Spero Therapeutics, Inc. (NASDAQ:SPRO) Q1 2020 Results Conference Call May 8, 2020 10:00 AM ET Company Participants Sharon Klahre - VP of IR and Strategy Dr. Ankit Mahadevia - Chief Executive Officer Dr. David Melnick - Chief Medical Officer Cristina Larkin - Chief Operating Officer Steve DiPalma - Interim Chief Financial Officer Conference Call Participants Louise Chen - Cantor Stephen Willey - Stifel Kevin DeGeeter - Oppenheimer Esther Hong - Janney Ram Selvaraju - H.C. Wainwright Chi Fong - Bank of Ameri ...

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 March 31, 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 incorpor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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) | Delaware | | 46-4590683 | | --- | --- ...

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, 2019 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 ...

1 Company Presentation Cantor Global Healthcare Conference October 3, 2019 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 initiation, timing, progress and results of the Company's preclinical studies and clinical trials and its research and development programs, including management's assessment of such results; regulatory activities, including the Company's expectation t ...

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 June 30, 2019 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 incorporat ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) Presents the company's unaudited condensed consolidated financial statements and management's analysis for the first quarter of 2019 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Provides unaudited condensed consolidated financial statements for Q1 2019, including balance sheets, statements of operations, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's financial position, including assets, liabilities, and equity, as of March 31, 2019, and December 31, 2018 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $49,395 | $34,080 | | Marketable securities | $56,997 | $81,363 | | Total current assets | $115,702 | $124,219 | | Total assets | $124,650 | $129,006 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $6,618 | $12,318 | | Total liabilities | $11,321 | $13,151 | | Total stockholders' equity | $113,329 | $115,855 | - The company adopted new lease accounting standards (ASC 842) effective January 1, 2019, resulting in the recognition of operating lease right-of-use assets of **$4.4 million** and operating lease liabilities of **$5.0 million** as of March 31, 2019[14](index=14&type=chunk)[54](index=54&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Presents the company's revenues, expenses, and net loss for the three months ended March 31, 2019, compared to the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | | :--- | :--- | :--- | | Grant revenue | $3,911 | $1,153 | | Collaboration revenue | $3,807 | $0 | | **Total revenues** | **$7,718** | **$1,153** | | Research and development | $9,526 | $8,925 | | General and administrative | $3,888 | $3,044 | | **Total operating expenses** | **$13,414** | **$11,969** | | Loss from operations | $(5,696) | $(10,816) | | **Net loss** | **$(5,072)** | **$(10,644)** | | Net loss per share | $(0.29) | $(0.74) | - The significant increase in total revenues was driven by **$3.8 million** from a new collaboration agreement and a **$2.8 million** year-over-year increase in grant revenue[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2019 Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,924) | $(11,961) | | Net cash provided by (used in) investing activities | $24,671 | $(22,825) | | Net cash provided by financing activities | $1,568 | $0 | | **Net increase (decrease) in cash** | **$15,315** | **$(34,786)** | - The positive cash flow from investing activities in Q1 2019 was primarily due to **$50.6 million** in proceeds from maturities of marketable securities, compared to net purchases in the prior year period[18](index=18&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies, significant transactions, and financial position supporting the consolidated financial statements - The company is a clinical-stage biopharmaceutical company focused on developing novel treatments for multi-drug resistant (MDR) bacterial infections. Its lead product candidates include SPR994, SPR720, SPR206, and SPR741[22](index=22&type=chunk) - Management has concluded that the company's existing cash, cash equivalents, and marketable securities are sufficient to fund operations for at least **12 months** from the financial statement issuance date of May 9, 2019[25](index=25&type=chunk) - In January 2019, the company entered into a license agreement with Everest Medicines for SPR206, receiving a **$3.0 million** upfront payment and recognizing **$3.8 million** in related revenue during the first quarter of 2019[105](index=105&type=chunk)[106](index=106&type=chunk)[111](index=111&type=chunk) - The company recognized **$3.6 million** in revenue in Q1 2019 from its contract with the Biomedical Advanced Research and Development Authority (BARDA) to develop SPR994[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Offers management's perspective on the company's financial performance, liquidity, and capital resources, including recent business developments - The company initiated its pivotal Phase 3 clinical trial (ADAPT-PO) for SPR994 in April 2019 for complicated urinary tract infections (cUTI) after receiving FDA acceptance of its IND application[130](index=130&type=chunk) - In March 2019, the FDA granted **Fast Track Designation** for SPR994 for the treatment of cUTI and acute pyelonephritis, which facilitates development and expedites review[131](index=131&type=chunk) R&D Expenses by Program (in thousands) | Program | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | | :--- | :--- | :--- | | SPR994 | $3,708 | $2,352 | | SPR720 | $1,064 | $364 | | Potentiator Platform (SPR206 & SPR741) | $1,236 | $3,441 | | **Total R&D Expenses** | **$9,526** | **$8,925** | - As of March 31, 2019, the company had **$106.4 million** in cash, cash equivalents, and marketable securities, which is expected to fund operations and capital requirements into the **second half of 2020**[129](index=129&type=chunk)[164](index=164&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the company's exposure to market risks, primarily interest rate sensitivity and foreign currency exchange rate fluctuations - The company's primary market risk is interest rate sensitivity. A hypothetical **50 basis point** increase in interest rates would result in an approximate **$0.1 million** decline in the fair value of its interest-sensitive marketable securities[194](index=194&type=chunk) - The company faces foreign currency exchange risk from research expenses in the Euro, British Pound, and Australian dollar, but fluctuations have not had a material impact on financial statements to date[194](index=194&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Details management's evaluation of the company's disclosure controls and internal control over financial reporting as of March 31, 2019 - Based on an evaluation as of March 31, 2019, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective** at a reasonable assurance level[195](index=195&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls. Controls were implemented to adopt the new leasing standard[196](index=196&type=chunk) [PART II – OTHER INFORMATION](index=37&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) Contains additional information not included in the financial statements, such as risk factors, equity sales, and exhibits [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Identifies significant risks that could materially impact the company's business, financial condition, and operational results - The company has a history of net losses and anticipates continued significant losses for the foreseeable future, requiring substantial additional funding to avoid delays or reductions in its development programs[200](index=200&type=chunk)[203](index=203&type=chunk) - The company is heavily dependent on the success of its lead product candidate, SPR994, and any failure or significant delay in its development, approval, or commercialization would materially harm the business[216](index=216&type=chunk) - The company relies on third parties for conducting all preclinical studies and clinical trials, as well as for manufacturing, which creates risks related to performance, compliance, and supply chain continuity[290](index=290&type=chunk)[294](index=294&type=chunk) - The company's success depends on obtaining and maintaining sufficient patent protection. The patent position for biopharmaceutical companies is highly uncertain, and the company may become involved in costly intellectual property litigation[315](index=315&type=chunk)[316](index=316&type=chunk)[321](index=321&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on the company's unregistered sales of equity securities and the utilization of proceeds from its Initial Public Offering - As of March 31, 2019, the company had utilized approximately **$71.2 million** from the net proceeds of its November 2017 Initial Public Offering (IPO)[384](index=384&type=chunk)[385](index=385&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) Lists all documents and certifications filed as exhibits to the Form 10-Q, including Sarbanes-Oxley Act compliance - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, along with XBRL Instance and Taxonomy documents[386](index=386&type=chunk) [Signatures](index=73&type=section&id=Signatures) Confirms the official signing and dating of the Form 10-Q by the company's principal executive and financial officers - The Form 10-Q was duly signed on **May 9, 2019**, by Ankit Mahadevia, M.D. (President and CEO) and Joel Sendek (CFO and Treasurer)[390](index=390&type=chunk)

SPER® 1 Company(Presentation Oppenheimer(Healthcare(Conference( March(20,(2019 Forward'looking-Statements 2 This presentation contains forward0looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, the initiation, timing, progress and results of the Company's preclinical studies and clinical trials and its research and development programs, including management's assessment of such results; the anticipated timing of the opening of sites to suppor ...

Financial Performance and Losses - The company has incurred net losses of $41.7 million, $39.9 million, and $32.6 million for the years ended December 31, 2018, 2017, and 2016, respectively, and anticipates continuing significant losses in the foreseeable future [215]. - As of December 31, 2018, the company had U.S. federal, state, and foreign net operating loss carryforwards of $100.4 million, $100.3 million, and $11.7 million, respectively, which may be limited in their utilization [229]. - The company anticipates needing substantial additional funding to support ongoing and planned clinical trials and product development efforts [219]. - The company expects its financial condition and operating results to fluctuate significantly from quarter to quarter and year to year due to various uncontrollable factors [234]. Product Development and Regulatory Approval - The successful completion of clinical trials for SPR994 is critical, with satisfactory safety, tolerability, and efficacy profiles required for FDA approval [238]. - The company has never obtained regulatory approval for a drug, which poses significant risks for the commercialization of SPR994 [239]. - Delays in clinical trials could lead to increased costs and hinder the ability to seek marketing approval, potentially affecting the company's revenue generation [248]. - The planned pivotal Phase 3 clinical trial of SPR994 is subject to risks, including the lack of direct clinical evidence of its effectiveness in treating cUTI in humans [256]. - Enrollment challenges in clinical trials may arise due to competition from other companies, potentially delaying the development of SPR994 [257]. - The company is relying on clinical data from exploratory Phase 2 trials conducted by Meiji and Global Pharma, which may not align with FDA guidance, risking delays and additional costs [258]. - If the Phase 3 clinical trial does not confirm the efficacy of SPR994, it could materially harm the company's business [259]. - The company faces the risk of additional unplanned costs and delays in obtaining marketing approval for its product candidates [247]. - Regulatory changes and policies may increase the time and cost required for conducting clinical trials, impacting the development timeline [252]. - Serious adverse events related to SPR994 could delay or prevent regulatory approval, impacting commercial potential [262]. - The active ingredient in SPR994, tebipenem, has been associated with side effects such as diarrhea and allergic reactions, although it has been generally well tolerated in trials [263]. - The company may need to limit the development of SPR994 if unexpected adverse events arise during clinical trials [264]. Market and Competitive Landscape - Market acceptance of SPR994 is uncertain, as physicians may be reluctant to switch from existing therapies [270]. - The company faces substantial competition from established pharmaceutical companies and other product candidates in development for treating urinary tract infections [280]. - SPR994 may be priced at a significant premium compared to existing therapies, which could hinder its competitiveness [281]. - Competitors with greater financial resources may pose a significant challenge in the development and commercialization of SPR994 [284]. - The commercial success of the product candidates will depend on the extent of coverage and reimbursement from government health programs and third-party payors, both domestically and abroad [289]. - The pricing, coverage, and reimbursement for new drug products vary widely from country to country, which may affect the commercial launch and revenues [286]. - The company anticipates pricing pressures due to managed healthcare trends and legislative proposals, which could reduce future revenues [387]. Collaboration and Funding - The BARDA award commits funding of $15.7 million over a three-year base period from July 1, 2018, to June 30, 2021, with additional potential funding from DTRA of up to $10.0 million [225]. - The company has entered into a license agreement with Everest Medicines II Limited for the development and commercialization of SPR206 in Greater China, South Korea, and certain Southeast Asian countries [309]. - The company may derive revenue from research and development fees, license fees, milestone payments, and royalties under collaborative arrangements [310]. - The company is exploring strategic partnerships for the development of new product candidates to expand its portfolio [293]. - Additional funds will be required to complete the development and potential commercialization of SPR994 and other product candidates [312]. Operational Risks and Challenges - The company has a limited operating history since its establishment in 2013 and has not yet demonstrated the ability to successfully commercialize pharmaceutical products [232]. - The company is heavily dependent on the success of SPR994, which is still under development, for its near-term prospects [235]. - The company must navigate various factors affecting patient enrollment in clinical trials, which is crucial for timely completion [254]. - The company relies on third parties for all preclinical studies and clinical trials, which may impact regulatory approval and commercialization [315]. - There is a risk of delays in product development and increased costs if third-party contractors do not meet their obligations [319]. - The company does not have long-term agreements with third-party manufacturers, which could lead to supply chain disruptions [322]. - The company is dependent on third-party manufacturers for compliance with regulatory requirements, which could affect product availability [324]. - The company faces risks related to U.S. government contracts, including unilateral control and unfavorable termination provisions [335]. - Compliance with numerous laws and regulations related to government contracts increases operational costs and complexity [341]. Intellectual Property and Legal Risks - The company faces risks related to intellectual property, including potential challenges to patent validity and enforceability [347]. - The biotechnology and pharmaceutical industries are prone to intellectual property litigation, which can be costly and time-consuming [357]. - Infringement of third-party intellectual property rights could result in the company being forced to cease development or commercialization of products [358]. - The company may be liable for monetary damages if found to willfully infringe a patent, which could materially harm business operations [359]. - The company has not yet registered its trademarks in the United States or other countries, which could adversely affect its business [363]. - The company may face claims regarding the misappropriation of intellectual property, which could lead to litigation and distract management [361]. Management and Operational Growth - The company is highly dependent on the expertise of its CEO and key executives, with a high turnover rate in management personnel posing a risk to business strategy implementation [400]. - Difficulty in attracting and retaining qualified personnel may limit the company's ability to develop and commercialize product candidates due to intense competition in the industry [401]. - The company anticipates significant growth in employee numbers and operational scope, which may lead to challenges in managing this growth effectively [402]. - Future acquisitions may disrupt business operations, dilute stockholder value, and reduce financial resources, with potential integration challenges [405]. Stock and Market Risks - The company's common stock price may experience substantial volatility, influenced by various market factors and competitive product developments [406]. - The trading market for the company's stock relies on analyst coverage, and a lack of coverage or negative downgrades could lead to a decline in share price [411]. - The company has the authority to issue up to 10 million shares of preferred stock, which could adversely affect the rights of common stockholders if converted [412].

SPER® 1 Company(Presentation Cowen(and Company(Health(Care(Conference( March(12,(2019 Forward'looking-Statements 2 This presentation contains forward0looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, the initiation, timing, progress and results of the Company's preclinical studies and clinical trials and its research and development programs, including management's assessment of such results; the anticipated timing of the opening of sites to ...