On Monday, Spero Therapeutics (NASDAQ:SPRO) experienced a shift in stock rating as TD Cowen adjusted its view on the company from Buy to Hold. The decision comes as a result of uncertainties regarding the timing of upcoming catalysts for the biopharmaceutical company. This change in rating follows the recent discontinuation of Spero’s Phase 2 program for its drug candidate, aimed at treating nontuberculous mycobacterial (NTM) infections.
The analyst from TD Cowen cited the lack of clarity on catalyst timing following the halting of the '720 Phase 2 NTM program as the primary reason for the downgrade. Despite this setback, Spero Therapeutics continues to work on other projects. The company is currently engaged in a Phase 3 trial for tebipenem pivoxil hydrobromide (tebi) in complicated urinary tract infections (cUTI), which is in partnership with GlaxoSmithKline (NYSE:GSK). According to the company, enrollment for this trial is proceeding as planned and is expected to be completed in the second half of 2025.
In addition to the ongoing Phase 3 trial, Spero Therapeutics has reaffirmed its intention to initiate a Phase 2 trial for another of its drug candidates, known as '206, targeting hospital-acquired and ventilator-associated bacterial pneumonia (HAP/VAP). However, the commencement of this trial is contingent upon the company securing non-dilutive funding.
The financial position of Spero Therapeutics was also a topic of note in the analyst's commentary. The company currently holds a cash reserve of $76.3 million, which is anticipated to fund its operational expenses into mid-2026. This financial runway provides Spero Therapeutics with some buffer as it navigates through its clinical development plans and seeks additional funding opportunities for its upcoming trials.
In other recent news, Spero Therapeutics has experienced a series of significant developments. The company reported Q2 2024 revenues of $10.2 million and a net loss of $17.9 million. H.C. Wainwright reaffirmed a Buy rating on Spero Therapeutics, despite lowering the price target from $7 to $5 following the interim results of the Phase 2a study for SPR720, which did not meet its primary endpoint. As a result, Spero suspended the SPR720 program and announced a restructuring plan, including a workforce reduction of approximately 39%.
Spero Therapeutics continues to advance other programs, including tebipenem HBr, which is in a global Phase 3 clinical trial, and SPR206, which is planned for a Phase 2 clinical trial contingent on non-dilutive funding. The company also announced executive changes, including the departure of their Chief Medical (TASE:PMCN) Officer and the appointment of Dr. John Pottage as interim clinical lead.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Spero Therapeutics' financial situation and market performance. Despite the recent downgrade, the company's balance sheet shows some strength, with InvestingPro Tips indicating that Spero holds more cash than debt and its liquid assets exceed short-term obligations. This aligns with the article's mention of the company's $76.3 million cash reserve, supporting its operational runway into mid-2026.
However, the market seems to be reflecting the uncertainties highlighted in the TD Cowen downgrade. InvestingPro data shows that Spero's stock has taken a significant hit over the last week, with a 1-week price total return of -11.28%. This recent decline has contributed to a year-to-date price total return of -19.73%, suggesting investor caution.
Looking ahead, InvestingPro Tips reveal that analysts anticipate a sales decline and a drop in net income for the current year. This outlook may be influenced by the discontinuation of the Phase 2 NTM program and the uncertainties surrounding the timing of future catalysts, as mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. The platform currently lists 8 more tips for Spero Therapeutics, providing a deeper understanding of the company's financial health and market position.
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