Corporate Presentation Oppenheimer Healthcare Conference March 16, 2021 Forward-looking Statements 2 This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, the design, initiation, timing and submission to the U.S. Food and Drug Administration (FDA) of a New Drug Application (NDA) for tebipenem HBr and the potential approval of tebipenem HBr by the FDA; future commercialization, the potential number of patients w ...

Spero Therapeutics, Inc. (NASDAQ:SPRO) Q4 2020 Earnings Conference Call March 11, 2021 4:30 PM ET Company Participants Sharon Klahre – Vice President of Investor Relations and Strategic Finance Ankit Mahadevia – Chief Executive Officer David Melnick – Chief Medical Officer Cristina Larkin – Chief Operating Officer Sath Shukla – Chief Financial Officer Conference Call Participants Lyla Youssef – Cowen & Company Louise Chen – Cantor Fitzgerald Kevin DeGeeter – Oppenheimer Esther Hong – Berenberg Ram Selvaraju ...

PART I [Forward-Looking Information](index=3&type=section&id=Forward-Looking%20Information) This section highlights that the Annual Report on Form 10-K contains forward-looking statements subject to risks and uncertainties - Forward-looking statements in the report are subject to **known and unknown risks, uncertainties, and other factors** that may cause actual results to differ materially from future expectations[12](index=12&type=chunk) - Key areas covered by forward-looking statements include the initiation, timing, design, progress, and results of preclinical studies and clinical trials, the timing and outcome of NDA approval for tebipenem HBr, and the impact of COVID-19 on business and operations[13](index=13&type=chunk) [Risk Factor Summary](index=4&type=section&id=Risk%20Factor%20Summary) This section provides a summary of the material risk factors that could impact the company's business, operations, and financial condition - The COVID-19 pandemic could adversely impact business, including preclinical studies and clinical trials[15](index=15&type=chunk) - The company has not generated product revenue, has a history of losses, and its auditor expresses substantial doubt about its ability to continue as a going concern, necessitating additional capital[15](index=15&type=chunk) - Heavy dependence on the success of tebipenem HBr, with risks related to development, marketing approval, and commercialization[15](index=15&type=chunk) - Clinical trials of product candidates may fail to demonstrate safety and efficacy, leading to delays or inability to complete development[15](index=15&type=chunk) - Reliance on third parties for manufacturing increases the risk of insufficient quantities or unacceptable costs, potentially delaying development or commercialization[15](index=15&type=chunk) [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Spero Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing treatments for multi-drug resistant (MDR) bacterial infections and rare diseases - Spero Therapeutics is a multi-asset, clinical-stage biopharmaceutical company focused on MDR bacterial infections and rare diseases[16](index=16&type=chunk) - Lead product candidate, tebipenem HBr, is an oral carbapenem for MDR Gram-negative infections, aiming to prevent hospitalizations and enable earlier, cost-effective treatment[16](index=16&type=chunk) - SPR720 is a novel oral antibiotic for non-tuberculous mycobacterial pulmonary infections (NTM disease), a rare orphan disease[16](index=16&type=chunk) - SPR206 is an IV-administered polymyxin investigational product candidate for MDR Gram-negative infections in hospitals[16](index=16&type=chunk) [Overview](index=5&type=section&id=Overview) Spero Therapeutics is a clinical-stage biopharmaceutical company dedicated to developing treatments for multi-drug resistant (MDR) bacterial infections and rare diseases - Spero Therapeutics is a multi-asset, clinical-stage biopharmaceutical company focused on identifying, developing and commercializing treatments in high unmet need areas involving multi-drug resistant (MDR) bacterial infections and rare diseases[16](index=16&type=chunk) - Their most advanced product candidate, Tebipenem Pivoxil Hydrobromide (tebipenem HBr), is designed as the first oral carbapenem-class antibiotic for adults to treat MDR Gram-negative infections[16](index=16&type=chunk) - The pipeline also includes SPR720 for non-tuberculous mycobacterial pulmonary infections (NTM disease) and SPR206 for IV-administered treatment of MDR Gram-negative infections in hospitals[16](index=16&type=chunk) [The Problem: Increasingly Limited Antibiotic Options for Severe Infections](index=5&type=section&id=The%20Problem:%20Increasingly%20Limited%20Antibiotic%20Options%20for%20Severe%20Infections) This section details the growing global health threat posed by antibiotic-resistant bacteria, particularly MDR Gram-negative pathogens - Antibiotic-resistant bacteria are a major global health threat, with over **2.8 million** antibiotic-resistant infections and **35,000** deaths annually in the U.S. (2019 report)[21](index=21&type=chunk) - Gram-negative pathogens are particularly concerning due to increasing resistance to nearly all available drugs, with the WHO highlighting critical groups like Acinetobacter, Pseudomonas, and Enterobacteriaceae[22](index=22&type=chunk) - There is an acute need for new, orally administrable antibiotics for MDR bacterial infections, especially as community-acquired infections rise[23](index=23&type=chunk) [Antibiotic Background](index=5&type=section&id=Antibiotic%20Background) Antibiotics treat bacterial infections, with bacteria categorized as Gram-negative or Gram-positive based on cell envelope structure - Antibiotics are drugs used to treat bacterial infections, which are categorized into Gram-negative and Gram-positive based on cell envelope structural differences[18](index=18&type=chunk) - Gram-negative bacteria have an outer membrane that acts as a significant barrier to antibiotics, contributing to reduced potency of many agents[20](index=20&type=chunk) - Gram-negative bacteria are associated with higher mortality and increased ICU admissions in certain patient types, such as those with sepsis and Interstitial Lung Disease[20](index=20&type=chunk) [Growing Antibiotic Resistance in the Hospital and Community Settings](index=6&type=section&id=Growing%20Antibiotic%20Resistance%20in%20the%20Hospital%20and%20Community%20Settings) Antibiotic resistance is a growing global health threat, causing over **2.8 million** infections and **35,000** deaths annually in the U.S - Antibiotic resistance is a major global health threat, causing over **2.8 million** infections and **35,000** deaths in the U.S. annually, with approximately **70%** of pathogens resistant to at least one antibiotic[21](index=21&type=chunk) - Gram-negative pathogens are becoming resistant to nearly all drugs, with the WHO highlighting critical MDR Gram-negative bacteria like Acinetobacter, Pseudomonas, and Enterobacteriaceae[22](index=22&type=chunk) - The annual economic impact of antibiotic-resistant infections on the U.S. economy is estimated at **$20-35 billion** in excess direct health care costs[21](index=21&type=chunk) [Chronic Bacterial Infection without a Viable Cure](index=7&type=section&id=Chronic%20Bacterial%20Infection%20without%20a%20Viable%20Cure) Non-tuberculous mycobacterial (NTM) infections represent a growing global health concern with no approved oral therapies - NTM infections are a growing global health concern and major unmet medical need due to lack of new medications[24](index=24&type=chunk) - Approximately **130,000** patients suffer from NTM disease in the U.S. and Europe, with an **8%** annual growth rate[25](index=25&type=chunk) - Current NTM treatment involves prolonged, often toxic combination therapy with limited efficacy, high healthcare costs (**$1.7 billion** annually in the U.S.), and high mortality rates (**29-69%** within five years)[26](index=26&type=chunk)[25](index=25&type=chunk) [Our Solution](index=7&type=section&id=Our%20Solution) Spero Therapeutics' product candidates aim to overcome the limitations of current antibiotics for MDR acute bacterial infections and NTM - Tebipenem HBr is designed to address the lack of orally administrable antibiotics for resistant Gram-negative infections, potentially preventing hospitalizations and enabling IV-to-oral switch therapy[27](index=27&type=chunk) - SPR720 aims to be the first oral treatment for NTM infection, where current therapies have limited efficacy and high toxicity, with a Phase 2a clinical trial initiated in December 2020 (now on clinical hold)[27](index=27&type=chunk) - SPR206 is designed to address the decline in effective IV-administered antibiotics for MDR Gram-negative infections in hospitals, potentially as a single drug[27](index=27&type=chunk) [Our Pipeline – Multiple Near-term Catalysts Across the Rare and Infectious Disease Portfolio](index=8&type=section&id=Our%20Pipeline%20%E2%80%93%20Multiple%20Near-term%20Catalysts%20Across%20the%20Rare%20and%20Infectious%20Disease%20Portfolio) This section introduces Spero Therapeutics' product pipeline, highlighting near-term catalysts across its rare and infectious disease portfolio - The company's pipeline includes tebipenem HBr, SPR720, and SPR206, with anticipated milestones across rare and infectious disease programs[28](index=28&type=chunk) [Our Product Candidates](index=8&type=section&id=Our%20Product%20Candidates) Spero Therapeutics' product candidates include tebipenem HBr, SPR720, and SPR206, each targeting high unmet needs in infectious diseases - Tebipenem HBr is an oral carbapenem for adults with MDR Gram-negative infections, with positive top-line data from the pivotal Phase 3 ADAPT-PO trial for cUTI and AP[29](index=29&type=chunk) - The ADAPT-PO trial showed oral tebipenem HBr was statistically non-inferior to IV ertapenem in overall response at the test-of-cure visit, with comparable safety and tolerability[29](index=29&type=chunk) - Tebipenem HBr has Qualified Infectious Disease Product (QIDP) designation for cUTI, CABP, and DFI, entitling it to priority review and a potential five-year exclusivity extension[31](index=31&type=chunk) - A patent covering a crystalline form and pharmaceutical compositions of tebipenem HBr was granted in January 2021, with an expiration of February 2038[32](index=32&type=chunk) [Tebipenem HBr: Novel Antibiotic with Potential to be the First Oral Carbapenem for Use in Adults](index=8&type=section&id=Tebipenem%20HBr:%20Novel%20Antibiotic%20with%20Potential%20to%20be%20the%20First%20Oral%20Carbapenem%20for%20Use%20in%20Adults) Tebipenem HBr is Spero's lead oral carbapenem candidate for MDR Gram-negative infections in adults, particularly cUTI and AP [Advantages of tebipenem HBr](index=9&type=section&id=Advantages%20of%20tebipenem%20HBr) Tebipenem HBr offers several advantages, including its potential as the first oral carbapenem for adults, enabling IV-to-oral transition to reduce hospital stays and costs - Tebipenem HBr is designed to be the first broad-spectrum oral carbapenem-class antibiotic for adults, potentially avoiding IV antibiotics and reducing hospitalization costs[34](index=34&type=chunk) - Its oral formulation may enable IV-to-oral transition, facilitating earlier hospital discharge and convenient home-based care for resistant Gram-negative infections[34](index=34&type=chunk) - The ADAPT-PO trial showed a safety and tolerability profile similar to IV ertapenem, with common adverse events being diarrhea and headaches, and no drug-related serious adverse events[34](index=34&type=chunk) E. coli Resistance Rates to Fluoroquinolones in the United States | Setting | 2019 E. coli Resistance Rates to Fluoroquinolones | 2013-2014 E. coli Resistance Rates to Fluoroquinolones | 2000-2004 E. coli Resistance Rates to Fluoroquinolones | | :---------------- | :------------------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Community Setting | 21.2% | 11.7% | 0% | | Hospital Setting | 30.8% | 34.5% | 3.5% | In Vitro Potency Differences (MIC90) against E. coli | Compound | MIC90 (µg/mL) | | :-------------- | :------------ | | tebipenem HBr | 0.03 | | Levofloxacin | >4 | [Significant Market Opportunity for Tebipenem HBr](index=10&type=section&id=Significant%20Market%20Opportunity%20for%20Tebipenem%20HBr) Tebipenem HBr, if approved, has a substantial market opportunity for treating urinary tract infections (UTIs) in both community and hospital settings - The market opportunity for tebipenem HBr is substantial, including treating community-acquired UTIs without hospitalization and transitioning hospitalized UTI patients to oral therapy upon discharge[41](index=41&type=chunk) - UTIs are common, with **33-34 million** patient visits/hospitalizations annually in the U.S.; **30-35%** of UTIs are resistant to primary oral options like fluoroquinolones and trimethoprim/sulfamethoxazole[40](index=40&type=chunk) - IQVIA estimates **4-5 million** U.S. patients annually have UTIs resistant to first-line therapy or require IV treatment, representing a target focus for tebipenem HBr, especially for the **2.7 million** cUTI patients receiving second-line or IV treatment[41](index=41&type=chunk)[42](index=42&type=chunk) [Tebipenem HBr Clinical Development Program (ADAPT-PO)](index=11&type=section&id=Tebipenem%20HBr%20Clinical%20Development%20Program%20(ADAPT-PO)) The ADAPT-PO Phase 3 clinical trial for tebipenem HBr successfully met its primary objective, demonstrating non-inferiority to IV ertapenem for cUTI and AP - The ADAPT-PO Phase 3 trial achieved its primary objective, demonstrating oral tebipenem HBr was statistically non-inferior to IV ertapenem for cUTI and AP[44](index=44&type=chunk) - Overall response rates at the test-of-cure (TOC) visit were **58.8%** for oral tebipenem and **61.6%** for IV ertapenem (treatment difference, -3.3%; 95% CI: -9.7, 3.2; -12.5% NI margin)[44](index=44&type=chunk) - Safety and tolerability data from **1,372** hospitalized adult patients were similar, with treatment-emergent adverse events (TEAEs) reported in **26%** of both groups, primarily diarrhea and headache[46](index=46&type=chunk) - An NDA submission to the FDA for tebipenem HBr for cUTI, including acute pyelonephritis, is planned for the second half of 2021[47](index=47&type=chunk) [QIDP Designation](index=11&type=section&id=QIDP%20Designation) Tebipenem HBr has received Qualified Infectious Disease Product (QIDP) designation from the FDA for cUTI, CABP, and DFI - Tebipenem HBr has QIDP designation for cUTI, community acquired bacterial pneumonia (CABP), and moderate to severe diabetic foot infections (DFI) under the GAIN Act[48](index=48&type=chunk) - QIDP designation qualifies the first marketing application for priority review by the FDA[48](index=48&type=chunk) - If approved, QIDP designation entitles tebipenem HBr to a one-time five-year extension to any non-patent exclusivity period (e.g., NCE exclusivity), totaling **10 years**[48](index=48&type=chunk) [Japanese Data Supporting Safety of Tebipenem](index=12&type=section&id=Japanese%20Data%20Supporting%20Safety%20of%20Tebipenem) The safety profile of tebipenem pivoxil, the prodrug of tebipenem HBr, is supported by extensive clinical data from Japan - The clinical safety profile of tebipenem pivoxil (prodrug of tebipenem HBr) is relevant and supportive, as both metabolize to the active metabolite, tebipenem[49](index=49&type=chunk) - Safety was evaluated in approximately **1,200** subjects (**741** adults, **440** pediatric) across **23** trials in Japan, showing general tolerability comparable to other oral beta-lactam antibiotics and IV carbapenems[50](index=50&type=chunk)[51](index=51&type=chunk) - A **3,540-patient** post-marketing study in Japan further supported the safety and tolerability, with diarrhea being the most frequent adverse drug reaction (**9.5%**) and one serious multi-organ failure event reported[52](index=52&type=chunk)[53](index=53&type=chunk) [Funded Label Expansion Opportunity](index=12&type=section&id=Funded%20Label%20Expansion%20Opportunity) Beyond cUTI, tebipenem HBr has potential for other serious infections like community-acquired bacterial pneumonia (CABP) - Tebipenem HBr has the potential to treat other serious infections, including community-acquired bacterial pneumonia (CABP)[55](index=55&type=chunk) - The BARDA award provides funding for Phase 1 and Phase 2 trials to support a potential CABP indication for tebipenem HBr[55](index=55&type=chunk) [SPR720: Novel Oral Antibiotic Designed for Treatment of Non-tuberculous Mycobacterial Pulmonary (NTM-PD) Disease](index=12&type=section&id=SPR720:%20Novel%20Oral%20Antibiotic%20Designed%20for%20Treatment%20of%20Non-tuberculous%20Mycobacterial%20Pulmonary%20(NTM-PD)%20Disease) SPR720 is a novel oral antibiotic targeting NTM pulmonary disease, a rare orphan condition with no approved oral therapies - SPR720 is a novel oral antibiotic designed for the treatment of non-tuberculous mycobacterial pulmonary disease (NTM disease), a rare orphan disease[56](index=56&type=chunk) - NTM infections are a growing global health concern, affecting approximately **86,000** diagnosed patients in the U.S. and increasing at **8%** annually, with no oral FDA-approved therapeutics specifically for NTM pulmonary disease[61](index=61&type=chunk)[62](index=62&type=chunk) - SPR720 has received Orphan Drug Designation, QIDP designation, and Fast Track Designation from the FDA for NTM pulmonary disease[65](index=65&type=chunk) - A Phase 2a dose-ranging clinical trial for SPR720 in NTM-PD patients was initiated in December 2020 but placed on clinical hold in February 2021 due to mortalities with inconclusive causality in an ongoing non-human primate toxicology study[66](index=66&type=chunk)[69](index=69&type=chunk) [SPR720 Key Attributes](index=12&type=section&id=SPR720%20Key%20Attributes) SPR720 exhibits several key attributes, including acceptable safety and tolerability in Phase 1 trials, broad-spectrum activity against common NTM organisms - SPR720 demonstrated acceptable safety and tolerability in Phase 1 trials, with predicted therapeutic exposures attainable at **500-1,000 mg** once daily oral doses and a low incidence of mild diarrhea[58](index=58&type=chunk) - It exhibits broad-spectrum activity against common NTM organisms like Mycobacterium avium complex (MAC), Mycobacterium kansasii, and Mycobacterium abscessus[58](index=58&type=chunk) - SPR720 offers high oral bioavailability, a novel mechanism targeting bacterial DNA replication with no known cross-resistance, and demonstrated lung exposure[63](index=63&type=chunk) [Our SPR720 Development Plan](index=14&type=section&id=Our%20SPR720%20Development%20Plan) Spero's strategy for SPR720 is to develop it as the first oral FDA-indicated treatment for NTM disease - Spero's strategy is to develop SPR720 as the first oral FDA-indicated treatment for NTM disease to reduce disease burden and improve patient quality of life[64](index=64&type=chunk) - SPR720 has been granted Orphan Drug Designation (March 2020), QIDP designation (February 2019), and Fast Track Designation (September 2020) by the FDA[65](index=65&type=chunk) - A Phase 2a dose-ranging clinical trial in NTM-PD patients was initiated in December 2020, designed as a multi-center, partially blinded, placebo-controlled proof-of-concept study[66](index=66&type=chunk) [Update on Phase 2a Clinical Trial](index=14&type=section&id=Update%20on%20Phase%202a%20Clinical%20Trial) On February 5, 2021, the FDA placed a clinical hold on the Phase 2a clinical trial of SPR720 following observed mortalities with inconclusive causality in an animal toxicology study - On February 5, 2021, the FDA placed a clinical hold on the Phase 2a clinical trial of SPR720[69](index=69&type=chunk) - The hold followed the company's decision to pause dosing due to mortalities with inconclusive causality observed in an ongoing non-human primate toxicology study of SPR720[69](index=69&type=chunk) - The company decided to discontinue the Phase 2a clinical trial to facilitate future protocol adjustments based on FDA feedback and avoid incurring costs while on clinical hold[71](index=71&type=chunk) [IV Potentiator Product Candidate SPR206](index=15&type=section&id=IV%20Potentiator%20Product%20Candidate%20SPR206) SPR206 is an IV-administered product candidate designed to treat MDR Gram-negative bacterial infections in hospital settings - SPR206 is an IV-administered product candidate developed to treat MDR Gram-negative bacterial infections in the hospital setting[72](index=72&type=chunk) - It demonstrated single-agent antibacterial activity in preclinical studies against critical pathogens like Acinetobacter baumannii and Pseudomonas aeruginosa[73](index=73&type=chunk) - A Phase 1 clinical trial in healthy subjects showed SPR206 was well-tolerated at therapeutic doses, with no severe or serious adverse events and no evidence of nephrotoxicity[74](index=74&type=chunk) - SPR206 has QIDP designation for cUTI and hospital-acquired bacterial pneumonia/ventilator-associated bacterial pneumonia (HABP/VABP), with patent protection expected through 2039[76](index=76&type=chunk) [SPR206 Advantages](index=15&type=section&id=SPR206%20Advantages) SPR206, an IV Potentiator, is designed to expand the potency of standard-of-care antibiotics by disrupting the Gram-negative outer membrane and also possesses direct antibiotic activity - SPR206 is designed to expand the potency of standard-of-care antibiotics by disrupting the Gram-negative outer membrane and has direct antibiotic activity against Pseudomonas aeruginosa and Acinetobacter baumannii[79](index=79&type=chunk) - Phase 1 data and GLP safety pharmacology studies support an acceptable safety profile, with SPR206 being well-tolerated at therapeutic doses[79](index=79&type=chunk) - It is being developed for high-risk patients with suspected or known Gram-negative infections such as CRE, CRAB, and MDR PA to prevent mortality and reduce hospital stays[79](index=79&type=chunk) [SPR206—Development Plan](index=16&type=section&id=SPR206%E2%80%94Development%20Plan) Spero plans to advance SPR206 into two Phase 1 clinical trials in the first half of 2021: a BAL study and a renal impairment study - Spero plans to advance SPR206 into a Phase 1 BAL clinical trial to assess pulmonary penetration in the first half of 2021 and initiate a renal impairment study in 2021[80](index=80&type=chunk) - The advancement is supported by positive Phase 1 SAD and MAD data from January 2020, which showed SPR206 was well-tolerated at therapeutic doses with no severe or serious adverse events[81](index=81&type=chunk) [In Vitro Activity of SPR206 against MDR Gram-Negative Bacteria](index=16&type=section&id=In%20Vitro%20Activity%20of%20SPR206%20against%20MDR%20Gram-Negative%20Bacteria) Susceptibility studies indicate that SPR206 demonstrates potent in vitro activity against various multi-drug resistant (MDR) Gram-negative bacteria - SPR206 possesses potent in vitro activity against MDR Enterobacteriaceae, carbapenem resistant Pseudomonas aeruginosa, and carbapenem resistant Acinetobacter baumannii[82](index=82&type=chunk) [Our Strategy](index=17&type=section&id=Our%20Strategy) Spero's strategy focuses on advancing its lead product to regulatory approval, establishing global commercialization, and diversifying into rare orphan infectious disease markets - Advance lead product candidate tebipenem HBr to regulatory approval, with an NDA submission to the FDA planned for the second half of 2021[84](index=84&type=chunk) - Establish global commercialization and marketing capabilities, intending to build a targeted sales force in the U.S. and seek third-party collaborations internationally[84](index=84&type=chunk) - Diversify into rare orphan infectious disease markets, such as NTM disease, with SPR720, aiming for it to be the first approved oral antibiotic for this condition[84](index=84&type=chunk) - Maximize pipeline value through collaborations with other pharmaceutical companies and continue to pursue funding support from non-commercial organizations like BARDA, NIAID, and DoD[84](index=84&type=chunk) - Expand the portfolio of product candidates for MDR infections, focusing on broad spectrum of activity, patient convenience, and novel mechanisms to overcome resistance[85](index=85&type=chunk) [Collaboration, License and Service Agreements](index=19&type=section&id=Collaboration,%20License%20and%20Service%20Agreements) Spero Therapeutics has various collaboration, license, and service agreements crucial for its product development - Spero has an exclusive license with Meiji for tebipenem HBr, retaining global commercialization rights except in specified Asian countries, with obligations for milestone payments and low single-digit royalties[88](index=88&type=chunk)[90](index=90&type=chunk) - An amended license agreement with Everest Medicines grants Everest exclusive rights to develop, manufacture, and commercialize SPR206 in Greater China, South Korea, and certain Southeast Asian countries, with potential milestones up to **$38.0 million** and high single-digit to low double-digit royalties[98](index=98&type=chunk) - A collaboration with Gates MRI grants a no-cost, exclusive license to develop SPR720 for TB in low- and middle-income countries, with Gates MRI funding preclinical and clinical studies[101](index=101&type=chunk) - An agreement with Vertex Pharmaceuticals assigned SPR720 patents to Spero, with obligations for future clinical, regulatory, and commercial milestones up to **$81.3 million** and mid-single to low double-digit royalties[102](index=102&type=chunk) - A service agreement with Savior Lifetec Corporation involves a **$2.0 million** non-refundable supervision fee for managing the buildout of a commercial manufacturing facility for tebipenem HBr, plus **$5.1 million** for facility costs[103](index=103&type=chunk) [Meiji Agreements](index=19&type=section&id=Meiji%20Agreements) Spero entered an exclusive License Agreement with Meiji in June 2017 for tebipenem HBr, gaining know-how, data, and regulatory documents - Spero obtained exclusive rights to commercialize tebipenem HBr globally, except in specified Asian countries, through a June 2017 license agreement with Meiji[88](index=88&type=chunk) - The agreement includes a **$0.6 million** upfront fee, up to **$2.0 million** in future clinical and regulatory milestone payments, and low single-digit royalties on net sales[90](index=90&type=chunk) - Spero is also obligated to pay Meiji a percentage of certain sublicensee amounts, up to an aggregate of **$7.5 million**[90](index=90&type=chunk) [IV Potentiator Product Agreements](index=20&type=section&id=IV%20Potentiator%20Product%20Agreements) Spero's IV Potentiator product agreements include the termination of the SPR741 license, the acquisition of SPR206 intellectual property, and an amended license agreement with Everest Medicines [Northern License Agreement](index=20&type=section&id=Northern%20License%20Agreement) Spero terminated its license agreement with Northern Antibiotics Oy (Ltd.) for SPR741 effective January 1, 2020 - Spero terminated its license agreement with Northern Antibiotics Oy (Ltd.) relating to SPR741, effective January 1, 2020[93](index=93&type=chunk) - All intellectual property rights associated with SPR741 reverted to Northern Antibiotics, and Spero no longer has any rights or obligations for its maintenance[93](index=93&type=chunk) [Cantab Agreements](index=20&type=section&id=Cantab%20Agreements) In June 2016, Spero acquired NPLH and its intellectual property rights for Potentiator products, including SPR206, through the Cantab Agreement - Spero acquired intellectual property rights for its Potentiator products, including SPR206, through the Cantab Agreement in June 2016[94](index=94&type=chunk) - The agreement included an upfront payment of **$0.3 million**, milestone payments up to **$5.8 million**, a **£5.0 million** (**$6.8 million** as of Dec 31, 2020) commercial milestone, and low single-digit royalties on net sales[94](index=94&type=chunk) - Spero also fulfilled an obligation to pay PBB a percentage of NIAID funds, up to **$1.3 million**, by December 31, 2020[95](index=95&type=chunk) [Everest Medicines License Agreement](index=20&type=section&id=Everest%20Medicines%20License%20Agreement) Spero entered an exclusive license agreement with Everest Medicines for SPR206 development, manufacturing, and commercialization in certain Asian countries - Spero granted Everest an exclusive license to develop, manufacture, and commercialize SPR206 in Greater China, South Korea, and certain Southeast Asian countries[96](index=96&type=chunk) - Spero received an upfront payment of **$3.0 million** and a **$2.0 million** milestone payment in Q4 2020[97](index=97&type=chunk) - The Amended Everest License Agreement (January 2021) adjusts potential milestone payments to **$38.0 million** (of which **$2.0 million** received) and includes high single-digit to low double-digit royalties on net sales[98](index=98&type=chunk) - Everest is responsible for all costs related to developing, obtaining regulatory approval, and commercializing SPR206 in the Territory[99](index=99&type=chunk) [Other License, Collaboration and Service Agreements](index=21&type=section&id=Other%20License,%20Collaboration%20and%20Service%20Agreements) Spero has additional agreements, including a collaboration with Gates MRI, a Vertex Pharmaceuticals agreement, and a service agreement with Savior Lifetec Corporation [Gates MRI Collaboration](index=21&type=section&id=Gates%20MRI%20Collaboration) In June 2019, Spero collaborated with Gates MRI to develop SPR720 for Mycobacterium tuberculosis (Mtb) lung infections - Spero entered a collaboration with Gates MRI in June 2019 to develop SPR720 for lung infections caused by Mycobacterium tuberculosis (Mtb)[101](index=101&type=chunk) - Gates MRI received a no-cost, exclusive license to develop, manufacture, and commercialize SPR720 for TB in low- and middle-income countries[101](index=101&type=chunk) - Gates MRI will conduct and fund preclinical and clinical studies for SPR720 against TB[101](index=101&type=chunk) [Vertex Assignment and License Agreement](index=21&type=section&id=Vertex%20Assignment%20and%20License%20Agreement) In May 2016, Vertex Pharmaceuticals assigned SPR720-related patents to Spero, including composition of matter and manufacturing methods - Vertex Pharmaceuticals assigned SPR720-related patents to Spero in May 2016, covering composition of matter, method of use, and manufacturing intermediates[102](index=102&type=chunk) - Spero is obligated to pay Vertex future clinical, regulatory, and commercial milestones up to **$81.3 million** and mid-single to low double-digit royalties on net sales[102](index=102&type=chunk) - During 2020, Spero paid **$0.9 million** in expense related to the achievement of regulatory milestones for SPR720[102](index=102&type=chunk) [Savior Service Agreement](index=22&type=section&id=Savior%20Service%20Agreement) In November 2018, Spero entered a service agreement with Savior Lifetec Corporation for technology transfer, process development, and formulation development for tebipenem HBr - Spero entered a service agreement with Savior Lifetec Corporation in November 2018 for technology transfer, process development, and formulation development for tebipenem HBr[103](index=103&type=chunk) - A **$2.0 million** non-refundable supervision fee was paid to Savior for managing a commercial manufacturing facility buildout, classified as a prepaid asset and amortized over approximately **34 months**[103](index=103&type=chunk) - An additional **$5.1 million** was paid to Savior for facility buildout costs, classified as a long-term asset as of December 31, 2020[103](index=103&type=chunk) [Government Awards](index=22&type=section&id=Government%20Awards) As of December 31, 2020, Spero has secured **$49.7 million** in committed non-dilutive government funding, with potential for up to **$63.0 million** - As of December 31, 2020, Spero had committed non-dilutive funding of up to **$49.7 million** from BARDA, NIAID, and DoD, with a potential total of **$63.0 million** if certain options are exercised[104](index=104&type=chunk) - The BARDA award provides up to **$46.8 million** for tebipenem HBr development, with **$34.1 million** committed to date, including studies for cUTI, biodefense threats, and pneumonia[105](index=105&type=chunk) - NIAID provides up to **$6.5 million** for SPR206 development (**$5.9 million** committed) and previously provided **$1.0 million** for SPR720 (closed out)[105](index=105&type=chunk) - The DoD awarded **$5.9 million** for SPR206 development, covering Phase 1 pharmacology, toxicology, and microbiological surveillance studies[105](index=105&type=chunk) [Intellectual Property](index=23&type=section&id=Intellectual%20Property) Spero Therapeutics protects its proprietary technology through patents and trade secrets, covering its product candidates - Spero protects its proprietary technology through patents and trade secrets, covering product candidates and their methods of use and manufacture[106](index=106&type=chunk) - The intellectual property portfolio for tebipenem HBr includes an issued U.S. patent (No. 10,889,587) covering crystalline form and compositions, expiring in February 2038, with other patents extending to 2040[109](index=109&type=chunk)[110](index=110&type=chunk) - SPR206's intellectual property includes one U.S. patent and multiple foreign patents/applications, with statutory expiration dates ranging from 2034 to 2039[111](index=111&type=chunk) - SPR720's portfolio includes **11** issued U.S. patents and **91** issued foreign patents, with statutory expiration dates ranging from 2032 to 2033[113](index=113&type=chunk) [Spero-Owned Intellectual Property Relating to Tebipenem HBr and Other Compounds Under Development](index=23&type=section&id=Spero-Owned%20Intellectual%20Property%20Relating%20to%20Tebipenem%20HBr%20and%20Other%20Compounds%20Under%20Development) Spero owns patent applications and issued patents for tebipenem HBr, SPR206, and SPR720 globally - Spero owns patent applications directed to the composition of matter, formulation, and/or use of tebipenem HBr, SPR206, and SPR720 in the United States, Europe, Japan, and other countries[108](index=108&type=chunk) - Tebipenem HBr has an issued U.S. Patent No. 10,889,587, covering its crystalline form and pharmaceutical compositions, expiring in February 2038, with other patents extending to 2040[109](index=109&type=chunk)[110](index=110&type=chunk) - SPR206's intellectual property includes one U.S. patent and multiple foreign patents, with statutory expiration dates ranging from May 2034 to June 2039[111](index=111&type=chunk) - SPR720's portfolio includes **11** issued U.S. patents and **91** issued foreign patents, with statutory expiration dates ranging from January 2032 to July 2033[113](index=113&type=chunk) [Patent Term and Patent Term Extensions](index=24&type=section&id=Patent%20Term%20and%20Patent%20Term%20Extensions) Patent terms are generally **20 years** from the earliest filing date, with potential for extensions in the U.S. and other jurisdictions for FDA-approved drugs - Patent terms are generally **20 years** from the earliest filing date of a non-provisional application in most countries, including the U.S[114](index=114&type=chunk) - In the U.S., a patent's term for a drug approved by the FDA may be eligible for a patent term extension of up to **five years** under the Hatch-Waxman Act, not exceeding **14 years** from product approval[114](index=114&type=chunk) - Similar provisions for patent term extensions exist in Europe and other foreign jurisdictions for approved drugs[114](index=114&type=chunk) [Trade Secrets](index=24&type=section&id=Trade%20Secrets) Spero relies on trade secrets, including unpatented know-how and proprietary information, to maintain its competitive position - Spero relies on trade secrets, including unpatented know-how, technology, and proprietary information, to protect aspects of its business not amenable to patent protection[115](index=115&type=chunk) - Protection involves confidentiality agreements with employees, consultants, and contractors, and maintaining physical and electronic security of data and systems[115](index=115&type=chunk) - Trade secrets are difficult to protect and can be compromised by breaches of agreements or independent discovery by competitors, potentially harming the business[115](index=115&type=chunk) [Competition](index=24&type=section&id=Competition) The biopharmaceutical industry is highly competitive, with Spero facing competition from large pharmaceutical, biotechnology, specialty, and generic drug companies - The biopharmaceutical industry is intensely competitive, with Spero facing competition from major pharmaceutical, biotechnology, specialty, and generic drug companies[116](index=116&type=chunk) - Key competitive factors for tebipenem HBr, if approved, include efficacy, coverage of drug-resistant strains, safety, tolerability, oral dosing convenience, price, reimbursement, and susceptibility to drug resistance[117](index=117&type=chunk) - Tebipenem HBr would compete with several antibiotics in clinical development for UTIs (e.g., sulopenem, ARX-1796, Gepotidacin, Pivmecillinam) and existing generic versions[118](index=118&type=chunk) - SPR206 would compete with IV-administered products for Gram-negative infections (e.g., Avycaz, Zerbaxa, Zemdri, Xerava, Vabomere) and late-stage candidates like cefiderocol and imipenem-relebactam[119](index=119&type=chunk) - SPR720, if approved, would be the first oral treatment for NTM disease, competing with inhaled Arikayce and combination therapies[122](index=122&type=chunk) [Government Regulation and Product Approval](index=26&type=section&id=Government%20Regulation%20and%20Product%20Approval) The development and commercialization of pharmaceutical products are extensively regulated by government authorities in the U.S. (FDA) and other countries - Pharmaceutical products are extensively regulated by government authorities in the U.S. (FDA) and other countries, covering research, development, clinical trials, manufacturing, and commercialization[123](index=123&type=chunk) - The U.S. regulatory process involves preclinical studies, IND submission, three phases of clinical trials (Phase 1, 2, 3), NDA submission, and FDA review and approval, which is time-consuming and resource-intensive[125](index=125&type=chunk) - Special FDA expedited review programs include Fast Track, Breakthrough Therapy, QIDP, and Priority Review, designed to accelerate development for serious or life-threatening conditions with unmet medical needs[144](index=144&type=chunk) - Post-approval, drugs are subject to ongoing FDA regulation, including cGMPs, labeling, advertising, and adverse event reporting, with potential for restrictions or withdrawal if non-compliance or new problems arise[153](index=153&type=chunk)[156](index=156&type=chunk) - Regulatory exclusivity provisions (Hatch-Waxman, QIDP, Orphan Drug, Pediatric) provide periods of market protection, but do not guarantee faster approval or prevent competition from different drugs or under specific circumstances[159](index=159&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk)[175](index=175&type=chunk) [United States Government Regulation](index=26&type=section&id=United%20States%20Government%20Regulation) In the U.S., the FDA regulates drugs under the FDCA, requiring extensive research, development, and clinical trials - The FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA), requiring substantial time and financial resources for regulatory approvals and compliance[124](index=124&type=chunk) - The approval process involves preclinical studies (GLP-compliant), submission of an Investigational New Drug (IND) application, and human clinical trials conducted in three phases (Phase 1, 2, 3) in accordance with Good Clinical Practices (GCPs)[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Successful clinical testing leads to a New Drug Application (NDA) submission, followed by FDA review, potential advisory committee review, and inspections of manufacturing facilities (cGMP) and clinical trial sites (GCP)[125](index=125&type=chunk)[134](index=134&type=chunk)[139](index=139&type=chunk) - The FDA may issue an approval letter or a complete response letter (CRL) detailing deficiencies, and approval may include limitations, post-approval studies (Phase 4), or a Risk Evaluation and Mitigation Strategy (REMS)[142](index=142&type=chunk)[143](index=143&type=chunk) [Special FDA Expedited Review](index=29&type=section&id=Special%20FDA%20Expedited%20Review) The FDA offers expedited development and review programs for drugs addressing unmet medical needs in serious or life-threatening conditions - The FDA offers Fast Track, Breakthrough Therapy, QIDP, and Priority Review designations to expedite development and review for drugs addressing unmet medical needs in serious or life-threatening conditions[144](index=144&type=chunk) - Fast Track designation, granted to tebipenem HBr (cUTI/AP) and SPR720 (NTM-PD), allows for rolling review of NDA components and increased FDA interaction[145](index=145&type=chunk) - QIDP designation, granted to tebipenem HBr and SPR206, provides eligibility for Fast Track, priority review, and a potential five-year exclusivity extension[147](index=147&type=chunk) - Priority Review shortens the FDA's review goal for marketing applications from **ten to six months** for new molecular entities that offer significant improvements in safety or effectiveness[148](index=148&type=chunk) [Accelerated Approval Pathway](index=29&type=section&id=Accelerated%20Approval%20Pathway) The Accelerated Approval Pathway allows for earlier approval of drugs for serious or life-threatening illnesses based on surrogate or intermediate clinical endpoints - The Accelerated Approval Pathway allows approval for drugs treating serious or life-threatening illnesses based on surrogate or intermediate clinical endpoints that are reasonably likely to predict clinical benefit[150](index=150&type=chunk) - A condition of accelerated approval is the sponsor's agreement to conduct diligent post-marketing confirmatory studies (Phase 4) to verify the predicted clinical benefit[151](index=151&type=chunk) - Failure to conduct required post-approval studies or confirm clinical benefit can lead to the FDA withdrawing approval of the drug[151](index=151&type=chunk) [Limited Population Antibacterial Drug Pathway](index=31&type=section&id=Limited%20Population%20Antibacterial%20Drug%20Pathway) The Cures Act established the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) for targeted patient groups with serious or life-threatening infections - The Cures Act established the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) for targeted patient groups with serious or life-threatening infections and unmet needs[152](index=152&type=chunk) - LPAD approvals are expected to rely on data from smaller clinical trials than ordinarily required by the FDA[152](index=152&type=chunk) - Drugs approved through this pathway will have 'Limited Population' prominently displayed on their labeling to inform healthcare providers[152](index=152&type=chunk) [Post-Approval Requirements](index=31&type=section&id=Post-Approval%20Requirements) After FDA approval, drug products are subject to continuous and pervasive regulation, including requirements for recordkeeping, reporting, and promotion - Approved drugs are subject to pervasive and continuing FDA regulation, including requirements for recordkeeping, reporting, product sampling, distribution, advertising, and adverse event reporting[153](index=153&type=chunk) - Manufacturers must comply with current Good Manufacturing Practices (cGMPs), and facilities are subject to periodic unannounced inspections by the FDA[155](index=155&type=chunk) - The FDA strictly regulates marketing and promotion, ensuring drugs are marketed only for approved indications and consistent with approved labeling; off-label promotion is prohibited[156](index=156&type=chunk) - Non-compliance or discovery of new problems can result in mandatory labeling revisions, post-market studies, product recalls, withdrawal of approval, fines, and criminal penalties[157](index=157&type=chunk) [Regulatory Exclusivity and Approval of Follow-on Products](index=32&type=section&id=Regulatory%20Exclusivity%20and%20Approval%20of%20Follow-on%20Products) The Hatch-Waxman Amendments established abbreviated pathways for generic drug approval and 505(b)(2) NDAs, allowing reliance on previously approved drug data - The Hatch-Waxman Amendments established abbreviated new drug applications (ANDAs) for generic drugs and Section 505(b)(2) NDAs, allowing reliance on data from previously approved reference-listed drugs (RLDs)[159](index=159&type=chunk)[161](index=161&type=chunk) - Applicants must certify concerning RLD patents listed in the FDA's Orange Book, with Paragraph IV certifications potentially leading to patent infringement lawsuits and a **30-month** stay on FDA approval[163](index=163&type=chunk)[164](index=164&type=chunk) - Non-patent data exclusivities include a **five-year** period for New Chemical Entities (NCEs) and a **three-year** period for new clinical investigations, which can delay the filing or approval of ANDAs or 505(b)(2) NDAs[165](index=165&type=chunk)[166](index=166&type=chunk) [Hatch-Waxman Exclusivity](index=32&type=section&id=Hatch-Waxman%20Exclusivity) Hatch-Waxman exclusivity provisions include a **five-year** period for New Chemical Entities (NCEs), preventing ANDA or 505(b)(2) NDA filings for five years - The Hatch-Waxman Amendments provide a **five-year** period of non-patent data exclusivity for the first applicant to gain approval of an NDA for a New Chemical Entity (NCE)[165](index=165&type=chunk) - During NCE exclusivity, an ANDA or 505(b)(2) NDA cannot be filed for **five years**, or **four years** if accompanied by a Paragraph IV certification[165](index=165&type=chunk) - A **three-year** data exclusivity period is granted if an NDA or supplement includes new clinical investigations essential to approval, protecting specific conditions of use[166](index=166&type=chunk) [Qualified Infectious Disease Product Exclusivity](index=34&type=section&id=Qualified%20Infectious%20Disease%20Product%20Exclusivity) Under the GAIN Act, Qualified Infectious Disease Product (QIDP) designation is granted to antibiotic/antifungal drugs for serious or life-threatening infections - QIDP designation is for antibiotic or antifungal drugs treating serious or life-threatening infections caused by resistant or qualifying pathogens[168](index=168&type=chunk) - QIDP-designated drugs are eligible for Fast Track, priority review, and a **five-year** extension to any non-patent marketing exclusivity period upon FDA approval[169](index=169&type=chunk) - Spero's tebipenem HBr, SPR206, and SPR720 have all received QIDP designation for their respective indications[168](index=168&type=chunk) [Orphan Drug Designation and Exclusivity](index=34&type=section&id=Orphan%20Drug%20Designation%20and%20Exclusivity) Orphan drug designation is granted by the FDA for drugs treating rare diseases (fewer than **200,000** U.S. patients or unrecoverable development costs) - Orphan drug designation is for drugs treating rare diseases (fewer than **200,000** U.S. individuals or unrecoverable development costs)[170](index=170&type=chunk) - SPR720 received orphan drug designation for the treatment of NTM infection in March 2020[170](index=170&type=chunk) - First FDA approval for an orphan-designated indication grants **seven years** of market exclusivity, preventing approval of the same drug for the same indication, with exceptions for clinical superiority or supply issues[172](index=172&type=chunk)[173](index=173&type=chunk) [Pediatric Exclusivity](index=35&type=section&id=Pediatric%20Exclusivity) Pediatric exclusivity, under the BPCA, provides an additional **six months** of marketing protection to existing regulatory exclusivity or listed patents - Pediatric exclusivity provides an additional **six months** of marketing protection to existing regulatory exclusivity or listed patents[175](index=175&type=chunk) - It is granted if the sponsor submits information requested by the FDA (Written Request) relating to the use of the active moiety in children, provided such use may produce health benefits in that population[175](index=175&type=chunk) - The data from pediatric studies do not need to demonstrate efficacy in the pediatric population, only a fair response to the FDA's Written Request[175](index=175&type=chunk) [Foreign Regulation](index=35&type=section&id=Foreign%20Regulation) Spero's products are subject to foreign regulations for clinical trials and commercial sales, which vary significantly by country - Spero is subject to foreign regulations governing clinical trials and commercial sales, with approval processes and requirements varying greatly by country[176](index=176&type=chunk) - In the EU, a Clinical Trial Authorization (CTA) application must be approved in each Member State, with a new Clinical Trial Regulation aiming to harmonize assessment and supervision via an EU portal and database[177](index=177&type=chunk)[179](index=179&type=chunk) - Brexit has introduced uncertainty regarding the UK's regulatory regime, which may diverge from EU legislation, potentially impacting product approvals[178](index=178&type=chunk) [Pharmaceutical Coverage, Pricing and Reimbursement](index=36&type=section&id=Pharmaceutical%20Coverage,%20Pricing%20and%20Reimbursement) Commercial success of Spero's approved products depends on coverage and reimbursement by third-party payors - Sales of approved products depend on coverage and reimbursement by third-party payors (government health programs, commercial insurance), which are increasingly challenging prices and limiting coverage[183](index=183&type=chunk) - Significant delays in obtaining coverage and reimbursement are possible, and approved amounts may not cover costs, impacting profitability[183](index=183&type=chunk) - Government efforts to contain healthcare costs, including price controls and generic substitution, could limit net revenue and results[184](index=184&type=chunk) - In the U.S., hospital inpatient drugs are typically reimbursed under bundled payments (DRGs), while outpatient drugs rely on coverage and adequate reimbursement rates from government and private payors[185](index=185&type=chunk)[187](index=187&type=chunk) - Foreign countries also have varying pricing and reimbursement regulations, including Health Technology Assessment (HTA) processes that influence market access and pricing[190](index=190&type=chunk)[191](index=191&type=chunk) [Other Healthcare Laws](index=39&type=section&id=Other%20Healthcare%20Laws) Spero's operations are subject to extensive federal and state healthcare laws, including anti-kickback statutes, false claims laws, and HIPAA - Spero's business operations are subject to federal and state anti-kickback, fraud and abuse, false claims, privacy and security, physician sunshine, and drug pricing transparency laws[193](index=193&type=chunk) - The federal Anti-Kickback Statute prohibits remuneration to induce referrals or purchases under federal healthcare programs, with violations potentially leading to False Claims Act liability[194](index=194&type=chunk) - The federal civil and criminal false claims laws prohibit presenting false claims or statements to the U.S. government, with significant penalties[194](index=194&type=chunk) - HIPAA and HITECH impose strict requirements on the privacy, security, and transmission of individually identifiable health information, with penalties for non-compliance[194](index=194&type=chunk) - The Physician Payments Sunshine Act requires manufacturers to report payments and transfers of value to physicians and teaching hospitals[194](index=194&type=chunk) [Healthcare Reform](index=40&type=section&id=Healthcare%20Reform) Healthcare reform initiatives in the U.S. and abroad aim to contain costs and improve quality, potentially affecting marketing approval and reimbursement - Healthcare reform measures, including the ACA and recent legislative changes, aim to contain costs and improve quality, potentially impacting marketing approval and reimbursement for Spero's products[196](index=196&type=chunk)[198](index=198&type=chunk) - The CREATES Act addresses restrictions on drug sample distribution for generic developers, while proposed regulations by the Trump Administration (e.g., drug importation) face legal challenges and uncertainty under the new Biden Administration[196](index=196&type=chunk)[197](index=197&type=chunk) - Failure to adapt to new requirements or maintain regulatory compliance could lead to loss of marketing approval and negatively affect business, financial condition, and results of operations[198](index=198&type=chunk) [Manufacturing](index=40&type=section&id=Manufacturing) Spero Therapeutics does not own or operate manufacturing facilities and relies entirely on a limited number of third-party contract manufacturers - Spero does not own or operate manufacturing facilities and relies on a limited number of third-party contract manufacturers for all raw materials, drug substance, and finished drug product[199](index=199&type=chunk) - The company intends to have two suppliers for tebipenem HBr's active pharmaceutical ingredient, each capable of producing commercial quantities (over **10kg**) under cGMP conditions[199](index=199&type=chunk) [Human Capital](index=41&type=section&id=Human%20Capital) As of December 31, 2020, Spero Therapeutics had **89** full-time employees, with **55** in R&D and **34** in administrative/operations, all based in the U.S - As of December 31, 2020, Spero had **89** full-time employees, including **20** with M.D. or Ph.D. degrees, with **55** in R&D and **34** in administrative/operations, all in the U.S[200](index=200&type=chunk) - The company prioritizes attracting, developing, and retaining human capital through competitive rewards (base salary, cash bonus, benefits, equity) and career-enhancing learning experiences[201](index=201&type=chunk)[202](index=202&type=chunk) - Spero faces intense competition for qualified individuals from numerous pharmaceutical and biotechnology companies, universities, and research institutions[201](index=201&type=chunk) [Our Corporate Information](index=41&type=section&id=Our%20Corporate%20Information) Spero Therapeutics, Inc. was formed in December 2013 as Spero Therapeutics, LLC in Delaware, later merging into Spero Therapeutics, Inc. in June 2017 - Spero Therapeutics, Inc. was formed in December 2013 as Spero Therapeutics, LLC and merged into Spero Therapeutics, Inc. in June 2017[203](index=203&type=chunk) - The company's principal executive offices are located at 675 Massachusetts Avenue, Cambridge, Massachusetts[203](index=203&type=chunk) [Available Information](index=41&type=section&id=Available%20Information) Financial and other information, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, are available free of charge on Spero Therapeutics' website as soon as they are filed with the SEC - Financial and other information, including SEC filings (10-K, 10-Q, 8-K), is available free of charge on Spero Therapeutics' website[204](index=204&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks that could materially and adversely affect Spero Therapeutics' business, financial condition, results of operations, and future growth - Investing in Spero's securities involves a high degree of risk, and actual results could differ materially from forward-looking statements[205](index=205&type=chunk) - Key risk categories include the impact of COVID-19, financial position and need for additional capital, challenges in product development and commercialization, reliance on third parties, complexities of government contracts, intellectual property disputes, regulatory hurdles, human capital management, and stock price volatility[205](index=205&type=chunk) [Risks Related to the COVID-19 Pandemic](index=41&type=section&id=Risks%20Related%20to%20the%20COVID-19%20Pandemic) The COVID-19 pandemic poses significant risks to Spero's business, potentially causing disruptions in preclinical studies and clinical trials - The COVID-19 pandemic could adversely impact Spero's business, including preclinical studies and clinical trials, through delays in patient enrollment, clinical site initiation, and disruptions in supply chains[206](index=206&type=chunk)[207](index=207&type=chunk) - Other potential disruptions include diversion of healthcare resources, interruption of key clinical trial activities, delays in regulatory agency operations, and limitations on employee resources[207](index=207&type=chunk) - The extent of the pandemic's impact is highly uncertain and depends on future developments, potentially affecting the ability to raise capital[209](index=209&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=42&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) Spero has a history of significant losses and no product revenue, leading to substantial doubt about its ability to continue as a going concern - Spero has not generated product revenue, incurred net losses of **$78.3 million** (2020) and **$60.9 million** (2019), and its auditor expresses substantial doubt about its ability to continue as a going concern[210](index=210&type=chunk)[211](index=211&type=chunk) - The company expects to incur significant expenses and increasing operating losses for the foreseeable future, requiring substantial additional funding[213](index=213&type=chunk)[216](index=216&type=chunk) - Existing cash, cash equivalents, and marketable securities, along with committed non-dilutive funding, are expected to fund operations into Q2 2022, but additional capital is needed[217](index=217&type=chunk) - Failure to raise capital could force delays, reductions, or elimination of product development programs or commercialization efforts, negatively impacting financial condition[216](index=216&type=chunk) - Raising additional capital through equity or convertible securities may dilute existing stockholders, while debt financing could impose restrictive covenants[223](index=223&type=chunk) - Spero has significant net operating loss (NOL) carryforwards (**$228.1 million** federal, **$226.2 million** state, **$10.7 million** foreign as of Dec 31, 2020), but their utilization may be limited by ownership changes under Section 382 of the Internal Revenue Code[225](index=225&type=chunk) [Risks Related to Product Development and Commercialization](index=46&type=section&id=Risks%20Related%20to%20Product%20Development%20and%20Commercialization) Spero's success is heavily dependent on its lead product candidate, which faces risks in clinical trials, regulatory approval, and market acceptance - Spero is heavily dependent on the success of tebipenem HBr, which is still under development, and its ability to obtain marketing approval and successfully commercialize it[230](index=230&type=chunk) - The company has no experience obtaining regulatory approval for a drug, and FDA may refuse NDAs or require additional costly studies[234](index=234&type=chunk) - Clinical trials for tebipenem HBr, SPR720, and other candidates may fail to demonstrate safety and efficacy, leading to additional costs, delays, or inability to complete development[235](index=235&type=chunk)[240](index=240&type=chunk) - Delays or difficulties in patient enrollment, reliance on foreign clinical data not fully compliant with FDA guidance, and serious adverse events could significantly harm development[244](index=244&type=chunk)[246](index=246&type=chunk)[253](index=253&type=chunk) - Even if approved, product candidates may not achieve market acceptance due to factors like efficacy, safety, convenience, pricing, reimbursement, and competition[258](index=258&type=chunk) - Product liability lawsuits could divert resources, incur substantial liabilities, and limit commercialization, while failure to comply with environmental, health, and safety laws could result in fines or penalties[283](index=283&type=chunk)[285](index=285&type=chunk) [Risks Related to Our Dependence on Third Parties](index=57&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Spero relies heavily on third-party collaborations, CROs, and CMOs for product development, clinical trials, and commercial supply - Spero expects to depend on collaborations with third parties for development and commercialization of some product candidates, especially outside the U.S., posing risks if collaborators do not perform as expected or terminate agreements[296](index=296&type=chunk)[298](index=298&type=chunk) - Failure to establish collaborations could force Spero to curtail or delay development programs or undertake commercialization activities at its own expense, requiring additional capital and expertise[302](index=302&type=chunk) - Spero relies entirely on third parties (CROs, medical institutions, clinical investigators) to conduct preclinical studies and clinical trials, limiting control over these activities while retaining regulatory responsibility[304](index=304&type=chunk)[305](index=305&type=chunk) - Reliance on third-party contract manufacturers for preclinical, clinical, and commercial supplies increases risks of manufacturing delays, termination of agreements, non-compliance with cGMPs, and potential misappropriation of proprietary information[309](index=309&type=chunk)[312](index=312&type=chunk) - Failure to comply with obligations in in-license or acquisition agreements (e.g., with Meiji, Vertex, PBB) could result in loss of crucial development or commercialization rights[314](index=314&type=chunk)[316](index=316&type=chunk) [Risks Related to Our United States Government Contracts and to Certain Grant Agreements](index=61&type=section&id=Risks%20Related%20to%20Our%20United%20States%20Government%20Contracts%20and%20to%20Certain%20Grant%20Agreements) Spero's government funding adds complexity and compliance risks, with provisions allowing the government to terminate agreements or claim intellectual property rights - Government funding for Spero's programs adds complexity and regulatory compliance risks, with provisions allowing the government to terminate agreements, claim intellectual property rights, and audit costs[317](index=317&type=chunk) - Government contracts include requirements like specialized accounting systems, mandatory financial audits, public disclosure of award information, and socioeconomic compliance, increasing business costs and potential liability[319](index=319&type=chunk) - U.S. government agencies can unilaterally terminate contracts for convenience or default, reduce scope, and change terms, impacting Spero's ability to recover costs[320](index=320&type=chunk) - Audits by agencies like DHHS and DCAA can lead to cost disallowances, civil/criminal penalties, administrative sanctions, and reputational harm if improper activities are found[321](index=321&type=chunk)[322](index=322&type=chunk) - Government funding may affect Spero's intellectual property rights, granting the government nonexclusive licenses and potential 'march-in' rights, and imposing U.S. manufacturing requirements[328](index=328&type=chunk) [Risks Related to Our Intellectual Property](index=63&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Spero's success depends on obtaining and maintaining strong patent protection for its technology and product candidates - Spero's success depends on obtaining and maintaining sufficient patent protection for its technology and product candidates, which is expensive, time-consuming, and uncertain[329](index=329&type=chunk) - Issued patents may not provide meaningful protection, prevent competitors, or offer a competitive advantage, as competitors may circumvent them or challenge their validity/enforceability[333](index=333&type=chunk)[334](index=334&type=chunk) - Spero may become involved in costly and time-consuming lawsuits to protect its intellectual property or defend against third-party infringement claims, potentially leading to loss of rights, monetary damages, or delays in commercialization[335](index=335&type=chunk)[337](index=337&type=chunk)[339](index=339&type=chunk) - Protecting trade secrets is difficult; breac

Corporate Presentation Evercore ISI HealthCONx Conference December 3, 2020 Forward-looking Statements This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, the design, initiation, timing and submission to the U.S. Food and Drug Administration (FDA) of a New Drug Application (NDA) for tebipenem HBr and the potential approval of tebipenem HBr by the FDA; future commercialization, the potential number of patients ...

Tebipenem HBr (SPR994) - Oral Carbapenem - Tebipenem HBr's ADAPT-PO Phase 3 trial met its primary endpoint, demonstrating non-inferiority to IV ertapenem in complicated urinary tract infections (cUTI) and acute pyelonephritis (AP), with similar safety results [5] - The overall combined response rate in the ADAPT-PO trial was 58.8% for oral tebipenem HBr versus 61.6% for IV ertapenem, a difference of -3.3% [21] - The company plans to submit an NDA for Tebipenem HBr in 2Q21 for the treatment of cUTI [5, 11] - If approved, Tebipenem HBr could address a multi-billion dollar opportunity in cUTI and NTM markets, with no approved branded or generic oral competition in the carbapenem class [6] - The carbapenem market is estimated at $3 billion in the United States alone [51] SPR720 - Oral Therapy for NTM Infections - SPR720 is a potential first oral therapy for non-tuberculous mycobacterial (NTM) infections, with orphan drug designation, and initiation of patient dosing in a Phase 2 study planned by YE20 [5] - More than 75% of NTM patients are non-refractory and lack any approved options to treat NTM [95] SPR206 - Novel Therapy for MDR Gram-Negative Infections - SPR206 is a novel therapy for multidrug-resistant (MDR) Gram-negative infections, with a Phase 1 BAL study planned for 1H21 [5] Financial Status - As of September 30, 2020, the company had $127.244 million in cash, cash equivalents, and marketable securities, funding operations into the first quarter of 2022 [118]

Spero Therapeutics, Inc. (NASDAQ:SPRO) Q3 2020 Earnings Conference Call November 5, 2020 4:30 PM ET Company Participants Sharon Klahre – Vice President of Investor Relations and Strategic Finance Ankit Mahadevia – Chief Executive Officer David Melnick – Chief Medical Officer Cristina Larkin – Chief Operating Officer Steve DiPalma – Interim Chief Financial Officer Conference Call Participants Carvey Leung – Cantor Vishal Sethi – Cowen Ellen Sands – Stifel Operator Operator Good day, and welcome to the Spero ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38266 SPERO THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) ( State or other jurisdiction of inco ...

Spero Therapeutics, Inc. (NASDAQ:SPRO) Q2 2020 Earnings Conference Call August 6, 2020 4:30 PM ET Company Participants Sharon Klahre – Senior Director-Investor Relations Ankit Mahadevia – Co-Founder, President and Chief Executive Officer David Melnick – Chief Medical Officer Cristina Larkin – Chief Operating Officer Steve DiPalma – Interim Chief Financial Officer Conference Call Participants Ritu Baral – Cowen Louise Chen – Cantor Stephen Willey – Stifel Ram Selvaraju – H.C. Wainwright Chi Fong – Bank of Am ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission File Number: 001-38266 SPERO THERAPEUTICS, INC. Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (Exact name of registrant as specified in its charter) ( State or other jurisdiction of incorpora ...

Company Overview - Spero Therapeutics has a market capitalization of $247 million as of May 12, 2020, and cash & equivalents of $88.8 million as of March 31, 2020[5] - Spero Therapeutics is focused on developing treatments for multidrug-resistant bacterial infections and rare diseases[6] - The company's lead product candidate, Tebipenem HBr, is the first oral carbapenem, with a single Phase 3 trial required for approval in cUTI[8] Tebipenem HBr (cUTI) - Tebipenem HBr targets a multi-billion dollar market opportunity in complicated urinary tract infections (cUTI)[9] - A Phase 3 trial (ADAPT-PO) for Tebipenem HBr in cUTI is enrollment complete, with topline data expected in 3Q20[13, 14] - Approximately 60% oral bioavailability of Tebipenem HBr[31] - The company estimates that 1.2 million (13%) UTI patients have resistant/recurrent infections or fail oral therapies and have to receive IV antibiotics[41] - The company estimates that 3.3 million UTI patients either require hospitalization or acquire UTI during hospitalization[44] - The US market opportunity for Tebipenem HBr is estimated at $5.4 billion[49] SPR720 (NTM) - SPR720 is a potential oral therapy for Non-Tuberculous Mycobacterial (NTM) infections, with Phase 2 planned for 2H20[8] - More than 75% of NTM patients are non-refractory and lack approved treatment options[72] - Phase 1 data supports advancing SPR720 to Phase 2 trials, with a proposed dose of 500-1000mg once daily[85, 87] SPR206 (MDR Gram-negative Infections) - SPR206 is a novel therapy for multidrug-resistant (MDR) Gram-negative infections, with a Phase 1 BAL study planned for 2H20[8] - Phase 1 data indicates SPR206 is well-tolerated at doses likely to be within a therapeutic range for MDR Gram-negative bacterial infections[98] Financials - Spero Therapeutics reported total revenue of $1.701 million, R&D expense of $20.436 million, and a net loss attributable to common stockholders of $(23.258) million for the three months ended March 31, 2020[105] - The company's cash, cash equivalents, and marketable securities totaled $88.841 million as of March 31, 2020, funding operations into the first quarter of 2021[105, 106]