Spero Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; balance-sheet figures compared with December 31, 2023. The filing was signed May 15, 2024. Spero is a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue.
Business context and programs
- SPR720: Wholly owned oral candidate in Phase 2a development for nontuberculous mycobacterial pulmonary disease.
- Tebipenem HBr: Partnered with GSK; a pivotal Phase 3 cUTI trial, PIVOT-PO, began enrolling in December 2023. Spero is responsible for the follow-up Phase 3 trial and its costs; GSK is responsible for further development, regulatory filing and commercialization activities beyond that trial.
- SPR206: Partnered program for hospital-setting MDR Gram-negative infections. The FDA granted Fast Track designation in March 2024 for specified hospital-acquired and ventilator-associated bacterial pneumonia indications.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / prior balance date |
|---|---|---|
| Total revenue | $9.267 million | $2.069 million |
| Research and development expense | $17.332 million | $8.979 million |
| General and administrative expense | $5.917 million | $7.317 million |
| Operating loss | $13.982 million | $14.227 million |
| Interest and other income, net | $1.313 million | $0.961 million |
| Net loss; loss per share | $12.669 million; $0.24 | $13.266 million; $0.25 |
| Operating cash flow | $5.938 million provided | $12.853 million used |
| Cash and cash equivalents | $82.271 million | $76.333 million |
| Total assets; total liabilities | $167.703 million; $71.454 million | $182.390 million; $75.496 million |
Revenue comprised $5.063 million in grants, $4.064 million in GSK-related collaboration revenue and $0.140 million in other collaboration revenue. No product-sales revenue was reported. The filing does not present a conventional gross margin for product sales; the company remains loss-making.
Cash increased by $5.938 million during the quarter. Operating cash flow benefited substantially from collection of the first $23.8 million installment of GSK’s $95.0 million development milestone, reflected as a $23.3 million decrease in collaboration receivable. Thus, positive quarterly operating cash flow should not be read as evidence that recurring operations are cash-generative. The filing reports no investing or financing cash flows in the quarter.
Current assets were $140.154 million and current liabilities were $41.821 million. The balance sheet includes $72.409 million of current and non-current collaboration receivables, principally related to GSK. No borrowings or funded debt are reported; liabilities include lease obligations and deferred revenue.
Material changes versus the prior comparable period
- Revenue increased $7.198 million, primarily from higher BARDA revenue for tebipenem HBr and higher GSK collaboration revenue. Grant revenue rose $3.734 million; GSK-related collaboration revenue rose $3.547 million.
- R&D expense increased $8.353 million. Tebipenem HBr direct costs rose $6.098 million with Phase 3 activity, and SPR720 costs rose $2.621 million with increased Phase 2a activity; SPR206 direct costs fell $0.472 million.
- G&A expense fell $1.400 million, mainly because of lower headcount-related costs and prior-year restructuring retention bonuses.
- Net loss narrowed by $0.597 million. Weighted-average shares increased to 53.5 million from 52.5 million; loss per share improved to $0.24 from $0.25.
- Year-over-year operating cash flow improved by $18.791 million, largely reflecting the GSK installment collection and related working-capital movements.
Outlook, risks and unusual items
- Management states that cash and cash equivalents should fund operating expenses and capital needs for at least 12 months from issuance of the financial statements, and estimates runway into late 2025. The company expects to need additional funding thereafter and may reduce spending or delay, scale back or eliminate programs if financing is unavailable. Management’s plans prioritize SPR720 Phase 2 milestones and tebipenem HBr Phase 3 activity; SPR206 Phase 2 activity is contingent on non-dilutive financing.
- The company expects continued operating losses and has an accumulated deficit of $403.7 million. Future funding could come from equity or debt offerings, collaborations and grants; equity financing could dilute shareholders, while debt may impose covenants.
- GSK’s remaining potential payments are contingent: $25 million for an FDA NDA submission milestone, up to $150 million in commercial milestones, up to $225 million in sales milestones, and tiered royalties. These amounts are not assured; the filing says uncertain future development milestones were fully constrained from the transaction price as of March 31, 2024.
- BARDA’s remaining $12.7 million option is subject to BARDA exercise and specified conditions, including satisfactory progress and results. Government-award funding, collaborator execution, trial outcomes, regulatory review and third-party manufacturing are material uncertainties.
- A consolidated putative securities class action and two derivative actions concern alleged statements about the tebipenem HBr NDA. Spero denies wrongdoing, intends to defend the cases and cannot predict outcomes or reasonably estimate a loss range. The class-action motion to dismiss had not been decided; derivative actions were stayed pending the class action, subject to court approval.
- The company has an effective $300 million shelf registration, including an at-the-market program of up to $75 million. It sold no shares under the program in Q1 2024.
- Management concluded disclosure controls were effective as of March 31, 2024; no material change in internal control over financial reporting was reported during the quarter.
Most important facts for investors to verify
- Cash use and runway in subsequent filings, especially the effect of Phase 3 trial spending and whether the late-2025 estimate changes.
- PIVOT-PO enrollment, timing, results and any FDA requirements; the SPA agreement does not guarantee approval.
- SPR720 Phase 2a progress and safety findings, and financing availability for SPR206 development.
- Timing and collection of remaining GSK installments, milestone conditions, and the allocation of Spero’s clinical-trial responsibilities and costs.
- BARDA option exercise and ongoing government-award funding, including any effects of award conditions.
- Progress and potential financial consequences of the securities and derivative lawsuits, for which no loss estimate is currently available.