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Item 3. Legal Proceedings

2025-03-27 compared with 2024-03-13 · 35 added, 14 removed, 14 unchanged (78% of the section changed)

Legal Proceedings.

Two putative class action lawsuits were 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.

Securities Class Action Lawsuits and Derivative Actions

Two putative class action lawsuits were filed against the Company and certain of its current and former officers in the United States District Court for the Eastern District of New York, one captioned Richard S.

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

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The parties moved to consolidate the two complaints on July 22, 2022, which were ordered consolidated on August 5, 2022 (“Consolidated Putative Class Action”).

The parties filed an Amended Complaint on December 5, 2022, purported to be brought on behalf of stockholders who purchased our common stock from September 8, 2020 through May 2, 2022.

The Amended Complaint generally alleges that we and certain of our current and former officers violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the NDA for tebipenem HBr in an effort to lead investors to believe that the drug would receive approval from the FDA.

The parties filed an Amended Complaint on December 5, 2022, purported to be brought on behalf of stockholders who purchased the Company's common stock from September 8, 2020 through May 2, 2022.

The Amended Complaint generally alleges that the Company and certain of its current and former officers violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the New Drug Application (“NDA”) for tebipenem HBr in an effort to lead investors to believe that the drug would receive approval from the FDA.

Plaintiffs seek unspecified damages, interest, attorneys’ fees, and other costs.

We filed a fully-briefed Motion to Dismiss on June 21, 2023.

The Court has not yet ruled on the Motion.

A stockholder derivative action was filed against us, as nominal defendant, and certain of our officers in the United States District Court for the District of Delaware, captioned Marti v.

The Company filed a fully-briefed Motion to Dismiss on June 21, 2023.

By Order entered on September 30, 2024, the Motion to Dismiss was granted, dismissing the Amended Complaint in its entirety.

The Court ordered the case to be closed by Memorandum and Order entered on October 28, 2024.

A stockholder derivative action was filed against the Company, as nominal defendant, and certain of the Company's current and former officers in the United States District Court for the District of Delaware, captioned Marti v.

Mahadevia, et al., Case.

1:23-cv-01133-RGA (the “Derivative Complaint”), on October 11, 2023.

1:23-cv-01133-RGA (the “First Derivative Complaint”), on October 11, 2023.

The plaintiffs both purport to be current stockholders, and the allegations are primarily the same as those made in the Consolidated Putative Class Action.

The Derivative Complaint was transferred to the Eastern District of New York on November 13, 2023, and stayed by party agreement pending outcome of the Motion to Dismiss the class action on November 20, 2023.

A second stockholder derivative action was filed against us, as nominal defendant, and certain of our officers in the Supreme Court of the State of New York, Kings County, captioned Heil v.

The First Derivative Complaint was transferred to the Eastern District of New York on November 13, 2023.

A second stockholder derivative action was filed against the Company, as nominal defendant, and certain of its current and former officers in the Supreme Court of the State of New York, Kings County, captioned Heil v.

Mahadevia, et al., Case.

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The Second Derivative Complaint makes primarily the same allegations as the First Derivative Complaint, and the Consolidated Putative Class Action.

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 us and certain of our officers or directors may be filed in the future.

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

The plaintiffs in both derivative suits agreed to a stay pending decision on the class action, subject to court approval.

By Order entered on September 30, 2024, the motion to stay the First Derivative Complaint was denied as moot due to the dismissal of the Consolidated Putative Class Action.

On March 20, 2025, the Second Derivative Complaint was voluntarily dismissed by the plaintiff.

The Company denies any allegations of wrongdoing and intends to vigorously defend against these lawsuits.

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

Moreover, the Company is 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 directors 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.

SEC Investigation and Wells Notice

On January 9, 2025, the Company responded to a “Wells Notice” from the staff of the Boston Regional Office (“Staff”) of the SEC regarding its preliminary determination to recommend a civil enforcement action or administrative proceeding against the Company, its former Chief Executive Officer and Chairman of the Board of Directors, Ankit Mahadevia, M.D.

Mahadevia”), and its former Chief Financial Officer and President and Chief Executive Officer, Satyavrat “Sath” Shukla (“Mr.

Shukla”), relating to certain public disclosures by the Company from March 31, 2022 leading up to the Company’s announcement on May 3, 2022 that it had determined to cease commercialization of tebipenem HBr based on feedback from the FDA, and whether the Company’s disclosures may have violated the federal securities laws (the “Investigation”).

Specifically, the contemplated civil enforcement action, if approved by the Commissioners, could include allegations that the Company violated Section 17(a) of the Securities Act and Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, and 13a-1 thereunder;

and could allege against Dr.

Mahadevia and Mr.

Shukla violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5 and 13a-14 thereunder.

The Company, Dr.

Mahadevia and Mr.

Shukla continue to cooperate with the SEC, they have engaged in further dialogue with the Staff and maintain that the Company’s disclosures were appropriate.

A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law, but is a preliminary determination by the Staff to recommend to the SEC Commissioners that a civil enforcement action or administrative proceeding be brought against the recipients.

It provides the recipients the opportunity to address in a non-public forum the issues raised by the Staff before a recommendation is made to the SEC regarding an enforcement action.

If the SEC were to authorize an action against the Company and/or any of the identified individuals, it may seek an injunction or cease-and-desist order against future violations of provisions of the federal securities laws, the imposition of civil monetary penalties, disgorgement or other equitable relief within the SEC’s authority, or any combination of the foregoing.

The SEC could also seek an order barring each identified individual from serving as an officer or director of a public company for a specified period of time.

The results of the Investigation and the Wells Notice process and any corresponding enforcement action against the Company and/or any of the identified individuals, and the costs, timing and other potential consequences of responding and complying therewith are unknown at this time.

Mine Saf ety Disclosures.

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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-K

Item 3. Legal Proceedings