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On What Basis Did Spero Therapeutics (SPRO) Stock Rise 91% In Pre-Hour Trades?

In pre-market trading hours on Thursday, Spero Therapeutics Inc. (SPRO) was up 91.07% at $1.57 after signing an exclusive licensing agreement. SPRO closed at $0.82 in the last trading session, down -6.68%.

In what agreement has SPRO entered?

Spero Therapeutics (SPRO) and GSK (NYSE: GSK) announced an exclusive license agreement today. SPRO’s late-stage antibiotic asset, tebipenem HBr, was the subject of the agreement. This is the first oral carbapenem antibiotic that is being developed specifically to treat complicated urinary tract infections (cUTIs), including pyelonephritis, caused by certain bacteria.

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As a result of Spero Therapeutics’ agreement with GSK, physicians, insurers, and patients will be able to fully realize the potential value tebipenem HBr can offer. After regulatory approval, GSK will launch tebipenem HBr as the first oral treatment for cUTI, providing patients with an alternative to intravenous (IV) therapy in hospitals. With its antibiotic expertise and global commercial reach, GSK is ideally positioned to launch this innovative product.

After receiving positive US FDA regulatory feedback on the proposed clinical trial design, SPRO plans to start a new phase 3 clinical trial in 2023.

The financial terms:

In all territories, with the exception of Japan and certain Asian countries, GSK will receive exclusive rights to develop and commercialize tebipenem pivoxil and tebipenem pivoxil HBr. SPRO will execute and pay for the follow-up Phase 3 clinical trial of tebipenem HBr according to the license agreement. A Phase III regulatory filing for tebipenem HBr outside of the Meiji Seika territory as well as commercialization activities for tebipenem HBr will be handled by GSK.

Spero Therapeutics and GSK have signed a stock purchase agreement which entails GSK making a $9 million investment in Spero through the purchase of 7,450,000 shares of SPRO’s common stock for approximately $1.20805 per share, with GSK and its affiliates owning not more than 19.99% of Spero Therapeutics beneficially.

Closing is expected in the fourth quarter of 2022, subject to customary closing conditions, including the expiration of the Hart-Scott-Rodino Antitrust Improvements Act waiting period. Following Hart-Scott-Rodino clearance, the equity investment will close if the license is effective.

Is SPRO going to benefit from this?

Spero Therapeutics (SPRO) had $45.4 million in cash, cash equivalents, and marketable securities on June 30, 2022. Taking into account the previously announced restructuring and the end of tebipenem HBr commercialization activities, as well as the initial cash payment of $66 million from the GSK licensing transaction, SPRO will be able to fund the company until 2024 on its current cash runway.

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