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  Title	Why $SPRO Might Be One of the Safest Undervalued Biotech Plays: Backed by GSK
  ID	13391315
  External ID	1nhhbyp
  Author	oquido
  Published Date	Sept. 15, 2025, 4:38 a.m.
  Summary	(Disclaimer: This is not financial advice. This post is based on personal research and investigation. I hold a long position with an average of $1.96.) (Not written by AI - used for grammar/spelling
  Tags	None
  URL	https://www.reddit.com/r/pennystocks/comments/1nhhbyp/why_spro_might_be_one_of_the_safest_undervalued/
  Sentiment	Negative: 0.01498    Neutral: 0.15441    Positive: 0.83061
  Relevance	0.02482

• Content Details

  Content ID	8462511
  Key	886dd8f0-c29d-4fbb-b53c-55d78b066b08
  Content	(Disclaimer: This is not financial advice. This post is based on personal research and investigation. I hold a long position with an average of $1.96.) (Not written by AI - used for grammar/spelling checks, I spent 2 weeks studying this company) When discussing biotech penny stocks, the focus often revolves around the likelihood of success in ongoing clinical trials, potential partnership opportunities, mechanisms of action (MoA), and lastly, the inevitable risk of dilution, which is less a matter of "if" and more a matter of "when." Spero Therapeutics ($SPRO) is one of few clinical-stage biotech which have cleared most of those issues. I will get into a summary first then detailed thesis. https://preview.redd.it/4dg4l5mr8apf1.png?width=914&format=png&auto=webp&s=07f687583de4ee27574c8a03f2dd0e9fbc983084 **1) Executive Summary** Spero's sole pipeline candidate, Tebipenem HBr (Tebi), is an oral carbapenem antibiotic designed to treat complicated urinary tract infections (cUTI). Currently, the standard of care (SoC) for severe cUTI cases involves hospital-based, IV-administered carbapenem dosing. Spero's Tebi has the potential to shift this SoC by reducing hospitalization time, thereby lowering overall medical system costs and easing financial burdens for patients. The **Phase 3 PIVOT-PO trial was stopped early in May this year following IDMC recommendations due to efficacy**, with results demonstrating non-inferiority compared to IV carbapenem therapy. In 2022, global pharmaceutical company GSK secured a global license through a strategic partnership. GSK is set to lead the NDA process, distribution, and launch execution. **Remaining milestones amount to approximately $350M**, alongside tiered royalties on sales. If approved, an FDA-approved oral carbapenem would be first-in-class, bolstering GSK’s expertise in the field. GSK’s global reach could ensure rapid market uptake and establish a durable revenue base, making the asset an attractive M&A prospect. Let's have a look at GSK's PR from 28th of May [https://www.gsk.com/en-gb/media/press-releases/pivot-po-phase-iii-study-for-tebipenem-hbr-stopped-early-for-efficacy-following-review-by-independent-data-monitoring-committee/](https://www.gsk.com/en-gb/media/press-releases/pivot-po-phase-iii-study-for-tebipenem-hbr-stopped-early-for-efficacy-following-review-by-independent-data-monitoring-committee/) https://preview.redd.it/aozao6j6bapf1.png?width=1025&format=png&auto=webp&s=266bc90a76c317946fa165b9c6348422408cbb05 \- If approved, tebi could be the first oral carbapenem antibiotic for cUTIs in the US. \- GSK is planning US FDA filing this year. \- Current SoC is contributing over $6 billion/year on healthcare costs. Let's also have a look at GSK's latest Q2 earnings report [https://www.gsk.com/media/zhfdbsly/q2-2025-results-announcement.pdf](https://www.gsk.com/media/zhfdbsly/q2-2025-results-announcement.pdf) https://preview.redd.it/k8hd539wbapf1.png?width=710&format=png&auto=webp&s=529e2dc8e3afb36954bab51e6ab6b5cc958e3501 On the first page, Spero's tebi is listed on top of the 14 key opportunities expected by GSK, each with PYS (peak year sales) potential above $2.7B. We can assume GSK is taking Spero's Tebi very seriously and has placed its filing on top of its priority list. Furthermore, GSK is holding little over 16% of Spero's shares, which can lead to speculation of buyout opportunities once the the drug is approved by FDA. **2) cUTI (complicated UTI) : Overview and Standard of Care** Let's take a moment to better understand cUTI. UTIs are divided into two types: uncomplicated UTI (uUTI) and complicated UTI (cUTI). While uUTIs typically affect younger or middle-aged women and are often treated with outpatient antibiotics, cUTIs are more common in both men and women, especially in older age groups. For men, any UTI involvement is likely to be cUTI. *Regarding the biology of the disease* cUTI involves structural or functional abnormalities, comorbidities (e.g., diabetes), or device-related factors, making it harder to treat than uUTI. Key pathogens include E. coli and K. pneumoniae, with increasing rates of ESBL-E. Oral first-line drugs (fluoroquinolones, TMP-SMX, oral β-lactams) are losing effectiveness due to resistance, leading to higher failure and readmission rates. Moderate to severe cases often require IV carbapenems in hospitals, which are costly, resource-intensive, and inconvenient. In the US, the average cost of an inpatient cUTI stay ranges from $10,000 to $15,000, contributing to billions in annual Medicare spending. As of 2011, hospitalization costs were reported at $2.8 billion per year according to a 2017 study, though these figures are likely higher now as mentioned in GSK's PR. **What benefits can Spero's tebi bring to current landscape of cUTI treatment?** * **Delivers carbapenem‑class coverage orally** — including ESBL‑E. * **Enables admission avoidance/earlier discharge** → shorter hospitalisation and lower total cost of care. * **Improves convenience and adherence**, expanding outpatient management. **3) Competition** SImply put, Spero/GSK's Tebipenem HBr is the most advanced in clinical stages for the oral treatment of cUTI. https://preview.redd.it/7alubsh1hapf1.png?width=874&format=png&auto=webp&s=f979679abe1cff3f418c09b460fdacd8c122b128 **4) Development History** In 2017, Spero obtained the global license for Orapenem from Meiji Seika Pharma, a Japanese pharmaceutical company, and began developing it for cUTIs. Originally launched in Japan in 2009, original formula is marketed as Orapenem and targets pediatric infections like pneumonia, otitis media, and sinusitis, showcasing its safety and efficacy. Spero received QIDP designation for the drug (Fast Track and extended exclusivity). After successful clinical trials, Spero submitted an NDA in 2021. However, in June 2022, the FDA issued a CRL requesting an additional pivotal trial. Despite efficacy being demonstrated, as some of the data from Meiji's studies prompted the FDA to seek further confirmatory results. Following the CRL, Spero secured a strategic partnership with GSK, which funded additional phase 3 trials and provided a stable revenue stream upon approval. Now, a few years later, additional phase 3 has again proven to be successful and the NDA filing is anticipated. The phase 3 trial hit the endpoint under SPA, and it makes the probability of the final approval very high. **5) Financial + Cash Runway, Partnership Structure, Milestone and Royalties, Exclusivity** **Spero has secured funding through 2028, eliminating dilution concerns until the FDA decision.** The company has halted other pipelines, significantly reduced costs, and is fully focused on obtaining FDA approval. In their recent conference call, the CEO reiterated that FDA approval is the top priority and the primary driver of value for the company. Breaking down the milestones: GSK will pay $25M upon NDA filing. Additional milestones include $101M for first sales in the US/EU (adjusted from $150M due to early termination of phase 3), up to $225M based on net sales, and tiered royalties ranging from low-single digits to low-double digits. While the milestones depend on FDA approval and product sales, the potential benefits of the medicine and GSK's strong network make these milestones seem like a matter of "when," not "if." Spero also holds market exclusivity in the US until 2041. If annual sales exceed GSK's forecast of $2.7B/year, Spero could earn up to $190M/year in royalties. (based on tiered royalty structure of 1% up to $750M, 5% up to $1B, and 10% beyond $1B). **6) Future Outlook** The biggest advantage of SPRO is that GSK is now managing all the regulatory procedures. NDA filing by smaller companies often presents challenges, but GSK's expert team will address and minimize the risks, particularly those related to manufacturing processes and sites, which are typically difficult for smaller companies to handle. Considering the addressable market size, pending milestone payments and royalty structure, we can see that current market cap of $109M is seriously undervalued for a company that no longer has a risk of near-term dilution nor clinical failures. ***Valuation and M&A scenarios*** Based on my research, I have made below price targets, based on each upcoming events. $2.30\~$2.80 upon NDA submission ($25M milestone payment) $2.60\~$3.40 upon acceptance and PDUFA date confirmation $7.00\~$9.00 FDA approval Post-approval buyout : $14.22\~21.32 Complete failure or GSK's abandonment: $0.20\~0.50 https://preview.redd.it/bs8700unpapf1.png?width=883&format=png&auto=webp&s=d39cc80c14faabec7334a813e52d4c8c02ef4eb9 **7) Conclusion and Risks** SPRO's stock price has definitely surged significantly following the early termination of phase 3 in May. However, after conducting an in-depth analysis of the company and its addressable market, I believe this stock is highly undervalued and decided to invest until a potential buyout. Even without a buyout, I strongly feel the current valuation severely underestimates the future revenue potential, as it stands at just one-third of the milestone amount alone. One reason for its undervaluation is that antibiotics are not the most attractive M&A targets. However, in the case of cUTI, approved oral antibiotics are virtually nonexistent (combinations of antibiotics are attempted but are less effective due to resistance, as previously explained), and this presents a strong potential to significantly change the standard of care. The company also has recently changed CEO to a financial expert, meaning they will either focus on M&A or maximise their finance from milestone/royalties upon the commercialisation. Nevertheless, the risks always need to be considered:- Early termination of phase 3 significantly increases the chances of approval, though **it doesn't mean the approval is 100% guaranteed.** Any delays in the procedures may also have negative impact on the stock price. Antibiotics have limited applications, and approvals are often accompanied by narrower labeling. However, that's typical with SoC, as their usage is generally restricted to moderate to severe cUTIs.
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