Google’s Venture Arm Leads $51.7M Investment in Spero Therapeutics

Xconomy Boston — 

Despite the growing problem of drug-resistant bacteria, few new antibiotics have been developed in recent decades. Spero Therapeutics is trying to fill that gap by assembling a pipeline of antibiotic candidates, and it now has $51.7 million in new capital to finance clinical trials on some of them.

GV, the venture arm of Google, led the Series C investment in Cambridge, MA-based Spero. New investors RA Capital Management and Rock Springs Capital joined the round, which also included participation from earlier investors such as Atlas Venture, Spero’s founding backer in 2013.

This investment comes a little more than a year after Spero raised $30 million in a Series B round to support its growing pipeline. In early 2016, Spero licensed compounds from Montana-based Promiliad Biopharma. Spero later acquired rights to antibiotic compounds from Vertex Pharmaceuticals (NASDAQ: VRTX). The company’s lead asset, SPR741, is the product of a deal with Finnish company Northern Antibiotics, which gave Spero access to its “potentiator” platform. This technology offers ways to make older, already-approved antibiotics effective against new pathogens. Potentiators accomplish this by piercing the fatty outer layer of gram-negative bacteria—an extra barrier that other bacteria don’t have.

“You can design plenty of drugs that are safe and hit targets but it’s hard to get the chemistry to get through the envelope,” says CEO Ankit Mahadevia.

SPR741 is currently in Phase 1 clinical trials. Mahadevia says it increases the spectrum and potency of more than two dozen classes of gram positive antibiotics, making them potential treatments for gram negative infections as well. The company says a second drug, a novel agent called SPR994, has also shown activity in the lab against gram negative bacteria. The new capital will allow Spero to bring that candidate into the clinic. Besides those two drugs, Spero has other preclinical compounds.

With multiple antibiotic assets in its pipeline, Spero has the option of outlicensing some of them to companies looking to bring a new antibiotic to market. Mahadevia says the company is in active discussions with potential partners. But he adds that Spero will keep some of those drug candidates to develop on its own.

The latest investment round brings to Spero so-called crossover investors—those who invest in both public and private companies. RA Capital and Rock Springs Capital are both considered crossover investors. Crossover investments are viewed as a sign that a company is preparing for an initial public stock offering, which Mahadevia acknowledged.

“We think we have the profile to be an attractive company to the public markets,” he says. “The Series C round gives us runway to explore our options, one of which could be an IPO.”

Mahadevia says that the latest investment gives the company enough cash to carry Spero into the second half of 2018. By then, he expects to have safety and efficacy data for its lead drug candidates.

Photo by Flickr user Anthony D’Onofrio via a Creative Commons license.