GSK plays the white knight, paying $66M to rescue Spero’s oral antibiotic after FDA rejection

GSK plays the white knight, paying $66M to rescue Spero’s oral antibiotic after FDA rejection

GSK is riding to the rescue of Spero Therapeutics’ oral antibiotic prospect, paying $66 million upfront for near-global rights to a drug candidate that needs to undergo another phase 3 trial following its recent rejection by the FDA. Spero is studying the drug as a treatment for complicated urinary tract infections.

The FDA hit the filing for approval of Spero’s tebipenem HBr oral tablets with a complete response letter in June after deciding the single phase 3 clinical trial was insufficient to support approval. Spero showed the oral therapy was noninferior to intravenous ertapenem in the phase 3 study, but the FDA called for more data, leaving the biotech scrambling to find an external partner to support development.

GSK has answered the call. The deal gives the Big Pharma rights to the candidate outside of Japan and certain other Asian territories—and puts Spero in a position to start the new phase 3 trial requested by the FDA next year. Spero sees the molecule enabling more patients to be treated at home.

The upfront fee is more than twice the value of Spero’s $29 million market cap prior to news of the deal, raising the question of why GSK didn’t buy the company outright. GSK is making a $9 million investment in its new partner, at a cost almost 50% above the closing price of the stock yesterday, and committing to up to $525 million in milestones.

GSK has tied a $150 million milestone to the delivery of the phase 3 program and put up a further $150 million tied to the first sales of the antibiotic. The remaining $225 million in milestones will come into play if sales rise above a series of thresholds, starting at $200 million and topping out at $1 billion.

The deal delivered a boost to Spero’s sagging share price, which has languished in the doldrums since it became clear the FDA was on course to reject the approval filing in May. Having closed yesterday at $0.82, the stock jumped around 90% to $1.56 in premarket trading.

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