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6 November 2017

Spero hits public markets with $77m IPO

The bacterial infections drug developer, based on research at Harvard Medical School, has gone public.

Author: Robert Lavine, news editor, Global Corporate Venturing

Spero Therapeutics, a US-based biopharmaceutical company based on research at Harvard University and backed by spinout-focused investment firm Osage University Partners, has raised $77m in its initial public offering.

The company issued 5 million shares on the Nasdaq Global Select Market priced at $14.00 each, at the foot of the IPO’s $14 to $16 range. The underwriters have a 30-day option to buy another 825,000 shares, which would lift the size of the offering to $88.6m.

Spero is working on drugs that will treat bacterial infections that have already proven resistant to multiple therapeutics, by enhancing the spectrum and potency of existing antibiotics.

The company was co-founded by Partners Innovation Fund (PIF), a subsidiary of healthcare provider Partners Healthcare, and VC firm Atlas Venture to exploit research conducted by Laurence Rahme, associate professor of surgery at Harvard Medical School and a microbiologist at the school’s teaching hospital Massachusetts General Hospital.

Approximately $40m of the IPO proceeds will support a phase 1 clinical trial and phase 3 pivotal trial for Spero’s lead product candidate, SPR994, which is being developed to treat Gram-negative infections, caused by bacteria that is resistant to most drugs.

A further $18m will fund preclinical activities and a phase 2 clinical trial for SPR741, a treatment Spero is developing for pulmonary non-tuberculous mycobacterial infections. It will put $7m into development activities for two more candidates, SPR206 and SPR720.

The company had raised about $115m in funding, including $3m in 2014 from PIF and SR One, a subsidiary of pharmaceutical firm GlaxoSmithKline, as well as Atlas Venture.

All three investors took part in Spero’s $30m series A round in 2015, alongside conglomerate Kraft Group, and MRL Ventures and Lundbeckfonden Ventures, which invest on behalf of pharmaceutical firms Merck & Co and Lundbeck.

The same six provided $30m more in February 2016 and returned for a $51.7m round in March 2017 also featuring Osage University Partners and GV, a corporate venturing vehicle for diversified conglomerate Alphabet, as well as Rock Springs Capital and RA Capital Management.

Atlas Venture is Spero’s largest shareholder, with a 23.6% stake that was diluted to 14.2% in the IPO. Its other main investors are SR One (a 10.3% stake post-IPO), GV (8%), Lundbeckfond Invest (6.3%), MRL Ventures (5.3%), RA Capital (4.3%) and Osage (3%).

Unspecified existing shareholders expressed interest in buying $30m of the company’s shares as part of the offering, but it is unclear whether they did so. BofA Merrill Lynch, Cowen and Stifel are the joint book-running managers for the IPO while Oppenheimer & Co is co-manager.

– A version of this article first appeared on our sister site, Global Corporate Venturing.

Copyright Mawsonia Limited 2010. Please don´t cut articles from or the PDF and redistribute by email or post to the web without written permission.

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