Two struggling biotechs fall under bear market influence, as Spero sharply reduces staff and Sesen seeks sale
As the bear market continues battering the biotech sector, Spero Therapeutics and Sesen Bio are seeking ways to mitigate losses.
Spero is undergoing an “immediate cessation” of commercialization work on its complicated urinary tract infection drug, known as tebipenem HBr, following feedback from the FDA last week. The treatment is likely out the door as the antibiotics biotech will let its medical and operating chiefs go in a sweeping companywide layoff.
And separately, Sesen said Tuesday it kicked off a strategic review process to explore a sale, merger, acquisition, business combination, divestiture, licensing or other options.
The agency is still reviewing Spero’s med, but the company said “the discussion suggested that the data package may be insufficient to support approval during this review cycle,” in a Tuesday press release.
Spero linked arms with investor HealthCare Royalty Partners last September for $50 million to prepare for market launch, another $50 million upon FDA green light and another $25 million upon commercial milestone.
“We are disappointed that the FDA has identified substantive review issues, and we strongly believe that tebipenem HBr would offer healthcare providers, payers and patients an important oral antibiotic alternative to IV treatment for cUTI for patients with limited oral treatment options,” Spero CEO Ankit Mahadevia said in the press release.
“We believe that there is a path forward to potential FDA approval for tebipenem HBr, though additional analysis or clinical study may be required. We are continuing our dialogue with the agency,” Mahadevia said in an investor call.
Spero will lay off 75% of its workforce, which comprised 146 people at the end of 2021, as Spero focuses on the drug it bought from Vertex and a Pfizer-supported antibiotic.
The layoffs add to the long-running list of biotechs and pharmas that have been hit by clinical failures, drug rejections, pipeline reorganizations and a bear market that has left no stone unturned. The Spero layoffs impacted the C-suite, including CMO David Melnick and COO Cristina Larkin, according to an SEC filing.
The move should free up Spero’s cash reserves to keep the lights on through late 2023. The company ended 2021 with $146.4 million in cash, which should bankroll Phase II milestones for the two drugs now at the top of Spero’s priority list.
The former Vertex drug, SPR720, was under an FDA clinical hold for nearly a year after scientists had uncovered deaths in a toxicology study involving non-human primates. The hold was lifted in January of this year and the mid-stage study is slated for a start in the second half of this year for non-tuberculous mycobacterial disease. FDA has given the med orphan drug and qualified infectious disease product designations.
SPR206 was developed in-house and is targeted at gram negative MDR bacterial infections. Pfizer bought up Spero stock last July, promised single-digit royalties and $80 million in biobucks in exchange for ex-US and ex-Asia rights. Everest bought the Asian rights in 2019.
Meanwhile, Sesen is continuing its development work but its “strong cash position provides us the opportunity to carefully consider a wide range of potential strategic alternatives,” CEO Thomas Cannell said in a press release.
The company’s non-muscle invasive bladder cancer drug was rejected by the FDA last August. Sesen intends to request a meeting with the agency in the coming weeks to “align on the remaining outstanding items related to an additional Phase 3 clinical trial.”
Sesen had $169.8 million as of March 31.