Stifel starts Spero Therapeutics at buy; PT $26

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Stifel initiated coverage of Spero Therapeutics (NASDAQ:SPRO) with a “buy” rating and $26 price target. The stock closed at $13.86 on Nov. 24.

“We believe Spero’s wholly-owned product pipeline of novel antibiotics – each of which, importantly, fulfills an under-served commercial niche within the treatment of various multi-drug resistant infections – is well-positioned to create near/long-term value,” writes analyst Stephen Willey.

Spero’s SPR994 is an extended-release formulation of tebipenem pivoxil – the centerpiece of a comprehensive clinical development prior to its 2009 approval in Japan.

“We believe the prior clinical/ commercial experience with tebipenem pivoxil in Japan significantly de-risks/streamlines the SPR994 development program,” he added.

Mr. Willey said physician feedback identifies oral Gram-negative therapy capable of covering extended spectrum beta-lactamases + pathogens as the most-significant unmet medical need within the infectious disease space, with the more than 25 million days of therapy potentially available in hospital/community settings representing an addressable market opportunity of more than $5-billion across a range of readily-achievable price points.

In addition, he said the company’s Potentiator Platform, which has already produced two mechanistically-distinct clinical candidates in SPR741 and SPR206,  “looks to fill a long- standing innovation void within the antibiotic space.”