Spero Therapeutics, a Delaware-based clinical-stage bio-pharmaceutical company, faces a class action lawsuit filed by investors who claim they suffered significant losses and damages due to misleading and false statements over a new drug meant to treat Complicated Urinary Tract Infections.
The lawsuit, filed in the Eastern District Court of New York on May 26, 2022, names Spero Therapeutics CEO Ankit Mahadevia, and its Chief Financial Officer Satyavrat Shukla. as the two main defendants.
Shukla told indica, “We can’t comment on any pending litigation.”
Spero, (NASDAQ SPRO) focuses on identifying, developing, and commercializing treatments for multi-drug resistant (MDR) bacterial infections and rare diseases in the United States.
According to the lawsuit, filed by attorneys for the plaintiff Richard S. Germond, on October 28, 2021, Spero announced that it had submitted a New Drug Application to the US Food and Drug Administration (“FDA”) for Tebipenem HBr, for the treatment of Complicated Urinary Tract Infections (UTI) including Pyelonephritis, a type of UTI that generally begins in your urethra or bladder and travels to one or both of your kidneys and requires prompt medical attention.
However, the lawsuit alleges that the defendants made “false and/or misleading statements and/or failed to disclose that: (i) the data submitted in support of the Tebipenem HBr NDA were insufficient to obtain FDA approval; (ii) accordingly, it was unlikely that the FDA would approve the Tebipenem HBr NDA in its current form; ) the foregoing would necessitate a significant workforce reduction and restructuring of Spero’s operations; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times.”
It cites a press Spero Therapeutics release dated October 28, 2021, which said, “….Spero [. . .] today announced the submission of a new drug application (NDA) to the U.S. Food and Drug Administration (FDA), seeking approval for tebipenem HBr tablets for the treatment of complicated urinary tract infections (cUTI), including pyelonephritis, caused by susceptible microorganisms. If approved, tebipenem HBr would be the only oral carbapenem antibiotic available for use in cUTI.
“With the submission of this NDA, we have taken a major step towards potentially providing a substantial number of appropriate cUTI patients with an oral treatment option that could replace historical use of intravenous (IV) therapy,” said Ankit Mahadevia, M.D., Chief Executive Officer of Spero Therapeutics. “If approved, we believe tebipenem HBr could help patients significantly, and the avoidance of IV administration could lead to reduced healthcare resource utilization. We look forward to working with the FDA during the NDA review process as we prepare for tebipenem HBr’s anticipated launch in the second half of 2022.”
However, on March 31, 2022, in a release announcing the Company’s fourth quarter and full year 2021 financial results, Spero disclosed that “[t]he U.S. Food and Drug Administration (FDA) has notified Spero that, as part of its ongoing review of Spero’s New Drug Application (NDA) for tebipenem HBr, it has identified deficiencies that preclude discussion of labeling and post-marketing requirements/commitments at this time.”
On this news, Spero’s stock price fell $1.59 per share, or 18.27%, to close at $7.11 per share on April 1, 2022.
Then in yet another release on May 3, 2022, Spero said “that it will immediately defer current commercialization activities for tebipenem HBr based on feedback from a recent Late Cycle Meeting (LCM) with the U.S. Food and Drug Administration (FDA) regarding Spero’s New Drug Application (NDA) for tebipenem HBr[,]” and that, “[a]lthough the review is still ongoing and the FDA has not yet made any final determination regarding approvability, the discussion suggested that the data package may be insufficient to support approval during this review cycle.” Specifically, the FDA advised the Company, in relevant part, that the FDA’s separate analysis of the relevant study population had “reduce[d] the number of evaluable patients in the primary analysis population compared with those resulting from the trial’s pre-specified micro-ITT population as outlined in the statistical analysis plan” and [a]s a result, the FDA considers that the pre-specified non-inferiority margin of -12.5% was not met.” Further, the press release advised that, “[i]n connection with this development, Spero announced that it is undertaking a reduction in its workforce by approximately 75% and a restructuring of its operations to reduce operating costs and reallocate resources.”
On this news, Spero’s stock price fell $3.24 per share, or 63.65%, to close at $1.85 per share on May 3, 2022.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the lawsuit says.
Demanding a trial by jury, it demands that the defendants pay damages sustained by the plaintiff and the Class, prejudgment and postjudgment interest, as well as their reasonable attorneys’ fees, expert fees and other costs; and any other further relief as the “Court may deem just and proper.”