- Antibiotics developer Spero Therapeutics is laying off 75% of its workforce, including two top executives, after the Food and Drug Administration indicated the clinical data underlying its lead program may not be good enough to support approval.
- Spero has been developing a treatment known as tebipenem for drug-resistant bacterial infections and in April published Phase 3 study results in the New England Journal of Medicine showing the drug appeared comparable to an approved agent for complicated urinary tract infections. However, the FDA has challenged that analysis, leaving the drug’s fate unclear.
- The agency has until June 27 to decide whether to approve tebipenem. Meanwhile, Spero has changed direction. The company “deferred” commercialization activities and will now put its cash into two earlier-stage programs for different types of infections. The company's shares have declined about 70% since Tuesday and now trade below the value of Spero's cash reserves.
Spero has become the latest in a long line of biotechs to restructure amid a downturn that caused stock prices to tumble and dozens of companies to cut jobs to save cash.
Biotechs have made these decisions for many reasons. For example, Nektar Therapeutics lost a lucrative partnership with Bristol Myers Squibb. An experimental sickle cell disease drug from Imara disappointed in early testing and heightened competition led Black Diamond Therapeutics to shelve a cancer drug that faced increasingly long odds. Several gene therapy developers have streamlined development plans to cut expenses.
For Spero, it's problems have stemmed from a regulatory setback that has left a once-promising antibiotic in limbo.
Spero was seeded in 2013 by Atlas Venture, a prominent creator of new biotechs. The company was one of just a short list of startups formed to develop antibiotics, medicines that, while viewed as crucial to stopping the rise of drug-resistant infections, face significant commercial challenges.
Spero’s core approach was a method of essentially disarming bacteria, rather than killing them, but later added more drug prospects through licensing deals with Vertex Pharmaceuticals and others. It received early financial backing from investors including Roche and GV to support the effort and raised $80 million in an initial public offering in 2017.
The financing helped propel forward tebipenem, a drug for the so-called gram-negative bacterial infections that are particularly resistant to antibiotics. As an oral treatment, tebipenem could become a more convenient alternative to the intravenous treatments typically used to deal with complicated urinary tract infections or acute pyelonephritis.
The drug appeared to meet that bar in 2020 when Spero said the treatment was non-inferior to intravenous antibiotics in a Phase 3 trial. Spero shares soon peaked at about $22 apiece as the company began plans to seek regulatory approval. The FDA accepted its application on Jan. 3.
However, almost all of Spero's market value has been wiped out since. On March 31, Spero said that the FDA had identified “deficiencies” in its application. This week, it revealed what the regulator's issues were: The FDA performed a separate analysis and concluded Spero’s drug failed the trial. That analysis excluded gram-positive patients, according to Evercore ISI analyst Josh Schimmer.
While the FDA’s review isn’t complete, a rejection may be forthcoming and Spero is tabling commercialization plans for tebipenem. It now will focus on one drug in Phase 2 testing for a type of bacterial lung disease, and another, in a partnership with Pfizer, is in early testing for hospitalized patients with drug-resistant infections.
Still, the series of events has “rattled my (and investors’) confidence,” wrote Evercore analyst Schimmer in a research note. “[W]ith finite resources and early stage anti-infectives, it’s no longer a name we can recommend owning.”
Spero will reduce its workforce from 146 full-time employees to 35, according to a regulatory filing. Chief Operating Officer Cristina Larkin and Chief Medical Officer David Melnick will leave the company as well.