What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-05 · 117 added, 93 removed, 212 unchanged (50% of the section changed)

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We are a multi-asset, clinical-stage biopharmaceutical company focused on identifying and developing novel treatments for rare diseases and diseases caused by multi-drug resistant (“MDR”) bacterial infections with high unmet need.

Our wholly-owned lead product candidate, SPR720, is an oral agent in development for the first-line treatment of nontuberculous mycobacterial (“NTM”) pulmonary disease, a rare disease.

We believe that SPR720, if successfully developed and approved, has the potential to be the first approved oral agent for NTM pulmonary disease in treatment-naïve and treatment-experienced and non-refractory patients.

Our partnered programs consist of tebipenem HBr and SPR206.

Tebipenem HBr is in development to potentially be the first oral carbapenem to treat complicated urinary tract infections (“cUTIs”), including pyelonephritis, caused by certain microorganisms, in adult patients.

SPR206 is an IV-administered antibiotic being developed as an innovative option to treat MDR Gram-negative bacterial infections in the hospital setting.

Our pipeline consists of three mid to late-stage clinical assets.

Tebipenem HBr is in Phase 3 development, with the potential to be the first broad-spectrum oral carbapenem to treat complicated urinary tract infections (“cUTIs”) including acute pyelonephritis, caused by certain microorganisms, in adult patients.

SPR206 is a Phase 2 ready IV-administered antibiotic being developed as an innovative option to treat MDR Gram-negative bacterial infections in the hospital setting.

SPR720, the development of which was recently suspended, is a Phase 2 investigational oral agent for the first-line treatment of nontuberculous mycobacterial (“NTM”) pulmonary disease, a rare disease.

As previously disclosed, following the SPR720 program suspension, we are evaluating other potential paths forward as the remaining data are collected and analyzed.

We believe that our novel product candidates, if successfully developed and approved, could provide meaningful benefits to patients suffering from serious rare diseases and life-threatening bacterial infections, in both the community and hospital settings.

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We do not have any products approved for sale and have not generated any revenue from product sales.

We have experienced net losses and significant cash outflows from cash used in operating activities since our inception through 2022.

We have experienced net losses and significant cash outflows from cash used in operating activities since our inception.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

As of June 30, 2024, we had an accumulated deficit of $421.6 million, and cash and cash equivalents of $63.5 million.

As of September 30, 2024, we had an accumulated deficit of $438.8 million, and cash and cash equivalents of $76.3 million.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.

We believe that our existing cash and cash equivalents, together with expected collections from our collaboration receivables – related party, will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the issuance of the financial statements included in this report.

Based on our cash and cash equivalents as of June 30, 2024, we believe that our cash runway will be sufficient to fund our operating expenses and capital expenditure requirements into late 2025.

During this period, we plan to prioritize advancing SPR720 to key Phase 2 milestones, advancing the Phase 3 clinical trial activities for tebipenem HBr under our GSK License Agreement and advancing SPR206 Phase 2 activities contingent on obtaining non-dilutive financing.

Based on our cash and cash equivalents as of September 30, 2024, our announced strategic restructuring as described below, the suspension of development activities for SPR720, together with earned and non-contingent development milestone payments from GSK, as well as other non-dilutive funding commitments, we believe that our cash runway will be sufficient to fund our operating expenses and capital expenditures into mid-2026.

During this period, we plan to prioritize advancing the Phase 3 clinical trial activities for tebipenem HBr under our GSK License Agreement and completing our analysis of the full dataset from the 25 treated patients in the Phase 2a proof-of-concept trial of SPR720.

Beyond this point we will need additional funding, which we expect will primarily consist of raising additional capital through some combination of equity or debt financings, potential new collaborations or additional grant funding.

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Recent Developments

Enrollment has concluded, with 25 patients enrolled in the Phase 2a proof-of-concept clinical trial evaluating SPR720 in NTM-PD.

The last patient received the first dose in July 2024.

Preliminary data on SPR720’s early bactericidal activity, as assessed by the change in NTM bacterial load over the treatment course of 56 days, are expected in the fourth quarter of 2024.

The rate of change in log 10 Colony Forming Units per milliliter (CFU/mL), which is the trial’s primary endpoint, is being measured, along with the rate of change in Time to Positivity, which is a key secondary endpoint.

The double-blinded, placebo-controlled, trial enrolled treatment-naïve and treatment-experienced patients with non-refractory NTM-PD due to Mycobacterium avium complex in 3 treatment groups (placebo, SPR720 500 mg and SPR720 1000 mg dosed QD).

Additional secondary endpoints include assessments of clinical response, pharmacokinetics (“PK”), and safety and tolerability.

Dosing completed in two Phase 1 clinical studies evaluating SPR720 in healthy volunteers:

i) a bronchoalveolar lavage (“BAL”) study assessing intrapulmonary PK (epithelial lung fluid and alveolar macrophage) of SPR719, the active moiety of the prodrug SPR720, and ii) a study evaluating changes in plasma PK when SPR720 is co-administered with azithromycin and ethambutol.

Topline results from both studies are also expected to be disclosed in the fourth quarter of 2024.

Strategic Restructuring

On October 29, 2024, we announced that we would suspend current development activities for SPR720 based on an interim analysis of the Phase 2a proof-of-concept study of SPR720 for the treatment of NTM-PD not meeting its primary endpoint.

While the data showed antimicrobial activity associated with SPR720, the interim analysis did not show sufficient separation from placebo and highlighted potential dose limiting safety issues in subjects dosed at 1,000 mg orally once daily, including three cases of reversible grade 3 hepatotoxicity.

In evaluating the totality of both the efficacy and safety data, we have elected to suspend our current development program for SPR720 and will evaluate other potential paths forward as the remaining data are collected and analyzed.

As a result, we have restructured our operations to focus on supporting the development of tebipenem HBr and other corporate activities while we continue to seek a pathway forward for SPR720.

In connection with the foregoing, on October 29, 2024, we implemented a strategic restructuring initiative and corresponding reduction in workforce.

The restructuring initiative and corresponding reduction in workforce is designed to reduce costs and reallocate resources towards our support of the development of tebipenem HBr and other corporate activities.

The restructuring reduced our workforce by approximately 39%.

We estimate that we will incur approximately $1.1 million of costs in connection with the reduction in workforce related to severance pay and other related termination benefits.

We may incur additional costs not currently contemplated due to events associated with or resulting from the workforce reduction.

We communicated the workforce reduction on October 29, 2024 and expect most of the costs associated with the workforce reduction to be incurred during the quarter ending December 31, 2024.

In July 2024, we concluded Phase 2a enrollment, with 25 non-refractory patients enrolled, for the proof-of-concept trial evaluating SPR720 in NTM-PD.

A planned interim analysis based on 16 patients indicated the trial did not meet its primary endpoint of differentiation from placebo in the rate of change in log 10 colony forming units per milliliter (CFU/mL).

In addition, analysis of the full 25 patient safety data highlighted potential dose limiting safety issues in patients dosed at 1,000mg orally once daily, including three cases of reversible grade 3 hepatotoxicity.

In October 2024, we announced the publication of data from our Phase 1 clinical trial, which assessed the intrapulmonary pharmacokinetics of SPR719 (active moiety of SPR720).

Results from this study suggested that SPR719 had significant lung uptake and enhanced liver fibrosis and alveolar macrophages concentrations.

Further in October, we announced a poster presentation at IDWeek 2024, entitled “ Evaluation of the Spontaneous Mutation Frequencies of SPR719 Alone and in Combination with Other Agents Used to Treat Mycobacterium avium Complex Pulmonary Disease .” The study described in the poster showed that SPR719 had a low propensity for resistance development in this study and showed no instances of antagonism when combined with clarithromycin or ethambutol, highlighting its potential for use in prolonged combination regimens typically required to treat NTM-PD.

Tebipenem HBr

In July 2024, an additional contract modification of $11.7 million was executed under our existing contract with BARDA, increasing the total committed funding under this award to $59.3 million with no change to the period of performance.

Enrollment in our PIVOT-PO, global Phase 3 clinical trial of tebipenem HBr in patients with cUTI is on track.

This randomized, double-blinded trial compares oral tebipenem HBr with intravenous imipenem cilastatin, in hospitalized adult patients with cUTI/acute pyelonephritis.

The primary endpoint is the overall response (a combination of clinical cure and favorable microbiological response) at the Test-of-Cure (TOC) visit.

Target enrollment for the trial is approximately 2,648 patients, with enrollment completion expected in the second half of 2025.

In July 2024, an additional contract modification of $11.7 million was executed under our existing contract with Biomedical Advanced Research and Development Authority (“BARDA”), increasing the total committed funding under this award to $59.3 million with no change to the period of performance.

The additional funding is expected to provide support for clinical development activities for tebipenem HBr.

In March 2024, SPR206 was awarded Fast Track designation by the FDA for treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia due to carbapenem-resistant Acinetobacter baumannii-calcoaceticus complex and carbapenem-resistant Pseudomonas aeruginosa.

The FDA cleared our investigational new drug (“IND”) application for a Phase 2 trial in participants with hospital-acquired or ventilator-associated bacterial pneumonia (“HABP/VABP”).

We maintain our guidance to initiate the trial, contingent upon availability of non-dilutive funding.

In August 2024, an additional contract modification of $3.4 million was executed under Option 1 of our existing contract with U.S.

National Institute of Allergy and Infectious Diseases (“NIAID”) for SPR206 Phase 2 start up activities.

Components of Our Results of Operations

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We also anticipate that we will continue to incur accounting, audit, legal, regulatory, compliance, infrastructure and director and officer insurance costs, as well as investor and public relations expenses associated with our continued operation as a public company.

In light of our decision to suspend development activities for SPR720 and our strategic restructuring, we expect that our future expenses relating to development activities will be substantially reduced as we evaluate potential paths forward for SPR720 and implement our restructuring.

In connection with our restructuring, we estimate that we will incur approximately $1.1 million of costs in connection with the reduction in workforce related to severance pay and other related termination benefits.

We may incur additional costs not currently contemplated due to events associated with or resulting from the workforce reduction.

We expect most of the costs associated with our workforce reduction to be incurred during the quarter ending December 31, 2024.

Other Income (Expense)

Interest Income (Expense)

Interest income (expense) during the three and six months ended June 30, 2024 and 2023 consists of interest expense related to the significant financing component related to the GSK License Agreement and interest earned on our cash equivalents, which are primarily invested in money market accounts, as well as interest earned on our investments in marketable securities.

Interest income (expense) during the three and nine months ended September 30, 2024 and 2023 consists of interest income related to the significant financing component related to the GSK License Agreement and interest earned on our cash equivalents, which are primarily invested in money market accounts, as well as interest earned on our investments in marketable securities.

Other Income (Expense), Net

Other income (expense), net, consists of insignificant amounts of miscellaneous income, as well as realized and unrealized gains and losses from foreign currency-denominated cash balances, vendor payables and receivables related to the Australian research and development tax incentive.

Critical Accounting Policies and Significant Judgments and Estimates

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Grant revenue

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General and administrative

Impairment of long-term asset

Total operating expenses

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Total other income (expense), net

Net loss before income taxes

Income tax benefit (expense)

Grant Revenue

Three Months Ended June 30,

Three Months Ended September 30,

BARDA Contract (Tebipenem HBr)

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Total grant revenue

Grant revenue recognized during the three months ended June 30, 2024 and 2023 consisted of the reimbursement of qualifying expenses incurred in connection with our various government awards.

The increase in grant revenue during the three months ended June 30, 2024 was primarily due to an increase of $3.1 million in qualified expenses incurred under our Biomedical Advanced Research and Development Authority (“BARDA”) contract for tebipenem HBr, partially offset by a decrease of $0.8 million under our U.S.

National Institute of Allergy and Infectious Diseases (“NIAID”) agreement relating to SPR206.

Grant revenue recognized during the three months ended September 30, 2024 and 2023 consisted of the reimbursement of qualifying expenses incurred in connection with our various government awards.

The increase in grant revenue during the three months ended September 30, 2024 was primarily due to an increase of $4.0 million in qualified expenses incurred under our BARDA contract for tebipenem HBr, partially offset by a decrease of $0.4 million under our NIAID agreement relating to SPR206.

Collaboration Revenue

Three Months Ended June 30,

Three Months Ended September 30,

GSK (Tebipenem HBr)

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Total collaboration revenue

During the three months ended June 30, 2024, we recognized $5.9 million in collaboration revenue related to our agreement with GSK and $0.1 million in collaboration revenue related to our agreement with Pfizer.

During the three months ended June 30, 2023, we recognized $0.5 million in collaboration revenue related to our agreement with GSK and $0.3 million in collaboration revenue related to our agreement with Pfizer.

During the three months ended September 30, 2024, we recognized $7.8 million in collaboration revenue related to our agreement with GSK and $0.1 million in collaboration revenue related to our agreement with Pfizer.

During the three months ended

September 30, 2023, we recognized $23.2 million in collaboration revenue related to our agreement with GSK and $0.2 million in collaboration revenue related to our agreement with Pfizer.

Research and Development Expenses

Three Months Ended June 30,

Three Months Ended September 30,

Direct research and development expenses by program:

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Total research and development expenses

Direct costs related to our SPR720 program increased by $3.5 million during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, due to increased clinical activity during the period related to our Phase 2a clinical trial of SPR720, which completed enrollment in the second quarter of 2024.

We expect to continue to incur direct costs related to SPR720 as we progress clinical activities.

Direct costs related to our tebipenem HBr program increased by $12.0 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, due to continued clinical activities related to our pivotal Phase 3 clinical trial of tebipenem HBr, which we initiated in the fourth quarter of 2023.

Direct costs related to our tebipenem HBr program during the three months ended June 30, 2024 reflect a $1.6 million reduction to expense related to a repurchase of drug substance material by GSK.

Direct costs related to our SPR206 program decreased by $0.9 million during the three months ended June 30, 2024, primarily due to decreased preclinical activity.

The decrease in personnel-related costs of $0.3 million was primarily a result of decreased research and development headcount costs.

Personnel-related costs during the three months ended June 30, 2023 included retention bonus payments in connection with our restructuring in May 2022.

Personnel-related costs for the three months ended June 30, 2024 and 2023 included share-based compensation expense of $0.7 million and $0.6 million, respectively.

Direct costs related to our SPR720 program decreased by $1.9 million during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, due to decreased clinical activity during the period related to our Phase 2a clinical trial of SPR720, which completed enrollment in the second quarter of 2024.

Subsequently, in October 2024, we announced that we would suspend current development activities for SPR720 based on an interim analysis of the Phase 2a proof-of-concept study of SPR720 for the treatment of NTM-PD not meeting its primary endpoint.

Direct costs related to our tebipenem HBr program increased by $12.4 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to continued clinical activities related to our pivotal Phase 3 clinical trial of tebipenem HBr, which we initiated in the fourth quarter of 2023 .Direct costs related to our tebipenem HBr program during the three months ended September 30, 2024 reflect a $0.7 million reduction to expense related to a repurchase of drug substance material by GSK.

Direct costs related to our SPR206 program decreased by $0.6 million during the three months ended September 30, 2024, primarily due to decreased preclinical activity.

The increase in personnel-related costs of $0.7 million was primarily a result of increased research and development headcount costs.

Personnel-related costs for the three months ended September 30, 2024 and 2023 included share-based compensation expense of $0.7 million and $0.6 million, respectively.

Facility-related and other costs primarily reflect costs related to supporting our research and development staff.

General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

Personnel related (including share-based compensation)

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Total general and administrative expenses

The decrease in personnel-related costs of $0.8 million was primarily a result of decreased headcount costs in our general and administrative functions during the period.

Personnel-related costs during the three months ended June 30, 2023 included retention bonus payments in connection with our restructuring in May 2022.

Personnel-related costs for the three months ended June 30, 2024 and 2023 included share-based compensation expense of $1.4 million and $1.3 million, respectively.

The increase in professional and consultant fees of $0.1 million was primarily due to varying legal and consulting expenses incurred in the three months ended June 30, 2024.

The increase in personnel-related costs of $0.1 million was primarily a result of increased headcount costs in our general and administrative functions during the period.

Personnel-related costs for the three months ended September 30, 2024 and 2023 included share-based compensation expense of $1.5 million and $1.3 million, respectively.

The decrease in professional and consultant fees of $0.7 million was primarily due to varying legal and consulting expenses incurred in the three months ended September 30, 2024.

Facility-related and other costs primarily reflect costs related to supporting our general and administrative staff.

Other Income (Expense), Net

Other income (expense), net was $1.2 million for the three months ended June 30, 2024, compared to $1.0 million for the three months ended June 30, 2023.

Total other income for the three months ended June 30, 2024 included $1.2 million of interest income, of which $0.4 million related to the significant financing component recognized under the GSK License Agreement, offset by immaterial fluctuations in unrealized foreign currency.

Total other income for the three months ended June 30, 2023 included $1.0 million of interest income, offset by changes primarily due to fluctuations in unrealized foreign currency.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

Other income (expense), net was $1.2 million for the three months ended September 30, 2024, compared to $0.9 million for the three months ended September 30, 2023.

Total other income for the three months ended September 30, 2024 included $1.2 million of interest income, of which $0.4 million related to the significant financing component recognized under the GSK License Agreement, offset by immaterial fluctuations in unrealized foreign currency.

Total other income for the three months ended September 30, 2023 included $1.0 million of interest income, offset by fluctuations in unrealized foreign currency.

Comparison of the Nine Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine Months Ended September 30,

Grant revenue

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General and administrative

Impairment of long-term asset

Total operating expenses

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Total other income (expense), net

Net loss before income taxes

Income tax benefit (expense)

Grant Revenue

Six Months Ended June 30,

Nine Months Ended September 30,

BARDA Contract (Tebipenem HBr)

1 unchanged sentence

Total grant revenue

Grant revenue recognized during the six months ended June 30, 2024 and 2023 consisted of the reimbursement of qualifying expenses incurred in connection with our various government awards.

The increase in grant revenue during the six months ended June 30, 2024 was primarily due to an increase of $7.5 million in qualified expenses incurred under our BARDA contract for tebipenem HBr, partially offset by a decrease of $1.5 million under our NIAID agreement relating to SPR206.

Grant revenue recognized during the nine months ended September 30, 2024 and 2023 consisted of the reimbursement of qualifying expenses incurred in connection with our various government awards.

The increase in grant revenue during the nine months ended September 30, 2024 was primarily due to an increase of $11.5 million in qualified expenses incurred under our BARDA contract for tebipenem HBr, partially offset by a decrease of $2.0 million under our NIAID agreement relating to SPR206.

Collaboration Revenue

Six Months Ended June 30,

Nine Months Ended September 30,

GSK (Tebipenem HBr)

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Total collaboration revenue

During the six months ended June 30, 2024, we recognized $10.0 million in collaboration revenue related to our agreement with GSK and $0.3 million in collaboration revenue related to our agreement with Pfizer.

During the six months ended June 30, 2023, we

recognized $1.0 million in collaboration revenue related to our agreement with GSK and $0.5 million in collaboration revenue related to our agreement with Pfizer.

During the nine months ended September 30, 2024, we recognized $17.7 million in collaboration revenue related to our agreement with GSK and $0.3 million in collaboration revenue related to our agreement with Pfizer.

During the nine months ended

September 30, 2023, we recognized $24.2 million in collaboration revenue related to our agreement with GSK and $0.7 million in collaboration revenue related to our agreement with Pfizer.

Research and Development Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

Direct research and development expenses by program:

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Total research and development expenses

Direct costs related to our SPR720 program increased by $6.1 million during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, due to increased clinical activity during the period related to our Phase 2a clinical trial of SPR720, which completed enrollment in the second quarter of 2024.

We expect to continue to incur direct costs related to SPR720 as we progress clinical activities.

Direct costs related to our tebipenem HBr program increased by $18.1 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to continued clinical activities related to our pivotal Phase 3 clinical trial of tebipenem HBr, which we initiated in the fourth quarter of 2023.

Direct costs related to our tebipenem HBr program during the six months ended June 30, 2024 reflect a $1.6 million reduction to expense related to a repurchase of drug substance material by GSK.

Direct costs related to our SPR206 program decreased by $1.4 million during the six months ended June 30, 2024, primarily due to decreased preclinical activity.

The decrease in personnel-related costs of $0.5 million was primarily a result of decreased research and development headcount costs.

Personnel-related costs during the six months ended June 30, 2023 included retention bonus payments in connection with our restructuring in May 2022.

Personnel-related costs for the six months ended June 30, 2024 and 2023 included share-based compensation expense of $1.4 million and $1.4 million, respectively.

Direct costs related to our SPR720 program increased by $4.2 million during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due to increased clinical activity during 2024 related to our Phase 2a clinical trial of SPR720, which completed enrollment in the second quarter of 2024.

Direct costs related to our tebipenem HBr program increased by $30.5 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to increased continued clinical activities related to our pivotal Phase 3 clinical trial of tebipenem HBr, which we initiated in the fourth quarter of 2023.

Direct costs related to our tebipenem HBr program during the nine months ended September 30, 2024 reflect a $2.3 million reduction to expense related to a repurchase of drug substance material by GSK.

Direct costs related to our SPR206 program decreased by $1.9 million during the nine months ended September 30, 2024, primarily due to decreased preclinical activity.

The increase in personnel-related costs of $0.2 million was primarily a result of increased research and development headcount costs.

Personnel-related costs during the nine months ended September 30, 2023 included retention bonus payments in connection with our restructuring in May 2022.

Personnel-related costs for the nine months ended September 30, 2024 and 2023 included share-based compensation expense of $2.1 million and $2.0 million, respectively.

Facility-related and other costs primarily reflect costs related to supporting our research and development staff.

General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

Personnel related (including share-based compensation)

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The decrease in personnel-related costs of $1.9 million was primarily a result of decreased headcount costs in our general and administrative functions during the period.

Personnel-related costs during the six months ended June 30, 2023 included retention bonus payments in connection with our restructuring in May 2022.

Personnel-related costs for the six months ended June 30, 2024 and 2023 included share-based compensation expense of $2.7 million and $2.6 million, respectively.

Changes in professional and consultant fees were primarily due to varying legal and consulting expenses incurred in the six months ended June 30, 2024.

Personnel-related costs during the nine months ended September 30, 2023 included retention bonus payments in connection with our restructuring in May 2022.

Personnel-related costs for the nine months ended September 30, 2024 and 2023 included share-based compensation expense of $4.2 million and $3.9 million, respectively.

The decrease in professional and consultant fees were primarily due to varying legal and consulting expenses incurred in the nine months ended September 30, 2024.

Facility-related and other costs primarily reflect costs related to supporting our general and administrative staff.

Other Income (Expense), Net

Other income (expense), net was $2.5 million for the six months ended June 30, 2024, compared to $1.9 million for the six months ended June 30, 2023.

Total other income for the six months ended June 30, 2024 included $2.5 million of interest income, of which $0.8 million related to the significant financing component recognized under the GSK License Agreement, offset by immaterial fluctuations in unrealized foreign currency.

Total other income for the six months ended June 30, 2023 included $1.9 million of interest income, offset by immaterial changes primarily due to fluctuations in unrealized foreign currency.

Other income (expense), net was $3.7 million for the nine months ended September 30, 2024, compared to $2.9 million for the nine months ended September 30, 2023.

Total other income for the nine months ended September 30, 2024 included $3.7 million of interest income, of which $1.2 million related to the significant financing component recognized under the GSK License Agreement, offset by immaterial fluctuations in unrealized foreign currency.

Total other income for the nine months ended September 30, 2023 included $2.9 million of interest income, offset by offset by fluctuations in unrealized foreign currency.

Liquidity and Capital Resources

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To date, we have funded our operations with payments received under license and collaboration agreements and funding from government contracts, and from the proceeds of multiple common stock offerings.

As of June 30, 2024, we had cash and cash equivalents of $63.5 million.

As of September 30, 2024, we had cash and cash equivalents of $76.3 million.

We filed a new universal shelf registration statement on Form S-3 with the SEC on March 15, 2024 (the “2024 Form S-3”), which became effective on March 22, 2024, 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 a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

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” offering as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), subject to the terms of the Sales Agreement.

During the three and six months ended June 30, 2024 and year-to-date, we did not sell any shares of our common stock under the Sales Agreement.

The following table summarizes our sources and uses of cash for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

During the three and nine months ended September 30, 2024 and year-to-date, we did not sell any shares of our common stock under the Sales Agreement.

The following table summarizes our sources and uses of cash for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

Cash used in operating activities

Cash provided by financing activities

Net decrease in cash and cash equivalents

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2024 was $(12.8) million, primarily resulting from our net loss of $30.5 million, adjusted for a net decrease in non-cash items of $4.7 million (primarily stock-based compensation).

Net cash provided by changes in our operating assets and liabilities was $13.1 million and consisted primarily of a $21.4 million decrease in our related party collaboration receivable, primarily due to the receipt of the first installment payment from GSK (see Note 9 - License, Collaboration and Service Agreements), a $10.2 million decrease in deferred revenue, a $3.2 million net increase in receivables, a $3.5 million increase in accrued expenses, a $1.3 million increase in accounts payable and a $1.0 million decrease in prepaid expenses.

Net cash used in operating activities for the six months ended June 30, 2023 was $31.4 million, primarily resulting from our net loss of $25.2 million, adjusted for net decrease in non-cash items of $4.7 million (primarily stock-based compensation).

Net cash used due to changes in our operating assets and liabilities was $11.0 million and consisted primarily of a $5.2 million increase in prepaid expenses and other current assets, a $1.0 million net increase in receivables, a decrease of $3.4 million in accrued expenses and a $1.5 million decrease in deferred revenue.

Net cash used in operating activities for the nine months ended September 30, 2024 was less than $0.1 million, primarily resulting from our net loss of $47.7 million, adjusted for non-cash items of $7.1 million (primarily stock-based compensation).

Net cash provided by changes in our operating assets and liabilities was $40.6 million and consisted primarily of a $45.2 million decrease in our related party collaboration receivable, primarily due to the receipt of the first and second installment payments from GSK (see Note 9 - License, Collaboration and Service Agreements), a $18.0 million decrease in deferred revenue, a $8.8 million increase in accrued expenses, a $4.7 million increase in accounts payable, a $2.1 million decrease in prepaid expenses and a $1.2 million net increase in other receivables.

Net cash used in operating activities for the nine months ended September 30, 2023 was $15.5 million, primarily resulting from our net loss of $28.4 million, adjusted for net decrease in non-cash items of $12.3 million (primarily stock-based compensation and impairment expense).

Net cash used due to changes in our operating assets and liabilities was $0.6 million and consisted primarily of a $2.0 million increase in prepaid expenses and other current assets, a $1.9 million net increase in receivables, a decrease of $2.4 million in accrued expenses, a $5.1 million increase in deferred revenue and a $2.2 million increase in income taxes payable.

Changes in accounts payable, accrued expenses and other current liabilities and prepaid expenses and other current assets in all periods were generally due to the advancement of our programs and the timing of vendor invoicing and payments.

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Investing Activities

We did not undertake any investing activities during the six months ended June 30, 2024 or 2023.

We did not undertake any investing activities during the nine months ended September 30, 2024 or 2023.

Financing Activities

We did not undertake any financing activities during the six months ended June 30, 2024 or 2023.

We did not undertake any financing activities during the nine months ended September 30, 2024.

Cash provided by financing activities during the nine months ended September 30, 2023 was $0.2 million, and consisted of net sales of common stock under our Sales Agreement.

Funding Requirements

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

As of June 30, 2024, we had cash and cash equivalents of $63.5 million.

As of September 30, 2024, we had cash and cash equivalents of $76.3 million.

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 cash and cash equivalents as of June 30, 2024, we believe that our cash runway will be sufficient to fund us into late 2025.

Based on our cash and cash equivalents as of September 30, 2024, our announced strategic restructuring as described above, and the suspension of development activities for SPR720, together with earned and non-contingent development milestone payments from GSK, as well as other non-dilutive funding commitments, we believe that our cash runway will be sufficient to fund our operating expenses and capital expenditures into mid-2026.

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If our access to capital is restricted or associated borrowing costs increase as a result of developments in financial markets, including relating to the global volatility, our operations and financial condition could be adversely impacted.

If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

If we are unable to raise additional funds

through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

During the three and six months ended June 30, 2024, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those described under the heading “Management’s Discussion and

Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended December 31, 2023.

During the three and nine months ended September 30, 2024, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Off-Balance Sheet Arrangements

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Quantitative and Qualitati ve Disclosures About Market Risk.

As of June 30, 2024, we had cash and cash equivalents of $63.5 million, consisting of cash and money market accounts.

As of September 30, 2024, we had cash and cash equivalents of $76.3 million, consisting of cash and money market accounts.

The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk.

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interest rates.

We did not have any assets classified as marketable securities as of June 30, 2024.

We did not have any assets classified as marketable securities as of September 30, 2024.

As we incur research expenses in foreign countries, we face exposure to movements in foreign currency exchange rates, primarily the Euro, British Pound, Japanese Yen and Australian dollar against the U.S.

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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 2. Management’s Discussion and Analysis