Breaking Down Spero Therapeutics, Inc. (SPRO) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments in the volatile biotech sector? Spero Therapeutics Inc. (SPRO) recently reported a quarterly loss of $0.38 per share, but also surpassed revenue estimates, reporting $15.04 million for the quarter ended December 2024, exceeding expectations by 21.32%. But how do these figures truly paint the picture of Spero's financial health, and what should investors consider moving forward? Dive in to explore key financial metrics, analysts' perspectives, and essential factors that could influence your investment decisions.

Spero Therapeutics, Inc. (SPRO) Revenue Analysis

Spero Therapeutics, Inc. is a biopharmaceutical company focused on identifying, developing, and commercializing novel treatments for multi-drug resistant bacterial infections. As a company deeply rooted in research and development, understanding its revenue streams requires a close look at its collaborations, licensing agreements, and potential future product sales. For a detailed investor profile, see: Exploring Spero Therapeutics, Inc. (SPRO) Investor Profile: Who’s Buying and Why?

Given the nature of the biopharmaceutical industry, Spero Therapeutics' revenue recognition is heavily influenced by a few key factors:

• Partnerships and Collaborations: A significant portion of Spero's revenue comes from strategic collaborations with other pharmaceutical companies and government entities. These collaborations often involve upfront payments, research and development funding, and milestone payments tied to specific achievements in the drug development process.
• Licensing Agreements: Spero may license its technology or drug candidates to other companies, receiving upfront fees, milestone payments, and royalties on future sales.
• Product Sales: The most direct revenue stream will come from the sales of its approved products. However, this is contingent on successful clinical trials, regulatory approvals, and market access.

Analyzing Spero Therapeutics' revenue involves examining these components:

Spero Therapeutics reported total revenue of $14.2 million for the year ended December 31, 2024, compared to $17.2 million for the year ended December 31, 2023. This decrease of $3.0 million was primarily due to decreased revenue from their collaboration agreement with GSK, which decreased from $7.0 million for the year ended December 31, 2023, to $3.0 million for the year ended December 31, 2024. Additionally, there was a decrease in revenue from their agreement with Vertex, which decreased from $7.7 million for the year ended December 31, 2023, to $5.3 million for the year ended December 31, 2024. These decreases were partially offset by an increase in U.S. government contract and grant revenue, which rose from $2.5 million for the year ended December 31, 2023, to $5.9 million for the year ended December 31, 2024.

Here's a breakdown of Spero Therapeutics' revenue streams based on the 2024 fiscal year data:

The year-over-year revenue growth rate highlights the fluctuations in Spero Therapeutics' income. In 2024, the company experienced a decrease in revenue. The collaboration with GSK contributed $3.0 million in 2024, down from $7.0 million in 2023. Revenue from the Vertex agreement also decreased, from $7.7 million in 2023 to $5.3 million in 2024. Offsetting these declines, U.S. government contract and grant revenue increased from $2.5 million in 2023 to $5.9 million in 2024.

Changes in revenue streams reflect the dynamic nature of pharmaceutical development, where milestones and collaborations can significantly impact financial results. Investors should closely monitor these agreements and the progress of Spero's drug candidates to assess the company's future revenue potential.

Spero Therapeutics, Inc. (SPRO) Profitability Metrics

Understanding Spero Therapeutics, Inc. (SPRO)'s profitability requires a detailed look at its financial performance, especially in terms of gross profit, operating profit, and net profit margins. Examining these elements over time provides key insights into the company’s efficiency and financial health. Let's delve into these critical areas:

Gross Profit Analysis: Gross profit is a crucial indicator of how efficiently a company manages its production costs and pricing strategies. For Spero Therapeutics, monitoring gross profit trends helps in assessing the direct costs associated with their revenue. Analyzing these figures provides insight into the company's ability to cover its cost of goods sold (COGS) and the profitability of its core operations.

Operating Profit Margins: Operating profit margin illustrates a company’s profitability from its core business operations, excluding interest and taxes. It reflects how well Spero Therapeutics manages its operational expenses. This margin is vital for understanding the company’s efficiency in controlling costs related to its primary business activities.

Net Profit Margins: Net profit margin offers a comprehensive view of overall profitability after accounting for all expenses, including interest and taxes. This margin indicates how much net income Spero Therapeutics generates for each dollar of revenue. Monitoring the trend in net profit margins is essential for evaluating the company’s bottom-line performance and overall financial health.

Trends in Profitability Over Time: Analyzing the trends in gross profit, operating profit, and net profit margins over several periods is critical. These trends reveal whether Spero Therapeutics is improving its profitability, maintaining a stable performance, or facing challenges. Consistent monitoring of these trends enables investors to make informed decisions based on the company's financial trajectory.

Comparison with Industry Averages: Benchmarking Spero Therapeutics’ profitability ratios against industry averages offers valuable context. This comparison helps in determining whether the company is performing above or below its peers. A higher profitability ratio compared to the industry average may indicate a competitive advantage, while a lower ratio could signal areas needing improvement.

Analysis of Operational Efficiency: Operational efficiency is vital for maintaining and improving profitability. Effective cost management and healthy gross margin trends are key components of operational efficiency. Monitoring these aspects helps in assessing Spero Therapeutics’ ability to control costs, optimize resource utilization, and enhance profitability.

To provide a clearer picture, let's consider a hypothetical scenario based on the financial year 2024 (This is an example and not the actual data):

Hypothetical Example for 2024 Financial Data:

Assume Spero Therapeutics reported the following:

• Revenue: $50 million
• Cost of Goods Sold (COGS): $20 million
• Operating Expenses: $25 million
• Interest and Taxes: $2.5 million

Based on these figures, we can calculate the following profitability metrics:

• Gross Profit: Revenue - COGS = $50 million - $20 million = $30 million
• Gross Profit Margin: (Gross Profit / Revenue) 100 = ($30 million / $50 million) 100 = 60%
• Operating Profit: Gross Profit - Operating Expenses = $30 million - $25 million = $5 million
• Operating Profit Margin: (Operating Profit / Revenue) 100 = ($5 million / $50 million) 100 = 10%
• Net Profit: Operating Profit - Interest and Taxes = $5 million - $2.5 million = $2.5 million
• Net Profit Margin: (Net Profit / Revenue) 100 = ($2.5 million / $50 million) 100 = 5%

A table summarizing these metrics would look like this:

This hypothetical data provides a clear illustration of how to assess Spero Therapeutics' profitability using key financial metrics. Investors can utilize this approach to analyze the company's actual financial data and make well-informed decisions.

Explore more insights about Spero Therapeutics, Inc. (SPRO)'s financial health: Breaking Down Spero Therapeutics, Inc. (SPRO) Financial Health: Key Insights for Investors

Spero Therapeutics, Inc. (SPRO) Debt vs. Equity Structure

Understanding how Spero Therapeutics, Inc. (SPRO) finances its growth is crucial for investors. This involves examining the company's debt levels, debt-to-equity ratio, and recent financing activities to assess its financial stability and growth strategy. Here's a detailed look at Spero Therapeutics, Inc. (SPRO)'s approach to balancing debt and equity.

Analyzing Spero Therapeutics, Inc. (SPRO)'s financial leverage involves taking a close look at both its short-term and long-term debt. Short-term debt includes obligations due within a year, while long-term debt consists of liabilities extending beyond a year. As of December 31, 2023, Spero Therapeutics, Inc. (SPRO) reported the following:

• Cash and Cash Equivalents: $58.5 million
• Total Current Liabilities: $17.9 million
• Total Liabilities: $51.2 million

The company's debt-to-equity ratio provides insights into its financial risk. This ratio measures the proportion of debt and equity used to finance the company's assets. As of December 31, 2023, Spero Therapeutics, Inc. (SPRO) had a stockholders' equity of $26.8 million and total liabilities of $51.2 million. This results in a debt-to-equity ratio of approximately 1.91, indicating that Spero Therapeutics, Inc. (SPRO) has more debt than equity. When compared to industry standards, it’s important to consider that biotech companies often have higher debt-to-equity ratios due to the high costs of research and development.

Recent financial activities, such as debt issuances and refinancing, can significantly impact a company's capital structure. In 2023, Spero Therapeutics, Inc. (SPRO) executed a $125 million revenue interest financing agreement with HealthCare Royalty Partners to support the commercialization of SPR206. Additionally, they closed a public offering of common stock, generating net proceeds of approximately $22.1 million. These activities show a mix of debt and equity financing strategies to fund operations and development.

Here’s a summary of Spero Therapeutics, Inc. (SPRO)'s key financial data:

Spero Therapeutics, Inc. (SPRO) strategically balances debt and equity to fund its operations and growth initiatives. While debt financing provides immediate capital, it also increases financial risk through interest expenses and repayment obligations. Equity financing, on the other hand, dilutes ownership but reduces the burden of debt. Spero Therapeutics, Inc. (SPRO)'s recent financing activities, including the revenue interest financing agreement and public offering of common stock, illustrate this balanced approach. The company’s ability to manage its debt while attracting equity investments is vital for its long-term financial health and ability to bring its products to market.

For more in-depth insights, you can read the full analysis here: Breaking Down Spero Therapeutics, Inc. (SPRO) Financial Health: Key Insights for Investors

Spero Therapeutics, Inc. (SPRO) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Spero Therapeutics, Inc. (SPRO), evaluating these metrics provides insights into its financial stability and risk profile.

Assessing Spero Therapeutics, Inc.'s Liquidity:

Analyzing Spero Therapeutics, Inc.'s liquidity involves examining key ratios and working capital trends to gauge its ability to cover short-term liabilities.

• Current and Quick Ratios: These ratios measure a company's ability to pay off its current liabilities with its current assets. The current ratio includes all current assets, while the quick ratio excludes inventory, which may not be easily convertible to cash.
• Analysis of Working Capital Trends: Monitoring the trend of working capital (current assets minus current liabilities) helps to identify whether the company's short-term financial health is improving or deteriorating.
• Cash Flow Statements Overview: A review of cash flow statements, specifically focusing on operating, investing, and financing activities, provides a comprehensive view of how Spero Therapeutics, Inc. generates and uses cash.

Below is a summarized analysis of Spero Therapeutics, Inc.'s cash flow trends based on the 2024 fiscal year data:

Based on the 2024 financial data, Spero Therapeutics, Inc. exhibits a concerning liquidity position. The company's negative operating cash flow indicates that its core business activities are not generating enough cash to cover expenses. To sustain operations, Spero Therapeutics, Inc. relies heavily on financing activities, particularly the issuance of stock. This reliance could dilute shareholder value and may not be a sustainable long-term strategy.

A closer look at the cash flow statements reveals:

• Operating Activities: The negative cash flow from operations is primarily driven by research and development expenses, which are typical for a biotech company in its development stage.
• Investing Activities: These activities involve the purchase and sale of long-term assets. Given the relatively small outflow, Spero Therapeutics, Inc. is not making significant capital investments.
• Financing Activities: The positive cash flow from financing is crucial for maintaining liquidity. However, continuous reliance on external funding may raise concerns about long-term financial sustainability.

Any potential liquidity concerns or strengths should be monitored closely. While the company has managed to secure financing to cover its short-term needs, the long-term viability depends on achieving positive cash flow from operations or securing more sustainable funding sources.

Spero Therapeutics, Inc. (SPRO) Valuation Analysis

Determining whether Spero Therapeutics, Inc. (SPRO) is overvalued or undervalued requires a multifaceted approach, considering various financial metrics and market factors. Key valuation ratios, stock price trends, and analyst opinions provide a comprehensive view of the company's current market position.

To assess Spero Therapeutics' valuation, consider the following:

• Price-to-Earnings (P/E) Ratio: This ratio compares the company's stock price to its earnings per share. A high P/E ratio might suggest overvaluation, while a low P/E ratio could indicate undervaluation, relative to industry peers.
• Price-to-Book (P/B) Ratio: The P/B ratio compares the company's market capitalization to its book value of equity. It can help investors determine if they are paying too much for the net assets of the company.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares the company's enterprise value (total market value plus debt minus cash) to its earnings before interest, taxes, depreciation, and amortization. It provides a more comprehensive valuation measure than P/E, especially for companies with significant debt.

Analyzing Spero Therapeutics, Inc. (SPRO)'s stock price trends over the last 12 months (or longer) offers insights into market sentiment and company performance. A consistent upward trend may reflect positive investor confidence, while a downward trend could signal concerns about the company's future prospects. Significant price volatility might indicate higher risk. As of April 2025, the latest stock performance data should be examined to understand the current trend.

Currently, Spero Therapeutics does not offer a dividend yield, as it is not paying dividends. Therefore, dividend payout ratios are not applicable in this case. For companies that do offer dividends, these metrics are useful to assess the sustainability of dividend payments and the company’s commitment to returning value to shareholders.

Analyst consensus on Spero Therapeutics' stock valuation provides a crucial external perspective. These ratings typically fall into three categories:

• Buy: Indicates that analysts believe the stock is undervalued and has the potential for price appreciation.
• Hold: Suggests that the stock is fairly valued, and analysts recommend maintaining current positions.
• Sell: Implies that the stock is overvalued and analysts advise selling shares.

By integrating these quantitative metrics with qualitative insights, investors can make well-informed decisions about Spero Therapeutics’ valuation and its potential as an investment.

Keep in mind that valuation is not an exact science, and these metrics should be used in conjunction with other research and analysis.

Explore more about the investors of Spero Therapeutics, Inc. (SPRO): Exploring Spero Therapeutics, Inc. (SPRO) Investor Profile: Who’s Buying and Why?

Spero Therapeutics, Inc. (SPRO) Risk Factors

Investing in Spero Therapeutics, Inc. (SPRO) involves navigating a complex landscape of risks, both internal and external, that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges detailed in their filings.

External Risks:

• Industry Competition: The pharmaceutical industry is intensely competitive. Spero faces competition from established pharmaceutical companies with greater resources, experience in research and development, clinical trials, manufacturing, and marketing and sales. These competitors may develop and market products that are more effective, safer, or less expensive than Spero's product candidates, or may obtain regulatory approval for their products more rapidly than Spero may obtain approval for its.
• Regulatory Changes: The regulatory environment for pharmaceutical products is subject to change. Changes in regulations could make it more difficult or expensive to obtain approval for Spero's product candidates or to manufacture and market its products.
• Market Conditions: Economic downturns, changes in healthcare policy, and other market conditions could affect the demand for Spero's products and its ability to raise capital.

Internal Risks:

• Operational Risks: These include challenges related to manufacturing, supply chain disruptions, and the ability to successfully commercialize approved products.
• Financial Risks: Spero may face challenges in securing additional funding to support its research and development activities, clinical trials, and commercialization efforts.
• Strategic Risks: These involve decisions related to product development, partnerships, and market entry strategies that could impact the company's long-term prospects.

Mitigation Strategies:

While specific mitigation strategies can vary and are often detailed in company filings, common approaches include:

• Diversifying product pipeline to reduce reliance on single products.
• Strategic partnerships to share development costs and market access.
• Implementing robust quality control and supply chain management processes.
• Maintaining strong relationships with regulatory agencies to navigate the approval process.

For a deeper dive into Spero Therapeutics, Inc. (SPRO), consider exploring: Exploring Spero Therapeutics, Inc. (SPRO) Investor Profile: Who’s Buying and Why?

Spero Therapeutics, Inc. (SPRO) Growth Opportunities

Spero Therapeutics, Inc. (SPRO) faces a dynamic landscape with several potential growth drivers despite recent financial challenges. An analysis reveals that the company's future hinges on strategic initiatives, product development, and market positioning.

Key growth drivers for Spero Therapeutics, Inc. (SPRO) include:

• Product Innovations: Spero's pipeline focuses on developing treatments for multi-drug resistant bacterial infections. Success in clinical trials and regulatory approvals for its lead candidates could significantly boost revenue.
• Market Expansion: Targeting unmet needs in the antibiotic market, particularly for hospital-acquired infections, offers substantial growth potential. Expanding geographically and securing partnerships can further enhance market reach.
• Strategic Partnerships: Collaborations with larger pharmaceutical companies or research institutions can provide financial support, accelerate drug development, and broaden the company's expertise.

Future revenue growth projections and earnings estimates are contingent upon several factors, including clinical trial outcomes, regulatory approvals, and market adoption of its products. Investors should closely monitor these milestones to assess the company's growth trajectory. Keep in mind that as of the fiscal year 2024, Spero Therapeutics faces financial constraints that could impact its ability to fully capitalize on these growth opportunities.

Strategic initiatives that may drive future growth involve:

• Clinical Development: Advancing its pipeline through clinical trials, particularly its lead candidate, tebipenem HBr, remains critical. Positive data readouts can drive investor confidence and attract potential partners.
• Regulatory Strategy: Successfully navigating the regulatory landscape and securing approvals from agencies like the FDA are essential for commercializing its products.
• Commercialization Planning: Developing a robust commercialization strategy, including manufacturing, marketing, and distribution plans, is crucial for maximizing revenue potential upon regulatory approval.

Spero Therapeutics, Inc. (SPRO) competitive advantages that position the company for growth include:

• Targeted Therapies: Focus on developing treatments for drug-resistant infections addresses a critical unmet need in the healthcare sector.
• Innovative Pipeline: Its pipeline of novel antibiotics provides a competitive edge over companies offering only generic or outdated treatments.
• Experienced Management Team: A skilled management team with expertise in drug development and commercialization can enhance the company's prospects.

For additional insights into Spero Therapeutics, Inc. (SPRO) financial health, refer to: Breaking Down Spero Therapeutics, Inc. (SPRO) Financial Health: Key Insights for Investors