represented a significant step forward in the development of SPR206 as a potential treatment for MDR Gram-negative infections.
Regarding the company's lead asset, tebipenem HBr, Spero reported that enrollment in the pivotal Phase 3 PIVOT-PO clinical trial remained on track, with the goal of completing enrollment in the second half of 2025. This trial is evaluating tebipenem HBr as a potential oral treatment for complicated urinary tract infections (cUTI), including acute pyelonephritis. The primary efficacy endpoint for the PIVOT-PO trial is overall response, which is a composite of clinical and microbiological response at the test-of-cure visit. The primary analysis will be an assessment of non-inferiority in the microbiological intent-to-treat population based on a 10% non-inferiority margin.
In July 2023, Spero received written agreement from the FDA under a special protocol assessment (SPA) on the design and size of the pivotal Phase 3 PIVOT-PO clinical trial of tebipenem HBr in patients with cUTI, including acute pyelonephritis. The company is responsible for the execution and costs of this follow-up Phase 3 clinical trial.
In November 2022, Spero entered into an exclusive license agreement with GlaxoSmithKline (GSK) for the development and commercialization of tebipenem HBr. Under the terms of the agreement, Spero received an upfront payment of $66 million and is eligible to receive up to $225 million in additional milestone payments, as well as tiered low-single digit to low-double digit royalties on net sales of the GSK Licensed Products in the GSK Territory (all territories except certain Asian countries previously licensed to Meiji).
However, in October 2024, Spero announced that a planned interim analysis of the Phase 2a proof-of-concept study of its SPR720 candidate for the treatment of nontuberculous mycobacterial pulmonary disease (NTM-PD) did not meet the primary endpoint. While the data showed antimicrobial activity associated with SPR720, the analysis did not demonstrate sufficient separation from placebo, and potential dose-limiting safety issues were observed. As a result, Spero has suspended the development of SPR720 and is evaluating alternative paths forward for the program.
Despite the setback with SPR720, Spero remains committed to advancing its other pipeline assets, tebipenem HBr and SPR206, while also exploring strategic alternatives to maximize value for shareholders. The company's recent restructuring and 39% workforce reduction in October 2024 are expected to extend its cash runway into mid-2026, providing the resources necessary to support the continued development of its lead programs.
Risks and Challenges
Spero Therapeutics faces several risks and challenges common to the biopharmaceutical industry, including the inherent uncertainty of clinical trial outcomes, regulatory approvals, and commercial success. The company's reliance on third-party manufacturers and partners for the development and commercialization of its product candidates also introduces additional risks related to supply chain disruptions and the successful execution of collaborative agreements.
Furthermore, the highly competitive nature of the rare disease and antimicrobial resistance therapeutic areas, as well as the potential for changing regulatory environments and pricing pressures, pose ongoing challenges for Spero. The recent decline in collaboration revenues highlights the potential volatility in the company's revenue streams, which are currently not derived from product sales.
Industry Trends
The antibiotics market is expected to grow at a compound annual growth rate (CAGR) of 4.3% from 2023 to 2028, driven by the increasing prevalence of infectious diseases and the rising threat of antimicrobial resistance. This trend aligns well with Spero's focus on developing novel treatments for MDR bacterial infections and positions the company to potentially capitalize on the growing market demand for innovative antibiotics.
Conclusion
Spero Therapeutics has established itself as a leading biopharmaceutical company dedicated to addressing unmet medical needs in rare diseases and antibiotic resistance. With a diversified pipeline of innovative product candidates, strategic partnerships, and a strengthened financial position, the company is well-positioned to continue its mission of developing novel treatments that can positively impact the lives of patients. While the recent setback with SPR720 presents a challenge, Spero's focus on its other lead assets, tebipenem HBr and SPR206, alongside its strategic restructuring, suggests that the company remains committed to navigating the complexities of the biopharmaceutical landscape and creating long-term value for its shareholders. The company's ability to secure milestone payments and maintain a strong cash position provides a solid foundation for its ongoing research and development efforts, as it works towards bringing its promising therapies to market.