Spero Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Spero is a clinical-stage biopharmaceutical company developing treatments for drug-resistant bacterial infections and rare diseases. It had no products approved for sale and no product-sale revenue.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Total revenue | $5.1 million | $1.7 million | $12.4 million | $3.4 million |
| Research and development | $14.5 million | $15.7 million | $32.9 million | $36.1 million |
| General and administrative | $9.2 million | $4.5 million | $17.5 million | $8.6 million |
| Operating loss | $18.5 million | $18.5 million | $37.9 million | $41.3 million |
| Net loss | $18.6 million | $17.5 million | $38.0 million | $40.8 million |
| Net loss per share | $0.63 | $0.85 | $1.29 | $2.06 |
Revenue came from government grants and collaboration arrangements, not product sales. Six-month grant revenue was $10.3 million, principally from BARDA and the Department of Defense; collaboration revenue was $2.1 million. Gross margin is not a meaningful measure disclosed for this development-stage business.
At June 30, cash and cash equivalents were $71.6 million and marketable securities were $27.7 million, totaling $99.2 million. Cash used in operating activities was $32.0 million for the first half, versus $48.2 million a year earlier. The company reported no debt. Total liabilities were $29.3 million, including $10.9 million of deferred revenue, and stockholders’ equity was $90.3 million.
Material changes and notable transactions
- First-half revenue rose $9.0 million year over year, driven mainly by higher BARDA and DoD funding and new collaboration revenue.
- First-half R&D expense fell $3.2 million, primarily because major tebipenem HBr Phase 3 activities were completed; spending on SPR206 increased as new Phase 1 studies began.
- First-half G&A expense increased $8.9 million, reflecting increased headcount, commercial-readiness costs for tebipenem HBr, and legal and consulting fees.
- On June 30, Spero entered into a global SPR206 license with Pfizer for territories excluding the United States and specified Asian markets. Potential consideration includes up to $80 million in development and sales milestones and tiered royalties. Separately, Pfizer agreed to buy 2,362,348 shares for $40 million; the share sale closed July 1, so proceeds were not included in June 30 cash. The filing recognized $1.4 million of license revenue and recorded $11.1 million as deferred revenue for future R&D services.
Outlook, risks, and contingencies
- Management estimated existing cash, securities, and committed non-dilutive funding would support operations into Q4 2022, subject to spending uncertainty. Management nevertheless concluded that substantial doubt exists about the company’s ability to continue as a going concern; additional financing is needed and is not assured.
- Spero anticipated submitting the tebipenem HBr NDA to the FDA in Q4 2021. The timeline and outcome depend on regulatory review and acceptance of the supporting clinical data.
- The FDA placed the SPR720 Phase 2a trial on clinical hold after deaths of unclear causality in a non-human-primate toxicology study. Spero discontinued the trial while evaluating findings with the FDA; it expected to complete the study report in Q3 and engage with the agency in Q4 2021. No serious adverse events had been observed in human study participants.
- Results from SPR206 Phase 1 bronchoalveolar lavage and renal-impairment studies were expected by early 2022. Funding awards, including BARDA’s remaining $12.7 million option and portions of NIAID awards, are conditional and not fully committed.
- Key risks include clinical and regulatory failure, financing needs and possible dilution, COVID-19 disruption, reliance on a small number of contract manufacturers, third-party collaboration performance, and intellectual-property and reimbursement risks. The company reported no material legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether tebipenem HBr’s NDA was submitted on the anticipated timetable and whether the FDA accepted the application and supporting data.
- Updates on the SPR720 clinical hold, toxicology findings, and any revised development plan.
- Actual cash burn and funding availability relative to the Q4 2022 runway estimate, including committed versus conditional government award funding.
- Pfizer transaction economics and execution: the July 1 share-sale proceeds, performance of the SPR206 license, and potential milestone and royalty terms.
- Whether increased G&A and commercialization preparations translate into sustainable progress without materially accelerating cash use.