What changed in this filing

/stocks — the workspaceLOADING

Item 1. Legal Proceedings

2022-08-10 compared with 2022-05-16 · 116 added, 95 removed, 1041 unchanged (17% of the section changed)

Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business.

We are not presently a party to any material litigation.

Two putative class action lawsuits have been filed against us and certain of our officers in the United States District Court for the Eastern District of New York, one captioned Richard S.

Spero Therapeutics, Inc., Ankit Mahadevia, and Satravrat Shukla, Case No.

1:22-cv-03125, filed on May 26, 2022, and the other captioned Kashif Memon v.

Spero Therapeutics, Inc., Ankit Mahadevia, and Satyavrat Shukla Case No.

1:22-cv-04154, filed on July 15, 2022.

Each complaint purports to be brought on behalf of stockholders who purchased our common stock, with the first complaint having a time period of October 28, 2021 through May 2, 2022 and the second having a time period of May 6, 2021 through May 2, 2022.

Each complaint generally alleges that we and certain of our officers violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the New Drug Application for tebipenem HBr in an effort to lead investors to believe that the drug would receive approval from the FDA.

Each complaint seeks unspecified damages, interest, attorneys’

fees, and other costs.

On July 25, 2022, a motion was filed to consolidate the lawsuits into one action.

On July 26, 2022, Plaintiff Memon filed a motion for appointment of lead plaintiff/lead counsel.

Also on July 26, 2022, stockholder Nabil Saad filed a motion for appointment of lead plaintiff/lead counsel.

We deny any allegations of wrongdoing and intend to vigorously defend against these lawsuits.

However, there is no assurance that we will be successful in our defense or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of these actions.

Moreover, we are unable to predict the outcomes or reasonably estimate a range of possible loss at this time.

Additional lawsuits against the Company and certain of its officers or director may be filed in the future.

If additional similar complaints are filed, absent new or different allegations that are material, the Company will not necessarily announce such additional filings.

Ris k Factors.

5 unchanged sentences

Risks Related to Product Development and Commercialization

Pursuant to our recently announced restructuring, we have suspended all commercialization efforts with respect to tebipenem HBr and have shifted our focus and resources to advancing the clinical development of our other programs, SPR720 and SPR206, while continuing our dialogue with the FDA to seek a pathway forward for the potential approval of tebipenem HBr.

Pursuant to our previously announced restructuring, we suspended all commercialization efforts with respect to tebipenem HBr and shifted our focus and resources to advancing the clinical development of our other programs, SPR720 and SPR206, while continuing our dialogue with the FDA to seek a pathway forward for the potential approval of tebipenem HBr.

If we fail to execute successfully on this re-prioritized strategic focus, our business and prospects may be adversely affected.

On May 3, 2022, we announced that we would immediately suspend current commercialization activities for tebipenem HBr based on feedback from a recent Late Cycle Meeting (“LCM”) with the FDA regarding our NDA for tebipenem HBr.

Although the review is still ongoing and the FDA has not yet made any final determination regarding approvability, the discussion suggested that the data package may be insufficient to support approval during this review cycle.

As a result, we have restructured our operations to focus on advancing our earlier stage programs, SPR720 and SPR206, while we continue our dialogue with the FDA to seek a pathway forward for the potential approval of tebipenem HBr.

On May 3, 2022, we announced that we would immediately suspend current commercialization activities for tebipenem HBr based on feedback from a recent Late Cycle Meeting with the FDA regarding our NDA for tebipenem HBr.

As a result, we restructured our operations to focus on advancing our earlier stage programs, SPR720 and SPR206, while we continue our dialogue with the FDA to seek a pathway forward for the potential approval of tebipenem HBr.

We believe this re-prioritized strategic focus is the best way to optimize our financial and other resources to advance our goal of developing and commercializing product candidates to address the unmet need for solutions to antibiotic resistant pathogens.

However, there is no assurance that we will be successful at executing on this strategy.

As described below, there are risks inherent in the clinical development process, especially for earlier-stage programs, and the regulatory path for potential approval of tebipenem HBr remains uncertain at this time.

As described below, there are risks inherent in the clinical development process, especially for earlier-stage programs.

If we are unable to execute successfully on this re-prioritized strategic focus, our business and prospects may be adversely affected.

Based on our recent feedback for the FDA, the timing and terms of any potential approval of tebipenem HBr remain uncertain, which may impact our ability to realize the value of tebipenem HB r.

Based on our receipt of a CRL from the FDA, the timing and terms of any potential approval of tebipenem HBr remain uncertain, which may impact our ability to realize the value of tebipenem HBr.

On June 27, 2022, we announced that we received a CRL from the FDA for our NDA for tebipenem HBr.

In the CRL, the FDA communicated that it had completed its review of the NDA and determined that the NDA could not be approved in its present form.

The FDA ultimately concluded that the Phase 3 cUTI clinical trial of tebipenem HBr (ADAPT-PO) was insufficient to support approval and that additional clinical study would be required.

On August 2, 2022, we held a Type A meeting with the FDA, to gain further insights as to the pathway forward towards a potential regulatory approval for tebipenem HBr.

We expect to receive written minutes during the third quarter of 2022.

We currently have no products approved for sale and have invested a significant portion of our efforts and financial resources in the development of tebipenem HBr as a product candidate for the treatment of bacterial infections causing cUTI.

Our ability to realize the value of tebipenem HBr depends on having a regulatory path for potential FDA approval, whose expected timeline and other requirements would affect the attractiveness of eventual commercialization of tebipenem HBr by us or commercialization through a potential partnership.

However, the FDA has substantial discretion in reviewing the NDA for tebipenem HBr.

There can be no assurances about the outcomes of our ongoing discussions with the FDA concerning our NDA for tebipenem HBr.

The FDA may be unable to meet its PDUFA goal date for our NDA for tebipenem HBr;

or it may request additional information from us in support of our NDA, the provision of which information could constitute a major amendment to the NDA and result in a three-month extension of the PDUFA date.

The FDA may decline to approve the NDA and instead issue a complete response letter.

Further, as part of any approval, the FDA could impose labeling requirements restricting the use of tebipenem HBr, which could reduce its commercial prospects, unless such requirements are subsequently modified to reduce such restrictions.

71 unchanged sentences

Should the FDA determine that an inspection is necessary for NDA approval and an inspection cannot be completed during the review cycle due to restrictions on travel, FDA has stated that it generally intends to issue a complete response letter.

Further, if there is inadequate information to make a determination on the acceptability of a facility, FDA may defer action on the application until an inspection can be completed.

Further, if there

is inadequate information to make a determination on the acceptability of a facility, FDA may defer action on the application until an inspection can be completed.

Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic and may experience delays in their regulatory activities.

106 unchanged sentences

Some countries require approval of the sale price of a drug before it can be marketed.

In many countries, the pricing review period begins

after marketing or product licensing approval is granted.

In many countries, the pricing review period begins after marketing or product licensing approval is granted.

In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted.

17 unchanged sentences

We cannot predict whether bacteria may develop resistance to our product candidates, if approved, which could affect their revenue potential.

We are developing tebipenem HBr and certain of our other product candidates to treat bacterial infections, including drug-resistant infections.

Tebipenem HBr and certain of our other product candidates are designed to treat bacterial infections, including drug-resistant infections.

The bacteria responsible for these infections evolve quickly and readily transfer their resistance mechanisms within and between species.

44 unchanged sentences

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes.

From time to time and in the

future, our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products.

From time to time and in the future, our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products.

Even if we contract with third parties for the disposal of these materials and wastes, we cannot completely eliminate the risk of contamination or injury resulting from these materials.

41 unchanged sentences

Risks Related to Our Financial Position and Need for Additional Capital

Our Revenue Interest Financing Agreement with HCR could limit cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.

In exchange for the total investment amount received by us from HCR under our Revenue Interest Agreement, entered into on September 29, 2021, we must pay HCR a tiered royalty on applicable revenue generated by tebipenem HBr, SPR720 and SPR206 and other products marketed by us until the aggregate amount paid to HCR is two and a half times the total investment amount.

We received gross proceeds of $50.0 million from HCR at an initial funding on October 19, 2021 (the "Initial Investment Amount").

We are entitled to receive an additional $50.0 million upon FDA approval of tebipenem HBr on or before December 31, 2022 (the "Second Investment Amount") and an additional $25.0 million subject to the mutual agreement of us and HCR and if we meet certain minimum tebipenem HBr product sales thresholds in the United States within 12 months from commercial launch (the "Third Investment Amount" and together with the Initial Investment Amount and the Second Investment Amount, collectively, the "Investment Amount").

Specifically, the tiered royalties are on:

(1) worldwide net sales of Included Products (as defined below) by us (and excluding sales by licensees), and (2) any payments received by licensees, in each case of tebipenem HBr, SPR720, SPR206 and any other products marketed by us, which we refer to as the Included Products, in amounts ranging from 12% to 1% based on annual net revenues, as defined in the Revenue Interest Agreement (or 14% to 1.5% if the Third Investment Amount is funded).

The applicable royalty rate is subject to a one-time step-down if certain sales milestones are met.

When HCR has received aggregate payments equal to the 250% of the Investment Amount (the "Hard Cap"), HCR’s right to receive royalties on net revenues will terminate.

If we have not received FDA approval for tebipenem HBr for a cUTI indication on or prior to December 31, 2022, the Revenue Interest Agreement will terminate and we must pay to HCR an amount equal to the initial investment amount of $50.0 million plus interest equal to a 13.5% annual rate of return.

If HCR has not received aggregate payments of at least 60% of the amount funded by HCR to date by September 30, 2025 and at least 100% of the amount funded by HCR to date by September 30, 2027, then we must make a cash payment within 45 calendar days of the applicable date to HCR in an amount sufficient to gross HCR up to such minimum amounts after giving full consideration of the cumulative amount we paid to HCR through each date.

When HCR has received aggregate payments equal to the Hard Cap, HCR’s right to receive royalties on net revenues will terminate.

If an event of default or a change of control of us occurs, we must immediately repay HCR an amount equal to the Hard

Cap, minus aggregate payments made to HCR under the Revenue Interest Agreement, and the Revenue Interest Agreement will terminate.

In the event of certain other material breaches of the Revenue Interest Agreement or the occurrence of a “material adverse effect”

(as defined therein), HCR will have the right to terminate the Revenue Interest Agreement, whereby we must pay to HCR an amount equal to the initial investment amount, plus a 15% annual rate of return, minus aggregate payments made to HCR under the Revenue Interest Agreement.

In the event that the Revenue Interest Agreement terminates on the twelfth anniversary of the initial closing, we may be required to make a payment to HCR at that time to ensure that HCR will have received aggregate payments equal to the total investment amount funded, plus a 2% annual rate of return over the term of the Revenue Interest Agreement.

Pursuant to the Revenue Interest Agreement, we agreed to specified affirmative and negative covenants, including covenants to use commercially reasonable efforts to promote tebipenem HBr in the United States;

prosecute and defend intellectual property rights;

periodic reporting of information by us to HCR;

audits of royalty payments made under the Revenue Interest Agreement;

and restrictions on the ability of us or any of our subsidiaries to incur indebtedness, subject to certain exceptions.

The Revenue Interest Agreement also contains representations and warranties, other covenants, indemnification obligations, and other provisions customary for transactions of this nature.

In connection with the Revenue Interest Agreement, we also entered into a Security Agreement with HCR’s collateral agent, pursuant to which we granted HCR a first-priority blanket lien on tebipenem HBr assets, including tebipenem HBr patent rights, tebipenem HBr regulatory approvals, and tebipenem HBr material contracts, as well as future cash receipts relating to product sales.

Additionally, we will grant HCR a lien on equity interests of any subsidiaries that hold tebipenem HBr-related assets and any such subsidiaries will become guarantors under the Security Agreement.

In the event of an event of default under the Revenue Interest Agreement, HCR would have the right to foreclose on the pledged collateral and exercise customary creditors’

rights and remedies under a deposit account control agreement covering a collection account that will receive all revenues from product sales.

We have not generated any revenue from the sale of our products, have a history of losses and expect to incur substantial future losses.

2 unchanged sentences

We have not generated any revenue from the sale of our products and have incurred losses in each year since our inception in 2013.

Our net losses were $32.8 million and $19.4 million during the three months ended March 31, 2022 and 2021, respectively.

Our net losses were $28.7 million and $18.6 million during the six months ended June 30, 2022 and 2021, respectively.

All of our product candidates are in development, none have been approved for sale and we may never have a product candidate approved for commercialization.

In accordance with ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern from the issuance date of our financial statements.

Based on our recently announced restructuring and the cessation of commercialization activities for the tebipenem HBr program and assuming the repayment of amounts under our Revenue Interest Agreement, we believe that our existing cash, cash equivalents and marketable securities, together with other non-dilutive funding commitments, will be sufficient to fund our planned operating expenses and capital expenditures pursuant to the priorities of our strategic refocusing through late 2023.

Based on our strategic restructuring, described in Note 11 - Restructuring to the Financial Statements, and the cessation of commercialization activities for the tebipenem HBr program, we believe that our existing cash, cash equivalents and marketable securities, together with other non-dilutive funding commitments, will be sufficient to fund our planned operating expenses and capital expenditures pursuant to the priorities of our strategic refocusing into late 2023.

This timeline is subject to uncertainty as to the timing of future expenditures.

31 unchanged sentences

Our failure to raise capital as and when needed would have a negative effect on our financial condition and our ability to pursue our business strategy.

Our cash forecasts are based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.

12 unchanged sentences

the extent to which we in-license or acquire other products and technologies.

As of March 31, 2022, our non-dilutive sources of funding consisted of an award from BARDA for tebipenem HBr, an award from NIAID under its Small Business Innovation Research program ("SBIR") for our SPR720 program, an award from NIAID for SPR206, an award from the DoD that provides partial funding for the development of SPR206 and an award from the DoD Congressionally Directed Medical Research Programs ("CDMRP") Joint Warfighter Medical Research Program for SPR206.

As of June 30, 2022, our non-dilutive sources of funding consisted of an award from BARDA for tebipenem HBr, an award from NIAID under its Small Business Innovation Research program ("SBIR") for our SPR720 program, an award from NIAID for SPR206, an award from the DoD that provides partial funding for the development of SPR206 and an award from the DoD Congressionally Directed Medical Research Programs ("CDMRP") Joint Warfighter Medical Research Program for SPR206.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

2 unchanged sentences

We filed a universal shelf registration statement on Form S-3 (Registration No.

333-254170) with the SEC on March 11, 2021, which was declared effective on March 29, 2021 and pursuant to which we registered for sale up to $300.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, including up to $75.0 million of our common stock available for issuance pursuant to an “at-the-market”

offering program sales agreement that we entered into with Cantor.

Under the Sales Agreement, Cantor may sell shares of our common stock by any method permitted by law deemed to be an “at the market”

15 unchanged sentences

We have not determined if we have experienced Section 382 ownership changes in the past and if a portion of our NOLs is subject to an annual limitation under Section 382.

In addition, we may experience ownership changes in the future as a result of subsequent changes in our stock ownership, some of which may be outside of our control.

In addition, we may experience ownership changes in the future as a result of subsequent changes in our stock ownership, some of which may be outside

of our control.

If we determine that an ownership change has occurred and our ability to use our historical NOLs is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.

11 unchanged sentences

Accordingly, stockholders should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

We and certain of our executive officers have been named as defendants in two recently initiated lawsuits that could result in substantial costs and divert management’s attention.

We, and certain of our executive officers, have been named as defendants in two purported class action lawsuits that generally allege that we and certain of our officers violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the New Drug Application for tebipenem HBr in an effort to lead investors to believe that the drug would receive approval from the FDA.

The complaints seek unspecified damages, interest, attorneys’

fees, and other costs.

The named plaintiffs in each lawsuit are seeking consolidation as one putative class action.

We intend to engage in a vigorous defense of the lawsuits.

However, we are unable to predict the outcome of these matters at this time.

Moreover, any conclusion of these matters in a manner adverse to us would have a material adverse effect on our financial condition and business.

We could incur substantial costs not covered by our directors’

and officers’

liability insurance, suffer a significant adverse impact on our reputation and divert management’s attention and resources from other priorities, including the execution of business plans and strategies that are important to our ability to grow our business, any of which could have a material adverse effect on our business.

In addition, any of these matters could require payments that are not covered by, or exceed the limits of, our available directors’

and officers’

liability insurance, which could have a material adverse effect on our operating results or financial condition.

Risks Related to the COVID-19 Pandemic

35 unchanged sentences

strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;

collaborators may not be able to develop, manufacture, market and sell our product candidates and use our intellectual property without infringing or misappropriating the intellectual property and other proprietary rights of third parties;

collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

40 unchanged sentences

Although we rely on these third parties to conduct our GLP-compliant nonclinical studies and clinical trials, we remain responsible for ensuring that each of our nonclinical studies and clinical trials are conducted in accordance with applicable laws and regulations, and our reliance on the CROs does not relieve us of our regulatory responsibilities.

The FDA and regulatory authorities in other jurisdictions also require us to comply with standards, commonly referred to as good clinical practices ("GCPs") for conducting, monitoring, recording and reporting the results of clinical trials to assure that data and reported results are accurate and that the trial subjects are adequately informed of the potential risks of

participating in clinical trials.

The FDA enforces these GCPs through periodic inspections of trial sponsors, principal investigators, clinical trial sites and institutional review boards.

28 unchanged sentences

Recently, our third-party contract manufacturers have been subject to various supply chain disruptions.

These supply chain disruptions have increased the price of certain materials due to the significant

increase in costs of raw materials and shipping costs.

These supply chain disruptions have increased the price of certain materials due to the significant increase in costs of raw materials and shipping costs.

Our ability to produce and timely deliver our products may be materially impacted in the future if these supply chain disruptions continue or worsen.

11 unchanged sentences

In addition, our manufacturers are subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with cGMPs and similar regulatory requirements.

Failure by any of our manufacturers to comply with applicable cGMPs or other regulatory requirements could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and have a material adverse effect on our business, financial condition and results of operations.

Failure by any of our

manufacturers to comply with applicable cGMPs or other regulatory requirements could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and have a material adverse effect on our business, financial condition and results of operations.

Our current and anticipated future dependence upon others for the manufacture of our product candidates and potential product candidates may adversely affect our future profit margins and our ability to commercialize any products for which we receive marketing approval on a timely and competitive basis.

1 unchanged sentence

We are a party to agreements with Meiji for tebipenem HBr, Vertex Pharmaceuticals for SPR720 and PBB Distributions Limited for SPR206, and we may enter into additional agreements, including license agreements, with other parties in the future that impose diligence, development and commercialization timelines, milestone payments, royalties, insurance and other obligations on us.

For example, we have an exclusive know-how license with Meiji (the "Meiji License") that gives us rights outside of specified countries in Asia to develop, manufacture, and commercialize tebipenem HBr as well as the right to use, cross-reference, file or incorporate by reference any information and relevant Meiji regulatory documentation to support any regulatory filings outside of Asia.

In addition, we have the right to develop, manufacture and have manufactured tebipenem HBr in Asia solely for the purpose of furthering development, manufacturing and commercialization of tebipenem HBr outside of Asia.

For example, we have an exclusive know-how license with Meiji (the "Meiji License") that gives us rights outside of specified countries in Asia (the “Meiji Territory”) to develop, manufacture, and commercialize tebipenem HBr as well as the right to use, cross-reference, file or incorporate by reference any information and relevant Meiji regulatory documentation to support any regulatory filings outside of the Meiji Territory.

In addition, we have the right to develop, manufacture and have manufactured tebipenem HBr in the Meiji Territory solely for the purpose of furthering development, manufacturing and commercialization of tebipenem HBr outside of the Meiji Territory.

In exchange for those rights, we are obligated to satisfy diligence requirements, including using commercially reasonable efforts to develop and commercialize tebipenem HBr and to implement a specified development plan, meeting specified development milestones and providing an update on progress on an annual basis.

The Meiji License requires us to pay future milestone payments of up to $1.0 million upon the achievement of specified clinical and regulatory milestones and royalties of a low single-digit percentage on net sales on a country-by-country basis.

The Meiji License requires us to pay future milestone payments of up to $1.0 million upon the achievement of specified regulatory milestones and royalties of a low single-digit percentage on net sales on a country-by-country basis.

If we fail to comply with our obligations to Meiji or any of our other partners, our counterparties may have the right to terminate these agreements, in which event we might not be able to develop, manufacture or market any product candidate that is covered by these agreements, which could materially adversely affect the value of the product candidate being developed under any such agreement.

39 unchanged sentences

The DHHS and the DCAA also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.

Any costs found to be improperly allocated to a specific contract will not be paid, while such costs already paid must be refunded.

found to be improperly allocated to a specific contract will not be paid, while such costs already paid must be refunded.

If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including:

24 unchanged sentences

To protect our proprietary position, we file patent applications in the United States and abroad related to our novel technologies and product candidates that are important to our business.

The patent application and approval process is expensive and time-consuming.

The patent application and

approval process is expensive and time-consuming.

We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

53 unchanged sentences

The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.

With respect to our Meiji License of certain know-how used in tebipenem pivoxil HBr, we are neither a party to, nor an express third-party beneficiary of, the letter agreement between Meiji and Global Pharma consenting to Meiji’s arrangement with us.

With respect to our Meiji License of certain know-how and regulatory documents concerning tebipenem pivoxil, we are neither a party to, nor an express third-party beneficiary of, the letter agreement between Meiji and Global Pharma consenting to Meiji’s arrangement with us.

As such, if any dispute among the parties were to occur, our direct enforcement rights with respect to the letter agreement may be limited or uncertain.

6 unchanged sentences

A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business.

Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative effect on our business.

Claims that we have misappropriated the intellectual property, confidential information or trade secrets of third parties could have a similar negative effect on our business.

We may be subject to claims that we or our employees, consultants or contractors have misappropriated the intellectual property of a third party, or claims asserting ownership of what we regard as our own intellectual property.

17 unchanged sentences

We have registered our trademarks for our name and logo in the United States and other countries and have a number of pending trademark applications in the United States and other countries.

As of March 31, 2022, we have two registered United States trademarks, 21 registered foreign trademarks, and four pending foreign trademark applications.

As of June 30, 2022, we have two registered United States trademarks, 21 registered foreign trademarks, and four pending foreign trademark applications.

If our registered trademarks are invalidated, we may be unable to exclusively use our name or logo in certain jurisdictions or may need to change our name or logo in certain jurisdictions, which could affect our business.

9 unchanged sentences

The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names.

If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

third parties and be acceptable to the FDA.

Risks Related to Regulatory Approval and Other Legal Compliance Matters

5 unchanged sentences

In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.

obtained regulatory approval for any product candidate and it is possible that neither tebipenem HBr nor any product candidates we may seek to develop in the future will ever obtain regulatory approval.

We have not obtained regulatory approval for any product candidate and it is possible that neither tebipenem HBr nor any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Neither we nor any future collaborators are permitted to market any of our product candidates in the United States until we or they receive regulatory approval of an NDA from the FDA.

47 unchanged sentences

In the United States, orphan designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

In addition, if a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, it is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity.

In addition, if a product candidate that has orphan drug designation

subsequently receives the first FDA approval for the disease for which it has such designation, it is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity.

Even though we have obtained orphan drug designation for SPR720 and may seek orphan drug designation for other product candidates in the future, there is no assurance that we will be the first to obtain marketing approval for NTM infection or for any particular rare indication.

Further, even though we have obtained orphan drug designation for SPR720, or even if we obtain orphan drug designation for other product candidates, such designation may not effectively protect us from competition because different drugs can be approved for the same condition and the same drug can be approved for different conditions and potentially used off-label in the orphan indication.

Even after an orphan drug is approved, the FDA can subsequently approve a competing drug for the same condition for several reasons, including, if the FDA concludes that the later drug is safer or more effective or makes a major

contribution to patient care.

Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

27 unchanged sentences

In addition, even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed, may be subject to significant conditions of approval or may impose requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product.

The FDA may also require a REMS as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and

other risk minimization tools.

The FDA closely regulates the post-approval marketing and promotion of drugs to ensure that drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling and regulatory requirements.

27 unchanged sentences

A person or entity does not need to have actual knowledge of the statute or specific intent to violate the statute in order to have committed a violation.

In addition, the government may assert that a claim that includes items or services resulting from a

violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;

In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;

the federal False Claims Act imposes criminal and civil penalties, which can be enforced by private citizens through civil whistleblower and qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

17 unchanged sentences

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

We expect to experience pricing pressures in

connection with the sale of any products for which we obtain marketing approval, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals.

We expect to experience pricing pressures in connection with the sale of any products for which we obtain marketing approval, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals.

Resulting legislative, administrative, or policy changes from payors may reduce payments for any products for which we obtain marketing approval and could affect future revenues.

27 unchanged sentences

Among other things, the executive order directed the FDA to work towards implementing a system for importing drugs from Canada (following on the Trump administration notice-and-comment rulemaking on Canadian drug importation that was finalized in October 2020).

The Biden order also called on DHHS to

release a comprehensive plan to combat high prescription drug prices, and it includes several directives regarding the Federal Trade Commission’s oversight of potentially anticompetitive practices within the pharmaceutical industry.

The Biden order also called on DHHS to release a comprehensive plan to combat high prescription drug prices, and it includes several directives regarding the Federal Trade Commission’s oversight of potentially anticompetitive practices within the pharmaceutical industry.

The drug pricing plan released by DHHS in September 2021 in response to the executive order makes clear that the Biden Administration supports aggressive action to address rising drug prices, including allowing DHHS to negotiate the cost of Medicare Part B and D drugs, but such significant changes will require either new legislation to be passed by Congress or time-consuming administrative actions.

In addition, increased scrutiny by the United States Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

In addition, increased

scrutiny by the United States Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

21 unchanged sentences

Average review times at the agency have fluctuated in recent years as a result.

In addition, government funding of the SEC

and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.

For example, over the last several years, the United States

government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly affect the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

5 unchanged sentences

Although we have formal employment agreements with our executive officers, these agreements do not prevent them from terminating their employment with us at any time.

On May 3, 2022, we implemented a restructuring that reduced our workforce from 146 full-time employees as of December 31, 2021 to approximately 35 full-time employees.

Pursuant to the restructuring and effective as of July 2, 2022, Cristina Larkin will separate from us as our Chief Operating Officer and David Melnick, M.D.

will separate from us as our Chief Medical Officer.

While we have confidence in our remaining leadership team, including the board of directors, the uncertainty inherent in this ongoing restructuring may be difficult to manage, may cause concerns from third parties with whom we do business, and may increase the likelihood of turnover of other key officers and employees.

On May 3, 2022, we implemented a restructuring that reduced our workforce from 146 full-time employees as of December 31, 2021 to approximately 41 full-time employees as of June 30 2022.

Pursuant to the restructuring and effective as of July 2, 2022, Cristina Larkin separated from us as our Chief Operating Officer and David Melnick, M.D.

separated from us as our Chief Medical Officer.

While we have confidence in our remaining leadership team, including the board of directors, the restructuring may cause concerns from third parties with whom we do business and may increase the likelihood of turnover of other key officers and employees.

If we lose one or more of our other executive officers or key employees, our ability to implement our business strategy successfully could be seriously harmed.

50 unchanged sentences

The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock.

In the past, securities class action litigation has

often been initiated against companies following periods of volatility in their stock price.

In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price.

This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

Our shares of common stock could be delisted from the Nasdaq Global Select Market which could result in, among other things, a decline in the price of our common stock and less liquidity for holders of shares of our common stock.

Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq GS”), which imposes, among other requirements, a minimum $1.00 per share bid price requirement for continued inclusion on the Nasdaq GS pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Requirement”).

The closing bid price for our common stock must remain at or above $1.00 per share to comply with the Bid Price Requirement for continued listing.

On August 8, 2022 we received a deficiency letter (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that, for the preceding 30 consecutive trading days, the closing bid price of our common stock was below the Bid Price Requirement.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have until February 6, 2023 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.

According to the Notice, if at any time before February 6, 2023, the closing bid price of our common stock is at least $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we have achieved compliance with the Bid Price Requirement and our common stock will continue to be eligible for listing on the Nasdaq GS.

If we do not regain compliance with the Bid Price Requirement by the Compliance Date, we may be eligible for an additional 180 day compliance period under the following circumstances.

To qualify, we would need to transfer the listing of the common stock to the Nasdaq Capital Market, provided that we meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards, with the exception of the Bid Price Requirement.

To effect such a transfer, we would also need to pay an application fee to Nasdaq and will need to provide written notice to Nasdaq of our intention to cure the deficiency during the additional compliance period by effecting a reverse stock split, if necessary.

As part of its review process, Nasdaq would make a determination of whether it believes we will be able to cure this deficiency.

If Nasdaq concludes that we will not be able to cure the deficiency, or if we do not cure the deficiency within such additional 180 day compliance period, Nasdaq will provide written notification to us that our common stock will be subject to delisting.

At that time, we may appeal Nasdaq’s delisting determination to a Nasdaq Listing Qualifications Panel (the “Panel”).

However, there can be no assurance that, if we receive a delisting notice and appeal the delisting determination by Nasdaq to the Panel, such appeal would be successful.

There can be no assurance that we will be able to keep the Closing Bid Price above $1.00 per share for the required 10 consecutive trading days by February 6, 2023.

Further, if we are unable to maintain the closing bid price at $1.00 for the required period, there is no guarantee that we will regain compliance with the Bid Price Requirement.

There is no guarantee that a reverse stock split would be approved by the stockholders or that a reverse stock split would allow us to regain compliance with the Bid Price Requirement.

Additionally, delisting from the Nasdaq GS could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity.

If our common stock is delisted by the Nasdaq GS, our common stock may be eligible to trade on the Nasdaq Capital Market or an over-the-counter quotation system, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common stock.

We cannot assure you that our common stock, if delisted from the Nasdaq GS, will be listed on another national securities exchange or quoted on an over-the counter quotation system.

We intend to actively monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

20 unchanged sentences

In connection with our rights offering, which we launched in February 2020 and closed in early March 2020, we issued 2,287 shares of our Series C Convertible Preferred Stock (“Series C Preferred Stock”) to BVF.

In September 2020, in connection with our underwritten public offering, we issued 3,215,000 shares of our Series D Convertible Preferred Stock (“Series D Preferred Stock”) to BVF.

In February 2021, BVF converted 73 shares of Series C Preferred Stock into 73,000 shares of our common stock, pursuant to BVF’s rights under the certificate of designation for such Series C Preferred Stock.

In September 2020, in connection with our underwritten public offering, we issued 3,215,000 shares of our Series D Convertible Preferred Stock to BVF.

In June 2022, BVF elected to convert 938 shares of Series B Preferred Stock into 938,000 shares of our common stock, pursuant to BVF’s rights under the certificate of designation for such Series B Preferred Stock.

In addition, BVF elected to convert 942,000 shares of Series D Preferred Stock into 942,000 shares of our common stock, pursuant to BVF’s rights under the certificate of designation for such Series D Preferred Stock.

If BVF or any other future holders of our shares of preferred stock convert their shares into common stock, existing holders of our common stock will experience dilution.

10 unchanged sentences

(ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering, which is December 31, 2022;

date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years;

(iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years;

or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC which means the first day of the year following the first year in which the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of June 30th.

2 unchanged sentences

We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

If some investors find our

common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.

6 unchanged sentences

We could qualify as a SRC if the market value of our common stock held by non-affiliates is below $250.0 million (or $700.0 million if our annual revenue is less than $100.0 million) as of June 30 in any given year.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an “emerging growth company,”

14 unchanged sentences

These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.

Our outstanding shares of common stock may be freely sold in the public market at any time to the extent permitted by Rules 144 and 701 under the Securities Act of 1933, as amended (the "Securities Act"), or to the extent that such shares

have already been registered under the Securities Act and are held by non-affiliates of ours.

Moreover, holders of a substantial number of shares of our common stock have rights, subject to conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

10 unchanged sentences

Our executive officers, directors and principal stockholders maintain the ability to control all matters submitted to stockholders for approval.

As of March 31, 2022, our executive officers and directors, combined with our stockholders who as of such date owned more than 5% of our outstanding common stock, in the aggregate, beneficially own shares representing approximately 46% of our capital stock.

As of June 30, 2022, our executive officers and directors, combined with our stockholders who as of such date owned more than 5% of our outstanding common stock, in the aggregate, beneficially own shares representing approximately 35% of our capital stock.

As a result, if these stockholders were to choose to act together, they would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs.

40 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings