Spero Therapeutics (SPRO) risk factors, FY2024 10-K

Risks Related to Product Development and Commercialization

1. 01Our ability to realize the value of tebipenem HBr depends on obtaining FDA approval. Even if such approval is obtained, the timeline of, and any requirements imposed as part of, such approval may impact the attractiveness of eventual commercialization of tebipenem HBr through our partnership with GSK
2. 02If our clinical trials fail to produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates
3. 03the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval
4. 04be required to remove the product from the market after obtaining marketing approval
5. 05If we experience delays or difficulties in the enrollment of patients in clinical trials, clinical development activities could be delayed or otherwise adversely affected
6. 06the risk that participants enrolled in clinical trials will drop out of the trials before completion
7. 07Analyses of preliminary or interim data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
8. 08our reputation may suffer
9. 09Even if a product candidate does obtain regulatory approval, it may never achieve the market acceptance by physicians, patients, hospitals, third-party payors and others in the medical community that is necessary for commercial success and the market opportunity may be smaller than we estimate
10. 10We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success
11. 11If we or our collaborators are unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing any of our product candidates if such product candidates are approved
12. 12unforeseen costs and expenses associated with creating an independent sales and marketing organization
13. 13We face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suffer if we fail to compete effectively
14. 14Even if we or our partners are able to commercialize any of our product candidates, the product may become subject to unfavorable pricing regulations, or third-party payor coverage and reimbursement policies that could harm our business
15. 15country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval
16. 16We cannot predict whether bacteria may develop resistance to our product candidates, if approved, which could affect their revenue potential
17. 17If we are not successful in discovering, developing and commercializing additional product candidates, our ability to expand our business and achieve our strategic objectives would be impaired
18. 18Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization of any products that we may develop
19. 19the inability to commercialize any products that we may develop
20. 20If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business
21. 21Our internal computer systems, or those of our contract research organizations or other contractors or consultants, may fail or suffer cybersecurity incidents, which could result in a material disruption of our product development programs, and could subject us to liability
22. 22Our actual or perceived failure to comply with data protection laws and regulations could lead to government enforcement actions, private litigation and/or adverse publicity and could negatively affect our business
23. 23We or third parties upon whom we depend may be adversely affected by natural disasters and/or health epidemics, and our business, financial condition and results of operations could be adversely affected

Risks Related to Our Financial Position and Need for Additional Capital

1. 24We expect to continue to incur significant expenses and operating losses for the foreseeable future; if we are unable to achieve commercialization, revenue from product sales, and, ultimately, profitability, the market value of our common stock will likely decline
2. 25acquire or in-license other product candidates and technologies
3. 26We expect that we will need substantial additional funding. If we are unable to raise capital when needed, or do not receive payments under our government awards or from our commercial partnership agreements, we could be forced to delay, reduce or eliminate our product development programs
4. 27Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates
5. 28Our ability to use our net operating loss carryforwards may be limited
6. 29We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability

Risks Related to Our Dependence on Third Parties

1. 30We may not achieve the milestones triggering payments to us in our license and collaboration agreements with third parties
2. 31collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates
3. 32We may have to alter our development and commercialization plans if we are not able to establish collaborations
4. 33industry and market conditions generally
5. 34the possible misappropriation of our proprietary information, including our trade secrets and know-how
6. 35If we fail to comply with our obligations in the agreements under which we in-license or out-license acquire development or commercialization rights to products, technology or data from or to third parties, we could lose such rights that are important to our business

Risks Related to Our U.S. Government Contracts and to Certain Grant Agreements

1. 36Our use of government funding for certain of our programs adds complexity to our research and commercialization efforts with respect to those programs and may impose requirements that increase the costs of commercialization and production of product candidates developed under those government-funded programs
2. 37pursue criminal or civil remedies under the False Claims Act (the “FCA”), the False Statements Act and similar remedy provisions specific to government agreements
3. 38public disclosures of certain award information, which may enable competitors to gain insights into our research program; and
4. 39U.S. government agencies have special contracting requirements that give them the ability to unilaterally control our contracts
5. 40change certain terms and conditions in our contract
6. 41United States government agencies such as the DHHS and the Defense Contract Audit Agency (the “DCAA”) routinely audit and investigate government contractors. These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards
7. 42Laws and regulations affecting government contracts make it more expensive and difficult for us to successfully conduct our business
8. 43laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data
9. 44Provisions in our U.S. government contracts, including our contracts with BARDA, may affect our intellectual property rights

Risks Related to Our Intellectual Property

1. 45We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful
2. 46If we are sued for infringing intellectual property rights of third parties, or otherwise become involved in disputes regarding our intellectual property rights, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates
3. 47We 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
4. 48If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed
5. 49We have registered trademarks and pending trademark applications. Failure to enforce our registered marks or secure registration of our pending trademark applications could adversely affect our business

Risks Related to Regulatory Approval and Other Legal Compliance Matters

1. 50If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired
2. 51We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and have relied on third-party contract research organizations to assist us in this process
3. 52the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval
4. 53A fast track designation may not actually lead to a faster development or regulatory review or approval process
5. 54Priority review designation by the FDA may not lead to a faster regulatory review or approval process and, in any event, does not assure FDA approval
6. 55While we have negotiated a SPA agreement with the FDA relating to our pivotal Phase 3 clinical trial of tebipenem HBr in patients with cUTI, including AP, this agreement does not guarantee approval of tebipenem HBr or any other particular outcome from regulatory review of the clinical trial or the product candidate
7. 56If approved for commercial marketing in the United States, our product candidates may face generic competition sooner than anticipated
8. 57If we or our partners are unable to obtain marketing approval in international jurisdictions, we will not be able to market our product candidates abroad
9. 58issue injunctions or impose civil or criminal penalties
10. 59Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings
11. 60Recently enacted and future policies and legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the reimbursement made for any product candidate for which we receive marketing approval
12. 61If we successfully commercialize one of our product candidates, failure to comply with our reporting and payment obligations under U.S. governmental pricing programs could have a material adverse effect on our business, financial condition and results of operations
13. 62Our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements

Risks Related to Employee Matters and Managing Growth

1. 63Our future success depends on our ability to retain our key executives and to attract, retain and motivate qualified personnel
2. 64We undertook internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition, and we may not realize the expected benefits from our restructuring and we may incur additional costs implementing it or other difficulties
3. 65If foreign approvals are obtained, we will be subject to additional risks in conducting business in international markets

Risks Related to Our Common Stock

1. 66The price of our common stock has been and, in the future, may continue to be volatile whether related or unrelated to our operations, which could result in a decline in value for our stockholders
2. 67the other factors described in this “Risk Factors” section
3. 68An active trading market for our common stock may never develop or be sustained
4. 69Our shares of common stock could be delisted from the Nasdaq GS, which could result in, among other things, a decline in the price of our common stock and less liquidity for our stockholders
5. 70If 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
6. 71addition, if one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline
7. 72We have broad discretion in the use of our cash reserves and may not use them effectively
8. 73We are a smaller reporting company and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors
9. 74We 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
10. 75Failure to maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley in the future could have a material adverse effect on our ability to produce accurate financial statements and on our stock price
11. 76A significant portion of our total outstanding shares may be sold into the market at any time, which could cause the market price of our common stock to decline significantly, even if our business is doing well
12. 77We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. Accordingly, stockholders must rely on capital appreciation, if any, for any return on their investment
13. 78Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management
14. 79require the approval of the holders of at least 75% of the votes that all of our stockholders would be entitled to cast to amend or repeal certain provisions of our Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated Bylaws
15. 80We have received a “Wells Notice” from the SEC contemplating a civil enforcement action, which could have a material adverse effect on our business, financial condition and results of operations, prospects, and/or our stock price
16. 81We may become involved in securities litigation that could divert management’s attention and harm the company’s business, and insurance coverage may not be sufficient to cover all costs and damages