Spero Therapeutics, Inc. (SPRO) 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. With a diversified pipeline and strategic partnerships, Spero Therapeutics is positioned to address some of the most pressing healthcare challenges of our time.
Business Overview and History
Spero Therapeutics was founded in 2013 with the mission of tackling the growing threat of antibiotic resistance and the lack of effective treatments for rare diseases. The company's founders recognized the urgent need for innovative solutions in these areas and set out to build a robust pipeline of product candidates.
Since its inception, Spero Therapeutics has made significant strides in advancing its portfolio and expanding its capabilities. In 2016, the company entered into key license agreements with Vertex Pharmaceuticals for SPR720 and with Meiji Seika Pharma Co. Ltd. for tebipenem HBr, which significantly bolstered its product pipeline. The following year, in 2017, Spero further expanded its reach by entering into an agreement with Everest Medicines for the development of SPR206 in Greater China and certain Southeast Asian countries.
Throughout its history, Spero has faced and overcome various challenges in the development of its product candidates. The company's resilience was demonstrated in 2022 when it had to suspend its development program for SPR720 following an interim analysis of the Phase 2a proof-of-concept study that did not meet its primary endpoint. In response, Spero restructured its operations to focus on advancing the clinical development of its tebipenem HBr program, showcasing its ability to adapt and prioritize its most promising assets.
Despite these setbacks, Spero has continued to make significant progress with its remaining product candidates. A major milestone was achieved in 2023 when the company received written agreement from the FDA on the design and size of the pivotal Phase 3 PIVOT-PO clinical trial of tebipenem HBr in patients with complicated urinary tract infections (cUTIs), including acute pyelonephritis. This development marked a crucial step towards potential regulatory approval for tebipenem HBr.
The company's lead product candidate, tebipenem HBr, is currently in a pivotal Phase 3 clinical trial for the treatment of complicated urinary tract infections (cUTIs), including acute pyelonephritis, in adult patients. Tebipenem HBr has the potential to be the first broad-spectrum oral carbapenem approved for this indication, addressing a critical unmet need.
In addition to tebipenem HBr, Spero Therapeutics is developing SPR206, a Phase 2-ready intravenously administered antibiotic targeting MDR Gram-negative bacterial infections, and SPR720, an investigational oral agent for the first-line treatment of nontuberculous mycular (NTM) pulmonary disease, a rare disease.
The company has leveraged strategic partnerships to bolster its development efforts. In 2022, Spero Therapeutics entered into an exclusive licensing agreement with GlaxoSmithKline (GSK) for the development and commercialization of tebipenem HBr. This collaboration has provided Spero with significant financial resources and expertise to advance the program. Under the terms of the agreement, Spero received an upfront payment of $66 million in November 2022 and is eligible for up to $25 million in development milestones, $150 million in commercial milestones, and $225 million in sales milestones, as well as tiered low-single digit to low-double digit royalties on net product sales.
Financials and Liquidity
As of September 30, 2024, Spero Therapeutics reported a cash and cash equivalents balance of $76.3 million. The company's net income for the full year 2023 was $22.8 million, and its total revenue was $96.7 million. Spero's operating cash flow and free cash flow for 2023 were both -$33.0 million.
For the nine months ended September 30, 2024, Spero reported revenue of $32.9 million, up from $30.3 million in the same period of the prior year. This revenue was primarily derived from the company's government awards and collaboration agreements, including $17.7 million in collaboration revenue from its agreement with GSK and $14.9 million in grant revenue. However, Spero incurred a net loss of $47.7 million during the nine-month period, compared to a net loss of $28.4 million in the prior year period, as the company continued to invest in the development of its product candidates.
In the most recent quarter (Q3 2024), Spero reported revenue of $7.8 million and a net loss of $17.2 million. Year-over-year, total revenue increased by 15.6% primarily due to an increase in collaboration revenue from GSK. Net income decreased by $13.9 million compared to the prior year quarter due to increased research and development expenses.
Based on its current cash position and expected collections from collaboration receivables, the company believes its cash runway will be sufficient to fund its operating expenses and capital expenditure requirements into mid-2026. Spero Therapeutics has stated that it may need to raise additional capital through a combination of equity or debt financing, potential new collaborations, or additional grant funding to support its continued operations and product development beyond this timeframe.
The company's liquidity position remains stable, with a debt-to-equity ratio of 0.07 and both current and quick ratios of 2.68 as of September 30, 2024. These figures indicate that Spero has a strong ability to meet its short-term obligations and maintain financial flexibility.
Recent Developments and Outlook
In October 2024, Spero Therapeutics announced a strategic restructuring and a reduction in its workforce by approximately 39%. This decision was driven by the company's suspension of development activities for its SPR720 program, following an interim analysis of the Phase 2a proof-of-concept study that did not meet its primary endpoint. The restructuring is aimed at focusing the company's resources on advancing the clinical development of tebipenem HBr and other corporate activities.
Despite this setback, Spero Therapeutics remains focused on its core pipeline. The company's pivotal Phase 3 PIVOT-PO trial for tebipenem HBr in cUTI patients has reached over 60% enrollment as of December 31, 2024, and remains on track to complete enrollment in the second half of 2025.
In addition, Spero has continued to strengthen its strategic partnerships. In October 2024, the company announced an amendment to its licensing agreement with GSK, which added an additional $0.8 million milestone payment opportunity related to an upcoming Phase 1 clinical study.
In terms of financial guidance, Spero exceeded its previous revenue guidance for fiscal year 2022, achieving revenue of $62 million compared to the projected range of $55 million to $60 million. For fiscal year 2023, the company provided revenue guidance in the range of $65 million to $70 million, representing a 5-13% year-over-year increase from the fiscal year 2022 actual revenue.
Risks and Challenges
Spero Therapeutics faces several risks and challenges inherent to the biopharmaceutical industry. The company's success is heavily dependent on the successful development, regulatory approval, and commercialization of its product candidates, particularly tebipenem HBr. Any setbacks in the clinical trial process or regulatory approvals could have a significant impact on the company's prospects.
Additionally, Spero Therapeutics operates in a highly competitive environment, with established pharmaceutical and biotechnology companies vying for market share. The company's ability to differentiate its products and maintain a competitive edge will be crucial for its long-term success.
Financing and capital requirements also pose a risk, as the company may need to secure additional funding to support its operations and product development beyond its current cash runway. Failure to obtain sufficient funding could slow or halt the company's progress.
Conclusion
Spero Therapeutics is navigating the complex and challenging landscape of rare diseases and antibiotic resistance with a diversified pipeline and strategic partnerships. The company's lead product candidate, tebipenem HBr, holds significant promise in addressing the unmet need for effective oral treatments for cUTIs, while its other programs target critical areas of healthcare.
Despite the recent setback with the SPR720 program, Spero Therapeutics remains focused on advancing its core pipeline and leveraging its strategic collaborations to drive long-term growth. The company's financial performance, including revenue growth and strategic partnerships, demonstrates its ability to generate value from its assets and collaborations.
As Spero continues to execute on its strategic priorities, it will be essential for investors to closely monitor its progress, financial position, and ability to overcome the inherent risks and challenges of the biopharmaceutical industry. The company's success in advancing its clinical programs, particularly tebipenem HBr, and its ability to meet or exceed its financial guidance will be key indicators of its future prospects and potential for long-term value creation.