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Spero (currently trading at $3) is this tiny biotech firm with a pretty cool drug called tebipenem. It’s an oral carbapenem antibiotic for gnarly urinary tract infections. Anyways, everyone's holding their breath for June 18th as that’s when the FDA’s gonna make their ruling on tebipenem.
Unlike most small companies, Spero has GlaxoSmithKline (GSK) managing the drug's development & sales outside the US. If the FDA gives the green light, Spero doesn’t have to assemble a massive sales team. Rather, it’ll focus on earning some hefty milestone payments & royalties off of GSK’s work.
The most recent trial wrapped up early cause it went so well with over 1,600 participants, nearly 93% showed improvement, and there were no serious safety red flags. Approval is almost assured and really it hinges on the FDA's labeling restrictions which will dictate how successful this drug can be commercially.
Spero’s current funds sit at roughly $56 million. On top of the cash from milestone sales ($76 million for launch, $25 million later on, and the rest in various bonuses), they hint at wanting to expand into something huge despite not having much of another drug lined up. And, they want the permission to crank out 120 million new shares even with only 58 million floating around. So odd, right?
To me, this all hints at bigger plans. Maybe deals or fusions with other companies are in the works? They have recently hired someone from Immunitas Therapeutics, which looks set to hit the market itself soon. Could Immunitas be getting a reverse merger to boost funds for future studies?
With all these clues about potential cash injections, it's clear there are several plays Spero might make, such as dangling tebipenem’s rights in front of GSK again, hooking up with someone big in the biz like merging or snapping up clinical assets. To top it off, GSK's already got a stake in Spero at 16%, which allows them to possibly ditch future sales & royalty duties while keeping their hands in any future SPRO transactions.
My base case value is around $5 to $7 per share, mostly because of approval. I figure this from their $56 million cash pile, $101 million in upcoming commercial milestones, and another $225 million in potential sales milestones. Plus, there's the revenue from royalties. Anything from a monetization or strategic deal would only add more value.