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Spero Therapeutics given Outperform rating and US$30 price target at Oppenheimer

The analysts were bullish about the Massachusetts-based biotech’s promising potentiator compounds and antibiotic pipeline
A researcher in a lab
The Cambridge biotech has multiple well-differentiated pipeline assets

Spero Therapeutics Inc (NASDAQ:SPRO) was assigned an Outperform rating Wednesday by Oppenheimer which was bullish on the biotech’s proprietary Potentiator platform to pioneer a new approach to fighting multi-drug resistant bacterial infections.   

Spero Therapeutics announced Wednesday that Phase 1b trials of SPR741 administered as a single dose of 400 mg alone and in combination with three commonly used antibiotics, piperacillin/tazobactam, ceftazidime, and aztreonam showed positive “top-line data.” The data showed that SPR741 is a safe, well-tolerated and combinable potentiator or regent that can be used widely with generic or new antibiotics.

The Cambridge, Massachusetts, clinical-stage biopharmaceutical company also announced results for SPR206, an agent that is in development to disrupt the outer membrane of gram-negative bacteria.

Analysts at Oppenheimer issued a US a US$30 price target ahead of what it expects to be several positive data readouts this year.

“We note SPRO's Potentiator platform offers a novel scientific premise of binding to the outer membrane of the bacteria, so antibiotics can penetrate,” wrote Oppenheimer analysts Jay Olson and Silvan Tuerkcan in a note to clients.

“SPRO has new data for both of the two promising potentiator compounds (SPR741 and SPR206) which we expect to enable prioritization and partnership discussions during the second half of 2018,” wrote the analysts.

“We are encouraged by the potential for SPR206 as both a single agent antimicrobial and also as a potentiator in combination with other antibiotics which we view as a driver of optionality for SPRO.”

Investment Thesis

The Oppenheimer note said the company is well positioned to take one of the “two Potentiators forward into clinical development” while partnering the other compound in “a potential strategic transaction” that could provide non-dilutive financing.

“The key, in our view, will be to optimize the shareholder value unlocked by these decisions,” wrote the analysts.

The biotech’s product candidates also include SPR994, an oral carbapenem type antibiotic for adults. Like penicillins and cephalosporins, carbapenems are members of the beta lactam class of antibiotics, which kill bacteria by binding to penicillin-binding proteins, thus inhibiting bacterial cell wall synthesis.

The analysts expect Spero’s “innovative platform to attract attention from potential partners” who may seek to either co-develop or out-license one of the biotech’s potentiators while SPRO advances the other independently through development.

“Both of these potentiator compounds represent novel, differentiated approaches to treating multi-drug resistant gram-negative infections, for which no new class of therapies has been approved in 30 years,” said the Oppenheimer note  

The analysts built their bullish thesis on Spero based on the fact that the biotech had “multiple well-differentiated pipeline assets,” two of which were “relatively de-risked.” They also saw further upside potential provided by additional assets.

“We believe SPRO is poised to enter an area of high unmet medical need with innovative treatment options and facilitated regulatory pathways,” wrote the analysts.

Shares of Spero Therapeutics closed 5% lower to US$10.58 dragged down with the rest of the market on North Korea worries.

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Spero Therapeutics, Inc. Timeline

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