With seed funding from Atlas Venture and an early-stage partnership with Roche ($RHHBY), startup Spero Therapeutics is striking out with a novel approach to drug-resistant bacteria amid an antibiotic sea change in the industry.
Atlas, the Partners Innovation Fund and GlaxoSmithKline's ($GSK) SR One have ponied up $3 million in Series A cash to get Spero off the ground as it develops its lead program, designed to effectively disarm undruggable bacteria and keep them from coming back. Spero's drug is a one-two punch that works by inhibiting the mechanism that controls the virulence of Gram-negative bacteria, including the superbug Pseudomonas aeruginosa, and the biotech's early results were promising enough to sway Roche, an industry heavyweight in the midst of re-embracing antibiotics, to partner up on the preclinical project.
Now, with a Big Pharma partner pitching in on R&D, Spero is hitting the gas on development, looking to follow up on early data in which its anti-infective showed promise in both treating acute bacterial infections and curbing the development of drug resistance, said Atlas Partner Ankit Mahadevia, who is serving as Spero's acting president.
Under Spero's agreement with Roche, the drugmaker has the option to buy the biotech's lead program once it's ready to submit a new drug filing with the FDA, a stage just before clinical trials. The two have already worked out the terms of a potential deal, which would include an upfront payment and milestones down the line.
"We see this as the perfect way to get this program off the ground and also lay the groundwork for us to move our other programs forward," Mahadevia told FierceBiotech. Spero is set up as an LLC, not a C corporation, meaning the biotech can sell off individual assets without flipping the whole company, he said: "If Roche buys it, we'll keep going."
Spero isn't disclosing the financial particulars of the deal, but if everything pans out, the biotech will have enough cash to broaden its scope and advance some early-stage candidates, Mahadevia said, all while churning out some attractive returns to investors.
As for Roche, the Swiss giant is diving back into antibiotics after essentially abandoning the space in 1999, and the Spero deal is its third foray into the field over the past 6 months. In February, Roche teamed up with the U.K.'s Discuva to discover new treatments for Gram-negative infections, handing over $16 million up front and agreeing to pay as much as $175 million per resulting drug. That agreement came on the heels of a tie-up with Switzerland's Polyphor through which it gets its hands on a Phase II antibiotic for hospital-acquired infections in exchange for up to $560 million.
Meanwhile, public health groups around the globe are warning that the scourge of drug-resistant bacteria far outstrips the pipeline of treatments set up to combat it, creating a huge unmet need. About 2 million Americans come down with antibiotic-resistant infections each year, according to the Centers for Disease Control and Prevention, and at least 23,000 of them die.
That spiraling concern played a major role in Atlas' decision to get back into antibiotics, Mahadevia said, following the company's 2009 sale of Novexel to AstraZeneca ($AZN) for $350 million. And, from a business perspective, 2012's GAIN Act and its promise of a speedy FDA review and extended market exclusivity have made antibiotics a smart investment for life sciences VCs, he said.
"To me, what it suggests is that it's going to do for antibiotics development what the Orphan Drug Act did for diseases, creating a bespoke regulatory pathway," Mahadevia said. "We think it's a perfect time to be a company pushing novel ways to look at anti-infectives."
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