10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number: 001-38266

SPERO THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	46-4590683
( State or other jurisdiction of<br><br>incorporation or organization)	(I.R.S. Employer<br><br>Identification No.)
675 Massachusetts Avenue, 14th Floor<br><br>Cambridge, Massachusetts	02139
(Address of principal executive offices)	(Zip Code)

(857) 242-1600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	SPRO	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 29, 2021, the registrant had 32,146,847 shares of common stock, $0.001 par value per share, outstanding.

Forward-Looking STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 the initiation, timing, design, progress and results of, including interim data from, our preclinical studies and clinical trials, and our research and development programs;

 the timing and outcome of the New Drug Application approval process for tebipenem HBr;

 our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

 our ability to advance product candidates into, and successfully complete, clinical trials;

 the timing or likelihood of regulatory filings and approvals;

 the direct and indirect impact of the pandemic caused by an outbreak of a new strain of coronavirus, or COVID-19, on our business and operations, including manufacturing, research and development costs, clinical trials, regulatory processes and employee expenses;

 the commercialization of our product candidates, if approved;

 the pricing, coverage and reimbursement of our product candidates, if approved;

 the implementation of our business model and strategic plans for our business and product candidates;

 the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;

 our ability to enter into strategic arrangements and/or collaborations and the potential benefits of such arrangements;

 our estimates regarding expenses, capital requirements and needs for additional financing;

 our ability to continue as a going concern;

 our financial performance;

 developments relating to our competitors and our industry; and

 other risks and uncertainties, including those listed under Part II, Item 1A. “Risk Factors”.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

Risk Factor Summary

We are providing the following summary of the risk factors contained in this Quarterly Report on Form 10-Q to enhance the readability and accessibility of our risk factor disclosures. We encourage you to carefully review the full risk factors contained in this Quarterly Report on Form 10-Q in their entirety for additional information regarding the material factors that make an investment in our securities speculative or risky. These risks and uncertainties include, but are not limited to, the following:

 The outbreak of the novel strain of coronavirus, SARS-CoV-2, which causes COVID-19 and its variants, could adversely impact our business, including our preclinical studies and clinical trials.

 We have not generated any revenue from the sale of our products, have a history of losses and expect to incur substantial future losses. The report of our auditor on our consolidated financial statements expresses substantial doubt about our ability to continue as a going concern; if we are unable to obtain additional capital, we may not be able to continue our operations on the scope or scale as currently conducted, and that could have a material adverse effect on our business, results of operations and financial condition.

 We expect that we will need substantial additional funding. If we are unable to raise capital when needed, or do not receive payment under our government awards, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

 We are heavily dependent on the success of tebipenem HBr, which is still under development, and our ability to develop, obtain marketing approval for and successfully commercialize tebipenem HBr. If we are unable to develop, obtain marketing approval for and successfully commercialize tebipenem HBr, or if we experience significant delays in doing so, our business could be materially harmed.

 If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the United States Food and Drug Administration, or FDA, or comparable foreign regulatory authorities or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.

 To support our accelerated clinical development strategy for tebipenem HBr, we are relying, in part, on clinical data from two exploratory Phase 2 clinical trials conducted by Meiji (ME1211) and Global Pharma (L-084 04) in Japan, which were not conducted in accordance with FDA guidance for clinical trials in patients with cUTI. To the extent that these clinical trial design differences limit our use of the clinical data, our proposed clinical trial plan for tebipenem HBr with the FDA could be materially delayed and we may incur material additional costs.

 Preliminary or interim data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

 Serious adverse events or undesirable side effects or other unexpected properties of tebipenem HBr or any other product candidate may be identified during development or after approval that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

 Even if a product candidate does obtain regulatory approval, it may never achieve the market acceptance by physicians, patients, hospitals, third-party payors and others in the medical community that is necessary for commercial success and the market opportunity may be smaller than we estimate.

 If we are unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing tebipenem HBr or any other product candidate if such product candidate is approved.

 We face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suffer if we fail to compete effectively.

 We expect to depend on collaborations with third parties for the development and commercialization of some of our product candidates. Our prospects with respect to those product candidates will depend in part on the success of those collaborations.

 We contract with third parties for the manufacture of preclinical and clinical supplies of our product candidates and expect to continue to do so in connection with any future commercialization and for any future clinical trials and commercialization of our other product candidates and potential product candidates. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

 Our use of government funding for certain of our programs adds complexity to our research and commercialization efforts with respect to those programs and may impose requirements that increase the costs of commercialization and production of product candidates developed under those government-funded programs.

 If we are unable to obtain and maintain sufficient patent protection for our technology or our product candidates, or if the scope of the patent protection is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be adversely affected.

 We have registered trademarks and pending trademark applications. Failure to enforce our registered marks or secure registration of our pending trademark applications could adversely affect our business.

 If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize tebipenem HBr or our other product candidates, and our ability to generate revenue will be materially impaired.

iii

Spero Therapeutics, Inc.

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	7
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020	8
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
	PART II – OTHER INFORMATION
Item 1A.	Risk Factors	44
Item 6.	Exhibits	82
Signatures		83

Item 1. Financial Statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

			December 31,
			2020
Assets
Current assets:
Cash and cash equivalents	71,562		$	85,209
Marketable securities	27,656			41,697
Other receivables	1,851			5,330
Tax incentive receivable, current	346			846
Prepaid expenses and other current assets	4,901			6,063
Total current assets	106,316			139,145
Property and equipment, net	1,362			1,669
Tax incentive receivable	-			311
Operating lease right of use assets	6,705			7,114
Other assets	5,211			5,212
Total assets	119,594		$	153,451
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	1,632		$	1,155
Accrued expenses and other current liabilities	9,007			12,241
Operating lease liabilities	1,008			947
Deferred revenue, current	1,179			-
Total current liabilities	12,826			14,343
Non-current operating lease liabilities	6,430			6,891
Deferred revenue, non-current	9,928			-
Other long-term liabilities	158			177
Total liabilities	29,342			21,411
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, 0.001 par value; 10,000,000 shares authorized, 3,218,152 shares issued and outstanding as of June 30, 2021 and 3,218,287 shares issued and outstanding as of December 31, 2020	3			3
Common stock, 0.001 par value; 60,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 29,699,147 shares issued and outstanding as of June 30, 2021 and 29,260,247 shares issued and outstanding as of December 31, 2020	30			29
Additional paid-in capital	405,923			409,722
Accumulated deficit	(315,702	)		(277,707	)
Accumulated other comprehensive gain (loss)	(2	)		(7	)
Total stockholders' equity	90,252		$	132,040
Total liabilities and stockholders' equity	119,594		$	153,451

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues:
Grant revenue	$	3,042		$	1,676		$	10,342		$	3,208
Collaboration revenue		2,106			51			2,106			220
Total revenues		5,148			1,727			12,448			3,428
Operating expenses:
Research and development		14,461			15,656			32,865			36,092
General and administrative		9,229			4,547			17,528			8,633
Total operating expenses		23,690			20,203			50,393			44,725
Loss from operations		(18,542	)		(18,476	)		(37,945	)		(41,297	)
Other income (expense):
Interest income		82			86			180			323
Other income (expense), net		(112	)		889			(230	)		215
Total other income (expense), net		(30	)		975			(50	)		538
Net loss	$	(18,572	)	$	(17,501	)	$	(37,995	)	$	(40,759	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.63	)	$	(0.85	)	$	(1.29	)	$	(2.06	)
Weighted average common shares outstanding, basic and diluted:		29,675,399			20,633,402			29,545,496			20,095,415
Comprehensive loss:
Net loss		(18,572	)		(17,501	)		(37,995	)		(40,759	)
Other comprehensive gain (loss):
Unrealized gain (loss) on marketable securities		1			34			5			(1	)
Net unrealized gains (losses) on securities		1			34			5			(1	)
Total comprehensive loss	$	(18,571	)	$	(17,467	)	$	(37,990	)	$	(40,760	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(37,995	)	$	(40,759	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		307			379
Non-cash lease cost		402			224
Share-based compensation		4,172			2,324
Unrealized foreign currency transaction (gain) loss		10			(251	)
Accretion of discount on marketable securities		124			(59	)
Changes in operating assets and liabilities:
Other receivables		3,479			3,727
Prepaid expenses and other current assets		1,258			(4,334	)
Tax incentive receivables		800			(252	)
Other assets		8			(1,761	)
Accounts payable		478			(2,567	)
Accrued expenses and other current liabilities		(3,314	)		(4,857	)
Deferred revenue		(1,356	)		—
Other long-term liabilities		(19	)		(53	)
Operating lease liability		(400	)		14
Net cash used in operating activities		(32,046	)		(48,225	)
Cash flows from investing activities:
Purchases of marketable securities		(12,578	)		(3,995	)
Proceeds from maturities of marketable securities		26,500			50,350
Purchases of property and equipment		—			(94	)
Net cash provided by (used in) investing activities		13,922			46,261
Cash flows from financing activities:
Proceeds from the issuance of common stock, net of commissions		4,253			7,271
Proceeds from the issuance of common stock related to Rights Offering		—			9,416
Proceeds from issuance of Series C Preferred Stock related to Rights Offering		—			20,583
Payment of offering and financing costs		(146	)		(502	)
Proceeds from stock option exercises		370			808
Net cash provided by financing activities		4,477			37,576
Net increase (decrease) in cash and cash equivalents		(13,647	)		35,612
Cash, cash equivalents and restricted cash at beginning of period		85,209			29,730
Cash, cash equivalents and restricted cash at end of period	$	71,562		$	65,342
Supplemental disclosure of non-cash activities:
Offering and financing costs in accounts payable and accruals	$	80		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

									Additional						Accumulated			Total
					Common Stock				Paid-in			Accumulated			Other Comprehensive			Stockholders'
			Par Value		Shares		Par Value		Capital			Deficit			Income (Loss)			Equity
Balances at March 31, 2021	3,218,152			3		29,663,946		30		415,946			(297,130	)		(3	)		118,846
Issuance of common stock upon the exercise of stock options	—			—		35,201		—		277			—			—			277
Premium for commitment to sell common stock	—			—		—		—		(12,463	)		—			—			(12,463	)
Share-based compensation expense	—			—		—		—		2,163			—			—			2,163
Unrealized gain on available-for-sale securities	—			—		—		—		—			—			1			1
Net loss	—			—		—		—		—			(18,572	)		—			(18,572	)
Balances at June 30, 2021	3,218,152			3		29,699,147		30		405,923			(315,702	)		(2	)		90,252
									Additional						Accumulated			Spero Therapeutics, Inc.
					Common Stock				Paid-in			Accumulated			Other Comprehensive			Stockholders'
			Par Value		Shares		Par Value		Capital			Deficit			Income (Loss)			Equity
Balances at December 31, 2020	3,218,287			3		29,260,247		29		409,722			(277,707	)		(7	)		132,040
Issuance of common stock upon the exercise of stock options	—			—		46,715		—		370			—			—			370
Issuance of common stock, net of financing costs of 130 and net of issuance costs	—			—		257,185		1		4,122			—			—			4,123
Conversion of convertible preferred stock to common stock	(135	)		—		135,000		—		—			—			—			—
Premium for commitment to sell common stock	—			—		—		—		(12,463	)		—			—			(12,463	)
Share-based compensation expense	—			—		—		—		4,172			—			—			4,172
Unrealized gain on available-for-sale securities	—			—		—		—		—			—			5			5
Net loss	—			—		—		—		—			(37,995	)		—			(37,995	)
Balances at June 30, 2021	3,218,152			3		29,699,147		30		405,923			(315,702	)		(2	)		90,252

All values are in US Dollars.

									Additional						Accumulated			Spero Therapeutics, Inc.
					Common Stock				Paid-in			Accumulated			Other Comprehensive			Stockholders'
		Par Value			Shares		Par Value		Capital			Deficit			Income (Loss)			Equity
Balances at March 31, 2020	5,007		—			20,328,340		20		305,111			(222,685	)		(19	)		82,427
Issuance of common stock upon the exercise of stock options	—		—			40,537		—		269			—			—			269
Issuance of common stock, net of issuance costs	—		—			645,218		1		7,270			—			—			7,271
Share-based compensation expense	—		—			—		—		1,214			—			—			1,214
Unrealized gain on available-for-sale securities	—		—			—		—		—			—			34			34
Net loss	—		—			—		—		—			(17,501	)		—			(17,501	)
Balances at June 30, 2020	5,007		—			21,014,095		21		313,864			(240,186	)		15			73,714
									Additional						Accumulated			Spero Therapeutics, Inc.
					Common Stock				Paid-in			Accumulated			Other Comprehensive			Stockholders'
		Par Value			Shares		Par Value		Capital			Deficit			Income (Loss)			Equity
Balances at December 31, 2019	2,720		—			19,190,695		19		273,966			(199,427	)		16			74,574
Issuance of common stock upon the exercise of stock options	—		—			131,933		—		808			—			—			808
Issuance of common stock, net of offering costs of 462 and net of issuance costs	—		—			1,691,467		2		16,224			—			—			16,226
Issuance of Series C preferred stock, net of offering costs of 41	2,287		—			—		—		20,542			—			—			20,542
Beneficial conversion feature of Series C preferred stock			(549	)		—		—		549			—			—			—
Deemed dividends related to immediate accretion of beneficial conversion feature of Series C preferred stock			549							(549	)								—
Share-based compensation expense	—		—			—		—		2,324			—			—			2,324
Unrealized loss on available-for-sale securities	—		—			—		—		—			—			(1	)		(1	)
Net loss	—		—			—		—		—			(40,759	)		—			(40,759	)
Balances at June 30, 2020	5,007		—			21,014,095		21		313,864			(240,186	)		15			73,714

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business and Basis of Presentation

Spero Therapeutics, Inc., together with its consolidated subsidiaries (the “Company” or “Spero”), is a multi-asset, clinical-stage biopharmaceutical company focused on identifying, developing and commercializing treatments in high unmet need areas involving multi-drug resistant, or MDR, bacterial infections and rare diseases. The Company’s most advanced product candidate, tebipenem pivoxil hydrobromide or tebipenem HBr, is designed to be the first oral carbapenem-class antibiotic for use in adults to treat MDR Gram-negative infections. Treatment with effective orally administrable antibiotics may prevent hospitalizations for serious infections and enable earlier, more convenient and cost-effective treatment of patients after hospitalization. The Company is also developing SPR720, a novel oral antibiotic designed for the treatment of a rare, orphan disease caused by pulmonary non-tuberculous mycobacterial infections, or NTM disease. In addition, the Company has a Potentiator technology, that includes an IV-administered product candidate, SPR206, being developed to treat MDR Gram-negative infections in the hospital.

The Company is subject to risks and uncertainties common to companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, risks of failure or unsatisfactory results of nonclinical studies and clinical trials, the need to obtain marketing approval for its product candidates, the need to successfully commercialize and gain market acceptance of its product candidates and the ability to secure additional capital to fund operations. The Company’s product candidates will require additional preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The pandemic caused by COVID-19 has resulted, and is likely to continue to result, in significant national and global economic disruption and may adversely affect our business. The Company has experienced impacts to its clinical and development timelines due to the worldwide spread of COVID-19 and its variants. However, to date, the Company has not experienced material impacts to liquidity, nor has it incurred impairment of any assets as a result of COVID-19 or its variants. The Company continues to monitor this situation and the possible effects on its business, results of operations and financial condition, including manufacturing, clinical trials, research and development costs and employee-related amounts.

The accompanying consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Since inception, the Company has funded its operations with proceeds from sales of preferred units (including bridge units, which converted into preferred units), payments received in connection with a concluded collaboration agreement, funding from government contracts, licensing agreements and through the sale of the Company’s common and preferred stock. The Company has incurred recurring losses since inception, including net losses of $18.6 million and $17.5 million for the three months ended June 30, 2021 and 2020, respectively, and $38.0 million and $40.8 million for the six months ended June 30, 2021 and 2020, respectively. In addition, as of June 30, 2021, the Company had an accumulated deficit of $315.7 million. The Company expects to continue to generate operating losses for the foreseeable future.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. Based on the Company’s current operating plan and existing cash, cash equivalents and marketable securities, the Company has determined that there is substantial doubt regarding its ability to continue as a going concern. The Company will require additional funding to fund the development of its product candidates through regulatory approval and commercialization, and to support its continued operations. The Company will seek additional funding through public or private financings, debt financing, collaboration agreements, government grants or other venues. The COVID-19 pandemic has resulted in ongoing volatility in financial markets. If our access to capital is restricted or associated borrowing costs increase as a result of developments in financial markets, including relating to the COVID-19 pandemic or its variants, our operations and financial condition could be adversely impacted. There is no assurance that the Company will be successful in obtaining sufficient funding on acceptable terms, if at all, and it could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could materially adversely affect its business prospects or its ability to continue operations.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Interim Financial Information

The consolidated balance sheet at December 31, 2020 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2021, and for the three and six months ended June 30, 2021, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2021, and results of operations for the three and six months ended June 30, 2021, and cash flows for the six months ended June 30, 2021 and 2020 have been made. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, the accrual for clinical trial costs and other research and development expenses, and the valuation of share-based awards. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has contemplated the impact of COVID-19 within its financial statements and is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. There may be changes to those estimates in future periods. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s singular focus is on identifying, developing and commercializing novel treatments for MDR bacterial infections. All of the Company’s tangible assets are held in the United States.

Concentrations of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains most of its cash and cash equivalents at one accredited financial institution. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs. As of June 30, 2021, and December 31, 2020, the Company had no off-balance sheet risk such as foreign exchange contracts, option contracts, or other hedging arrangements.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash held in banks and money market instruments.

Marketable Securities

Marketable securities consist of investments in corporate obligations with original maturities greater than 90 days. The Company considers its portfolio of investments to be available-for-sale. Accordingly, these investments are recorded at fair value, which is based on quoted market prices. Investments with maturities beyond one year are generally classified as short term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses and declines in value are included as a component of other income (expense), net based on the specific identification method. Any credit impairments are recorded through an allowance account.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recognized using the straight-line method over the estimated useful life of each asset as follows:

	Estimated Useful Life
Laboratory equipment	5 years
Computer software and equipment	3 years
Office furniture and equipment	7 years
Manufacturing equipment	5 years
Leasehold improvements	Shorter of life of lease or 5 years

Costs for capital assets not yet placed into service are capitalized as construction in progress and are depreciated in accordance with the above guidelines once placed into service. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance are charged to expense as incurred. The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment.

Leases

Effective January 1, 2019, the Company adopted ASC Topic 842, Leases (“ASC 842”), using the modified retrospective approach and utilizing the effective date as its date of initial application, for which prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”).

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. As of June 30, 2021, the Company had no short-term leases with terms of one year or less. Options to renew a lease are not included in the Company’s initial lease term assessment unless there is reasonable certainty that the Company will renew. The Company monitors its plans to renew its material leases on a quarterly basis.

Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate (“IBR”), which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, and in a similar economic environment. Since the Company does not have any debt and has not been rated by any major credit rating agency, the Company’s IBR was estimated by developing a synthetic credit rating for the Company.

The Company has elected to account for lease and non-lease components together as a single lease component.

Other Assets

Other assets consist of long-term prepayments and deposits.

Impairment of Long-Lived Assets

Long-lived assets consist of property and equipment and operating lease right-of-use assets. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 Level 1—Quoted prices in active markets for identical assets or liabilities.

 Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

 Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.

Revenue Recognition – Collaboration Revenue

Effective June 30, 2021, the Company entered into a licensing agreement that is evaluated under Accounting Standards Codification, Topic 606 (“Topic 606”), Revenue from Contracts with Customers, through which the Company licenses certain of its product candidates’ rights to a third party. Any future out-licensing agreements entered into by the Company and additional third parties shall also be evaluated under Topic 606. Terms of these arrangements include various payment types, typically including one or more of the following: upfront license fees; development, regulatory and commercial milestone payments; payments for manufacturing supply services; and/or royalties on net sales of licensed products.

Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations under the agreement; (iii) determine the transaction price, including constraint on variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) determine how the revenue will be recognized for each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it is entitled in exchange for the goods or services it transfers to a customer.

Once a contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a

material right to the customer and if so, they are considered performance obligations. The exercise of a material right may be accounted for as a contract modification or as a continuation of the contract for accounting purposes.

The Company assesses whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether a promised good or service is distinct in the evaluation of a collaboration arrangement subject to Topic 606, the Company considers factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, the Company is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (“SSP”) on a relative SSP basis. The SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. In certain circumstances, the Company may apply the residual method to determine the SSP of a good or service if the standalone selling price is considered highly variable or uncertain. The Company validates the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations.

If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the unconstrained amount of estimated variable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.

If an arrangement includes development and regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less. The Company assessed its revenue-generating arrangement in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in the arrangement. For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time or over time, and if over time this is based on the use of an output or input method.

In determining the accounting treatment for these arrangements, the Company develops assumptions to determine the stand-alone selling price for each performance obligation in the contract. These assumptions may include forecasted revenues, development

timelines, discount rates and probabilities of technical and regulatory success.

In June 2019, the Company entered into a collaboration agreement with the Bill and Melinda Gates Medical Research Institute (the “Gates MRI”) and concluded that the agreement is within the scope of the accounting guidance for collaboration arrangements (see Note 10). Due to the cost-funded nature of the payments and the Company’s assessment that it does not have a vendor/customer relationship with the Gates MRI, the Company recognizes the funding received under the agreement as a reduction to the research and development expenses incurred, as the related expenses are incurred.

Government Tax Incentives

For available government tax incentives that the Company may earn without regard to the existence of taxable income and that require the Company to forego tax deductions or the use of future tax credits and net operating loss carryforwards, the Company classifies the funding recognized as a reduction of the related qualifying research and development expenses incurred.

Since the fourth quarter of 2016, the Company’s operating subsidiary in Australia has met the eligibility requirements to receive a tax incentive for qualifying research and development activities (see Note 11). The Company recognizes these incentives as a reduction of research and development expenses in the consolidated statements of operations and comprehensive loss in the same period that the related qualifying expenses are incurred. Reductions of research and development expense recognized upon incurring qualifying expenses in advance of receipt of tax incentive payments are recorded in the consolidated balance sheet as tax incentive receivables.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including personnel salaries, share-based compensation and benefits, allocated facilities costs, depreciation, manufacturing expenses, costs related to the Company’s government contract and grant arrangements, and external costs of outside vendors engaged to conduct preclinical development activities, clinical trials as well as the cost of licensing technology. Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred. Advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Clinical Trial and other Research Contract Costs and Accruals

The Company has entered into various research and development contracts with clinical research organizations and other companies both inside and outside of the United States. These agreements are generally cancelable, and related payments are recorded as research and development expenses as incurred. There may be instances in which payments made to these vendors exceed the level of service provided and will result in a prepayment of the expense. The Company records accruals for estimated ongoing research and clinical trial costs based on the services received and efforts expended pursuant to multiple contracts with these vendors. When evaluating the adequacy of the accrued liabilities, the Company analyzes the progress of the studies or trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

Share-Based Compensation

The Company measures all share-based awards granted to employees and directors based on the fair value on the date of grant using the Black-Scholes option-pricing model. Compensation expense of those awards is recognized over the requisite service period, which is generally the vesting period of the respective award. The Company records the expense for awards with service-based conditions using the straight-line method over the requisite service period, net of any actual forfeitures. The Company has also granted certain awards subject to performance-based vesting eligibility and a subsequent partial time-based vesting schedule. The Company

classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with shareholders. For the three and six months ended June 30, 2021 and 2020, these changes related to unrealized gains and losses on the Company’s available-for-sale marketable securities.

Net Loss per Share

The Company follows the two-class method when computing net income (loss) per share, as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Net income (loss) per share attributable to common stockholders is calculated based on net income (loss) attributable to Spero Therapeutics, Inc. and excludes net income (loss) attributable to non-controlling interests.

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.

Income Taxes

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (2017 Tax Act). Corporate taxpayers may carryback net operating losses (NOLs) originating during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.

In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the three and six months ended June 30, 2021, or to our net deferred tax assets as of June 30, 2021.

Recently Issued and Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No 2016-13, Financial Instruments – Credit Losses (Topic 326). The Accounting Standards Codification 326, Financial Instruments- Credit Losses (“ASC 326”) requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Under ASU 2016-13, the Company is required to use a current expected credit loss (“CECL”) model that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of the update, including trade receivables. The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments related to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position no longer impacts the determination of whether a credit loss exists. The Company adopted the guidance on January 1, 2020 with no impact. For available-for-sale securities, the updated guidance was applied prospectively.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) (“ASU 2018-15”). The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this standard as of January 1, 2020, on a prospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This standard modifies certain disclosure requirements on fair value measurements. This standard became effective for the Company on January 1, 2020, and did not have a material impact on its disclosures. For the new disclosures regarding our Level 3 instruments, please read Note 3, Fair Value Measurements, to these condensed consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This standard makes targeted improvements for collaborative arrangements as follows:

 Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

 Adds unit-of-account guidance to ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606; and

 Precludes a company from presenting transactions with collaborative arrangement participants that are not directly related to sales to third parties with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer.

This standard became effective for the Company on January 1, 2020, and did not have a material impact on its condensed consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intraperiod tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The amended guidance is effective for interim and annual periods in 2021. Early adoption is permitted. The application of the amendments in the new guidance are to be applied on a retrospective basis, on a modified retrospective basis through a cumulative-effect adjustment to retained earnings or prospectively, depending on the amendment. This standard became effective for the Company on January 1, 2021, and did not have a material impact on its condensed consolidated financial statements and related disclosures.

3. Fair Value Measurements and Marketable Securities

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements at June 30, 2021 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	70,896	$	—	$	70,896
Total cash equivalents		—		70,896		—		70,896
Marketable securities:
Corporate bonds		—		12,663		—		12,663
Commercial paper		—		14,993		—		14,993
Total marketable securities		—		27,656		—		27,656
Total cash equivalents and marketable securities	$	—	$	98,552	$	—	$	98,552

	Fair Value Measurements at December 31, 2020 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	73,488	$	—	$	73,488
Commercial paper		—		5,998		—		5,998
Corporate bonds		—		3,006		—		3,006
Total cash equivalents		—		82,492		—		82,492
Marketable securities:
Corporate bonds		—		13,221		—		13,221
Commercial paper		—		28,476		—		28,476
Total marketable securities		—		41,697		—		41,697
Total cash equivalents and marketable securities	$	—	$	124,189	$	—	$	124,189

Excluded from the tables above is cash of $0.7 million and $2.7 million as of June 30, 2021, and December 31, 2020, respectively. During the six months ended June 30, 2021, there were no transfers between Level 1, Level 2 and Level 3 categories.

Marketable Securities

The Company’s marketable securities are classified as Level 2 assets under the fair value hierarchy as these assets were primarily determined from independent pricing sources, which generally derive security prices from recently reported trades for identical or similar securities. The Company evaluated debt securities with unrealized losses for any expected credit losses and determined unrealized losses on these securities were related to non-credit factors. Additionally, the Company currently does not intend to and is not required to sell these investments prior to an anticipated recovery in value.

The following table summarizes the gross unrealized gains and losses of the Company’s marketable securities as of June 30, 2021, and December 31, 2020 (in thousands):

	June 30, 2021
	Amortized Cost		Gross Unrealized<br>Gains		Gross Unrealized<br>Losses			Fair Value
Assets:
Corporate bonds	$	12,665	$	—	$	(2	)	$	12,663
Commercial paper		14,993		—		—			14,993
	$	27,658	$	—	$	(2	)	$	27,656
	December 31, 2020
---	---	---	---	---	---	---	---	---	---
	Amortized Cost		Gross Unrealized<br>Gains		Gross Unrealized<br>Losses			Fair Value
Assets:
Corporate bonds	$	13,227	$	—	$	(6	)	$	13,221
Commercial paper		28,476		—		—			28,476
	$	41,703	$	—	$	(6	)	$	41,697

As of June 30, 2021, and December 31, 2020, all of the Company’s marketable securities had remaining contractual maturity dates of one year or less from the respective consolidated balance sheet date.

4. Accrued Expenses and Other Current Liabilities

The following table presents the Company’s accrued expenses and other current liabilities as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021		December 31, 2020
Accrued external research and development expenses	$	4,752		7,035
Accrued payroll and related expenses		2,495		3,918
Accrued professional fees		1,560		1,066
Accrued other		200		222
Total Accrued expenses and other current liabilities	$	9,007	$	12,241

5. Equity Transactions

Underwritten Public Offering

On September 15, 2020, the Company completed an underwritten public offering of an aggregate of 4,785,000 shares of its common stock, and an aggregate of 3,215,000 shares of newly designated Series D Convertible Preferred Stock (“Series D Preferred Stock”). The price to the public in the offering was $10.00 per share with respect to the common stock and the Series D Preferred Stock. In addition, under the terms of the Underwriting Agreement, the Company granted the underwriters an option, exercisable for 30 days, to purchase up to 1,200,000 additional shares of common stock.

The shares of Series D Preferred Stock are convertible on a one-to-one basis into shares of common stock at any time at the option of the holder, provided that the holder will be prohibited from converting the Series D Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of shares of common stock then issued and outstanding, subject to certain exceptions. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series D Preferred Stock will receive a payment equal to $0.001 per share of Series D Preferred Stock before any proceeds are distributed to the holders of common stock and equal to any distributions to the holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. Shares of Series D Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series D Preferred Stock will be required to amend the terms of the Series D Preferred Stock. As such, the Company has classified the Series D Preferred Stock within permanent equity in its consolidated balance sheet.

The offering closed on September 15, 2020 with an aggregate public offering price of $80.0 million. Aggregate net proceeds from the offering were $74.7 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Additionally, pursuant to the Underwriting Agreement, on October 1, 2020, the Company issued and sold 1,200,000 shares of common stock at the price of $10.00 per share pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock, resulting in additional net proceeds of approximately $11.2 million after deducting underwriting discounts and commissions.

Rights Offering

On February 11, 2020, the Company announced a rights offering pursuant to which it distributed to holders of its common stock and Series A Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Convertible Preferred Stock (“Series B Preferred Stock”), at no charge, non-transferable subscription rights to purchase shares of Spero common stock and Series C Convertible Preferred Stock (“Series C Preferred Stock”), with an aggregate offering value of $30.0 million. For each share of common stock (including shares of common stock issuable upon conversion of the Company’s outstanding shares of Series A Preferred Stock and Series B Preferred Stock) owned by holders of record as of 5:00 p.m., New York time, on February 10, 2020, the holders of such shares received 0.152 rights to purchase shares of Spero common stock (subject to the aggregate offering threshold and certain ownership limitations). Each whole right allowed holders to subscribe for one share of common stock at the subscription price equal to $9.00 per whole share (or an equivalent number of shares of Series C Preferred Stock). The total number of subscription rights issued to each stockholder was rounded down to the nearest whole number.

The Rights Offering was fully backstopped by certain affiliates of BVF Partners L.P. (“BVF”), which agreed to purchase, at a minimum, their respective as-converted pro rata share of the offered shares under the Rights Offering, plus an additional amount of Common Stock or Series C Preferred Stock that are not subscribed by other purchasers in the Rights Offering, for a total of up to $30.0 million.

At the closing of the rights offering on March 5, 2020, a total of 1,046,249 shares of the Company’s common stock and 2,287 shares of Series C Preferred Stock were issued for aggregate gross proceeds of $30.0 million. The aggregate issue costs related

to the offering were $0.5 million. $20.6 million of the aggregate gross proceeds relates to the issuance of Series C and the associated issuance costs are $0.1 million.

Each share of Series C Preferred Stock is convertible into 1,000 shares of Spero common stock at the election of the holder, subject to beneficial ownership conversion limits applicable to the Series C Preferred Stock. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series C Preferred Stock will receive a payment equal to $0.001 per share of Series C Preferred Stock before any proceeds are distributed to the holders of Common Stock and equal to any distributions to the holders of the Series A Preferred Stock and Series B Preferred Stock. The Series C Preferred Stock have no voting rights, except as required by law. The Series C Preferred Stock does not have any mandatory redemption rights or other redemption rights that would be outside of the Company’s control. As such, the Company has classified the Series C Preferred Stock within permanent equity in its consolidated balance sheet.

Upon issuance, each share of Series C Preferred Stock included an embedded beneficial conversion feature. The beneficial conversion feature arose because the market price of the Company’s common stock on the date of issuance of the Series C Preferred Stock was $9.22 per share as compared to an effective conversion price of the Series C Preferred Stock of $8.98 per share. As a result, the Company recorded the intrinsic value of the beneficial conversion feature of $0.5 million as a discount on the Series C Preferred Stock at issuance. Because the Series C Preferred Stock is immediately convertible upon issuance and does not include mandatory redemption provisions, the discount on the Series C Preferred Stock was immediately accreted.

6. Common Stock

On December 3, 2018, the Company filed a universal shelf registration statement on Form S-3 (Registration No. 333-228661) with the SEC, which was declared effective on December 11, 2018, and pursuant to which the Company registered for sale up to $200.0 million of any combination of its common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that the Company may determine, including up to $50.0 million of its common stock available for issuance pursuant to an “at-the-market” offering program sales agreement that it entered into with Cantor Fitzgerald & Co. (“Cantor”). Under the sales agreement, Cantor was permitted to sell shares of the Company’s common stock by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), subject to the terms of the sales agreement. The prospectus underlying the “at-the-market” offering program was terminated on September 9, 2020 in connection with the Company’s underwritten public offering that was completed in September 2020. At such time, the Company had raised approximately $15.4 million in sales of its common stock under the “at-the-market” offering program, prior to deducting sales commissions, and had remaining available capacity of approximately $34.6 million. On November 13, 2020, the Company reinstated the “at-the-market” offering program with a capacity of up to $34.0 million by filing an updated prospectus.

On March 11, 2021, the Company entered into a new sales agreement with Cantor and filed a new universal shelf registration statement on Form S-3 (Registration No. 333-254170), and pursuant to which the Company registered for sale up to $300.0 million of any combination of its common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that the Company may determine, including up to $75.0 million of its common stock available for issuance pursuant to the new “at-the-market” offering program sales agreement that it entered into with Cantor. Under the new sales agreement, Cantor may sell shares of the Company’s common stock by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, subject to the terms of the new sales agreement. The Company’s universal shelf registration statement on Form S-3 (Registration No. 333-254170) became effective on March 29, 2021 and its prior sales agreement with Cantor terminated automatically at such time.

In February 2021, a holder of the Company’s Series B Preferred Stock elected to convert 62 shares of Series B Preferred Stock into 62,000 shares of the Company’s common stock, pursuant to such holder’s rights under the certificate of designation for such Series B Preferred Stock. In addition, a holder of the Company’s Series C Preferred Stock elected to convert 73 shares of Series C Preferred Stock into 73,000 shares of the Company’s common stock, pursuant to such holder’s rights under the certificate of designation for such Series C Preferred Stock.

On June 30, 2021, the Company agreed to sell 2,362,348 shares of common stock to Pfizer Inc. (“Pfizer”) pursuant to a Share Purchase Agreement (the “Pfizer Purchase Agreement”), at a price of $16.93 per share, which represented a premium over the most recent closing price on June 30, 2021, for an aggregate purchase price of $40.0 million. In addition, under the terms of the Pfizer Purchase Agreement, the shares are subject to a lock-up restriction, such that Pfizer will not, subject to certain limited exceptions, without the prior approval of the Company, sell or otherwise dispose of the shares until one year after the date of the closing of the sale of the shares under the Pfizer Purchase Agreement.

No shareholder approval was required for the sale of the shares. Pfizer is an accredited investor as defined in the Securities Act, and the shares were sold pursuant to exemptions from registration under Regulation D of the Securities Act. The Company has not

filed a registration statement with the SEC covering the resale of the shares and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

The fair market value of 2,362,348 shares of the Company's common stock issued to Pfizer under the Pfizer Purchase Agreement was $27.5 million. The common stock issued under the Pfizer Purchase Agreement were valued using an option pricing valuation model as the shares are subject to certain holding period restrictions. The Company accounted for the associated premium of $12.5 million as a freestanding equity-linked instrument under ASC 815. The premium was allocated as consideration for the Company's license agreement with Pfizer (the “Pfizer License Agreement”) and evaluated under ASC 606. The premium was determined not to be constrained and was included in the calculation of the total transaction price related to the Pfizer License Agreement as of June 30, 2021. Refer to Note 10 for further discussion.

The closing of the sale of the shares pursuant to the Pfizer Purchase Agreement occurred on July 1, 2021. Upon closing, the Company recorded the fair market value of the shares issued in stockholders’ equity in its condensed consolidated balance sheet.

During the six months ended June 30, 2021 the Company sold 257,185 shares of its common stock under its “at-the-market” offering sales agreement at an average price of approximately $17.05 per share for aggregate gross proceeds of approximately $4.4 million prior to deducting sales commissions.

7. Share-Based Compensation

The Company maintains two equity compensation plans: the 2017 Stock Incentive Plan (the “2017 Plan”) and the 2019 Inducement Equity Incentive Plan (the “2019 Inducement Plan”). In June 2020, the board of directors approved an increase of 700,000 shares of common stock for issuance under the 2019 Inducement Plan.

Performance-based awards

During 2019, the Company granted 100,000 options and 50,000 restricted stock units (“RSUs”) containing the same performance-based vesting criteria. These options and RSUs (the “Performance Awards”) are subject to performance-based vesting eligibility and a subsequent partial time-based vesting schedule. Specifically, the Performance Awards are eligible for vesting based on the achievement of performance criteria, each representing a 25% vesting opportunity if achieved within a specified time during the performance period (the “Performance Period”), and relating to (i) the release of tebipenem HBr top-line data; (ii) FDA acceptance of a tebipenem HBr New Drug Application; (iii) non-dilutive financing; and (iv) equity financing. Following the Performance Period, Performance Awards determined to be eligible for vesting as a result of achievement of the performance criteria will vest as follows: (a) 50% of the eligible award will vest immediately, and (b) the remaining eligible award will vest (i) in the case of options, in equal monthly installments ending two years after the Performance Period expiration, and (ii) in the case of RSUs, on such two year anniversary.

In January 2021, the Company cancelled the performance-based awards due to the non-achievement of the performance-based vesting criteria, and the awards were added back to the shares of common stock available for issuance under the 2017 Plan. None of the outstanding options had vested and no compensation expense associated with performance-based awards was recognized as of June 30, 2021.

The following table summarizes the activity of options and RSUs under the 2017 Plan containing performance-based vesting criteria during the six months ended June 30, 2021:


Outstanding as of December 31, 2020	63,107		30,561
Granted	-		-
Exercised	-		-
Forfeited or cancelled	(63,107	)	(30,561	)
Outstanding as of June 30, 2021	-		-

Stock Options

The weighted-average grant date fair value of options, estimated as of the grant date using the Black-Scholes option pricing model, was $14.05 and $6.70 per option for those options granted during the six months ended June 30, 2021 and 2020 respectively.

The following table summarizes stock option activity under all equity plans (excluding RSUs) during the six months ended June 30, 2021:

			Weighted<br>Average<br>Exercise<br>Price		Weighted<br>Average<br>Contractual<br>Term		Aggregate<br>Intrinsic<br>Value
					(in years)		(in thousands)
Outstanding as of December 31, 2020	3,682,233		$	9.10		7.84	$	37,881
Granted	1,169,615			18.28		—		—
Exercised	(46,715	)		8.33		—		—
Forfeited or cancelled	(225,425	)		13.83		—		—
Outstanding as of June 30, 2021	4,579,708		$	11.22		7.78	$	17,689
Outstanding as of June 30, 2021 - vested and<br> expected to vest	4,579,708		$	11.22		7.78	$	17,689
Exercisable at June 30, 2021	2,260,040		$	8.19		6.67	$	13,066

As of June 30, 2021, a total of 5,549,873 shares have been authorized and reserved for issuance under all equity plans and 463,627 shares were available for future issuance under such plans.

Share-Based Compensation Expense

The Company recorded share-based compensation expense related to incentive stock options, nonqualified stock options, stock grants, and stock-based awards in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development expenses	$	895	$	559	$	1,735	$	1,055
General and administrative expenses		1,268		655		2,437		1,269
Total	$	2,163	$	1,214	$	4,172	$	2,324

8. Commitments and Contingencies

License Agreements

The Company has entered into license agreements with various parties under which it is obligated to make contingent and non-contingent payments (see Note 10).

Operating Leases

The Company has entered into an operating lease agreement with U.S. REIF Central Plaza Massachusetts, LLC with respect to its corporate headquarters located at 675 Massachusetts Avenue, Cambridge, Massachusetts.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases,

unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements that will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of June 30, 2021 or December 31, 2020.

Legal Proceedings

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses, as incurred, the costs related to any such legal proceedings.

9. Government Contracts

BARDA

In July 2018, the Company was awarded a contract from Biomedical Advanced Research and Development Authority (“BARDA”) of up to $44.2 million to develop tebipenem HBr for the treatment of complicated urinary tract infections (“cUTI”) caused by antibiotic resistant Gram-negative bacteria and for assessment against biodefense pathogens.

The award committed initial funding of $15.7 million over a three-year base period from July 1, 2018 to June 30, 2021 for cUTI development activities. In May 2019, the contract was modified to include additional funding of approximately $2.5 million for the development of tebipenem HBr, increasing the amount of initial committed funding from $15.7 million to approximately $18.2 million and increasing the overall potential award to $46.8 million. In January 2020, BARDA exercised its first contract option for additional committed funding of $15.9 million, increasing the total committed funding to $34.1 million and extended the period of performance through November 1, 2021. The balance of the award is subject to BARDA exercising a second option, which would entail funding of $12.7 million and is exercisable by BARDA subject to, among other things, satisfactory progress and results from the biodefense studies described below.

As part of an inter-agency collaboration between BARDA and the Defense Threat Reduction Agency (“DTRA”), a series of studies to assess the efficacy of tebipenem HBr in the treatment of infections caused by biodefense threats such as anthrax, plague and melioidosis will be conducted under the direction of Spero. The FDA requires data from a human pneumonic disease as supportive evidence of human efficacy when developing an antibiotic to treat a pulmonary biothreat infection under 21 CFR 314.600, “The Animal Rule,” the scope of which the BARDA award includes the assessment of tebipenem HBr levels in the lung of healthy volunteers as well as a proof of concept clinical trial in pneumonia patients. DTRA provides up to $10.0 million, in addition to the total potential award from BARDA, to cover the cost of the nonclinical biodefense aspects of the collaborative program for tebipenem HBr. Together, BARDA and DTRA will provide up to $56.8 million in total funding for the clinical development and biodefense assessment of tebipenem HBr, of which $12.7 million is subject to the exercise of options by BARDA and Spero’s achievement of specified milestones.

The Company recognized $1.9 million and $1.6 million of revenue under the BARDA award during the three months ended June 30, 2021 and 2020, respectively, and recognized $8.2 million and $2.8 million of revenue under the BARDA award during the six months ended June 30, 2021 and 2020.

U.S. Department of Defense

On July 1, 2019, the Company received a $5.9 million award from the DoD Congressionally Directed Medical Research Programs (“CDMRP”) Joint Warfighter Medical Research Program. The funding will support the further clinical development of SPR206. The award commits non-dilutive funding of $5.9 million over a four-year period to cover the costs of select Phase 1 pharmacology studies, a 28-day GLP non-human primate toxicology study, and microbiological surveillance studies that would be required for a potential New Drug Application, or NDA, submission with the U.S. Food and Drug Administration for SPR206. The Company recognized $1.1 million and $1.8 million in revenue under this agreement during the three and six months ended June 30, 2021, respectively, and recognized immaterial revenue under this agreement during the three and six months ended June 30, 2020.

NIAID

In May 2021, the Company was awarded a five-year contract from the U.S. National Institute of Allergy and Infectious Diseases, or NIAID, under the Agency’s Omnibus Broad Agency Announcement No. HHS-NIH-NIAID-BAA2020-1 award

mechanism to support further development of SPR206. Funding will be used to offset certain expenses related to manufacturing, clinical, non-clinical and regulatory activities. The Company can receive up to $23.4 million over a base period and five option periods. As of June 30, 2021, funding for the base period totaling $2.1 million has been committed. The Company recognized immaterial revenue under this agreement during both the three and six months ended June 30, 2021.

In February 2017, the Company was awarded a grant from NIAID, under its Small Business Innovation Research program, over a two-year period from March 1, 2017 to February 28, 2019, to conduct additional preclinical studies of SPR720, the Company’s novel oral bacterial gyrase inhibitor, for the treatment of non-tuberculous mycobacterial infections. The award was structured as a 12-month $0.6 million base period and a $0.4 million option period. Through December 31, 2017, only the base period funds were committed. In February 2018, NIAID exercised the $0.4 million 12-month option period. In January 2019, the period of performance for this award was extended through February 28, 2020 and during the year ended December 31, 2020, this award was closed out. The Company did not recognize revenue under this agreement during the both the three months ended June 30, 2021 and 2020, respectively. The Company did not recognize revenue under this agreement during the six months ended June 30, 2021 and recognized approximately $0.1 million of revenue under this agreement during the six months ended June 30, 2020.

In June 2016, the Company entered into agreements with Pro Bono Bio PLC (“PBB”), a corporation organized under the laws of England, and certain of its affiliates, including PBB Distributions Limited and Cantab Anti-Infectives Limited (“CAI”), in order to acquire certain intellectual property and government funding arrangements relating to SPR206. Under these agreements, CAI agreed to submit a request to NIAID to novate the then CAI-held NIAID contract to Spero, which was finalized in December 2017. The NIAID contract provides for development funding of up to $6.5 million over a base period and three option periods. As of June 30, 2021, funding for the base period and the first two option periods totaling $5.9 million have been committed. In March 2021, a contract modification was executed, and the period of performance for this award was extended until June 2021. The Company recognized less than $0.1 million of revenue under this agreement during both the three months ended June 30, 2021 and 2020, respectively, and recognized $0.4 million and $0.3 million during the six months ended June 30, 2021 and 2020, respectively.

10. License, Collaboration and Service Agreements

The Company has certain obligations under license agreements with third parties that include annual maintenance fees and payments that are contingent upon achieving various development, regulatory and commercial milestones. Pursuant to these license agreements, the Company is required to make milestone payments if certain development, regulatory and commercial milestones are achieved, and may have certain additional research funding obligations. Also, pursuant to the terms of each of these license agreements, when and if commercial sales of a product commence, the Company will pay royalties to its licensors on net sales of the respective products.

Cantab License Agreements

Under the Cantab Agreements, the Company is obligated to make milestone payments of up to $5.8 million upon the achievement of specified clinical and regulatory milestones and a payment of £5.0 million ($6.9 million and $6.8 million as of June 30, 2021 and December 31, 2020, respectively) upon the achievement of a specified commercial milestone. In addition, the Company agreed to pay to PBB royalties, on a product-by-product and country-by-country basis, of a low single-digit percentage based on net sales of products licensed under the agreement. During both the three and six months ended June 30, 2021 and 2020, the Company did not record any research and development expense related to the achievement of regulatory milestones for SPR206.

The Cantab Agreements continue indefinitely, with royalty payment obligations thereunder continuing on a product-by-product and country-by-country basis until the later of ten years after the first commercial sale of such product in such country or the expiration in such country of the last to expire valid claim of any of the applicable patents.

Vertex License Agreement

In May 2016, the Company entered into an agreement with Vertex Pharmaceuticals Incorporated (“Vertex”) whereby Vertex granted the Company certain know-how and a sublicense to research, develop, manufacture and sell products for a proprietary compound, as well as a transfer of materials. In exchange for the know-how, sublicense and materials, Spero paid Vertex an upfront, one-time, nonrefundable, non-creditable fee of $0.5 million, which was recognized as research and development expense. As part of the agreement, the Company is obligated to make future milestone payments of up to $80.2 million upon the achievement of specified clinical, regulatory and commercial milestones and to pay Vertex tiered royalties, on a product-by-product and country-by-country basis, of a mid single-digit to low double-digit percentage based on net sales of products licensed under the agreement. During the three and six months ended June 30, 2021, the Company did not record any research and development expense related to the achievement of regulatory milestones for SPR720.

The agreement continues in effect until the expiration of all payment obligations thereunder, with royalty payment obligations continuing on a product-by-product and country-by-country basis until the later of ten years after the first commercial sale of such product in such country or the date of expiration in such country of the last to expire applicable patent. Further, Vertex has the right to terminate the agreement if provided with notification from the Company of intent to cease all development or if no material development or commercialization efforts occur for one year.

Meiji License Agreement

In June 2017, the Company entered into agreements with Meiji Seika Pharma Co. Ltd. (“Meiji”), a Japanese corporation, whereby Meiji granted to the Company certain know-how and a license to research, develop, manufacture and sell products for a proprietary compound in the licensed territory. In exchange for the know-how and license, the Company paid Meiji an upfront, one-time, nonrefundable, non-creditable fee of $0.6 million, which was recognized as research and development expense. As part of the agreement, the Company is obligated to make future milestone payments of up to $2.0 million as of June 30, 2021 upon the achievement of specified clinical and regulatory milestones, to pay royalties, on a product-by-product and country-by-country basis, of a low single-digit percentage based on net sales of products licensed under the agreement and to pay Meiji a low double-digit percentage of any sublicense fees received by the Company up to $7.5 million. In October 2017, the Company paid a $1.0 million milestone payment to Meiji upon the enrollment of the first patient in the Company’s Phase 1 clinical trial of tebipenem HBr. The payment was recorded as research and development expense in the statement of operations and comprehensive loss for the year ended December 31, 2017. The Company paid Meiji approximately $1.6 million during the fourth quarter of 2018 related to fixed assets which will be used in manufacturing related activities at Meiji. This equipment has been capitalized as property and equipment in the condensed consolidated balance sheet as of June 30, 2021.

The agreement continues in effect until the expiration of all payment obligations thereunder (including royalty payments and licensee revenue) on a product-by-product and country-by-country basis, unless earlier terminated by the parties. Pursuant to the terms of the agreement, in addition to each party’s right to terminate the agreement upon the other party’s material breach (if not cured within a specified period after receipt of notice) or insolvency, the Company also has unilateral termination rights (i) in the event that the Company abandons the development and commercialization of tebipenem HBr for efficacy, safety, legal or business factors, and (ii) under certain circumstances arising out of the head license with a global pharmaceutical company.

Everest Medicines License Agreement

On January 4, 2019, the Company, through its wholly owned subsidiary New Pharma License Holdings Limited (“NPLH”), entered into a license agreement (the “Original Everest License Agreement”), with Everest Medicines II Limited (“Everest”). Under the terms of the Original Everest License Agreement, the Company granted Everest an exclusive license to develop, manufacture and commercialize SPR206 or products that contain SPR206 (the “Licensed Products”), in Greater China (which includes Mainland China, Hong Kong and Macau), South Korea and certain Southeast Asian countries (the “Territory”). The Company retained development, manufacturing and commercialization rights with respect to SPR206 and Licensed Products in the rest of the world and also retained the right to develop or manufacture SPR206 and Licensed Products in the Territory for use outside the Territory. In addition to the license grant with respect to SPR206, the Company, through its wholly owned subsidiary, Spero Potentiator, Inc., a Delaware corporation, granted Everest a 12-month exclusive option to negotiate with it for an exclusive license to develop, manufacture and commercialize SPR741 in the Territory.

Under the terms of the Original Everest License Agreement and the Everest License Agreement, the Company received an upfront payment of $3.0 million that was recognized in the first quarter of 2019, comprised of a $2.0 million payment to license SPR206 and $1.0 million for the exclusive option to negotiate a license to develop SPR741. The Company also received a milestone payment of $2.0 million in the fourth quarter of 2020 upon completion and delivery of the results of a clinical study.

On January 15, 2021, the Company entered into an amended and restated license agreement (“the Amended Everest License Agreement”) with Everest and Potentiator, which amended and restated in its entirety the Original Everest License Agreement. The Amended Everest License Agreement modifies the dates and values of certain milestone events related to development and commercialization of SPR206. Everest will be making more significant investments in the development of SPR206 beyond what was contemplated at the time of the Original Everest License Agreement. The Original Everest License Agreement provided that the Company could receive up to $59.5 million upon achievement of certain milestones. The Amended Everest License Agreement provides that the Company may receive up to $38.0 million upon achievement of certain milestones, of which $2.8 million has been received to date. The Company may receive milestones of up to $1.5 million if the Company chooses to complete a future clinical study, of which the Company received approximately $0.8 million upon the initiation of the Bronchoalveolar Lavage (BAL) clinical trial of SPR206 in June 2021. In addition, under the Amended Everest License Agreement, the Company assigned patents in the Territory to Everest, rather than licensing such patents to Everest, and the option related to SPR741 and the related provisions have been removed. Under the terms of the Amended Everest License Agreement, the Company is also entitled to receive high single-digit to low double-digit royalties on net sales, if any, of Licensed Products in the Territory following regulatory approval of SPR206. Everest has the right to sublicense to affiliates and third parties in the Territory.

Everest is responsible for all costs related to developing, obtaining regulatory approval of and commercializing SPR206 and Licensed Products in the Territory, and is obligated to use commercially reasonable efforts to develop, manufacture and commercialize Licensed Products, including to achieve certain specified diligence milestones within agreed-upon periods. A joint development committee will be established between the Company and Everest to coordinate and review the development, manufacturing and commercialization plans with respect to Licensed Products in the Territory.

Unless earlier terminated due to certain material breaches of the contract, or otherwise, the Amended Everest License Agreement will expire on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis upon the latest to occur of expiration of the last valid claim under a licensed patent in such jurisdiction, the expiration of regulatory exclusivity in such jurisdiction or ten years after the first commercial sale of such Licensed Product in such jurisdiction. The Amended Everest License Agreement may be terminated in its entirety by Everest upon 90 or 180 days’ prior written notice, depending on the stage of development of the initial Licensed Product.

Gates MRI Collaboration Agreement

In June 2019, the Company entered into a collaboration with Gates MRI to develop SPR720 for the treatment of lung infections caused by Mycobacterium tuberculosis. In furtherance of the Gates MRI’s charitable purposes, the Company also granted to Gates MRI a no-cost, exclusive license to develop, manufacture and commercialize SPR720 for the treatment of tuberculosis (“TB”) in low- and middle- income countries. The Gates MRI is responsible for formulating and funding its own research plan for the development of SPR720 for TB. As such, Gates MRI will conduct and fund preclinical and clinical studies for the development of SPR720 against TB. In addition, Gates MRI and the Company will jointly design and manage certain collaborative research activities, which the Company will perform and which will be funded by the Gates MRI. Due to the cost-funded nature of the payments and the Company’s assessment that it does not have a vendor/customer relationship with the Gates MRI, the Company will recognize the funding received under the agreement as a reduction to the research and development expenses incurred, as the related expenses are incurred.

The Company recorded $0.6 million and $1.1 million during the three and six months ended June 30, 2021, respectively, as a reduction to research and development expense related to activities funded by Gates MRI.

Savior Service Agreement

In November 2018, the Company entered into a service agreement with Savior Lifetec Corporation (“Savior”) to perform technology transfer, process development, analytical method development and testing and formulation development for tebipenem HBr. Per the terms of the agreement, the Company paid Savior a non-refundable supervision fee of approximately $2.0 million to manage the buildout of a commercial manufacturing facility. The supervision fee is classified as a prepaid asset on the Company’s balance sheet and is being amortized over a service period of approximately 34 months. The Company has paid Savior an additional $5.1 million for facility build out costs, which is classified as a long-term asset on the Company’s balance sheet as of June 30, 2021.

Pfizer License and Share Purchase Agreements

On June 30, 2021, the Company and Pfizer entered into the Pfizer License Agreement and the Pfizer Purchase Agreement. Under the terms of the Pfizer License Agreement, the Company granted Pfizer an exclusive royalty-bearing license to develop, manufacture and commercialize SPR206 or products that contain SPR206 (the “Licensed Products”) globally with some territorial exceptions (the “Pfizer Territory”). The Pfizer Territory excludes the United States and the Asian markets previously licensed to Everest, those being the People’s Republic of China, including Hainan Island, the Hong Kong Special Administrative Region of the People’s Republic of China, and the Macau Special Administrative Region of the People’s Republic of China, Taiwan, the Republic of Korea (South Korea), the Republic of Singapore, Malaysian Federation, Kingdom of Thailand, the Republic of Indonesia, Socialist Republic of Vietnam and the Republic of the Philippines).

Under the terms of the Pfizer Purchase Agreement, Pfizer purchased 2,362,348 shares of the Company’s common stock at a price of $16.93 per share for a total investment of $40.0 million. Under the terms of the Pfizer License Agreement, the Company received no other upfront payments but is eligible to receive up to $80.0 million in development and sales milestones, and may also receive high single-digit to low double-digit royalties on net sales of SPR206 in the Pfizer Territory. Achievement of these payments cannot be guaranteed. The Company and Pfizer agree that upon Pfizer’s request, the parties will negotiate in good faith regarding procuring a clinical or commercial supply of the compound.

The fair market value of 2,362,348 shares of the Company's common stock issued to Pfizer under the Pfizer Purchase Agreement was determined to be $27.5 million. The common stock issued under the Pfizer Purchase Agreement were valued using an option pricing valuation model as the shares are subject to certain holding period restrictions. The Company accounted for the associated premium of $12.5 million as a freestanding equity-linked instrument under ASC 815. The premium was allocated as consideration for the Pfizer License Agreement and evaluated under ASC 606. The premium was determined not to be constrained and was included in the calculation of the total transaction price related to the Pfizer License Agreement as of June 30, 2021.

The Company is responsible for all costs related to developing and obtaining regulatory approval of SPR206 and Licensed Products in the Pfizer Territory, with a focus on the European market, and is obligated to use commercially reasonable efforts, including to achieve certain specified diligence milestones within agreed-upon periods. A joint development committee will be established between the Company and Pfizer to coordinate and review the development, manufacturing and commercialization plans with respect to Licensed Products in the Pfizer Territory. Pfizer is responsible for commercializing SPR206 and the Licensed Products in the Pfizer Territory.

Unless earlier terminated due to certain material breaches of the contract or by Pfizer’s convenience, or otherwise, the Pfizer License Agreement will expire on a jurisdiction-by-jurisdiction and licensed product-by-licensed product basis after ten years from the effective date. The Pfizer License Agreement will automatically renew for an additional ten-year term unless terminated.

Accounting Analysis and Revenue Recognition

The Company determined that Pfizer is a customer and that the Pfizer License Agreement is within the scope of ASC 606 as licensing intellectual property and performing ongoing research and development services are ordinary activities that are ongoing and central to the Company’s operations. Accordingly, in determining the appropriate amount of revenue to be recognized, the Company performed the following steps: (i) identified the promised goods or services in the contract; (ii) determined whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measured the transaction price, including the constraint on variable consideration; (iv) allocated the transaction price to the identified performance obligations in proportion to their SSP; and (v) recognized revenue when each performance obligation was deemed to be satisfied.

Based on that evaluation, the Company identified two performance obligations, as presented below. The Company determined that the supply agreement is a customer option and not a material right, as the pricing to Pfizer is not at a significant discount. Furthermore, Pfizer has the right to use third parties to manufacture the compound, or to manufacture the compound itself. The transaction price to be allocated to the identified performance obligations was determined to be the $12.5 million premium on the Company's commitment to sell common stock to Pfizer under the Pfizer Purchase Agreement at a price per share in excess of fair value. The allocation was performed based on the relative standalone selling prices of the performance obligations. The following table shows the performance obligations and the transaction price allocated to those obligations (in millions):

	Transaction
	Price
Performance Obligations	Allocated		Recognition Method
License and know-how transfer (1)	$	1.4	Fully satisfied; recognized upon delivery of the license
Research and development services related to upcoming milestones (2)		11.1	Recognized over time as services are delivered
	$	12.5

1. The standalone selling price for the license and know-how was determined by the income approach utilizing a discounted cash flow. The key assumptions in our estimate of the standalone selling price for the license and know-how include the probability of technological and regulatory success, our estimate of future product revenues, and the discount rate, among others.

2. The standalone selling price for the research and development services was estimated based on our estimate of costs to be incurred to fulfill our obligations associated with the performance of the research and development services, plus a reasonable margin.

The potential license maintenance fees and development milestone payments from the Pfizer License Agreement will be accounted for as variable consideration under ASC 606. Given the uncertain nature of these payments, we determined they were fully constrained as of June 30, 2021 and not included in the transaction price. The Company can also earn sales-based royalties.

The Company recognizes revenue for the license performance obligation at a point in time, that is upon transfer of the license to Pfizer. As control of the license was transferred on the Effective Date and Pfizer could begin to use and benefit from the license at the Effective Date, the Company recognized $1.4 million of revenue from the contract during the three and six months ended June 30, 2021. The remaining transaction price balance of $11.1 million from the Pfizer Purchase Agreement allocated to the research and development services performance obligation has been recorded as deferred revenue in the condensed consolidated balance sheet. As of June 30, 2021, the research and development services related to the second performance obligation were expected to be recognized over a period of approximately five years.

As of June 30, 2021, the Company recorded $11.1 million in deferred revenue, which was not included in the condensed consolidated statement of cash flows and $1.4 million in revenue associated with the Pfizer Purchase Agreement, which was treated as a non-cash operating activity.

11. Australia Research and Development Tax Incentive

The Australian government has established a research and development tax incentive to encourage industry investment in research and development, which is available to companies incorporated under Australian law that have core research and development activities. In September 2016, the Company established Spero Potentiator Australia Pty Limited to carry out certain research and development activities. As this subsidiary meets the eligibility requirements of the Australian tax law, it is eligible to receive a 43.5% tax incentive for qualified research and development activities.

The Company did not record a reduction during both the three and six months ended June 30, 2021, and recorded less than $0.1 million and $0.3 million during the three and six months ended June 30, 2020, respectively, as a reduction to research and development expenses in the consolidated statements of operations and comprehensive loss associated with this tax incentive, representing 43.5% of the Company’s qualified research and development spending in Australia. The tax incentive refund is denominated in Australian dollars and, therefore, the associated tax incentive receivable is re-measured to U.S. dollars as of each reporting date. The Company’s tax incentive receivables from the Australian government totaled $0.3 million and $1.2 million as of June 30, 2021, and December 31, 2020, respectively.

12. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders of Spero Therapeutics, Inc. was calculated as follows (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Numerator:
Net loss	$	(18,572	)	$	(17,501	)	$	(37,995	)	$	(40,759	)
Deemed dividend		—			—			—			(549	)
Net loss attributable to common stockholders	$	(18,572	)	$	(17,501	)	$	(37,995	)	$	(41,308	)
Denominator:
Weighted average common shares outstanding, basic and diluted		29,675,399			20,633,402			29,545,496			20,095,415
Net loss per share, basic and diluted	$	(0.63	)	$	(0.85	)	$	(1.29	)	$	(2.06	)

The net loss applicable to common stockholders for the six months ended June 30, 2020 did not equal net loss due to the accretion of the beneficial conversion feature of Series C Preferred Stock in the amount of $0.5 million. The beneficial conversion feature was initially recorded as a discount on the Series C Preferred Stock with a corresponding amount recorded to Additional Paid-in Capital. The discount on the Series C Preferred Stock was then immediately written off as a deemed dividend as the Series C Preferred Stock does not have a stated redemption date and is immediately convertible at the option of the holder.

The Company excluded potentially dilutive securities from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders of Spero Therapeutics, Inc. is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Options to purchase common stock		4,579,708		3,671,200		4,579,708		3,671,200
Unvested restricted stock units		—		30,561		—		30,561
Series A convertible preferred stock (as converted to common shares)		—		1,720,000		—		1,720,000
Series B convertible preferred stock (as converted to common shares)		938,000		1,000,000		938,000		1,000,000
Series C convertible preferred stock (as converted to common shares)		2,214,000		2,287,000		2,214,000		2,287,000
Series D convertible preferred stock (as converted to common shares)		3,215,000		—		3,215,000		—
		10,946,708		8,708,761		10,946,708		8,708,761

13. Subsequent Events

The Company has evaluated, for potential recognition and disclosure, events that occurred prior to the date in which the condensed consolidated financial statements were available to be issued. Other than as disclosed below, there were no material subsequent events.

On July 1, 2021 the Company sold 2,362,348 shares of its common stock to Pfizer as at price of $16.93 for an aggregate purchase price of $40.0 million prior to deducting offering expenses under the Pfizer Purchase Agreement, which was effective as of June 30, 2021.

Subsequent to June 30, 2021, the Company sold 70,000 shares of its common stock under the at-the-market offering program sales agreement with Cantor at an average price of approximately $16.27 per share for aggregate gross proceeds of approximately $1.1 million prior to deducting sales commissions and offering expenses.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited financial information and the notes thereto included appearing elsewhere in this Quarterly Report on Form 10-Q, and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Overview

We are a multi-asset, clinical-stage biopharmaceutical company focused on identifying, developing and commercializing treatments in high unmet need areas involving multi-drug resistant, or MDR, bacterial infections and rare diseases. Our most advanced product candidate, Tebipenem Pivoxil Hydrobromide, or tebipenem HBr, is designed to be the first broad-spectrum oral carbapenem-class antibiotic for use in adults to treat MDR Gram-negative infections. Treatment with effective orally administrable antibiotics may prevent hospitalizations for serious infections and enable earlier, more convenient and cost-effective treatment of patients after hospitalization. We are also developing SPR720, a novel oral antibiotic designed for the treatment of a rare, orphan disease caused by non-tuberculous mycobacterial pulmonary infections, or NTM disease. In addition, we have a Potentiator technology, which includes an IV-administered product candidate, SPR206, being developed to treat MDR Gram-negative infections in the hospital. We believe that our novel product candidates, if successfully developed and approved, would have a meaningful patient impact and significant commercial applications for the treatment of MDR infections in both the community and hospital settings. Since our inception in 2013, we have focused substantially all of our efforts and financial resources on organizing and staffing our company, business planning, raising capital, acquiring and developing product and technology rights, building our intellectual property portfolio and conducting research and development activities for our product candidates. We do not have any products approved for sale and have not generated any revenue from product sales.

We have experienced net losses and significant cash outflows from cash used in operating activities since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. As of June 30, 2021, we had an accumulated deficit of $315.7 million, and cash, cash equivalents and marketable securities of $99.2 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, together with the committed funding from our existing BARDA contract and other non-dilutive funding commitments, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022. This timeline is subject to uncertainty as to the timing of future expenditures. We have developed plans to mitigate this risk, which primarily consist of raising additional capital through some combination of equity or debt financings, potential new collaborations, additional grant funding and/or reducing cash expenditures. If we are not able to secure adequate additional funding, we plan to make reductions in spending. In that event, we may have to delay, scale back, or eliminate some or all of our planned clinical trials, research stage programs and commercialization activities. The actions necessary to reduce spending under this plan at a level that mitigates the factors described above is not considered probable, as defined in the accounting standards and therefore, the full extent to which management may extend our funds through these actions may not be considered in management’s assessment of our ability to continue as a going concern. As a result, management has concluded that substantial doubt exists about our ability to continue as a going concern.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates and do not enter

into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. Further, we expect to incur additional costs associated with our continued operation as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, government funding arrangements, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Recent Developments

Pfizer License Agreement and Share Purchase Agreement

On June 30, 2021, we entered into a license agreement (the “Pfizer License Agreement”) with Pfizer Inc. (“Pfizer”). Pursuant to the Pfizer License Agreement, we have granted Pfizer the rights to develop, manufacture, and commercialize our product candidate SPR206 in ex-U.S. and ex-Asia territories. In exchange for these rights, we are eligible to receive up to $80.0 million in development and sales milestones, and may also receive high single-digit to low double-digit royalties on net sales of SPR206 in ex-U.S. and ex-Asia territories. Under the terms of the Pfizer License Agreement, Pfizer has the right to sublicense to affiliates and third parties in ex-U.S. and ex-Asia territories.

In addition, on June 30, 2021, we agreed to sell 2,362,348 shares of our common stock to Pfizer pursuant the Pfizer Purchase Agreement, at a price of $16.93 per share, which represented a premium over the most recent closing price on June 30, 2021, for an aggregate purchase price of $40.0 million. In addition, under the terms of the Pfizer Purchase Agreement, the shares are subject to a lock-up restriction, such that Pfizer will not, subject to certain limited exceptions, without the prior approval from us, sell or otherwise dispose of the shares until one year after the date of the closing of the sale of the shares under the Pfizer Purchase Agreement.

Updates on tebipenem HBr

We are currently performing integrated analyses in conjunction with the NDA and drafting sections of the NDA both at the study and summary level. We anticipate the completion of an NDA submission to the FDA in the fourth quarter of 2021.

Updates on SPR206

In May 2021, we were awarded funding of $2.1 million, with the potential for up to an additional $21.3 million over five years, from the National Institute of Allergy and Infectious Diseases (NIAID), one of 27 institutes and centers that make up the National Institutes of Health (NIH). The funding will support the further clinical development of SPR206.

The initial award provides funding for pharmacokinetic/pharmacodynamic studies to aid in dose selection, manufacturing process development, clinical microbiology, and support for regulatory interactions. If fully exercised, the award additionally provides funding for a broad range of activities including NDA-enabling toxicology studies, drug substance, and drug product manufacturing, a Phase 1 absorption, distribution, metabolism, and excretion (ADME) study, and a Phase 2 clinical proof-of-concept study to evaluate the efficacy of SPR206 in target indications.

In June 2021, in conjunction with Everest Medicines, and through our grant from the DoD awarded in July 2019, we initiated a Phase 1 bronchoalveolar lavage (BAL) clinical trial assessing the penetration of SPR206 into the pulmonary compartment and a renal impairment study (RIS) of SPR206.

The Phase 1 BAL clinical trial is an open-label study designed to enroll thirty healthy volunteers into five cohorts. Subjects will receive three 100 mg doses of SPR206 infused every eight hours over one day. The objectives of the study are to evaluate the intrapulmonary PK, including epithelial lining fluid (ELF) and alveolar macrophage (AM) concentrations of SPR206 compared to plasma concentrations. These data are important to establish dose requirements for clinical efficacy of SPR206 in the setting of hospital-acquired pneumonia (HAP)/ventilator-associated pneumonia (VAP). This study is being conducted in collaboration with, and with financial support from, the DoD. The initiation of this clinical trial triggers the first of two milestone payments related to the study from Spero’s development partner, Everest Medicines.

The Phase 1 renal impairment clinical trial is an open-label study designed to enroll forty subjects into five cohorts. Cohort 1 will be healthy volunteers, cohorts 2-4 will be clinically stable subjects with various degrees of renal insufficiency, and cohort 5 will be clinically stable subjects with end stage renal disease (ESRD) on hemodialysis. Participants will receive a single 100 mg infusion of SPR206. The objectives of the study are to evaluate the PK of SPR206 in healthy subjects and in those with various degrees of renal insufficiency, including ESRD. These data are important to establish if the concentrations of SPR206 are impacted by differences in renal function and whether dose adjustments for SPR206 would be recommended in such context. This study is being conducted in collaboration with, and with financial support from, the DoD.

Data from a prior Phase 1 clinical trial showed that SPR206 was generally well tolerated with a lack of nephrotoxicity at predicted therapeutic dose levels. Results from the Phase 1 BAL and renal impairment clinical trials are expected by early 2022.

Update on Phase 2a Clinical Trial of SPR720

On February 5, 2021, we announced that the FDA informed us that a clinical hold had been placed on our Phase 2a clinical trial of SPR720, following our notification to the FDA of our decision to pause dosing in our ongoing Phase 2a clinical trial of SPR720 as a precautionary measure related to events in our ongoing animal toxicology study of SPR720. The decision to implement the pause was made based on a recommendation from the Company’s Safety Review Board, or SRB, following review of data from an ongoing toxicology study of SPR720 in adult non-human primates in which mortalities with inconclusive causality to treatment were observed.

The animal study is being conducted to assess the potential toxicity of SPR720. A concurrent study of SPR720 in rats is proceeding uneventfully. These studies are meant to support longer-term treatment with SPR720 beyond the 28 days currently supported by IND-enabling toxicology studies. No serious adverse events have been observed in any human study participants.

Subsequent to receiving verbal notification from the FDA of the clinical hold, we received a formal clinical hold letter in which the FDA has requested additional information from the non-human primate trial, including a study report. We have decided to discontinue the Phase 2a clinical trial at this time to best facilitate future potential adjustments to the protocol based on FDA feedback and to avoid incurring costs associated with the trial while on clinical hold. We are continuing to work with the FDA to evaluate the findings and determine the further development pathway for the SPR720 clinical program. We anticipate completing the clinical study report in the third quarter of 2021 and engaging with the FDA in the fourth quarter of 2021.

Business Update regarding COVID-19

The continued spread of SARS-CoV-2, and the resulting disease COVID-19 and related variants, has resulted in an economic downturn on a global scale, as well as significant volatility in the financial markets. In response to the pandemic, we have implemented a hybrid working policy for all employees to aid the global containment effort.

Components of Our Results of Operations

Sales Revenue

To date, we have not generated any revenue from product sales. If our development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.

Grant Revenue

To date, the majority of our revenue has been derived from government awards. We expect that our revenue for the next few years will be derived primarily from payments under our government awards that we have currently entered into and that we may enter into in the future.

Collaboration Revenue

Collaboration revenue relates to our agreements with Everest Medicines and Pfizer.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

 employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in research and development functions;

 expenses incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with contract research organizations, or CROs;

 costs incurred in connection with our government awards;

 the cost of consultants and contract manufacturing organizations, or CMOs, that manufacture drug products for use in our preclinical studies and clinical trials;

 facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and supplies; and

 payments made under third-party licensing agreements.

We have recorded research and development expenses conducted by our Australian subsidiary net of a 43.5% research and development tax incentive we expect to receive for qualified expenses from the Australian government.

In June 2019, we entered into a collaboration with the Bill & Melinda Gates Medical Research Institute, or the Gates MRI, a nonprofit research institution wholly owned by the Bill and Melinda Gates Foundation, to develop SPR720 for the treatment of lung infections caused by Mycobacterium tuberculosis, or Mtb. In furtherance of the Gates MRI’s charitable purposes, we also granted the Gates MRI a no cost, exclusive license to develop, manufacture and commercialize SPR720 for the treatment of tuberculosis, or TB, in low- and middle- income countries. Gates MRI will conduct and fund preclinical and clinical studies for the development of SPR720 against TB, and fund certain agreed upon collaborative research activities performed by us. Due to our assessment that we do not have a vendor/customer relationship with the Gates MRI, we recognize the funding received under the agreement as a reduction to the research and development expenses as the related expenses are incurred.

We expense research and development costs as incurred. Nonrefundable advance payments we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical development activities. License fees and other costs incurred after a product candidate has been designated and that are directly related to the product candidate are included in direct research and development expenses for that program. License fees and other costs incurred prior to designating a product candidate are included in early stage research programs. We do not allocate employee costs, costs associated with our preclinical programs or facility expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties, including the following:

 successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority, including on account of the disruptive impacts of the COVID-19 pandemic;

 receipt of marketing approvals from applicable regulatory authorities;

 establishment of arrangements with third-party manufacturers to obtain manufacturing supply;

 obtainment and maintenance of patent, trade secret protection and regulatory exclusivity, both in the United States and internationally, including our ability to maintain our license agreement with Meiji with respect to tebipenem HBr;

 protection of our rights in our intellectual property portfolio;

 launch of commercial sales of tebipenem HBr and our other product candidates, if approved, whether alone or in collaboration with others;

 acceptance of tebipenem HBr and our other product candidates, if approved, by patients, the medical community and third-party payors;

 competition with other therapies; and

 a continued acceptable safety profile of tebipenem HBr and our other product candidates, if approved.

A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs, including share-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We anticipate that our general and administrative expenses will increase in the foreseeable future as we increase our headcount to support our continued research, development and commercialization of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, infrastructure and director and officer insurance costs as well as investor and public relations expenses associated with our continued operation as a public company.

Other Income (Expense)

Interest Income

Interest income consists of interest earned on our cash equivalents, which are primarily invested in money market accounts, as well as interest earned on our investments in marketable securities that we held during the three and six months ended June 30, 2021 and 2020.

Other Income (Expense), Net

Other income (expense), net, consists of insignificant amounts of miscellaneous income, as well as realized and unrealized gains and losses from foreign currency-denominated cash balances, vendor payables and receivables from the Australian research and development tax incentive.

Critical Accounting Policies and Significant Judgments and Estimates

A description of our significant accounting policies is disclosed in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Note 2 to our unaudited consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

We have made no changes to our existing critical accounting policies, as described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Results of Operations

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of revenues and the satisfaction of liabilities in the normal course of business. We have incurred losses from the inception of our operations. These factors raise substantial doubt about our ability to continue as a going concern.

Comparison of the Three Months Ended June 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,
	2021			2020			Change
Revenues:
Grant revenue	$	3,042		$	1,676
Collaboration revenue		2,106			51
Total revenues		5,148			1,727
Operating expenses:
Research and development		14,461			15,656			)
General and administrative		9,229			4,547
Total operating expenses		23,690			20,203
Loss from operations		(18,542	)		(18,476	)		)
Other income (expense):
Interest income		82			86			)
Other income (expense), net		(112	)		889			)
Total other income (expense), net		(30	)		975			)
Net loss	$	(18,572	)	$	(17,501	)		)

All values are in US Dollars.

Grant Revenue

	Three Months Ended June 30,
	2021		2020		Change
BARDA Contract (tebipenem HBr)	$	1,889	$	1,627
NIAID Contract (SPR206)		43		35
NIAID Award (SPR720)		—		—
DoD Agreement (Potentiator product candidates)		1,110		14
Total grant revenue	$	3,042	$	1,676

All values are in US Dollars.

Grant revenue recognized during the three months ended June 30, 2021 and 2020 consisted of the reimbursement of qualifying expenses incurred in connection with our various government awards. The increase in revenue during the three months ended June 30, 2021 was primarily due to an increase of $1.1 million in funding under our DoD agreement relating to SPR206, an increase of $0.3 million in qualified expenses incurred under our BARDA contract for tebipenem HBr, and net immaterial activity under our other government awards.

Collaboration Revenue

During the three months ended June 30, 2021, we recognized $1.4 million in collaboration revenue related to our agreement with Pfizer consisting of the delivery of the license for SPR206 in ex-U.S. and ex-Asia territories and $0.8 million in collaboration revenue upon the initiation of the BAL clinical trial of SPR206 in June 2021, related to our agreement with Everest Medicines. During the three months ended June 30, 2020, we recognized $0.1 million of revenue, related to our agreement with Everest Medicines, consisting of the performance of research and development services.

Research and Development Expenses

	Three Months Ended June 30,
	2021		2020		Change
Direct research and development expenses by program:
Tebipenem HBr	$	6,403	$	9,470		)
SPR720		682		1,274		)
Potentiator product candidates (SPR206 and SPR741)		1,275		256
Unallocated expenses:
Personnel related (including share-based compensation)		5,019		3,617
Facility related and other		1,082		1,039
Total research and development expenses	$	14,461	$	15,656		)

All values are in US Dollars.

Direct costs related to our tebipenem HBr program decreased by $3.1 million during the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to the completion of significant activities in the Phase 3 clinical trial. We expect to continue to incur direct costs related to tebipenem HBr as we finalize activities in the ongoing clinical trials to support a potential NDA filing for tebipenem HBr.

Direct costs related to our SPR720 program decreased by $0.6 million during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, primarily due to decreased spend related to the clinical hold on our Phase 2a clinical trial. On February 5, 2021, we announced that the FDA informed us that a clinical hold had been placed on our Phase 2a clinical trial of SPR720, which is further described elsewhere in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Quarterly Report on Form 10-Q under the heading “Recent Developments – Update on Phase 2a Clinical Trial of SPR720.” Direct costs related to our SPR720 program during the three months ended June 30, 2021 reflect a $0.6 million reduction to expense related to activities funded by Gates MRI, compared to $0.4 million during the three months ended June 30, 2020.

Direct costs related to our SPR206 program increased by $1.0 million during the three months ended June 30, 2021, primarily due to clinical costs for the Phase 1 BAL and renal impairment trials, which we initiated in June 2021. In early January 2020, we decided to proceed with SPR206 as the lead Potentiator product candidate and discontinue development of SPR741. We did not incur direct costs related to our SPR741 program during the three months ended June 30, 2021, and costs related to our SPR741 program were immaterial for the three months ended June 30, 2020.

During 2021 and 2020, research and development expenses incurred by our Australian subsidiary were recorded net of a 43.5% research and development tax incentive for qualified expenses from the Australian government, resulting in a receivable of $0.3 million as of June 30, 2021.

The increase in personnel-related costs of $1.4 million was primarily a result of an increase in research and development headcount. Personnel-related costs for the three months ended June 30, 2021 and 2020 included share-based compensation expense of $0.9 million and $0.6 million, respectively.

The increase in facility-related and other costs was primarily due to the increased costs of supporting a larger research and development staff.

General and Administrative Expenses

	Three Months Ended June 30,
	2021		2020		Change
Personnel related (including share-based compensation)	$	4,719	$	2,388
Professional and consultant fees		3,838		1,750
Facility related and other		672		409
Total general and administrative expenses	$	9,229	$	4,547

All values are in US Dollars.

The increase in personnel-related costs of $2.3 million was primarily a result of an increase in headcount in our commercial, general and administrative functions. Personnel-related costs for the three months ended June 30, 2021 and 2020 included share-based compensation expense of $1.3 million and $0.7 million, respectively.

The increase in professional and consultant fees of $2.1 million was primarily due to increased commercial operation expenses to support the potential commercialization of tebipenem HBr, as well as increased legal expenses.

The increase in facility-related and other costs was primarily due to the increased costs of supporting a larger general and administrative staff.

Other Income (Expense), Net

Other income, net was less than $(0.1) million for the three months ended June 30, 2021, compared to $1.0 million for the three months ended June 30, 2020. The changes quarter over quarter were primarily due to fluctuations in unrealized foreign currency gains, offset by interest income.

Comparison of the Six Months Ended June 30, 2021 and 2020

The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020 (in thousands):

	Six Months Ended June 30,
	2021			2020			Change
Revenues:
Grant revenue	$	10,342		$	3,208
Collaboration revenue		2,106			220
Total revenues		12,448			3,428
Operating expenses:
Research and development		32,865			36,092			)
General and administrative		17,528			8,633
Total operating expenses		50,393			44,725
Loss from operations		(37,945	)		(41,297	)
Other income (expense):
Interest income		180			323			)
Other income (expense), net		(230	)		215			)
Total other income (expense), net		(50	)		538			)
Net loss	$	(37,995	)	$	(40,759	)

All values are in US Dollars.

Grant Revenue

	Six Months Ended June 30,
	2021		2020		Change
BARDA Contract (SPR994)	$	8,185	$	2,809
NIAID Contract (SPR206)		402		336
NIAID Award (SPR720)		—		40		)
DoD Agreement (Potentiator product candidates)		1,755		23
Total revenue	$	10,342	$	3,208

All values are in US Dollars.

Grant revenue recognized during the six months ended June 30, 2021 and 2020 consisted of the reimbursement of qualifying expenses incurred in connection with our various government awards. The increase in revenue during the six months ended June 30, 2021 was primarily due to an increase of $5.4 million in qualified expenses incurred under our BARDA contract for tebipenem HBr, an increase of $1.7 million in funding under our DoD agreement relating to SPR206, and net immaterial activity under our other government awards.

Collaboration Revenue

During the six months ended June 30, 2021, we recognized $1.4 million in collaboration revenue related to our agreement with Pfizer consisting of the delivery of the license for SPR206 in ex-U.S. and ex-Asia territories and $0.8 million in collaboration revenue upon the initiation of the BAL clinical trial of SPR206 in June 2021, related to our agreement with Everest Medicines. During the six months ended June 30, 2020, we recognized $0.2 million of revenue, related to our agreement with Everest Medicines, consisting of the performance of research and development services.

Research and Development Expenses

	Six Months Ended June 30,
	2021		2020		Change
Direct research and development expenses by program:
Tebipenem HBr	$	16,518	$	24,778		)
SPR720		1,925		1,845
Potentiator product candidates (SPR206 and SPR741)		2,365		629
Unallocated expenses:
Personnel related (including share-based compensation)		9,771		6,875
Facility related and other		2,286		1,965
Total research and development expenses	$	32,865	$	36,092		)

All values are in US Dollars.

Direct costs related to our tebipenem HBr program decreased by $8.3 million during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 primarily due to the completion of significant activities in the Phase 3 clinical trial. We expect to continue to incur direct costs related to tebipenem HBr as we finalize activities in the ongoing clinical trials to support a potential NDA filing for tebipenem HBr.

Direct costs related to our SPR720 program increased by less than $0.1 million during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to expenses related to our Phase 2a clinical trial. These expenses were partially offset by a decrease in spending associated with formulation development, manufacturing process and manufacturing of clinical trial material. On February 5, 2021, we announced that the FDA informed us that a clinical hold had been placed on our Phase 2a clinical trial of SPR720, which is further described elsewhere in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Quarterly Report on Form 10-Q under the heading “Recent Developments – Update on Phase 2a Clinical Trial of SPR720.” Direct costs related to our SPR720 program during the six months ended June 30, 2021 reflect a $1.1 million reduction to expense related to activities funded by Gates MRI, compared to $0.6 million during the six months ended June 30, 2020.

Direct costs related to our SPR206 program increased by $1.7 million during the six months ended June 30, 2021, primarily due to higher preclinical costs incurred and from clinical costs for the Phase 1 BAL and renal impairment trials, which we initiated in June 2021. In early January 2020, we decided to proceed with SPR206 as the lead Potentiator product candidate and discontinue development of SPR741. Direct costs related to our SPR741 program were immaterial for both the six months ended June 30, 2021 and 2020.

The increase in personnel-related costs of $2.9 million was primarily a result of an increase in research and development headcount. Personnel-related costs for the six months ended June 30, 2021 and 2020 included share-based compensation expense of $1.7 million and $1.1 million, respectively.

The increase in facility-related and other costs was primarily due to the increased costs of supporting a larger research and development staff.

General and Administrative Expenses

	Six Months Ended June 30,
	2021		2020		Change
Personnel related (including share-based compensation)	$	9,148	$	4,676
Professional and consultant fees		6,950		3,082
Facility related and other		1,430		875
Total general and administrative expenses	$	17,528	$	8,633

All values are in US Dollars.

The increase in personnel-related costs of $4.5 million was primarily a result of an increase in headcount in our commercial, general and administrative functions. Personnel-related costs for the six months ended June 30, 2021 and 2020 included share-based compensation expense of $2.4 million and $1.3 million, respectively.

The increase in professional and consultant fees of $3.9 million was primarily due to increased commercial operation expenses to support the potential commercialization of tebipenem HBr, as well as increased legal expenses.

The increase in facility-related and other costs was primarily due to the increased costs of supporting a larger general and administrative staff.

Other Income (Expense), Net

Other income, net was less than $0.1 million for the six months ended June 30, 2021, compared to $0.5 million for the six months ended June 30, 2020. The changes quarter over quarter were primarily due to fluctuations in unrealized foreign currency gains, offset by interest income.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. We have recognized limited revenue to date from funding arrangements with the DoD, NIAID, CARB-X and BARDA and our license agreements with Everest and Pfizer. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for a few years, if at all. To date, we have funded our operations with proceeds from the sales of preferred units and bridge units, payments received under license and collaboration agreements and funding from government contracts, and from multiple equity financings of our common and preferred stock. As of June 30, 2021, we had cash, cash equivalents and marketable securities of $99.2 million.

On September 15, 2020, we completed an underwritten public offering of an aggregate of 4,785,000 shares of our common stock, and 3,215,000 shares of our Series D Preferred Stock. The price to the public in the offering was $10.00 per share with respect to the common stock and the Series D Preferred Stock. In addition, under the terms of the Underwriting Agreement, we granted the underwriters an option, exercisable for 30 days, to purchase up to 1,200,000 additional shares of common stock.

The shares of Series D Preferred Stock are convertible on a one-to-one basis into shares of common stock at any time at the option of the holder, provided that the holder will be prohibited from converting the Series D Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of shares of common stock then issued and outstanding, subject to certain exceptions. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series D Preferred Stock will receive a payment equal to $0.001 per share of Series D Preferred Stock before any proceeds are distributed to the holders of common stock and equal to any distributions to the holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. Shares of Series D Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series D Preferred Stock will be required to amend the terms of the Series D Preferred Stock. As such, we have classified the Series D Preferred Stock within permanent equity in its consolidated balance sheet.

In addition, pursuant to the Underwriting Agreement, on October 1, 2020, we issued and sold 1,200,000 shares of common stock at the price of $10.00 per share pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock, resulting in additional net proceeds of approximately $11.2 million after deducting underwriting discounts and commissions.

On February 11, 2020, the Company announced a rights offering pursuant to which it distributed to holders of its common stock and Series A Preferred Stock and Series B Preferred Stock, at no charge, non-transferable subscription rights to purchase shares of our common stock and Series C Preferred Stock, with an aggregate offering value of $30.0 million. For each share of common stock (including shares of common stock issuable upon conversion of the Company’s outstanding shares of Series A Preferred Stock and Series B Preferred Stock) owned by holders of record as of 5:00 p.m., New York time, on February 10, 2020, such holders received 0.152 rights to purchase shares of our common stock (subject to the aggregate offering threshold and certain ownership limitations). Each whole right allowed holders to subscribe for one share of common stock at the subscription price equal to $9.00 per whole share (or an equivalent number of shares of Series C Preferred Stock). The total number of subscription rights issued to each stockholder was rounded down to the nearest whole number.

Any participant in the rights offering that, following exercise of such participant’s subscription right, would be or become a holder of greater than 9.99% of the outstanding number of shares of the Company’s common stock following the offering could elect to instead purchase Series C Preferred Stock at a purchase price of $9,000 per share (ratably adjusted for fractional shares), and any such holder so electing had a right to purchase one one-thousandth of a share of Series C Preferred Stock for each share of common stock it had a right to purchase under the subscription rights. Each share of Series C Preferred Stock is convertible into 1,000 shares of our common stock at the election of the holder, subject to beneficial ownership conversion limits applicable to the Series C Preferred Stock. The Series C Preferred Stock generally have no voting rights, except as required by law, and participate pari passu (on an as-converted basis) with any distribution of proceeds to holders of common stock and Series A Preferred Stock and Series B Preferred Stock, in the event of the Company’s liquidation, dissolution or winding up or the payment of a dividend on the common stock.

At the closing of the rights offering on March 5, 2020, a total of 1,046,249 shares of our common stock and 2,287 shares of Series C Preferred Stock were issued for aggregate gross proceeds of $30.0 million. Issuance costs related to the offering were $0.5 million.

On December 3, 2018, we filed a universal shelf registration statement on Form S-3 (Registration No. 333-228661) with the SEC, which was declared effective on December 11, 2018, and pursuant to which we registered for sale up to $200.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, including up to $50.0 million of our common stock available for issuance pursuant to an at-the-market offering program sales agreement that we entered into with Cantor Fitzgerald & Co, or Cantor. Under the sales agreement, Cantor was permitted to sell shares of our common stock by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, subject to the terms of the sales agreement.

The prospectus underlying the “at the market” offering program was terminated on September 9, 2020 in connection with our underwritten public offering that was completed in September 2020. At such time, we had raised approximately $15.4 million in sales of our common stock under the “at the market” offering program, prior to deducting sales commissions, and had remaining available

capacity of approximately $34.6 million. On November 13, 2020, we reinstated the “at-the-market” offering program with a capacity of up to $34.0 million by filing an updated prospectus.

On March 11, 2021, we entered into a new sales agreement with Cantor and filed a new universal shelf registration statement on Form S-3 (Registration No. 333-254170), and pursuant to which we registered for sale up to $300.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, including up to $75.0 million of our common stock available for issuance pursuant to the new “at-the-market” offering program sales agreement that we entered into with Cantor. Under the new sales agreement, Cantor may sell shares of our common stock by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, subject to the terms of the new sales agreement. Our universal shelf registration statement on Form S-3 (Registration No. 333-254170) became effective on March 29, 2021 and our prior sales agreement with Cantor terminated automatically at such time.

During the six months ended June 30, 2021, we sold 257,185 shares of our common stock under the prior “at the market” agreement at an average price of approximately $17.05 per share for aggregate gross proceeds of approximately $4.4 million prior to deducting sales commissions.

The COVID-19 pandemic has resulted in ongoing volatility in financial markets. If our access to capital is restricted or associated borrowing costs increase as a result of developments in financial markets relating to the COVID-19 pandemic, our operations and financial condition could be adversely impacted.

Cash Flows

The following table summarizes our sources and uses of cash for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30,
	2021			2020
Cash used in operating activities	$	(32,046	)	$	(48,225	)
Cash provided by investing activities		13,922			46,261
Cash provided by financing activities		4,477			37,576
Net increase in cash and cash equivalents	$	(13,647	)	$	35,612

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2021 was $32.0 million, primarily resulting from our net loss of $38.0 million, adjusted for net non-cash items of $5.0 million (primarily stock-based compensation, depreciation and amortization). Net cash provided by changes in our operating assets and liabilities was $0.9 million and consisted primarily of a $4.3 million net decrease in receivables, a $1.3 million decrease in prepaid expenses and other current assets, a decrease of $3.3 million in accrued expenses, $1.4 million net activity in deferred revenue and a $0.5 million increase in accounts payable.

Net cash used in operating activities for the six months ended June 30, 2020 was $48.2 million, primarily resulting from our net loss of $40.8 million, adjusted for net non-cash items of $2.6 million (primarily stock-based compensation, depreciation, amortization, and unrealized foreign currency transaction gain). Net cash provided by changes in our operating assets and liabilities was $10.1 million and consisted primarily of a $3.5 million decrease in receivables, a $2.6 million decrease in accounts payable, a $4.3 million increase in prepaid expenses and other current assets and a decrease of $4.8 million in accrued expenses.

Changes in accounts payable, accrued expenses and other current liabilities, and prepaid expenses and other current assets in all periods were generally due to the advancement of our development programs and the timing of vendor invoicing and payments.

Investing Activities

Cash provided by investing activities during the six months ended June 30, 2021 was $13.9 million primarily related to the maturities of marketable securities of $26.5 million, offset by purchases of marketable securities of $12.6 million.

Cash provided by investing activities during the six months ended June 30, 2020 was $46.3 million primarily related to the maturities of marketable securities of $50.4 million offset by purchases of marketable securities of $4.0 million.

Financing Activities

Cash provided by financing activities during the six months ended June 30, 2021 was $4.5 million, and consisted primarily of $4.3 million net sales of common stock under our “at-the-market” offering program sales agreement and proceeds of $0.4 million from the exercise of employee stock options, offset by the payment of offering expenses of approximately $0.2 million.

Cash provided by financing activities during the six months ended June 30, 2020 was $37.6 million, consisting primarily of proceeds of $30.0 million from the sale of common stock and Series C Preferred Stock in our rights offering, proceeds of $7.3 million

from the sale of common stock under our “at-the-market” offering program sales agreement and proceeds of $0.8 million from the exercise of employee stock options, offset by offering expenses of $0.5 million.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our clinical programs and prepare for possible commercialization of one or more of our product candidates. In addition, we expect to incur additional costs associated with our continued operation as a public company. The timing and amount of our operating expenditures will depend largely on:

 the timing and costs of our ongoing and planned clinical trials;

 the initiation, progress, timing, costs and results of preclinical studies and clinical trials of our other product candidates and potential new product candidates;

 the amount of funding that we receive under government contracts that we have applied for;

 the number and characteristics of product candidates that we pursue;

 the outcome, timing and costs of seeking regulatory approvals;

 the costs of commercialization activities for tebipenem HBr and other product candidates if we receive marketing approval, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;

 the receipt of marketing approval and revenue received from any potential commercial sales of tebipenem HBr;

 the terms and timing of any future collaborations, licensing or other arrangements that we may establish;

 the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments and patent prosecution fees that we are obligated to pay pursuant to our license agreements;

 the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property related claims;

 the costs of operating as a public company; and

 the extent to which we in-license or acquire other products and technologies.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $99.2 million. In accordance with Accounting Standards Update, or ASU, 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern from the issuance date of our financial statements. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, together with the committed funding from our existing BARDA contract and other non-dilutive funding commitments, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022.

This timeline is subject to uncertainty as to the timing of future expenditures. We have developed plans to mitigate this risk, which primarily consist of raising additional capital through some combination of equity or debt financings, potential new collaborations, additional grant funding and/or reducing cash expenditures. If we are not able to secure adequate additional funding, we plan to make reductions in spending. In that event, we may have to delay, scale back, or eliminate some or all of our planned clinical trials, research stage programs and commercial activities. The actions necessary to reduce spending under this plan at a level that mitigates the factors described above is not considered probable, as defined in the accounting standards and therefore, the full extent to which management may extend our funds through these actions may not be considered in management’s assessment of our ability to continue as a going concern. As a result, management has concluded that substantial doubt exists about our ability to continue as a going concern.

Our consolidated financial statements as of December 31, 2020 were prepared under the assumption that we will not continue as a going concern for the next twelve months. As a result, the opinion from our independent registered public accounting firm with respect to our annual financial statements contains an explanatory paragraph about such substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The substantial doubt about our ability to continue as a going concern may adversely affect our stock price and our ability to raise capital. There is no assurance that we will be successful in obtaining sufficient funding on acceptable terms, if at all, and we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which could materially adversely affect our business prospects or our ability to continue operations.

We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including those listed above.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, government funding, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. The COVID-19 pandemic has resulted in ongoing volatility in financial markets. If our access to capital is restricted or associated borrowing costs increase as a result of developments in financial markets, including relating to the COVID-19 pandemic, our operations and financial condition could be adversely impacted. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

During the three months ended June 30, 2021, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended December 31, 2020.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Recently Issued and Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $99.2 million, consisting of cash, corporate bonds, commercial paper, money market accounts and U.S. government debt securities. The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. If market interest rates were to increase immediately and uniformly by 50 basis points, from levels as of June 30, 2021, the net fair value of our interest sensitive marketable securities would hypothetically decline by $0.2 million. As we incur research expenses in foreign countries, we face exposure to movements in foreign currency exchange rates, primarily the Euro, British Pound, Japanese Yen and Australian dollar against the U.S. dollar. Historically, foreign currency fluctuations have not had a material impact on our consolidated financial statements.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of

June 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) occurred during the three months ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 1A. Risk Factors.

Careful consideration should be given to the following risk factors, in addition to the other information set forth in this Quarterly Report, including the section of this Quarterly Report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, and in other documents that we file with the SEC, in evaluating our company and our business. Investing in our securities involves a high degree of risk. If any of the events described in the following risk factors actually occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected and the trading price of our securities could decline. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this Quarterly Report on Form 10-Q.

Risks Related to the COVID-19 Pandemic

The outbreak of the novel strain of coronavirus, SARS-CoV-2, which causes COVID-19, could adversely impact our business, including our preclinical studies and clinical trials.

Public health crises such as pandemics or similar outbreaks could adversely impact our business. In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (COVID-19), surfaced in Wuhan, China. Since then, COVID-19 has spread globally. In response to the spread of COVID-19 and its variants, we have implemented a hybrid working policy for all employees to aid the global containment effort.

As a result of the COVID-19 outbreak, or similar pandemics, we have experienced, and may in the future experience, certain disruptions that could materially impact our business, preclinical studies and clinical trials. Such disruptions may include:

 delays or difficulties in enrolling patients in our clinical trials;

 delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

 delays or disruptions in preclinical studies or clinical trials due to unforeseen circumstances at contract research organizations and vendors along their supply chain;

 increased rates of patients withdrawing from our clinical trials following enrollment as a result of contracting COVID-19, being forced to quarantine, or not being willing to travel to clinical trial sites;

 diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

 interruption of key clinical trial activities, such as clinical trial site data monitoring and data collection, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures (particularly any procedures that may be deemed non-essential), which may impact the integrity of subject data and clinical study endpoints;

 interruption or delays in the operations of the FDA and comparable foreign regulatory agencies, which may impact approval timelines and other agency interactions;

 interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; and

 limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, continued reliance on working from home or mass transit disruptions.

These and other factors arising from the COVID-19 pandemic could worsen in countries that are already afflicted with COVID-19 or could return to countries where the pandemic has been partially contained, each of which could further adversely impact our ability to conduct clinical trials and our business generally, and could have a material adverse impact on our business, operations and financial condition and results.

In addition, the trading prices for our common stock and the securities of other biopharmaceutical companies have been highly volatile. As a result, we may face difficulties raising capital through sales of our common stock or such sales may be on unfavorable terms. The COVID-19 outbreak continues to evolve rapidly. The extent to which the outbreak may impact our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel restrictions and actions to contain the outbreak or treat its impact, such as social distancing and quarantines or lock-downs in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Risks Related to Our Financial Position and Need for Additional Capital

We have not generated any revenue from the sale of our products, have a history of losses and expect to incur substantial future losses. The report of our auditor on our consolidated financial statements expresses substantial doubt about our ability to continue as a going concern; if we are unable to obtain additional capital, we may not be able to continue our operations on the scope or scale as currently conducted, and that could have a material adverse effect on our business, results of operations and financial condition.

We have not generated any revenue from the sale of our products and have incurred losses in each year since our inception in 2013. Our net loss was $38.0 million and $40.8 million during the six months ended June 30, 2021 and 2020, respectively. All of our product candidates are in development, none have been approved for sale and we may never have a product candidate approved for commercialization.

In accordance with Accounting Standards Update, or ASU, 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern from the issuance date of our financial statements. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, together with the committed funding from our existing BARDA contract and other non-dilutive funding commitments, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022. This timeline is subject to uncertainty as to the timing of future expenditures. We have developed plans to mitigate this risk, which primarily consist of raising additional capital through some combination of equity or debt financings, potential new collaborations, additional grant funding and/or reducing cash expenditures. If we are not able to secure adequate additional funding, we plan to make reductions in spending. In that event, we may have to delay, scale back, or eliminate some or all of our planned clinical trials, research stage programs and commercial activities. The actions necessary to reduce spending under this plan at a level that mitigates the factors described above is not considered probable, as defined in the accounting standards and therefore, the full extent to which management may extend our funds through these actions may not be considered in management’s assessment of our ability to continue as a going concern. As a result, we have concluded that substantial doubt exists about our ability to continue as a going concern.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future; if we are unable to achieve commercialization, revenue from product sales, and, ultimately, profitability, the market value of our common stock will likely decline.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we continue to advance our product candidates through preclinical and clinical development and seek marketing approval for such candidates if clinical trials are successful. Our expenses will also increase substantially if and as we:

 conduct additional clinical trials and studies of our product candidates;

 continue to discover and develop additional product candidates;

 establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval;

 establish manufacturing and supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain marketing approval;

 maintain, expand and protect our intellectual property portfolio;

 hire additional clinical, scientific and commercial personnel;

 add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and

 acquire or in-license other product candidates and technologies.

If our product candidates fail to demonstrate safety and efficacy in clinical trials, do not gain regulatory approval, or do not achieve market acceptance following regulatory approval and commercialization, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.

Because of the numerous risks and uncertainties associated with developing biopharmaceutical products, we are unable to predict the extent of any future losses or when, if ever, we will become profitable. Our expenses could increase if we are required by the FDA, or any comparable foreign regulatory authority to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product candidates.

We expect that we will need substantial additional funding. If we are unable to raise capital when needed, or do not receive payment under our government awards, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete. We expect that our expenses will continue to increase as we commence and advance our ongoing and planned clinical trials and other studies of tebipenem HBr, SPR720 and SPR206, seek marketing approval for tebipenem HBr, and evaluate the advancement of our other product candidates. If we obtain marketing approval for tebipenem HBr or any other product candidate, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing. Some of these expenses may be incurred in advance of marketing approval, and could be substantial. Accordingly, we will be required to obtain further funding through public or private equity offerings, debt financings, collaborations, licensing arrangements, government funding or other sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative effect on our financial condition and our ability to pursue our business strategy.

Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, together with the committed funding from our existing BARDA contract and other non-dilutive funding commitments, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022. Our cash forecasts are based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. Our future funding requirements, both short-term and long-term, will depend on many factors, including:

 the timing, costs and results of our ongoing, planned and potential clinical trials for our product candidates;

 the amount of funding that we receive under our government awards;

 the number and characteristics of product candidates that we pursue;

 the outcome, timing and costs of seeking regulatory approvals;

 the receipt of marketing approval and revenue received from any potential commercial sales of tebipenem HBr;

 the terms and timing of any future collaborations, licensing or other arrangements that we may establish;

 the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property related claims;

 the costs of our continued operation as a public company; and

 the extent to which we in-license or acquire other products and technologies.

As of June 30, 2021, our non-dilutive sources of funding consisted of an award from BARDA for tebipenem HBr, an award from NIAID under its Small Business Innovation Research program or SBIR, for our SPR720 program, an award from NIAID for SPR206, an award from the DoD that provides partial funding for the development of our Potentiator product candidates and an award from the DoD Congressionally Directed Medical Research Programs, or CDMRP, Joint Warfighter Medical Research Program for SPR206.

The BARDA award provides total reimbursement to us of $46.8 million for qualified expenses for tebipenem HBr development over a five-year period through November 2021. The award initially committed funding of $15.7 million over a three-year base period from July 2018 to June 2021 for cUTI development activities. In May 2019, the contract was modified to include additional funding of approximately $2.5 million for tebipenem HBr, increasing the amount of initial committed funding from $15.7 million to approximately $18.2 million. In February 2020, BARDA exercised its first option under the contract, committing $15.9 million for tebipenem HBr through November 2021. Total committed funding under the BARDA award to date is $34.1 million, including the first option exercised in 2020. There is a second option exercisable by BARDA for the remaining $12.7 million of funding, subject to specified milestones being achieved under the award agreement. As part of our tebipenem HBr collaboration with BARDA described above, there will be studies assessing the efficacy of tebipenem HBr in treatment of infections caused by biodefense threats such as anthrax, plague, and melioidosis, including a clinical trial in pneumonia patients. The Defense Threat Reduction Agency, or DTRA, will provide up to $10.0 million in addition to the total potential $46.8 million from BARDA, to cover the cost of the nonclinical biodefense aspects of the collaboration program. While such funding would be for the purpose of developing tebipenem HBr in these areas, we will not receive any funds directly from DTRA. Upon these achievements, BARDA may exercise its second option to fund a Phase 2 clinical trial in community-acquired bacterial pneumonia patients to demonstrate safety and data suggestive of efficacy.

The NIAID contract awarded in June 2016 for SPR206 provides for total development funding of up to $6.5 million over a base period and three option periods. To date, funding for the base period and the first two option periods totaling $5.9 million have been committed. The NIAID contract awarded in May 2021 for SPR206 provides total development funding of up to $23.4 million, of which $2.1 million has been committed. The NIAID SBIR award is structured as a base period followed by a single option. For the base period of March 1, 2017 through February 28, 2018, NIAID committed funding of approximately $0.6 million for the SPR720 program. In February 2018 NIAID exercised the approximately $0.4 million option, which had an initial a period of performance from March 1, 2018 through February 28, 2019. In January 2019, the period of performance for this award was extended for an additional 12-month period. Our DoD cooperative agreement is structured as a single, two-year $1.5 million award. We are eligible for the full funding from the DoD and there are no options to be exercised at a later date. The NIAID award is subject to termination for convenience at any time by NIAID. NIAID is not obligated to provide funding to us beyond the base period amounts from Congressionally approved annual appropriations. The DoD CDMRP award commits funding of $5.9 million over a four-year period to cover the costs of select Phase 1 pharmacology studies, 28-day GLP non-human primate toxicology study and microbiological surveillance studies that would be required for a potential NDA submission with the FDA for SPR206.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements and government funding arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. We filed a universal shelf registration statement on Form S-3 (Registration No. 333-254170) with the SEC on March 11, 2021, which was declared effective on March 29, 2021 and pursuant to which we registered for sale up to $300.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, including up to $75.0 million of our common stock available for issuance pursuant to an “at-the-market” offering program sales agreement that we entered into with Cantor Fitzgerald & Co., or Cantor. Under the sales agreement, Cantor may sell shares of our common stock by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, subject to the terms of the sales agreement.

We may seek to raise additional capital at any time. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest of our then existing stockholders may be materially diluted, and the terms of these securities could include liquidation or other preferences and anti-dilution protections that could adversely affect the rights of our stockholders. In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely affect our ability to conduct our business. In addition, securing additional financing would require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us.

Our ability to use our net operating loss carryforwards may be limited.

As of December 31, 2020, we had United States federal, state and foreign net operating loss carryforwards, or NOLs, of $228.1 million, $226.2 million and $10.7 million, respectively. The federal NOLs of $73.0 million will expire at various dates from 2033 to 2037 and approximately $155.1 million can be carried forward indefinitely. The state NOLs begin to expire in 2033 and will expire at various dates through 2039. The foreign NOLs do not expire. Utilization of these NOLs depends on many factors, including our future income, which cannot be assured. These NOLs could expire unused and be unavailable to offset our future income tax liabilities. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership by 5% stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change income may be limited. We have not determined if we have experienced Section 382 ownership changes in the past and if a portion of our NOLs is subject to an annual limitation under Section 382. In addition, we may experience ownership changes in the future as a result of subsequent changes in our stock ownership, some of which may be outside of our control. If we determine that an ownership change has occurred and our ability to use our historical NOLs is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.

Under current United States federal tax legislation, although the treatment of net operating loss carryforwards arising in tax years beginning on or before December 31, 2017 has generally not changed, net operating loss carryforwards arising in tax years beginning after December 31, 2017 may be used to offset only 80% of taxable income. In addition, net operating losses arising in tax years beginning after December 31, 2017 may be carried forward indefinitely, as opposed to the 20-year carryforward under prior law.

We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability.

We were established in 2013 and began operations in 2014. Our operations to date have been limited to financing and staffing our company, developing our technology and developing tebipenem HBr and our other product candidates. We have not yet demonstrated an ability to successfully obtain marketing approval, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.

We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our business objectives. We will eventually need to transition from a company with a development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, stockholders should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

Risks Related to Product Development and Commercialization

We are heavily dependent on the success of tebipenem HBr, which is still under development, and our ability to develop, obtain marketing approval for and successfully commercialize tebipenem HBr. If we are unable to develop, obtain marketing approval for and successfully commercialize tebipenem HBr, or if we experience significant delays in doing so, our business could be materially harmed.

We currently have no products approved for sale and have invested a significant portion of our efforts and financial resources in the development of tebipenem HBr as a product candidate for the treatment of MDR bacterial infections. Our near-term prospects are substantially dependent on our ability to develop, obtain marketing approval for and successfully commercialize tebipenem HBr. The success of tebipenem HBr will depend on several factors, including the following:

 successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;

 receipt of marketing approvals from applicable regulatory authorities;

 establishment of arrangements with third-party manufacturers to obtain manufacturing supply in compliance with all regulatory requirements;

 protection of our rights in our intellectual property portfolio;

 launch of commercial sales of tebipenem HBr, if approved, whether alone or in collaboration with others;

 acceptance of tebipenem HBr, if approved, by patients, the relevant medical communities and third-party payors;

 competition with other therapies;

 establishment and maintenance of adequate health care coverage and reimbursement;

 continued compliance with any post-marketing requirements imposed by applicable regulatory authorities, including any required post-marketing clinical trials or the elements of any post-marketing Risk Evaluation and Mitigation Strategy, or REMS, that may be required by the FDA or comparable requirements in other jurisdictions to ensure the benefits of tebipenem HBr outweigh its risks; and

 a continued acceptable safety profile of tebipenem HBr following approval.

Successful development of tebipenem HBr for any additional indications would be subject to these same risks.

Many of these factors are beyond our control, including clinical development, the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any future collaborator. If we are unable to develop, receive marketing approval for, or successfully commercialize tebipenem HBr, or if we experience delays as a result of any of these factors or otherwise, our business could be materially harmed. Even if we successfully obtain regulatory approvals to manufacture and market tebipenem HBr, our revenues will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such product, if approved.

We have no experience as a company in obtaining regulatory approval for a drug.

As a company, we have never obtained regulatory approval for, or commercialized, a drug. It is possible that the FDA may refuse to accept any or all of our planned new drug applications, or NDAs, for substantive review or may conclude after review of our data that our application is insufficient to obtain regulatory approval for any current or future product candidates. If the FDA does not approve any of our planned NDAs, it may require that we conduct additional costly clinical, nonclinical or manufacturing validation studies before it will reconsider our applications. Depending on the extent of these or any other FDA-required studies, approval of any NDA or other application that we submit may be significantly delayed, possibly for several years, or may require us to expend more resources than we have available. Any failure or delay in obtaining regulatory approvals would prevent us from commercializing tebipenem HBr or any of our other product candidates for which we may seek regulatory approval, generating revenues and achieving and sustaining profitability. It is also possible that additional studies, if performed and completed, may not be considered sufficient by the FDA to approve any NDA or other application that we submit. If any of these outcomes occur, we may be forced to abandon the development of our product candidates, which would materially adversely affect our business and could potentially cause us to cease operations. We face similar risks for our applications in foreign jurisdictions.

If clinical trials of product candidates that we advance to clinical trials fail to demonstrate safety and efficacy to the satisfaction of the FDA or comparable foreign regulatory authorities or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.

We may not commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approval from the FDA or in other countries without obtaining approvals from comparable foreign regulatory authorities, such as the European Medicines Agency, or EMA, and we may never receive such approvals. We must complete extensive preclinical development and clinical trials to demonstrate the safety and efficacy of our product candidates in humans before we will be able to obtain these approvals. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. We have not previously submitted an NDA to the FDA or similar applications to comparable foreign regulatory authorities for any of our product candidates.

The clinical development of tebipenem HBr, SPR720 and any of our other product candidates is susceptible to the risk of failure inherent at any stage of drug development, including failure to demonstrate efficacy in a trial or across a broad population of patients, the occurrence of severe adverse events, failure to comply with protocols or applicable regulatory requirements, and determination by the FDA or any comparable foreign regulatory authority that a drug product is not approvable. A number of companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in clinical trials, even after promising results in earlier nonclinical studies or clinical trials. The results of preclinical and other nonclinical studies and/or early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Notwithstanding any promising results in

early nonclinical studies or clinical trials, we cannot be certain that we will not face similar setbacks. For example, although tebipenem HBr is a new formulation of the active pharmaceutical ingredient tebipenem that exhibited a favorable safety and efficacy profile during clinical trials conducted by Meiji and a global pharmaceutical company, which we refer to as Global Pharma, in Japan, we may nonetheless fail to obtain regulatory approval for tebipenem HBr for the treatment of cUTI based on the results of our recently completed Phase 3 clinical trial and those supporting foreign data.

In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for the product candidates. Even if we believe that the results of our clinical trials warrant marketing approval, the FDA or comparable foreign regulatory authorities may disagree and may not grant marketing approval of our product candidates.

In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, adherence to the dosing regimen and other trial protocols and the rate of dropout among clinical trial participants, among others. It is possible that even if one or more of our product candidates has a beneficial effect, that effect will not be detected during clinical evaluation as a result of one of the factors listed or otherwise. Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. Similarly, in our clinical trials, we may fail to detect toxicity of or intolerability of our product candidates or may determine that our product candidates are toxic or not well tolerated when that is not in fact the case. In the case of our clinical trials, results may differ on the basis of the type of bacteria with which patients are infected. We cannot make assurances that any clinical trials that we may conduct will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market our product candidates.

We may encounter unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent us from obtaining regulatory approval for tebipenem HBr or any of our other product candidates, including:

 the FDA or other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials;

 we may be delayed in or fail to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

 clinical trials of our product candidates may produce unfavorable or inconclusive results;

 we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

 the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or we may fail to recruit suitable patients to participate in clinical trials;

 our third-party contractors, including those manufacturing our product candidates or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

 the FDA or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

 regulators or institutional review boards may require that we or our investigators suspend or terminate clinical trials of our product candidates for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate;

 the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we enter into agreements for clinical and commercial supplies;

 the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; and

 the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the institutional review boards, or IRBs, of the institutions in which such trials are being conducted, by the Data Safety Monitoring Board, or DSMB, if any, for such trial or by the FDA or other regulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen

safety issues or adverse side effects, failure to demonstrate a benefit from using a drug or changes in governmental regulations or administrative actions. On February 5, 2021, we announced that the FDA informed us that a clinical hold had been placed on our Phase 2a clinical trial of SPR720 following mortality events in a non-human primate toxicology study.

If we are required to conduct additional clinical trials or other testing of tebipenem HBr, SPR720 or any other product candidate beyond the trials and testing that we contemplate, if we are unable to successfully complete clinical trials or other testing of our product candidates, if the results of these trials or tests are unfavorable or are only modestly favorable or if there are safety concerns associated with tebipenem HBr or any other product candidate, we may:

 incur additional unplanned costs;

 be delayed in obtaining marketing approval for our product candidates;

 not obtain marketing approval at all;

 obtain approval for indications or patient populations that are not as broad as intended or desired;

 obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxed warnings;

 be subject to additional post-marketing testing or other requirements; or

 be required to remove the product from the market after obtaining marketing approval.

Our failure to successfully initiate and complete clinical trials of our product candidates and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market any of our product candidates would significantly harm our business. Our product candidate development costs will also increase if we experience delays in testing or marketing approvals and we may be required to obtain additional funds to complete clinical trials. We cannot make assurances that our clinical trials will begin as planned or be completed on schedule, if at all, or that we will not need to restructure our trials after they have begun. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates, which may harm our business and results of operations. In addition, many of the factors that cause, or lead to, delays of clinical trials may ultimately lead to the denial of regulatory approval of tebipenem HBr or any other product candidate.

If we experience delays or difficulties in the enrollment of patients in clinical trials, clinical development activities could be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. We may not be able to initiate, continue or complete clinical trials of our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in clinical trials as required by the FDA or comparable foreign regulatory authorities, such as the EMA. Patient enrollment is a significant factor in the timing of clinical trials, and is affected by many factors, including:

 the size and nature of the target patient population;

 the severity of the disease under investigation;

 the proximity of patients to clinical sites;

 the patient eligibility criteria for participation in the clinical trial;

 the design of the clinical trial;

 our ability to recruit clinical trial investigators with appropriate competencies and experience;

 competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications that we are investigating;

 our ability to obtain and maintain patient consents; and

 the risk that patients enrolled in clinical trials will drop out of the trials before completion.

Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or might require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, slow down or halt our product candidate development and approval process and jeopardize our ability to seek and obtain the marketing approval required to commence product sales and generate revenue, which would cause the value of our company to decline and limit our ability to obtain additional financing if needed.

To support our accelerated clinical development strategy for tebipenem HBr, we are relying, in part, on clinical data from two exploratory Phase 2 clinical trials conducted by Meiji (ME1211) and Global Pharma (L-084 04) in Japan, which were not conducted in accordance with FDA guidance for clinical trials in patients with cUTI. To the extent that these clinical trial design differences limit our use of the clinical data, our proposed clinical trial plan for tebipenem HBr with the FDA could be materially delayed and we may incur material additional costs.

There are significant differences in the trial design for the two exploratory Phase 2 clinical trials conducted by Meiji and its partner in Japan compared to the clinical trial design described by the FDA in its guidance for clinical trials in patients with cUTI, including:

 The studies were not randomized and were open-label and had no comparator arm. Treatment assignments were made by the investigators;

 The inclusion criteria specified complicated UTI as an entry criterion, but other than retained residual volume (100 ml) there were no other criteria defining “complicated” UTI;

 While L-084 04 excluded patients who received prior antibiotics and who had no clinical response, there were no parameters or limits for inclusion (e.g., less than 24 hours of a potentially effective antibiotic or number of doses). ME1211 did not specifically mention prior antibiotic use;

 While urine cultures were obtained at baseline, these were not quantitative, and there was no minimum requirement for bacterial load for entry;

 While microbiological outcome was assessed, the definitions did not include a minimum reduction in bacterial counts (i.e., a reduction to less than 104 cfu/ml);

 Clinical outcomes were global assessments by the investigators and did not specifically mention the resolution of baseline signs and symptoms; and

 The primary endpoint was not a composite of both clinical and microbiological outcomes.

To the extent that these clinical trial design differences limit our use of the clinical data, our proposed clinical trial plan for tebipenem HBr with the FDA could be materially delayed and we may incur material additional costs.

Preliminary or interim data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

We currently have no products approved for sale and we cannot guarantee that we will ever have marketable products. Clinical failure can occur at any stage of clinical development. Clinical trials may produce negative or inconclusive results, and we or any future collaborators may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies. We will be required to demonstrate with substantial evidence through well-controlled clinical trials that our product candidates are safe and effective for use in a diverse population before we can seek marketing approvals for their commercial sale. Success in preclinical studies and early-stage clinical trials does not mean that future larger registration clinical trials will be successful. This is because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety and efficacy to the satisfaction of the FDA and comparable foreign regulatory authorities despite having progressed through preclinical studies and early-stage clinical trials.

Preliminary or interim data from our clinical studies are not necessarily predictive of final data. Preliminary and interim data are subject to the risk that one or more of the clinical outcomes may materially change, as more patient data become available and we issue our final clinical study report. Preliminary or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could affect our planned clinical path for tebipenem HBr, SPR720 or other product candidates we advance into clinical trials, including potentially increasing cost and/or causing delay in such development.

In some instances, there can be significant variability in safety and efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial protocols, differences in size and type of the patient populations, differences in and adherence to the dosing regimen and other trial protocols and the rate of dropout among clinical trial participants. We therefore do not know whether any clinical trials we may conduct will demonstrate consistent or adequate efficacy and safety sufficient to obtain marketing approval to market our product candidates.

Serious adverse events or undesirable side effects or other unexpected properties of tebipenem HBr or any other product candidate may be identified during development or after approval that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

Serious adverse events or undesirable side effects caused by, or other unexpected properties of, our product candidates could cause us, an institutional review board, or regulatory authorities to interrupt, delay or halt our clinical trials and could result in a more restrictive label, the imposition of distribution or use restrictions or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. If tebipenem HBr or any of our other product candidates is associated with serious or unexpected adverse events or undesirable side effects, the FDA, the IRBs at the institutions in which our studies are conducted, or a DSMB, could suspend or terminate our clinical trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

To date, patients treated with the active ingredient in tebipenem HBr have experienced drug-related side effects including diarrhea, temporary increases in hepatic enzymes, allergic reactions, rashes and convulsions. To date, tebipenem HBr has generally been well tolerated in clinical trials and there have been no reports of serious adverse events related to tebipenem HBr, but additional adverse events may emerge in any subsequent clinical trials.

If unexpected adverse events occur in any of our ongoing or planned clinical trials, we may need to abandon development of our product candidates, or limit development to lower doses or to certain uses or subpopulations in which the undesirable side effects or other unfavorable characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in clinical or earlier stage testing are later found to cause undesirable or unexpected side effects that prevented further development of the compound.

Undesirable side effects or other unexpected adverse events or properties of tebipenem HBr or any of our other product candidates could arise or become known either during clinical development or, if approved, after the approved product has been marketed. If such an event occurs during development, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of, or could deny approval of, tebipenem HBr or our other product candidates. If such an event occurs after such product candidates are approved, a number of potentially significant negative consequences may result, including:

 regulatory authorities may withdraw or limit their approval of such product;

 we may decide to or be required to recall a product or change the way such product is administered to patients;

 regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication, or impose distribution or use restrictions;

 regulatory authorities may require one or more post-market studies to monitor the safety and efficacy of the product;

 we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, including the creation of a medication guide outlining the risks of such side effects for distribution to patients;

 we could be sued and held liable for harm caused to patients exposed to or taking our product candidates;

 our product may become less competitive; and

 our reputation may suffer.

We believe that any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate, if approved, or could substantially increase commercialization costs and expenses, which could delay or prevent us from generating revenue from the sale of our products and harm our business and results of operations.

Even if a product candidate does obtain regulatory approval, it may never achieve the market acceptance by physicians, patients, hospitals, third-party payors and others in the medical community that is necessary for commercial success and the market opportunity may be smaller than we estimate.

Even if we obtain FDA or other regulatory approvals and are able to launch tebipenem HBr or any other product candidate commercially, the approved product candidate may nonetheless fail to gain sufficient market acceptance among physicians, patients, hospitals (including pharmacy directors) and third-party payors and, ultimately, may not be commercially successful. For example, physicians are often reluctant to switch their patients from existing therapies even when new and potentially more effective or convenient treatments enter the market. Further, patients often acclimate to the therapy that they are currently taking and do not want to switch unless their physicians recommend switching products or they are required to switch therapies due to lack of coverage and reimbursement for existing therapies. If an approved product candidate does not achieve an adequate level of acceptance, we may not generate significant product revenues or any profits from operations. The degree of market acceptance of any product candidate for which we receive approval depends on a number of factors, including:

 the efficacy and safety of the product candidate as demonstrated in clinical trials;

 relative convenience and ease of administration;

 the clinical indications for which the product candidate is approved;

 the potential and perceived advantages and disadvantages of the product candidates, including cost and clinical benefit relative to alternative treatments;

 the willingness of physicians to prescribe the product and of the target patient population to try new therapies;

 the willingness of hospital pharmacy directors to purchase the product for their formularies;

 acceptance by physicians, patients, operators of hospitals and treatment facilities and parties responsible for coverage and reimbursement of the product;

 the availability of coverage and adequate reimbursement by third-party payors and government authorities;

 the effectiveness of our sales and marketing efforts;

 the strength of marketing and distribution support;

 limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling or an approved risk evaluation and mitigation strategy;

 whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy for particular infections;

 the approval of other new products for the same indications;

 the timing of market introduction of the approved product as well as competitive products;

 adverse publicity about the product or favorable publicity about competitive products;

 the emergence of bacterial resistance to the product; and

 the rate at which resistance to other drugs in the target infections grows.

Any failure by tebipenem HBr or any other product candidate that obtains regulatory approval to achieve market acceptance or commercial success would adversely affect our business prospects.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we intend to focus on developing product candidates for specific indications that we identify as most likely to succeed, in terms of both their potential for marketing approval and commercialization. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that may prove to have greater commercial potential.

Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to the product candidate.

If we are unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing tebipenem HBr or any other product candidate if such product candidate is approved.

We do not have a sales, marketing or distribution infrastructure and we have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsource those functions to third parties. We intend to build a commercial organization in the United States and recruit experienced sales, marketing and distribution professionals. The development of sales, marketing and distribution capabilities will require substantial resources, will be time-consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing and distribution capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization costs. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel. In addition, we may not be able to hire a sales force in the United States that is sufficient in size or has adequate expertise in the medical markets that we intend to target. If we are unable to establish a sales force and marketing and distribution capabilities, our operating results may be adversely affected.

Factors that may inhibit our efforts to commercialize our products on our own include:

 our inability to recruit and retain adequate numbers of effective sales and marketing personnel;

 the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products;

 the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

 unforeseen costs and expenses associated with creating an independent sales and marketing organization.

We intend to use collaborators to assist with the commercialization of tebipenem HBr and any other product candidate outside the United States. As a result of entering into arrangements with third parties to perform sales, marketing and distribution services, our product revenues or the profitability of these product revenues to us would likely be lower than if we were to directly market and sell products in those markets. Furthermore, we may be unsuccessful in entering into the necessary arrangements with third parties or may be unable to do so on terms that are favorable to us. In addition, we likely would have little control over such third parties, and any of them might fail to devote the necessary resources and attention to sell and market our products effectively.

If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

We face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suffer if we fail to compete effectively.

The development and commercialization of new drug products is highly competitive. We face competition from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to tebipenem HBr and our other product candidates that we may seek to develop and commercialize in the future. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product candidates for the treatment of resistant infections. Potential competitors also include academic institutions, government agencies and other public and private research organizations. Our competitors may succeed in developing, acquiring or licensing technologies and drug products that are more effective or less costly than tebipenem HBr or any other product candidates that we are currently developing or that we may develop, which could render our product candidates obsolete and noncompetitive.

There are a variety of available oral therapies marketed for the treatment urinary tract infections that we would expect would compete with tebipenem HBr, such as Levaquin, Cipro and Bactrim. Many of the available therapies are well established and widely accepted by physicians, patients and third-party payors. Insurers and other third-party payors may also encourage the use of generic products, for example in the fluoroquinolone class. However, the susceptibility of urinary tract pathogens to the existing treatment alternatives is waning. If tebipenem HBr is approved, the pricing may be at a significant premium over other competitive products. This may make it difficult for tebipenem HBr to compete with these products.

There are also a number of oral product candidates in clinical development by third parties that are intended to treat UTIs. Some mid- to late-stage product candidates include ceftibuten/clavulanate, or C-Scape from Cipla Therapeutics, Inc., and sulopenem from Iterum Therapeutics Limited. If our competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for their product candidates more rapidly than us, it could result in our competitors establishing a strong market position before we are able to enter the market.

There are several IV-administered products marketed for the treatment of infections resistant to first-line therapy for Gram-negative infections, including ceftazidime-avibactam, or Avycaz, from Allergan plc and Pfizer Inc., ceftolozane-tazobactam, or Zerbaxa, from Merck & Co., imipenem/cilastatin and relebactam, or Recarbrio, from Merck & Co., plazomicin, or Zemdri, from Cipla Therapeutics, Inc., cefiderocol, or Fetroja, from Shionogi & Co. Ltd., eravacycline, or Xerava, from Tetraphase Pharmaceuticals, Inc. and meropenem-vaborbactam, or Vabomere, from Melinta Therapeutics, Inc.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

In July 2012, the Food and Drug Administration Safety and Innovation Act was passed, which included the Generating Antibiotics Incentives Now Act, or the GAIN Act. The GAIN Act is intended to provide incentives for the development of new, qualified infectious disease products. In December 2016, the Cures Act was passed, providing additional support for the development of new infectious disease products. These incentives may result in more competition in the market for new antibiotics, and may cause

pharmaceutical and biotechnology companies with more resources than we have to shift their efforts towards the development of product candidates that could be competitive with tebipenem HBr and our other product candidates.

Even if we are able to commercialize tebipenem HBr or any other product candidate, the product may become subject to unfavorable pricing regulations, or third-party payor coverage and reimbursement policies that could harm our business.

Marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, which may negatively affect the revenues that we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval.

We currently expect that some of our product candidates, if approved, will be administered in a hospital inpatient setting. In the United States, governmental and other third-party payors generally reimburse hospitals a single bundled payment established on a prospective basis intended to cover all items and services provided to the patient during a single hospitalization. Hospitals bill third-party payors for all or a portion of the fees associated with the patient’s hospitalization and bill patients for any deductibles or co-payments. Because there is typically no separate reimbursement for drugs administered in a hospital inpatient setting, some of our target customers may be unwilling to adopt our product candidates in light of the additional associated cost. If we are forced to lower the price we charge for our product candidates, if approved, our gross margins may decrease, which would adversely affect our ability to invest in and grow our business.

To the extent tebipenem HBr or any other product candidate we develop is used in an outpatient setting, the commercial success of our product candidates will depend substantially, both domestically and abroad, on the extent to which coverage and reimbursement for these products and related treatments are available from government health programs and third-party payors. If coverage is not available, or reimbursement is limited, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investments. Government authorities and third-party payors, such as health insurers and managed care organizations, publish formularies that identify the medications they will cover and the related payment levels. The healthcare industry is focused on cost containment, both in the United States and elsewhere. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably.

Increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new technologies and are challenging the prices charged. We cannot be sure that coverage will be available for tebipenem HBr or any other product candidate that we commercialize and, if available, that the reimbursement rates will be adequate. Further, the net reimbursement for outpatient drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. An inability to promptly obtain coverage and adequate payment rates from both government-funded and private payors for any approved products used on an outpatient basis that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

We cannot predict whether bacteria may develop resistance to tebipenem HBr or our other product candidates, which could affect their revenue potential.

We are developing tebipenem HBr and certain of our other product candidates to treat drug-resistant bacterial infections. The bacteria responsible for these infections evolve quickly and readily transfer their resistance mechanisms within and between species. We cannot predict whether or when bacterial resistance to tebipenem HBr or any of such other product candidates may develop.

As a carbapenem, tebipenem HBr is not active against organisms expressing a resistance mechanism mediated by enzymes known as carbapenemases. Although occurrence of this resistance mechanism is currently rare, we cannot predict whether carbapenemase-mediated resistance will become widespread in regions where we intend to market tebipenem HBr if it is approved. The growth of drug resistant infections in community settings or in countries with poor public health infrastructures, or the potential use of tebipenem HBr or any of our other product candidates outside of controlled hospital settings, could contribute to the rise of resistance. If resistance to tebipenem HBr or any of our other product candidates becomes prevalent, our ability to generate revenue from tebipenem HBr or such product candidates could suffer.

If we are not successful in discovering, developing and commercializing additional product candidates, our ability to expand our business and achieve our strategic objectives would be impaired.

Although a substantial amount of our efforts will focus on our ongoing and planned clinical trials and potential approval of our lead product candidate, tebipenem HBr, SPR720 and our Potentiator product candidate, SPR206, a key element of our strategy is to discover, develop and commercialize a portfolio of therapeutics to treat drug resistant bacterial infections. We are seeking to do so

through our internal research programs and are exploring, and intend to explore in the future, strategic partnerships for the development of new product candidates.

Research programs to identify product candidates require substantial technical, financial and human resources, whether or not any product candidates are ultimately identified. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including the following:

 the research methodology used may not be successful in identifying potential product candidates;

 we may be unable to successfully modify candidate compounds to be active in Gram-negative bacteria or defeat bacterial resistance mechanisms or identify viable product candidates in our screening campaigns;

 competitors may develop alternatives that render our product candidates obsolete;

 product candidates that we develop may nevertheless be covered by third parties’ patents or other exclusive rights;

 a product candidate may, on further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;

 a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;

 a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors; and

 the development of bacterial resistance to potential product candidates may render them ineffective against target infections.

If we are unsuccessful in identifying and developing additional product candidates, our potential for growth may be impaired.

Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization of any products that we may develop.

We face an inherent risk of product liability claims as a result of the clinical testing of our product candidates despite obtaining appropriate informed consents from our clinical trial participants. We will face an even greater risk if we obtain marketing approval for and commercially sell tebipenem HBr or any other product candidate. For example, we may be sued if any product that we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates. Regardless of the merits or eventual outcome, liability claims may result in:

 reduced resources for our management to pursue our business strategy;

 decreased demand for our product candidates or products that we may develop;

 injury to our reputation and significant negative media attention;

 withdrawal of clinical trial participants;

 initiation of investigations by regulators;

 product recalls, withdrawals or labeling, marketing or promotional restrictions;

 significant costs to defend resulting litigation;

 substantial monetary awards to trial participants or patients;

 loss of revenue; and

 the inability to commercialize any products that we may develop.

Although we maintain general liability insurance and clinical trial liability insurance, this insurance may not fully cover potential liabilities that we may incur. The cost of any product liability litigation or other proceeding, even if resolved in our favor, could be substantial. We will need to increase our insurance coverage if and when we receive marketing approval for and begin selling tebipenem HBr or any other product candidate. In addition, insurance coverage is becoming increasingly expensive. If we are unable to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibit the development and commercial production and sale of our product candidates, which could adversely affect our business, financial condition, results of operations and prospects.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. From time to time and in the future, our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products. Even if we contract with third parties for the disposal of these materials and wastes, we cannot completely eliminate the risk of contamination or injury resulting from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.

We maintain workers’ compensation insurance to cover us for costs and expenses that we may incur due to injuries to our employees resulting from the use of hazardous materials, but this insurance may not provide adequate coverage against potential liabilities. Moreover, we do not currently maintain insurance for environmental liability or toxic tort claims that may be asserted against us.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, including public health measures in place due to the ongoing COVID-19 pandemic. Current or future environmental laws and regulations may impair our research, development or production efforts, which could adversely affect our business, financial condition, results of operations or prospects. In addition, failure to comply with these laws and regulations may result in substantial fines, penalties or other sanctions.

Our internal computer systems, or those of our contract research organizations or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs, and could subject us to liability.

We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities. As the use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their effects.

Despite the implementation of security measures, our internal computer systems and those of our contract research organizations and other contractors and consultants are vulnerable to damage or disruption from hacking, computer viruses, software bugs, unauthorized access, natural disasters, terrorism, war, and telecommunication, equipment and electrical failures. While we have not, to our knowledge, experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations or the operations of those third parties with which we contract, it could result in a material disruption of our programs and our business operations. For example, the loss of clinical trial data from completed or ongoing clinical trials for any of our product candidates could result in delays in our development and regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure or theft of confidential or proprietary information, we could incur liability, the further development of our product candidates could be delayed, or our competitive position could be compromised.

Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in enforcement actions by the United States, the United States Federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations. Because of the rapidly moving nature of technology and the increasing sophistication of cybersecurity threats, our measures to prevent, respond to and minimize such risks may be unsuccessful.

In addition, the European Parliament and the Council of the European Union adopted a comprehensive general data privacy regulation, or GDPR, in 2016 to replace the current European Union Data Protection Directive and related country-specific legislation. The GDPR took effect in May 2018 and governs the collection and use of personal data in the European Union. The GDPR, which is wide-ranging in scope, will impose several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, enhances enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the infringer, whichever is greater.

The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR has been and will continue to be a rigorous and time-intensive process that has increased and will continue to increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we or our collaborators may be subject to fines and penalties, litigation and reputational harm in connection with any European activities, which could adversely affect our business, prospects, financial condition and results of operations.

In addition, in June 2018, California enacted the California Consumer Privacy Act, or CCPA, which takes effect on January 1, 2020. The CCPA gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation. Although the CCPA includes exemptions for certain clinical trials data, and HIPAA protected health information, the law may increase our compliance costs and potential liability with respect to other personal information we collect about California residents. The CCPA has prompted a number of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, increase our compliance costs and adversely affect our business.

We or third parties upon whom we depend may be adversely affected by natural disasters and/or health epidemics, and our business, financial condition and results of operations could be adversely affected.

Natural disasters could severely disrupt our operations and have a material adverse effect on our business operations. If a natural disaster, health epidemic, such as COVID-19, or other event beyond our control occurred that prevented us from using all or a significant portion of our office, that damaged critical infrastructure, such as the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult for us to continue our business for a substantial period of time.

Risks Related to Our Dependence on Third Parties

We expect to depend on collaborations with third parties for the development and commercialization of some of our product candidates. Our prospects with respect to those product candidates will depend in part on the success of those collaborations.

Although we expect to commercialize tebipenem HBr ourselves in the United States, we intend to commercialize it outside the United States through collaboration arrangements. In addition, we may seek third-party collaborators for development and commercialization of certain of our product candidates. Currently we are party to license and collaboration agreements with third parties as described in Note 10 (“License Collaborations and Services Agreements”) to the quarterly financial statements filed herewith. Our likely collaborators for any other marketing, distribution, development, licensing or broader collaboration arrangements we may pursue include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.

We may derive revenue from research and development fees, license fees, milestone payments and royalties under any collaborative arrangement into which we enter. Our ability to generate revenue from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. In addition, our collaborators may have the right to abandon research or development projects and terminate applicable agreements, including funding obligations, prior to or upon the expiration of the agreed upon terms. As a result, we can expect to relinquish some or all of the control over the future success of a product candidate that we license to a third party.

We face significant competition in seeking and obtaining appropriate collaborators. Collaborations involving our product candidates may pose a number of risks, including the following:

 collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;

 collaborators may not perform their obligations as expected;

 collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;

 collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

 product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates;

 a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

 disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;

 collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;

 collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and

 collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a collaborator of ours is involved in a business combination, it could decide to delay, diminish or terminate the development or commercialization of any product candidate licensed to it by us.

We may have to alter our development and commercialization plans if we are not able to establish collaborations.

We will require additional funds to complete the development and potential commercialization of tebipenem HBr and our other product candidates. For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. Moreover, we intend to utilize a variety of types of collaboration arrangements for the potential commercialization of our product candidates outside the United States. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include:

 the design or results of clinical trials;

 the likelihood of approval by the FDA or comparable foreign regulatory authorities;

 the potential market for the subject product candidate;

 the costs and complexities of manufacturing and delivering such product candidate to patients;

 the potential for competing products;

 our patent position protecting the product candidate, including any uncertainty with respect to our ownership of our technology or our licensor’s ownership of technology we license from them, which can exist if there is a challenge to such ownership without regard to the merits of the challenge;

 the need to seek licenses or sub-licenses to third-party intellectual property; and

 industry and market conditions generally.

The collaborator may also consider alternative product candidates or technologies for similar indications that may be available for collaboration and whether such a collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under future license agreements from entering into agreements on certain terms with potential collaborators. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to

undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bring them to market and our business may be materially and adversely affected.

We rely on third parties to conduct all of our preclinical studies and all of our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize any of our product candidates. If they do not perform satisfactorily, our business may be materially harmed.

We do not independently conduct nonclinical studies that comply with GLP requirements. We also do not have the ability to independently conduct clinical trials of any of our product candidates. We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators, to conduct our clinical trials of tebipenem HBr, SPR720 or our other product candidates and expect to rely on these third parties to conduct clinical trials of our other product candidates and potential product candidates. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities and increase our costs.

Our reliance on these third parties for clinical development activities limits our control over these activities but we remain responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards. For example, notwithstanding the obligations of a contract research organization for a trial of one of our product candidates, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial and applicable regulatory requirements. While we will have agreements governing their activities, we control only certain aspects of their activities and have limited influence over their actual performance. The third parties with whom we contract for execution of our GLP studies and our clinical trials play a significant role in the conduct of these studies and trials and the subsequent collection and analysis of data. Although we rely on these third parties to conduct our GLP-compliant nonclinical studies and clinical trials, we remain responsible for ensuring that each of our nonclinical studies and clinical trials are conducted in accordance with applicable laws and regulations, and our reliance on the CROs does not relieve us of our regulatory responsibilities. The FDA and regulatory authorities in other jurisdictions also require us to comply with standards, commonly referred to as good clinical practices, or GCPs, for conducting, monitoring, recording and reporting the results of clinical trials to assure that data and reported results are accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials. The FDA enforces these GCPs through periodic inspections of trial sponsors, principal investigators, clinical trial sites and institutional review boards. If we or our third-party contractors fail to comply with applicable GCP standards, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our product candidates, which would delay the regulatory approval process. We cannot make assurances that, upon inspection, the FDA will determine that any of our clinical trials comply with GCP. We are also required to register clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

Furthermore, the third parties conducting clinical trials on our behalf are not our employees, and except for remedies available to us under our agreements with such contractors, we cannot control whether or not they devote sufficient time and resources to our ongoing development programs. These contractors may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities, which could impede their ability to devote appropriate time to our clinical programs. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we may not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates. If that occurs, we may not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates. In such an event, our financial results and the commercial prospects for tebipenem HBr or our other product candidates could be harmed, our costs could increase and our ability to generate revenue could be delayed, impaired or foreclosed.

We also rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of any resulting products, producing additional losses and depriving us of potential product revenue.

We contract with third parties for the manufacture of preclinical and clinical supplies of our product candidates and expect to continue to do so in connection with any future commercialization and for any future clinical trials and commercialization of our other product candidates and potential product candidates. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

We do not currently have nor do we plan to build the internal infrastructure or capability to manufacture tebipenem HBr or our other product candidates for use in the conduct of our preclinical research, our clinical trials or for commercial supply. We currently rely on and expect to continue to rely on third-party contract manufacturers to manufacture supplies of tebipenem HBr and our other product candidates, and we expect to rely on third-party contract manufacturers to manufacture commercial quantities of any product candidate that we commercialize following approval for marketing by applicable regulatory authorities, if any. Reliance on third-party manufacturers entails risks, including:

 manufacturing delays if our third-party manufacturers give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreement between us;

 the possible termination or nonrenewal of the agreement by the third-party at a time that is costly or inconvenient for us;

 the possible breach of the manufacturing agreement by the third-party;

 the failure of the third-party manufacturer to comply with applicable regulatory requirements; and

 the possible misappropriation of our proprietary information, including our trade secrets and know-how.

We currently rely on a small number of third-party contract manufacturers for all of our required raw materials, drug substance and finished product for our preclinical research and clinical trials. We do not have long-term agreements with any of these third parties. We also do not have any current contractual relationships for the manufacture of commercial supplies of any of our product candidates. If any of our existing manufacturers should become unavailable to us for any reason, we may incur delays in identifying or qualifying replacements.

If any of our product candidates are approved by any regulatory agency, we intend to enter into agreements with third-party contract manufacturers for the commercial production of those products. This process is difficult and time consuming and we may face competition for access to manufacturing facilities as there are a limited number of contract manufacturers operating under cGMPs that are capable of manufacturing our product candidates. Consequently, we may not be able to reach agreement with third-party manufacturers on satisfactory terms, which could delay our commercialization.

Third-party manufacturers are required to comply with cGMPs and similar regulatory requirements outside the United States. Facilities used by our third-party manufacturers must be approved by the FDA after we submit an NDA and before potential approval of the product candidate. Similar regulations apply to manufacturers of our product candidates for use or sale in foreign countries. We do not control the manufacturing process and are completely dependent on our third-party manufacturers for compliance with the applicable regulatory requirements for the manufacture of our product candidates. The inability or failure of our manufacturers to successfully manufacture material that conforms to the strict regulatory requirements of the FDA and any applicable foreign regulatory authority, may require us to find alternative manufacturing facilities, which could result in delays in obtaining approval for the applicable product candidate. In addition, our manufacturers are subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with cGMPs and similar regulatory requirements. Failure by any of our manufacturers to comply with applicable cGMPs or other regulatory requirements could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and have a material adverse effect on our business, financial condition and results of operations.

Our current and anticipated future dependence upon others for the manufacture of tebipenem HBr and our other product candidates and potential product candidates may adversely affect our future profit margins and our ability to commercialize any products for which we receive marketing approval on a timely and competitive basis.

If we fail to comply with our obligations in the agreements under which we in-license or acquire development or commercialization rights to products, technology or data from third parties, including those for tebipenem HBr, we could lose such rights that are important to our business.

We are a party to agreements with Meiji for tebipenem HBr, Vertex Pharmaceuticals for SPR720 and PBB Distributions Limited for SPR206, and we may enter into additional agreements, including license agreements, with other parties in the future that impose diligence, development and commercialization timelines, milestone payments, royalties, insurance and other obligations on us.

For example, we have an exclusive know-how license with Meiji, or the Meiji License, that gives us rights outside of specified countries in Asia to develop, manufacture, and commercialize tebipenem HBr as well as the right to use, cross-reference, file or incorporate by reference any information and relevant Meiji regulatory documentation to support any regulatory filings outside of Asia. In addition, we have the right to develop, manufacture and have manufactured tebipenem HBr in Asia solely for the purpose of furthering development, manufacturing and commercialization of tebipenem HBr outside of Asia. In exchange for those rights, we are obligated to satisfy diligence requirements, including using commercially reasonable efforts to develop and commercialize tebipenem HBr and to implement a specified development plan, meeting specified development milestones and providing an update on progress on an annual basis. The Meiji License requires us to pay future milestone payments of up to $2.0 million upon the achievement of specified clinical and regulatory milestones and royalties of a low single-digit percentage on net sales on a country-by-country basis.

If we fail to comply with our obligations to Meiji or any of our other partners, our counterparties may have the right to terminate these agreements, in which event we might not be able to develop, manufacture or market any product candidate that is covered by these agreements, which could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.

Risks Related to Our United States Government Contracts and to Certain Grant Agreements

Our use of government funding for certain of our programs adds complexity to our research and commercialization efforts with respect to those programs and may impose requirements that increase the costs of commercialization and production of product candidates developed under those government-funded programs.

We have received significant non-dilutive financing from various government agencies for the further development of our product candidates. Such funding sources may pose risks to us not encountered in other commercial contracts, including significant regulatory compliance risks. Contracts funded by the United States government and its agencies include provisions that reflect the government’s substantial public policy and compliance requirements, and substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to:

 terminate agreements, in whole or in part, for any reason or no reason;

 reduce or modify the government’s obligations under such agreements without the consent of the contractor;

 claim rights, including intellectual property rights, in products and data developed under such agreements;

 audit contract-related costs and fees, including allocated indirect costs;

 suspend the contractor from receiving new contracts pending resolution of alleged violations of procurement laws or regulations;

 impose United States manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements;

 suspend or debar the contractor or grantee from doing future business with the government;

 control and potentially prohibit the export of products; and

 pursue criminal or civil remedies under the False Claims Act, or the FCA, the False Statements Act and similar remedy provisions specific to government agreements.

We may not have the right to prohibit the United States government from using certain technologies developed by us, and we may not be able to prohibit third-party companies, including our competitors, from using those technologies in providing products and services to the United States government. The United States government generally takes the position that it has the right to royalty-free use of technologies that are developed under United States government contracts.

In addition, government contracts and grants, and subcontracts and subawards awarded in the performance of those contracts and grants, normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example:

 specialized accounting systems unique to government awards;

 mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent;

 public disclosures of certain award information, which may enable competitors to gain insights into our research program; and

 mandatory socioeconomic compliance requirements, including labor standards, anti-human-trafficking, non-discrimination and affirmative action programs, energy efficiency and environmental compliance requirements.

If we fail to maintain compliance with these requirements, we may be subject to potential contract or FCA liability and to termination of our contracts.

United States government agencies have special contracting requirements that give them the ability to unilaterally control our contracts.

United States government contracts typically contain unfavorable termination provisions and are subject to audit and modification by the government at its sole discretion, which will subject us to additional risks. These risks include the ability of the United States government to unilaterally:

 audit and object to our government contract-related costs and fees, and require us to reimburse all such costs and fees;

 suspend or prevent us for a set period of time from receiving new contracts or extending our existing contracts based on violations or suspected violations of laws or regulations;

 cancel, terminate or suspend our contracts based on violations or suspected violations of laws or regulations;

 terminate our contracts if in the government’s interest, including if funds become unavailable to the applicable governmental agency;

 reduce the scope and value of our contract; and

 change certain terms and conditions in our contract.

The United States government will be able to terminate any of its contracts with us, either for convenience or if we default by failing to perform in accordance with or to achieve the milestones set forth in the contract schedules and terms. Termination-for-convenience provisions generally enable us to recover only our costs incurred or committed and settlement expenses on the work completed prior to termination. Except for the amount of services received by the government, termination-for-default provisions do not permit these recoveries and would make us liable for excess costs incurred by the United States government in procuring undelivered items from another source.

Our business is subject to audit by the United States government and other potential sources for grant funding, including under our contracts with BARDA, NIAID and DoD, and a negative outcome in an audit could adversely affect our business.

United States government agencies such as the Department of Health and Human Services, or the DHHS, and the Defense Contract Audit Agency, or the DCAA, routinely audit and investigate government contractors. These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards.

The DHHS and the DCAA also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allocated to a specific contract will not be paid, while such costs already paid must be refunded. If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including:

 termination of contracts;

 forfeiture of profits;

 suspension of payments;

 fines; and

 suspension or prohibition from conducting business with the United States government.

In addition, we could suffer serious reputational harm if allegations of impropriety were made against us, which could cause our stock price to decrease.

Laws and regulations affecting government contracts make it more expensive and difficult for us to successfully conduct our business.

We must comply with numerous laws and regulations relating to the formation, administration and performance of government contracts, which can make it more difficult for us to retain our rights under our government contracts. These laws and regulations affect how we conduct business with government agencies. Among the most significant government contracting regulations that affect our business are:

 the Federal Acquisition Regulations, or the FAR, and agency-specific regulations supplemental to the FAR, which comprehensively regulate the procurement, formation, administration and performance of government contracts;

 business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and include other requirements such as the Anti-Kickback Statute and the Foreign Corrupt Practices Act;

 export and import control laws and regulations; and

 laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

These requirements change frequently, such as through appropriations bills or executive orders. Any changes in applicable laws and regulations could restrict our ability to maintain our existing BARDA and other government contracts and obtain new contracts, which could limit our ability to conduct our business and materially adversely affect our results of operations.

Provisions in our United States government contracts, including our contracts with BARDA, may affect our intellectual property rights.

Certain of our activities have been funded, and may in the future be funded, by the United States government, including through our contracts with BARDA. When new technologies are developed with United States government funding, the government obtains certain rights in any resulting patents, including the right to a nonexclusive license authorizing the government to use the invention and rights that may permit the government to disclose our confidential information to third parties and to exercise “march-in” rights. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the United States government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to United States industry. In addition, United States government-funded inventions must be reported to the government, United States government funding must be disclosed in any resulting patent applications, and our rights in such inventions may be subject to certain requirements to manufacture products in the United States.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain sufficient patent protection for our technology or our product candidates, or if the scope of the patent protection is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be adversely affected.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary chemistry technology and product candidates. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage that we may have, which could harm our business and ability to achieve profitability. To protect our proprietary position, we file patent applications in the United States and abroad related to our novel technologies and product candidates that are important to our business. The patent application and approval process is expensive and time-consuming. We may not be able to file and prosecute all necessary or desirable patent

applications at a reasonable cost or in a timely manner. We may also fail to identify patentable aspects of our research and development before it is too late to obtain patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain. No consistent policy regarding the breadth of claims allowed in biotechnology and pharmaceutical patents has emerged to date in the United States or in many foreign jurisdictions. In addition, the determination of patent rights with respect to pharmaceutical compounds and technologies commonly involves complex legal and factual questions, which has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Furthermore, changes in patent laws in the United States, including those made by the America Invents Act of 2011, may affect the scope, strength and enforceability of our patent rights or the nature of proceedings which may be brought by us related to our patent rights.

Our pending and future patent applications may not result in patents being issued which protect our technology or product candidates, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

The laws of foreign countries may not protect our rights to the same extent or in the same manner as the laws of the United States. For example, in the US there is an exception for one’s own publication of an invention prior to filing a patent application for the invention. Most other countries have no such exception and any publication prior to filing is an absolute bar to patentability. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result of the America Invents Act of 2011, the United States transitioned to a first-inventor-to-file system in March 2013, under which, assuming the other requirements for patentability are met, the first inventor to file a patent application is entitled to the patent. However, as a result of the lag in the publication of patent applications following filing in the United States, we are still not be able to be certain upon filing that we are the first to file for patent protection for any invention. Moreover, we may be subject to a third-party preissuance submission of prior art to the USPTO or become involved in opposition, derivation, reexamination, inter partes review or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner. Our competitors may seek to market generic versions of any approved products by submitting Abbreviated New Drug Applications to the FDA in which they claim that patents owned or licensed by us are invalid, unenforceable and/or not infringed. Alternatively, our competitors may seek approval to market their own products similar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid and/or unenforceable. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents, trademarks, copyrights or other intellectual property, or those of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patents do not cover the invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.

In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

If we are sued for infringing intellectual property rights of third parties, or otherwise become involved in disputes regarding our intellectual property rights, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates.

Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our product candidates and use our proprietary chemistry technology without infringing the intellectual property and other proprietary rights of third parties. Numerous third-party United States and non- United States issued patents and pending applications exist in the area of antibacterial treatment, including compounds, formulations, treatment methods and synthetic processes that may be applied towards the synthesis of antibiotics. If any of their patents or patent applications cover our product candidates or technologies, we may not be free to manufacture or market our product candidates as planned.

There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our technology or product candidates, including interference proceedings before the U.S. Patent and Trademark Office. Intellectual property disputes arise in a number of areas including with respect to patents, use of other proprietary rights and the contractual terms of license arrangements. Third parties may assert claims against us based on existing or future intellectual property rights. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance. With respect to our Meiji License of certain know-how used in tebipenem pivoxil HBr, we are neither a party to, nor an express third-party beneficiary of, the letter agreement between Meiji and Global Pharma consenting to Meiji’s arrangement with us. As such, if any dispute among the parties were to occur, our direct enforcement rights with respect to the letter agreement may be limited or uncertain. A termination or early expiration of the head license between Meiji and Global Pharma (which currently by its terms is set to expire in January 2022) or any restriction on our ability to use the Global Pharma know-how could have a negative impact on our development of tebipenem HBr and adversely affect our business.

If we are found to infringe a third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product. Alternatively, we may be required to obtain a license from such third party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product candidate. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative effect on our business.

We may be subject to claims that we or our employees, consultants or contractors have misappropriated the intellectual property of a third party, or claims asserting ownership of what we regard as our own intellectual property.

Many of our employees, consultants and contractors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that these individuals do not use the intellectual property and other proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed such intellectual property or other proprietary information. Litigation may be necessary to defend against these claims.

In addition, while we typically require our employees, consultants and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. To the extent that we fail to obtain such assignments or such assignments are breached, we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our management and scientific personnel.

If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed.

In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, in seeking to develop and maintain a competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our consultants, independent contractors, advisors, corporate collaborators, outside scientific collaborators, contract manufacturers, suppliers and other third parties. We, as well as our licensors, also enter into confidentiality and invention or patent assignment agreements with employees and certain consultants. Any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such third party, or those to whom they communicate such technology or information, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our business and competitive position could be harmed.

We have registered trademarks and pending trademark applications. Failure to enforce our registered marks or secure registration of our pending trademark applications could adversely affect our business.

We have registered our trademarks for our name and logo in the United States and other countries and have a number of pending trademark applications in the United States and other countries. As of December 31, 2020, Spero therapeutics has two registered United States trademarks, nine registered foreign trademarks, and nine pending trademark applications. If our registered trademarks are invalidated, we may be unable to exclusively use our name or logo in certain jurisdictions or may need to change our name or logo in certain jurisdiction, which could affect our business. If we do not secure registrations for our pending trademark applications, we may encounter more difficulty in enforcing them against third parties, which could adversely affect our business. We have not yet registered trademarks for any of our product candidates in any jurisdiction. When we file trademark applications for our product candidates, those applications may not be allowed for registration, and registered trademarks may not be obtained, maintained or enforced. During trademark registration proceedings in the United States and foreign jurisdictions, we may receive rejections. We are given an opportunity to respond to those rejections, but we may not be able to overcome such rejections. In addition, in the United States Patent and Trademark Office and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings.

In addition, any proprietary name we propose to use with tebipenem HBr or any other product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

Risks Related to Regulatory Approval and Other Legal Compliance Matters

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize tebipenem HBr or our other product candidates, and our ability to generate revenue will be materially impaired.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable foreign regulatory authorities, with regulations differing from country to country. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We currently do not have any products approved for sale in any jurisdiction. We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process.

The time required to obtain approval, if any, by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval. Neither we nor any future collaborators are permitted to market any of our product candidates in the United States until we or they receive regulatory approval of an NDA from the FDA.

In order to obtain approval to commercialize a product candidate in the United States or abroad, we or our collaborators must demonstrate to the satisfaction of the FDA or foreign regulatory agencies, that such product candidates are safe and effective for their intended uses. Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe that the nonclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. The FDA may also require us to conduct additional nonclinical studies or clinical trials for our product candidates either prior to or post-approval, and it may otherwise object to elements of our clinical development program.

We have not submitted an NDA for any of our product candidates, although we are currently preparing the NDA to seek marketing approval for tebipenem HBr for the treatment of cUTI. An NDA must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and efficacy for each desired indication. The NDA must also include significant information regarding the chemistry, manufacturing and controls for the product candidate. Obtaining approval of an NDA is a lengthy, expensive and uncertain process. The FDA has substantial discretion in the review and approval process and may refuse to accept for filing any application or may decide that our data are insufficient for approval and require additional nonclinical, clinical or other studies. Foreign regulatory authorities have differing requirements for approval of drugs with which we must comply with prior to marketing. Obtaining marketing approval for marketing of a product candidate in one country does not ensure that we will be able to obtain marketing approval in other countries, but the failure to obtain marketing approval in one jurisdiction could negatively affect our ability to obtain marketing approval in other jurisdictions. The FDA or any foreign regulatory bodies can delay, limit or deny approval of our product candidates or require us to conduct additional nonclinical or clinical testing or abandon a program for many reasons, including:

 the FDA or the applicable foreign regulatory agency’s disagreement with the design or implementation of our clinical trials;

 negative or ambiguous results from our clinical trials or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval;

 serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates;

 our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory body that our product candidates are safe and effective for the proposed indication;

 the FDA’s or the applicable foreign regulatory agency’s disagreement with the interpretation of data from nonclinical studies or clinical trials;

 our inability to demonstrate the clinical and other benefits of our product candidates outweigh any safety or other perceived risks;

 the FDA’s or the applicable foreign regulatory agency’s requirement for additional nonclinical studies or clinical trials;

 the FDA’s or the applicable foreign regulatory agency’s disagreement regarding the formulation, labeling and/or the specifications for our product candidates; or

 the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval.

Of the large number of drugs in development, only a small percentage complete the FDA or foreign regulatory approval processes and are successfully commercialized. The lengthy review process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval, which would significantly harm our business, financial condition, results of operations and prospects.

Even if we eventually receive approval of an NDA or foreign marketing application for our product candidates, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials, often referred to as Phase 4 clinical trials, and the FDA may require the implementation of an REMS which may be required to ensure safe use of the drug after approval. The FDA or the applicable foreign regulatory agency also may approve a product candidate for a more limited indication or patient population than we originally requested, and the FDA or applicable foreign regulatory agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of a product candidate. Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would materially adversely impact our business and prospects.

A fast track designation may not actually lead to a faster development or regulatory review or approval process.

We have received fast track designation for tebipenem HBr for the treatment of complicated urinary tract infections and acute pyelonephritis, as well as fast track designation for SPR720 for treatment of adult patients with NTM-PD, and we may seek fast track designation for one or more of our other product candidates in the future. If a drug is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a drug sponsor may apply for fast track designation by the FDA for the particular indication under study. If fast track designation is obtained, the FDA may initiate review of sections of an NDA before the application is complete. This “rolling review” is available if the applicant provides and the FDA approves a schedule for the remaining information. If we seek fast track designation for a product candidate, we may not receive it from the FDA. However, even if we receive fast track designation, fast track designation does not ensure that we will receive marketing approval or that approval will be granted within any particular timeframe. We may not experience a faster development or regulatory review or approval process with fast track designation compared to conventional FDA procedures. In addition, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program. Fast track designation alone does not guarantee qualification for the FDA’s priority review procedures.

In March 2020, the FDA granted orphan drug designation for SPR720. We may seek orphan drug designation for certain of our other product candidates. We may not be able to obtain or maintain orphan drug designations for any of our other product candidates, and we may be unable to take advantage of the benefits associated with orphan drug designation, including the potential for market exclusivity.

Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product as an orphan product if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population of greater than 200,000 individuals in the United States, but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. There can be no assurance that the FDA will grant orphan designation for any indication for which we apply.

In the United States, orphan designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. In addition, if a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, it is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity.

Even though we have obtained orphan drug designation for SPR720 and may seek orphan drug designation for other product candidates in the future, there is no assurance that we will be the first to obtain marketing approval for NTM infection or for any particular rare indication. Further, even though we have obtained orphan drug designation for SPR720, or even if we obtain orphan drug designation for other product candidates, such designation may not effectively protect us from competition because different drugs can be approved for the same condition and the same drug can be approved for different conditions and potentially used off-label in the orphan indication. Even after an orphan drug is approved, the FDA can subsequently approve a competing drug for the same condition for several reasons, including, if the FDA concludes that the later drug is safer or more effective or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

If approved for commercial marketing in the United States, our lead product candidate tebipenem HBr and our other product candidates may face generic competition sooner than anticipated.

Even if we are successful in achieving regulatory approval to commercialize a product candidate, it may face competition from generic products earlier or more aggressively than anticipated, depending upon how well our future products perform in the United States prescription drug market. In addition to creating the 505(b)(2) NDA pathway, the Hatch-Waxman Amendments to the FDCA authorized the FDA to approve generic drugs that are the same as drugs previously approved for marketing under the NDA provisions of the statute pursuant to abbreviated new drug applications, or ANDAs. An ANDA relies on the preclinical and clinical testing conducted for a previously approved reference listed drug, or RLD, and must demonstrate to the FDA that the generic drug product is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug and also that it is “bioequivalent” to the RLD. The FDA is prohibited by statute from approving an ANDA when certain marketing or data exclusivity protections apply to the RLD.

If the FDA approves our future NDA for tebipenem HBr for the treatment of cUTI we expect that it will be designated by the agency as an RLD and that it will be eligible for five-year new chemical entity exclusivity under the Hatch-Waxman provisions of the FDCA. This exclusivity period would block FDA from approving either a subsequent ANDA or 505(b)(2) NDA that references our future NDA, if approved. The Qualified Infectious Disease Product, or QIDP, designation granted by FDA to this drug product and indication also make it eligible for a further five-year extension of that Hatch-Waxman exclusivity. We cannot predict the interest of potential generic competitors in the future market for such an approved treatment for cUTI, whether someone will attempt to invalidate our period of exclusivity or otherwise force the FDA to take other actions, or how quickly others may seek to come to market with competing products after the applicable exclusivity period ends. Future product candidates may also receive marketing exclusivity under the FDCA after approval that may similarly be subject to challenge or uncertainty.

If we are unable to obtain marketing approval in international jurisdictions, we will not be able to market our product candidates abroad.

In order to market and sell tebipenem HBr or our other product candidates in the European Union and many other jurisdictions, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. The approval procedure varies among countries and can involve additional testing. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. The time required to obtain approval from regulatory authorities in other countries may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory authorities outside the United States on a timely basis or at all.

If we receive regulatory approval for any product candidate, we will be subject to ongoing obligations and continuing regulatory review, which may result in significant additional expense. Our product candidates, if approved, could be subject to restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if approved.

Any product candidate for which we obtain marketing approval will also be subject to ongoing regulatory requirements for labeling, packaging, storage, distribution, advertising, promotion, record keeping and submission of safety and other post-market information. For example, approved products, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to cGMPs. As such, we and our contract manufacturers will be subject to continual review and periodic inspections to assess compliance with cGMPs. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. We will also be required to report certain adverse reactions and production problems, if any, to the FDA and to comply with requirements concerning advertising and promotion for our products.

In addition, even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed, may be subject to significant conditions of approval or may impose requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. The FDA may also require a REMS as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure that drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling and regulatory requirements. The FDA also imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we do not

restrict the marketing of our products only to their approved indications, we may be subject to enforcement action for off-label marketing.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, it may impose restrictions on that product or us. In addition, if any product fails to comply with applicable regulatory requirements, a regulatory agency may:

 issue warning letters, untitled letters or impose holds on clinical trials if any are still on-going;

 mandate modifications to promotional materials or require provision of corrective information to healthcare practitioners;

 impose restrictions on the product or its manufacturers or manufacturing processes;

 impose restrictions on the labeling or marketing of the product;

 impose restrictions on product distribution or use;

 require post-marketing studies or clinical trials;

 require withdrawal of the product from the market;

 refuse to approve pending applications or supplements to approved applications that we submit;

 require recall of the product;

 require entry into a consent decree, which can include imposition of various fines (including restitution or disgorgement of profits or revenue), reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

 suspend or withdraw marketing approvals;

 refuse to permit the import or export of the product;

 seize or detain supplies of the product; or

 issue injunctions or impose civil or criminal penalties.

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay marketing approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we may obtain marketing approval. Our future arrangements with third-party payors and customers will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any products for which we obtain marketing approval and reimbursement. These laws and regulations include, for example, the false claims and anti-kickback statutes and regulations. At such time as we market, sell and distribute any products for which we obtain marketing approval and reimbursement, it is possible that our business activities could be subject to challenge under one or more of these laws and regulations. Restrictions under applicable federal and state healthcare laws and regulations include the following:

 the federal healthcare Anti-Kickback Statute, among other things, prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federally funded healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate the statute in order to have committed a violation. In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;

 the federal False Claims Act imposes criminal and civil penalties, which can be enforced by private citizens through civil whistleblower and qui tam actions, against individuals or entities for knowingly presenting, or causing to be

 presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

 the federal ban on physician self-referrals, which prohibits, subject to certain exceptions, physician referrals of Medicare or Medicaid patients to an entity providing certain “designated health services” if the physician or an immediate family member of the physician has any financial relationship with the entity;

 the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or for making any false statements relating to healthcare matters; as in the case of the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate the statute in order to have committed a violation;

 HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, also imposes obligations on certain covered entities as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, and requires notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information;

 the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

 the federal transparency or “sunshine” requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively, the ACA, requires manufacturers of drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the United States Department of Health and Human Services, or DHHS, information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors and, beginning in 2022 for payments and other transfers of value provided in the previous year, certain advanced non-physician health care practitioners), teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and

 analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to implement compliance programs and to track and report gifts, compensation and other remuneration provided to physicians, in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and pricing information. State laws also govern the privacy and security of health information in some circumstances, and many such state laws differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

We will be required to spend substantial time and money to ensure that our business arrangements with third parties, and our business generally, comply with applicable healthcare laws and regulations. Even then, governmental authorities may conclude that our business practices, including arrangements we may have with physicians and other healthcare providers, some of whom may receive stock options as compensation for services provided, do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If governmental authorities find that our operations violate any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, imprisonment, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and we may be required to curtail or restructure our operations. Moreover, we expect that there will continue to be federal and state laws and regulations, proposed and implemented, that could affect our operations and business. For example, in November 2020, DHHS finalized significant changes to the regulations implementing the Anti-Kickback Statute, as well as the Physician Self-Referral Law (Stark Law) and the civil monetary penalty rules regarding beneficiary inducements, with the goal of offering the healthcare industry more flexibility and reducing the regulatory burden associated with those fraud and abuse laws, particularly with respect to value-based arrangements among industry participants. The extent to which future legislation or regulations, if any, relating to healthcare fraud and abuse laws or enforcement, may be enacted or what effect such legislation or regulation would have on our business remains uncertain.

Recently enacted and future policies and legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the reimbursement made for any product candidate for which we receive marketing approval.

The pricing and reimbursement environment may become more challenging due to, among other reasons, policies advanced by the new presidential administration, federal agencies, new healthcare legislation passed by the United States Congress or fiscal challenges faced by all levels of government health administration authorities. Among policy makers and payors in the United States and foreign countries, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access to healthcare. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. We expect to experience pricing pressures in connection with the sale of any products for which we obtain marketing approval, due to the trend toward managed

healthcare, the increasing influence of health maintenance organizations and additional legislative proposals. Resulting legislative, administrative, or policy changes from payors may reduce payments for any products for which we obtain marketing approval and could affect future revenues.

The ACA became law in the United States in March 2010 with the goals of broadening access to health insurance, reducing or constraining the growth of healthcare spending, enhancing remedies against fraud and abuse, adding new transparency requirements for the health care and health insurance industries and imposing additional health policy reforms. Provisions of ACA may negatively affect our future revenues. For example, the ACA requires, among other things, that annual fees be paid by manufacturers for certain branded prescription drugs, that manufacturers participate in a discount program for certain outpatient drugs under Medicare Part D, and that manufacturers provide increased rebates under the Medicaid Drug Rebate Program for outpatient drugs dispensed to Medicaid recipients. The ACA also addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for line extensions and expands oversight and support for the federal government’s comparative effectiveness research of services and products.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and as a result certain sections of the ACA have not been fully implemented or effectively repealed. The uncertainty around the future of the ACA, and in particular the impact to reimbursement levels, may lead to uncertainty or delay in the purchasing decisions of our customers, which may in turn negatively impact our product sales. If there are not adequate reimbursement levels, our business and results of operations could be adversely affected.

Beginning on April 1, 2013, Medicare payments for all items and services under Part A and B, including drugs and biologicals, and most payments to plans under Medicare Part D were reduced by 2%, or automatic spending reductions, required by the Budget Control Act of 2011, or BCA, as amended by the American Taxpayer Relief Act of 2012. The BCA requires sequestration for most federal programs, excluding Medicaid, Social Security, and certain other programs. The BCA caps the cuts to Medicare payments for items and services and payments to Part D plans at 2%. As long as these cuts remain in effect, they could adversely affect payment for our product candidates. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures. The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which was signed into law on March 27, 2020 and was designed to provide financial support and resources to individuals and businesses affected by the COVID-19 pandemic, suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester by one year, through 2030, in order to offset the added expense of the 2020 cancellation. The 2021 Consolidated Appropriations Act was subsequently signed into law on December 27, 2020 and extends the CARES Act suspension period to March 31, 2021.

Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. There have been several United States Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In December 2020, the U.S. Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers, or PBMs, and other members of the health care and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the effect of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the United States Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services. Moreover, the Biden Administration, including his nominee for Secretary of DHHS, has indicated that lowering prescription drug prices is a priority, but we do not yet know what steps the administration will take or whether such steps will be successful.

If we successfully commercialize one of our product candidates, failure to comply with our reporting and payment obligations under United States governmental pricing programs could have a material adverse effect on our business, financial condition and results of operations.

If we participate in the Medicaid Drug Rebate Program if and when we successfully commercialize a product candidate, we will be required to report certain pricing information for our product to the Centers for Medicare & Medicaid Services, the federal agency

that administers the Medicaid and Medicare programs. We may also be required to report pricing information to the United States Department of Veterans Affairs. If we become subject to these reporting requirements, we will be liable for errors associated with our submission of pricing data, for failure to report pricing data in a timely manner, and for overcharging government payers, which can result in civil monetary penalties under the Medicaid statute, the federal civil False Claims Act, and other laws and regulations.

Additionally, the 2021 Consolidated Appropriations Act signed into law on December 27, 2020 incorporated extensive healthcare provisions and amendments to existing laws, which includes a requirement that all manufacturers of drug products covered under Medicare Part B report the product’s average sales price, or ASP, to DHHS beginning on January 1, 2022, subject to enforcement via civil money penalties.

Our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; manufacturing standards; federal and state healthcare fraud and abuse laws and regulations; or laws that require the true, complete and accurate reporting of financial information or data. Specifically, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials or creating fraudulent data in our preclinical studies or clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished potential profits and future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results of operations or prospects.

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent our product candidates from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business relies, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly affect the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Separately, in response to the COVID-19 pandemic and public health emergency declaration in the United States, on March 10, 2020, the FDA announced its intention to temporarily postpone most inspections of foreign manufacturing facilities and products. On March 18, 2020, the FDA announced its intention to temporarily postpone routine surveillance inspections of domestic manufacturing facilities and provided guidance regarding the conduct of clinical trials, which has been updated periodically since that time with common questions and answers. As of October 2020, utilizing a rating system to assist in determining when and where it is safest to conduct such inspections based on data about the virus’s trajectory in a given state and locality and the rules and guidelines that are put in place by state and local governments, FDA is either continuing to, on a case-by-case basis, conduct only mission-critical inspections, or, where possible to do so safely, resuming prioritized domestic inspections, which generally include pre-approval inspections. Foreign pre-approval inspections that are not deemed mission-critical remain postponed, while those deemed mission-critical will be considered for inspection on a case-by-case basis. FDA will use similar data to inform resumption of prioritized operations abroad as it becomes feasible and advisable to do so, and it has recently resumed inspections in China and plans to also resume such activities in India as soon as possible. The FDA may not be able to maintain this pace and delays or setbacks are possible in the future. As of January 29, 2021, the FDA noted it was continuing to ensure timely reviews of applications for medical products

during the COVID-19 pandemic in line with its user fee performance goals and conducting mission-critical domestic and foreign inspections to ensure compliance of manufacturing facilities with FDA quality standards.

Should FDA determine that an inspection is necessary for NDA approval and an inspection cannot be completed during the review cycle due to restrictions on travel, FDA has stated that it generally intends to issue a complete response letter. Further, if there is inadequate information to make a determination on the acceptability of a facility, FDA may defer action on the application until an inspection can be completed. Additionally, regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown recurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

If a prolonged government shutdown or slowdown occurs, it could significantly affect the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Risks Related to Employee Matters and Managing Growth

Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.

Our industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on the development, regulatory, commercialization and business development expertise of Ankit Mahadevia, M.D., our President and Chief Executive Officer, as well as the other principal members of our management, scientific and clinical team. Although we have formal employment agreements with our executive officers, these agreements do not prevent them from terminating their employment with us at any time.

If we lose one or more of our executive officers or key employees, our ability to implement our business strategy successfully could be seriously harmed. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and commercialize product candidates successfully. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these additional key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be engaged by entities other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to develop and commercialize product candidates will be limited.

We expect to grow our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of product candidate development, regulatory affairs and sales, marketing and distribution. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities to devote time to managing these growth activities. To manage these growth activities, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. Our inability to effectively manage the expansion of our operations may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If our management is unable to effectively manage our expected growth, our expenses may increase more than expected, our potential ability to generate revenue could be reduced and we may not be able to implement our business strategy.

If foreign approvals are obtained, we will be subject to additional risks in conducting business in international markets.

Even if we are able to obtain approval for commercialization of a product candidate in a foreign country, we will be subject to additional risks related to international business operations, including:

 potentially reduced protection for intellectual property rights;

 the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from a foreign market (with low or lower prices) rather than buying them locally;

 unexpected changes in tariffs, trade barriers and regulatory requirements;

 economic weakness, including inflation, or political instability in particular foreign economies and markets;

 workforce uncertainty in countries where labor unrest is more common than in the United States;

 production shortages resulting from any events affecting a product candidate and/or finished drug product supply or manufacturing capabilities abroad;

 business interruptions resulting from geo-political actions, including war and terrorism, health epidemics or natural disasters, including earthquakes, hurricanes, typhoons, floods and fires; and

 failure to comply with Office of Foreign Asset Control rules and regulations and the Foreign Corrupt Practices Act.

These and other risks may materially adversely affect our ability to attain or sustain revenue from international markets.

We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.

In the future, we may enter into transactions to acquire other businesses, products or technologies. If we do identify suitable candidates, we may not be able to make such acquisitions on favorable terms, or at all. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by investors. We may decide to incur debt in connection with an acquisition or issue our common stock or other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership of our existing stockholders. We could incur losses resulting from undiscovered liabilities of the acquired business that are not covered by the indemnification we may obtain from the seller. In addition, we may not be able to successfully integrate the acquired personnel, technologies and operations into our existing business in an effective, timely and nondisruptive manner. Acquisitions may also divert management attention from day-to-day responsibilities, increase our expenses and reduce our cash available for operations and other uses. We cannot predict the number, timing or size of future acquisitions or the effect that any such transactions might have on our operating results.

Risks Related to Our Common Stock

The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our stockholders.

Our stock price may be volatile. The stock market in general and the market for smaller pharmaceutical and biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, our stockholders may not be able to sell their shares at or above the price they paid for their shares. The market price for our common stock may be influenced by many factors, including:

 the success of existing or new competitive products or technologies;

 the timing of clinical trials of our product candidate;

 results of clinical trials of tebipenem HBr and any other product candidate;

 failure or discontinuation of any of our development programs;

 results of clinical trials of product candidates of our competitors;

 regulatory or legal developments in the United States and other countries;

 the perception of the pharmaceutical and biotechnology industry by the public, legislatures, regulators and the investment community;

 developments or disputes concerning patent applications, issued patents or other proprietary rights;

 the recruitment or departure of key personnel;

 the level of expenses related to any of our product candidates or clinical development programs;

 the results of our efforts to develop, in-license or acquire additional product candidates or products;

 actual or anticipated changes in estimates as to financial results or development timelines;

 announcement or expectation of additional financing efforts;

 sales of our common stock by us, our insiders or other stockholders;

 variations in our financial results or those of companies that are perceived to be similar to us;

 changes in estimates or recommendations by securities analysts, if any, that cover our stock;

 changes in the structure of healthcare payment systems;

 market conditions in the pharmaceutical and biotechnology sectors;

 general economic, industry and market conditions; and

 the other factors described in this “Risk Factors” section.

In addition, the stock market has experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our common stock relies in part on the research and reports that securities or industry analysts publish about us or our business. If few analysts provide coverage of us, the trading price of our stock would likely decline. If one or more of the analysts covering our business downgrade our stock or change their opinion of our stock, our share price would likely decline. In addition, if one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

We can issue and have issued shares of preferred stock, which may adversely affect the rights of holders of our common stock.

Our amended and restated certificate of incorporation authorizes us to issue up to 10,000,000 shares of preferred stock with designations, rights and preferences determined from time-to-time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of holders of our common stock. For example, an issuance of shares of preferred stock could:

 adversely affect the voting power of the holders of our common stock;

 make it more difficult for a third party to gain control of us;

 discourage bids for our common stock at a premium;

 limit or eliminate any payments that the holders of our common stock could expect to receive upon our liquidation; or

 otherwise adversely affect the market price or our common stock.

We have in the past issued, and we may at any time in the future issue, shares of preferred stock. In connection with our July 2018 public offering, we issued 2,220 shares of our Series A Convertible Preferred Stock, or Series A Preferred Stock, to certain affiliates of Biotechnology Value Fund, L.P., or BVF, each share of which is convertible into 1,000 shares of our common stock, subject to certain ownership restrictions. In November 2018, we entered into an exchange agreement with BVF to exchange 1,000,000 shares of our common stock previously held by BVF for 1,000 shares of our Series B Convertible Preferred Stock, or Series B Preferred Stock, each share of which is convertible into 1,000 shares of our common stock, subject to certain ownership restrictions. In June 2019, BVF converted 500 shares of Series A Preferred Stock into 500,000 shares of our common stock pursuant to BVF’s rights under the certificate of designation for such Series A Preferred Stock. In December 2020, BVF converted the remaining 1,720 shares of Series A Preferred Stock into 1,720,000 shares of our common stock pursuant to BVF’s rights under the certificate of designation for such Series A Preferred Stock. In addition, in February 2021, BVF converted 62 shares of Series B Preferred Stock into 62,000 shares of our common stock pursuant to BVF’s rights under the certificate of designation for such Series B Preferred Stock. In connection with our rights offering, which we launched in February 2020 and closed in early March 2020, we issued 2,287 shares of our Series C Preferred Stock to BVF. In February 2021, BVF converted 73 shares of Series C Preferred Stock into 73,000 shares of our common stock, pursuant to BVF’s rights under the certificate of designation for such Series C Preferred Stock. In September 2020, in connection with our underwritten public offering, we issued 3,215,000 shares of our Series D Preferred Stock to BVF. If BVF or any other future holders of our shares of preferred stock convert their shares into common stock, existing holders of our common stock will experience dilution.

We have broad discretion in the use of our cash reserves and may not use them effectively.

Our management will have broad discretion in the application of our cash reserves and could spend these funds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds

effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline and delay the development of our product candidates. Pending their use, we may invest our cash reserves in a manner that does not produce income or that loses value.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. We would cease to be an emerging growth company upon the earlier of: (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering, which is December 31, 2022; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC which means the first day of the year following the first year in which the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of June 30th. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or Sarbanes-Oxley, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and we will therefore be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, changes in rules of United States generally accepted accounting principles or their interpretation, the adoption of new guidance or the application of existing guidance to changes in our business could significantly affect our financial position and results of operations.

We are subject to Section 404 of The Sarbanes-Oxley Act of 2002, or Section 404, and the related rules of the SEC, which generally require our management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. Beginning with our next annual report that we will be required to file with the SEC, Section 404 requires an annual management assessment of the effectiveness of our internal control over financial reporting. However, for so long as we remain an emerging growth company as defined in the JOBS Act, or a "smaller reporting company" (SRC) and non-accelerated filer, we intend to take advantage of certain exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404. Once we are no longer an emerging growth company and otherwise do not meet the definition of a SRC and non-accelerated filer or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting. We could qualify as a SRC if the market value of our common stock held by non-affiliates is below $250 million (or $700 million if our annual revenue is less than $100 million) as of June 30 in any given year.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an “emerging growth company,” we incur significant legal, accounting and other expenses that we did not incur as a private company. Sarbanes-Oxley, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and have made some activities more time-consuming and costly. For example, these rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Failure to maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley in the future could have a material adverse effect on our ability to produce accurate financial statements and on our stock price.

Section 404 of Sarbanes-Oxley requires us, on an annual basis, to review and evaluate our internal controls. To maintain compliance with Section 404, we are required to document and evaluate our internal control over financial reporting, which is both costly and challenging. We will need to continue to dedicate internal resources, continue to engage outside consultants and follow a detailed work plan to continue to assess and document the adequacy of internal control over financial reporting, continue to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous

reporting and improvement process for internal control over financial reporting. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

A significant portion of our total outstanding shares may be sold into the market in the near future, which could cause the market price of our common stock to decline significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock. Our outstanding shares of common stock may be freely sold in the public market at any time to the extent permitted by Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act, or to the extent that such shares have already been registered under the Securities Act and are held by non-affiliates of ours. Moreover, holders of a substantial number of shares of our common stock have rights, subject to conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also have registered all shares of common stock that we may issue under our equity compensation plans or that are issuable upon exercise of outstanding options. These shares can be freely sold in the public market upon issuance and once vested, subject to volume limitations applicable to affiliates. If any of these additional shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline.

We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. Accordingly, stockholders must rely on capital appreciation, if any, for any return on their investment.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the operation, development and growth of our business. To the extent that we enter into any future debt agreements, the terms of such agreements may also preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.

Our executive officers, directors and principal stockholders maintain the ability to control all matters submitted to stockholders for approval.

As of June 30, 2021, our executive officers and directors, combined with our stockholders who as of such date owned more than 5% of our outstanding common stock, in the aggregate, beneficially own shares representing approximately 46% of our capital stock. As a result, if these stockholders were to choose to act together, they would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership control may:

 delay, defer or prevent a change in control;

 entrench our management and/or our board of directors; or

 impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and amended and restated by-laws may discourage, delay or prevent a merger, acquisition or other change in control of us that our stockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

 establish a classified board of directors such that all members of the board are not elected at one time;

 allow the authorized number of our directors to be changed only by resolution of our board of directors;

 limit the manner in which stockholders can remove directors from our board of directors;

 establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on at stockholder meetings;

 require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

 limit who may call a special meeting of stockholders;

 authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and

 require the approval of the holders of at least 75% of the votes that all of our stockholders would be entitled to cast to amend or repeal certain provisions of our certificate of incorporation or by-laws.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. This could discourage, delay or prevent someone from acquiring us or merging with us, whether or not it is desired by, or beneficial to, our stockholders.

In addition, our amended and restated certificate of incorporation, to the fullest extent permitted by law, provides that the Court of Chancery of the State of Delaware will be the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act. It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and asserts claims under the Securities Act, inasmuch as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rule and regulations thereunder. There is uncertainty as to whether a court would enforce such provision with respect to claims under the Securities Act, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provisions contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.

Provisions in our charter and other provisions of Delaware law could limit the price that investors are willing to pay in the future for shares of our common stock.

Item 6. Exhibits

Exhibit<br><br>Number	Exhibit Description	Filed with<br><br>this Report
10.1†	License Agreement, dated June 30, 2021, by and between the Registrant and Pfizer Inc.	X
10.2	Share Purchase Agreement, dated June 30, 2021, by and between the Registrant and Pfizer Inc.	X
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Principal Executive Officer and Principal Financial Officer	X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)	X

† Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

* The certification attached as Exhibit 32 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Spero Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SPERO THERAPEUTICS, INC.
Date: August 5, 2021	By:	/s/ Ankit Mahadevia, M.D.
		Ankit Mahadevia, M.D.
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 5, 2021	By:	/s/ Satyavrat Shukla
		Satyavrat Shukla
		Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

EX-10.1

Exhibit 10.1

LICENSE AGREEMENT

by and among

SPERO THERAPEUTICS, INC.

and

Pfizer inc.

June 30, 2021

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS		5
ARTICLE 2 LICENSES		22
2.1 Licenses to Pfizer		22
2.2 License to Spero		22
2.3 Sublicense Rights		23
2.4 Spero’s Retained Rights; In-License Agreements		24
2.5 No Implied Licenses		25
2.6 Non-Diversion		25
2.7 Subcontracting		25
2.8 Statements and Compliance with Applicable Laws		26
2.9 Section 365(n)		26
2.10	[***] for U.S. Rights	26
ARTICLE 3 GOVERNANCE		27
3.1 Joint Development Committee		27
3.2 JDC Membership and Meetings		28
ARTICLE 4 DEVELOPMENT		30
4.1 General		30
4.2 Development Plan		30
4.3 Development Diligence Obligations		30
4.4 Development Records		32
4.5 Pivotal Trial Completion and Data Package		32
4.6 Disclosure of Results		33
4.7 Confidentiality of Results, Reports and Analyses		33
ARTICLE 5 REGULATORY		33
5.1 Regulatory Responsibilities		33
5.2 Regulatory Diligence Obligations		33
5.3 Regulatory Cooperation		33
5.4 Rights of Reference		34
5.5 Recalls, Suspensions or Withdrawals		35
5.6 Pharmacovigilance Agreement; Global Safety Database		35
5.7 Regulatory Inspections		35
ARTICLE 6 MANUFACTURING AND SUPPLY		36
6.1 Manufacturing Responsibilities		36
6.2 Manufacturing Technology Transfer		36
6.3 Supply Agreements		36
ARTICLE 7 COMMERCIALIZATION		37
7.1 General		37
7.2 Commercial Diligence		37
ARTICLE 8 FINANCIAL PROVISIONS	37
---	---
8.1 License Maintenance Fees	37
8.2 Development Milestones	39
8.3 Commercial Milestones	40
8.4 Royalty Payments	41
8.5 Currency; Exchange Rate; Payments	44
8.6 Late Payments	44
8.7 Taxes	44
8.8 Financial Records and Audit	45
8.9 Audit Dispute	46
ARTICLE 9 INTELLECTUAL PROPERTY RIGHTS	46
9.1 Ownership of Intellectual Property	46
9.2 Patent Prosecution and Maintenance	48
9.3 Cooperation of the Parties	49
9.4 Infringement by Third Parties	49
9.5 Infringement Claims by Third Parties	51
9.6 Consent for Settlement	52
9.7 Common Ownership under Joint Research Agreement	52
9.8 Patent Extensions	52
9.9 Orange Book Information	52
9.10 Trademarks	52
9.11 Spero Trademarks	53
ARTICLE 10 CONFIDENTIALITY; PUBLICATION	53
10.1 Duty of Confidence	53
10.2 Exceptions	54
10.3 Authorized Disclosures	54
10.4 Publication	55
10.5 Publicity/Use of Names	55
ARTICLE 11 TERM AND TERMINATION	56
11.1 Term	56
11.2 Termination	57
11.3 Effect of Termination	58
11.4 Survival	60
11.5 Termination Not Sole Remedy	60
ARTICLE 12 REPRESENTATIONS, WARRANTIES AND COVENANTS	60
12.1 Representations and Warranties of Each Party	60
12.2 Mutual Covenants	61
12.3 Representations and Warranties by Spero	62
12.4 Representations and Warranties by Pfizer	64
12.5 Covenants by Spero	64
12.6 No Other Warranties	65
ARTICLE 13 INDEMNIFICATION; LIABILITY	65
---	---
13.1 Indemnification by Spero	65
13.2 Indemnification by Pfizer	66
13.3 Indemnification Procedure	66
13.4 Mitigation of Loss	68
13.5 Special, Indirect and Other Losses	68
13.6 Insurance	69
ARTICLE 14 GENERAL PROVISIONS	69
14.1 Governing Law	69
14.2 Assignment	69
14.3 Entire Agreement; Modification	70
14.4 Relationship among the Parties	70
14.5 Non-Waiver	70
14.6 Force Majeure	71
14.7 Export Control	71
14.8 Severability	71
14.9 Notices	72
14.10 Dispute Resolution	72
14.11 Performance by Affiliates	76
14.12 Headings	76
14.13 Waiver of Rule of Construction	76
14.14 Business Day Requirements	76
14.15 English Language	76
14.16 No Benefit to Third Parties	76
14.17 Further Assurances	77
14.18 Counterparts	77

Exhibits and Schedules:

Exhibit A Licensed Patents

Exhibit B Spero Trademarks

Exhibit C SPR 206

Exhibit D Initial Development Plan

Schedule 4.5 Data Package

Schedule 8.1 Triggering Events and Notice

Schedule 12.4 Representations and Warranties of Pfizer

LICENSE AGREEMENT

This LICENSE AGREEMENT (this “Agreement XE "Agreement" \t "See Preamble" ”) is made as of June 30, 2021 (“Effective Date XE "Effective Date" \t "See Preamble" ”), by and among Spero Therapeutics, Inc., a Delaware corporation (“Spero XE "Spero" \t "See Preamble" ”) having its principal place of business at 675 Massachusetts Avenue, 14th Floor, Cambridge, Massachusetts, 02139 and Pfizer Inc., a Delaware corporation (“Pfizer XE "Pfizer" \t "See Preamble" ”) having its principal place of business at 235 East 42nd Street, New York, New York 10017. Spero and Pfizer are referred to individually as a “Party XE "Party" \t "See Preamble" ” and collectively as the “Parties XE "Parties" \t "See Preamble" .”

RECITALS

WHEREAS, Spero Controls certain intellectual property relating to a compound known as SPR206 being investigated as an antibiotic against multi-drug resistant and extensively drug resistant bacterial strains;

WHEREAS, Spero wishes to grant a license to Pfizer, and Pfizer wishes to take a license, under such intellectual property rights of Spero to develop and commercialize SPR206 in certain territories in accordance with the terms and conditions set forth below; and

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the receipt and sufficiency which are hereby acknowledged, the Parties hereby agree as follows.

ARTICLE 1 DEFINITIONS

Unless the context otherwise requires, the terms in this Agreement with initial letters capitalized, shall have the meanings set forth below, or the meaning as designated in the indicated places throughout this Agreement.

1.1 “Affiliate” means, with respect to a Party, any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with that Party, but for only so long as such control exists. For the purpose of this definition, “control” (including, with correlative meaning, the terms “controlled by” and “under common control”) means (a) to possess, directly or indirectly, the power to direct the management or policies of an entity, whether through ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise; or (b) direct or indirect beneficial ownership of more than fifty percent (50%), or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction, of the voting share capital or other equity interest in such entity.

1.2 “Anti-Corruption Laws” means all applicable anti-bribery and anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010, and the local laws and regulations of any countries in which the Compound or

Licensed Products, payments or services will be provided or procured under or pursuant to this Agreement.

1.3 “API” means any substance intended to be used in a pharmaceutical product that when used becomes an active ingredient of that product intended to exert a pharmacological, immunological or metabolic action with a view to restoring, correcting or modifying physiological functions in man or animal; but excluding formulation components such as coatings, stabilizers, excipients or solvents, adjuvants or controlled release technologies.

1.4 “Applicable Laws” means the applicable provisions of any and all national, supranational, regional, federal, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, permits (including MAAs) of or from any court, arbitrator, Regulatory Authority or Government Authority having jurisdiction over or related to the subject item.

1.5 “Business Day” means a day other than a Saturday, Sunday or a bank or other public holiday in New York State or The Commonwealth of Massachusetts in the United States.

1.6 “Calendar Quarter” means each respective period of three (3) consecutive months ending on 31 March, 30 June, 30 September, and 31 December during the Term, commencing with the 1 January, 1 April, 1 July or 1 October to occur after the Effective Date and ending on the last day of the Term.

1.7 “Calendar Year” means each successive period of 12 calendar months commencing on 1 January and ending on 31 December except that the first Calendar Year of the Term shall commence on the Effective Date and end on 31 December of the year in which the Effective Date occurs and the last Calendar Year of the Term shall commence on 1 January of the year in which the Term ends and end on the last day of the Term.

1.8 “Change of Control” means a transaction or series of related transactions (including any merger, consolidation, share exchange, reorganization or combination) involving either Party and any Third Party that results in (a) the holders of outstanding voting securities of such Party immediately prior to such transaction ceasing to hold at least fifty percent (50%) of the combined outstanding voting power of such Party or of the surviving or continuing entity, immediately after such transaction or series of transactions; (b) any Third Party becoming the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, including as a single Third Party, all Third Parties, who act together as a “group” for purposes of acquiring shares of a Party, as referenced in Section 13(d) of the Exchange Act; or (c) the sale or other disposition to a Third Party of all or substantially all of such Party’s assets or business to which this Agreement relates.

1.9 “Claims” means all Third Party demands, claims, actions, proceedings and liabilities (whether criminal or civil, in contract, tort or otherwise) for losses, damages, legal costs and other expenses of any nature.

1.10 “CMC” means chemistry, manufacturing, and controls.

1.11 “Combination Product” means any Licensed Product comprised of the following, either formulated together (i.e., a fixed dose combination) or packaged together and sold for a single price: (a) the Compound, and (b) at least one other API.

1.12 “Commercialization” means the conduct of all activities undertaken before and after Regulatory Approval has been obtained relating to the promotion, marketing, sale, pricing, reimbursement and distribution (including importing, exporting, transporting for commercial sales, customs clearance, warehousing, invoicing, handling and delivering the Licensed Products to customers) of the Compound or the Licensed Products, including: (a) sales force efforts, detailing, advertising, medical education, planning, marketing, sales force training, and sales and distribution; and (b) scientific and medical affairs. For clarity, Commercialization does not include any Development activities, whether conducted before or after Regulatory Approval. “Commercialize” and “Commercializing” have correlative meanings.

1.13 “Commercially Reasonable Efforts” means, (a) with respect to Spero’s obligations under this Agreement relating to the Development, Manufacturing, and Commercialization activities with respect to the Compound or the Licensed Products, the carrying out of such activities using efforts and resources that are consistent with the exercise of customary scientific and business practices as applied in the pharmaceutical industry for a company of a similar stage and size as Spero and having similar resources, for development, regulatory, manufacturing and commercialization activities conducted with respect to products at a similar stage of development or commercialization and having similar commercial potential, taking into account all Relevant Factors; and (b) with respect to Pfizer’s obligations under this Agreement relating to the seeking of European Regulatory Approval for, and Commercialization of, the Compound and Licensed Products, the carrying out of such activities using efforts and resources that are consistent with the efforts and resources that Pfizer would normally use to accomplish a similar objective under similar circumstances, for regulatory and commercialization activities conducted with respect to products at a similar stage of development or commercialization and having similar commercial potential, taking into account all Relevant Factors; provided, however, that Pfizer will be deemed to have exercised Commercially Reasonable Efforts if it has exercised those efforts normally used by Pfizer, in the relevant portion of the Pfizer Territory, with respect to a compound or protein, product or product candidate, as applicable (a) of similar modality Controlled by Pfizer, or (b) (i) to which Pfizer has similar rights, (ii) which is of similar market potential in such country, and (iii) which is at a similar stage in its development or product life cycle, as the Licensed Product, in each case, taking into account all Relevant Factors in effect at the time such efforts are to be expended. The Parties agree that the level of effort may be different for different markets and may change over time, reflecting changes in the status of the aforementioned attributes and potential of the Compound and Licensed Products. When used regarding obligations under this Agreement other than the Development, Manufacturing, and Commercialization activities with respect to the Compound or Licensed Products, the term “Commercially Reasonable Efforts” shall mean the carrying out of such activities using commercially reasonable efforts and financial, personnel and other resources that are consistent with the exercise of customary business practices as applied in the carrying out of such activities generally by and on behalf of such party. Further, to the extent that the performance of a Party’s obligations hereunder is adversely affected by the other Party’s failure to perform its obligations hereunder, the impact of such performance failure will be taken into account in determining

whether such Party has used its Commercially Reasonable Efforts to perform any such affected obligations.

1.14 “Complete,” “Completed,” or “Completion” means, with respect to a clinical trial, the point in time at which database lock for such trial has occurred and, if such trial has a statistical analysis plan, the primary endpoint and key safety data (including tables, listings and figures generated based on that database lock) under the statistical analysis plan for such trial are available.

1.15 “Compound” means SPR206.

1.16 “Confidential Information” of a Party means all Know-How, Inventions, unpublished patent applications, Regulatory Documentation, Development Data and other information and data of a financial, commercial, business, operational or technical nature of such Party that is disclosed or made available by or on behalf of such Party or any of its Affiliates to the other Party or any of its Affiliates, whether made available orally, in writing or in electronic or other form. The terms of this Agreement are the Confidential Information of both Parties.

1.17 “Control” or “Controlled” means, with respect to any Know-How, Patents, Regulatory Documentation, Development Data or other intellectual property rights, that a Party has the legal authority or right (whether by ownership, license or otherwise, other than by virtue of any license granted to such Party by the other Party pursuant to this Agreement) to grant a license, sublicense, access or other right (as applicable) under such Know-How, Patents, Regulatory Documentation, Development Data or other intellectual property rights to the other Party on the terms and conditions set forth herein, in each case without breaching the terms of any agreement with a Third Party, infringing third party intellectual property, or misappropriating third party trade secrets.

1.18 “Cost of Goods” means, with respect to the Compound or any Licensed Product, the fully absorbed cost to manufacture or to supply such Compound or Licensed Product in finished form for Development and/or Commercialization use, which means: (a) in the case of compounds, products, intermediates, API and services that one Party acquires directly from and in contractual privity with one or more Third Parties, all documented payments made to such Third Parties or direct material costs directly related to such products, intermediates, API and services, including without limitation, all costs incurred in purchasing materials, sales, excise and other taxes imposed thereon, customs duties, import, export and other charges levied by Governmental Authorities, all costs of packaging, shipping and insuring such materials; (b) in the case of (1) compounds, products, intermediates, API and services that one Party acquires from or supplies to the other Party in contractual privity with each other without performing direct manufacturing services or (2) of manufacturing or supply services performed directly by a Party or its Affiliates, including manufacturing or supply services that are reasonably necessary to support products and services acquired from Third Parties as contemplated in subsection (a), the actual unit costs of manufacture or supply, with no markup of any nature. The remainder of this definition is only applicable for determining costs of acquiring compounds, products, intermediates, API and services that one Party acquires from or supplies to the other in contractual privity and manufacturing services performed by a Party or its Affiliates as contemplated by subsection (b). Actual unit costs and supply costs shall consist of direct material costs, direct labor costs, and

manufacturing or supply overhead directly attributable to such Compound or Licensed Product, all calculated in accordance with GAAP, but without allocation of idle capacity, all to the extent provided, procured or incurred in connection with the supply or manufacture of such Compound or Licensed Product. Direct material costs shall include the costs incurred in purchasing materials, including sales, excise and other taxes imposed thereon, customs duties, import, export and other charges levied by Governmental Authorities, and all costs of packaging, shipping and insuring such components. Direct labor costs shall include the cost of: (i) employees working in direct manufacturing, supply and packaging of such Compound or Licensed Product; and (ii) direct quality control and quality assurance activities. Manufacturing and supply overhead attributable to such Compound or Licensed Product shall include a reasonable allocation of indirect labor costs (not previously included in direct labor costs). Manufacturing and supply overhead shall in no event exceed [***]% of the sum of the direct material costs and direct labor costs. Cost of Goods under the preceding subsection (b) specifically excludes profit margins of Spero or its Affiliates.

1.19 “Covered Transaction” means [***].

1.20 “CTA” means a Clinical Trial Application that is required to initiate a clinical trial for registering a drug product under the Applicable Laws of any Regulatory Authority or Government Authority, in each as the same may be amended from time to time.

1.21 “Develop” or “Development” means to develop (including clinical, non-clinical and CMC development), analyze, test and conduct preclinical, clinical and all other regulatory trials for the Compound or Licensed Product, including all post-approval clinical trials, as well as all related regulatory activities (including seeking Regulatory Approval) and any and all activities pertaining to new indications, pharmacokinetic studies and all related activities including work on new formulations, new methods of treatment and CMC activities including new manufacturing methods. “Developing” and “Development” have correlative meanings.

1.22 “Development Data” means Pfizer Development Data and Spero Development Data.

1.23 “Dollar” means U.S. dollars, and “$” shall be interpreted accordingly.

1.24 “EMA” means the European Medicines Agency or any successor agency or authority thereto.

1.25 “European Regulatory Approval” means, with respect to a Licensed Product, the Regulatory Approval of such Licensed Product by the EMA and the European Commission.

1.26 “European Union” means the organization of member states of the European Union, as it may be constituted from time to time during the Term.

1.27 “Everest” means Everest Medicines II Limited, a company incorporated under the laws of the Cayman Islands, and its successors and permitted assigns.

1.28 “Everest License Agreement” means that certain Amended and Restated License Agreement dated as of January 15, 2021 by and among Spero, Everest and Spero Potentiator, Inc., a Delaware corporation, as amended or modified from time to time.

1.29 “Everest Territory” means the People’s Republic of China, including Hainan Island, the Hong Kong Special Administrative Region of the People’s Republic of China, and the Macau Special Administrative Region of the People’s Republic of China, Taiwan, the Republic of Korea (South Korea), the Republic of Singapore, Malaysian Federation, Kingdom of Thailand, the Republic of Indonesia, Socialist Republic of Vietnam and the Republic of the Philippines.

1.30 “Excluded Territory” means (a) the U.S. Territory and (b) the Everest Territory.

1.31 “Exploit” means to make, have made, import, use, sell or offer for sale, including to research, Develop, Commercialize, register, Manufacture, have Manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market or have sold, sublicense or otherwise dispose of any rights with respect to the Compound or Licensed Products. “Exploitation” has the correlative meaning.

1.32 “FDA” means the United States Food and Drug Administration or any successor entity thereto.

1.33 “FFDCA” means the United States Federal Food, Drug, and Cosmetic Act, as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions and modifications thereto).

1.34 “First Commercial Sale” means, with respect to any Licensed Product in any jurisdiction in the Pfizer Territory, the first arm’s length sale of such Licensed Product by Pfizer, its Affiliates or Sublicensees to a Third Party for monetary value for use or consumption of such Licensed Product by the end user in the general public after Regulatory Approval for such Licensed Product in such jurisdiction has been granted. Sales prior to receipt of Regulatory Approval for such Licensed Product, such as so-called “treatment IND sales,” “named patient sales,” and “compassionate use sales,” shall not be construed as a First Commercial Sale.

1.35 “GAAP” means the then-current Generally Accepted Accounting Principles or International Financial Reporting Standards (IFRS), whichever is adopted as the standard financial accounting guideline in the United States for public companies, as consistently applied.

1.36 “Generic Product” means, with respect to a Licensed Product in a particular country in the Pfizer Territory, any pharmaceutical product sold by a Third Party that is not authorized by Pfizer that: (a) (i) contains the same API as a Licensed Product, and (ii) is approved in reliance, in whole or in part, on a prior Regulatory Approval of a Licensed Product; or (b) (i) is approved in reliance, in whole or in part, on a prior Regulatory Approval of a Licensed Product and (ii) is determined by the applicable Regulatory Authority to be substitutable for a Licensed Product.

1.37 “GxP” means, collectively, all relevant good practice quality guidelines and regulations, encompassing such internationally recognized standards as Good Manufacturing Practice (GMP), Good Clinical Practice (GCP), Good Laboratory Practice (GLP), Good Distribution Practice (GDP), and Good Review Practice (GRP), including, as applicable, those standards required by any Regulatory Authority or Applicable Laws in the Pfizer Territory.

1.38 “Government” or “Government Authority” means (a) any federal, state, national, provincial or local government, or political subdivision thereof;(b) any multinational organization or public international organization or authority; (c) any ministry, department, bureau, division, authority, agency, commission, or body entitled to exercise any administrative, executive, judicial, legislative, policy, regulatory, or taxing authority or power; (d) any court, tribunal, or governmental arbitrator or arbitral body; (e) any government-owned or controlled institution or entity; (f) any enterprise or instrumentality performing a governmental function; and (g) any political party.

1.39 “Government Official” means (a) any elected or appointed government official (e.g., a member of a ministry of health), (b) any employee or person acting for or on behalf of a government official, Governmental Authority, or other enterprise performing a governmental function, (c) any political party, candidate for public office, officer, employee, or person acting for or on behalf of a political party or candidate for public office, (d) any member of a military or a royal or ruling family, and (e) any employee or person acting for or on behalf of a public international organization (e.g., the United Nations). For clarity, healthcare providers employed by Government-owned or -controlled hospitals, or a person serving on a healthcare committee that advises a Government, will be considered Government Officials.

1.40 “IND” means a CTA or any other investigational new drug application, clinical trial application, clinical trial exemption or similar or equivalent application or submission for approval to conduct human clinical investigation filed with or submitted to the FDA, EMA or any other Regulatory Authority in conformance with the requirements of such Regulatory Authority.

1.41 “Infringed IP” means (a) a claim of an issued and unexpired Patent (as may be extended through supplementary protection certificate or patent term extension or the like) that has not been cancelled, revoked, held invalid or unenforceable by a decision of a patent office or other Government Authority of competent jurisdiction from which no appeal can be taken (or from which no appeal was taken within the allowable time period) and which claim has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise; (b) a claim of a Patent application pending for no more than [***] years that has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken; or (c) any Know-How not in the public domain; in each of case (a) and (b) which such claim a Party reasonably believes is or would be infringed by such Party’s Manufacturing, selling or offering for sale of the Compound or a Licensed Product; and in the case of (c), which Know-How a Party reasonably believes to be necessary or useful to such Party’s Manufacturing, selling or offering for sale of the Compound or a Licensed Product.

1.42 “Initiation” means, with respect to a clinical trial, the first dosing of the first subject in such clinical trial.

1.43 “Invention” means any technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including: biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality control data and

information, including study designs and protocols, assays and biological methodology process, composition of matter, article of manufacture, discovery or finding, patentable or otherwise, that is made, generated, conceived or otherwise invented as a result of a Party exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or independent contractors, including all rights, title and interest in and to the intellectual property rights therein. For clarity, “Invention” does not include Spero Development Data or Pfizer Development Data.

1.44 “Joint Inventions” means any Inventions that are conceived and reduced to practice jointly by employees of, or consultants or service providers to, Spero and Pfizer, at any time during the Term of this Agreement and that are made, generated, conceived or otherwise invented as a result of Spero and Pfizer exercising their rights or carrying out their obligations under this Agreement, whether directly or via their Affiliates, agents or independent contractors.

1.45 “Joint Patents” means any Patents that contain one or more claims that cover Joint Inventions.

1.46 “Know-How” means any information, including discoveries, improvements, modifications, processes, methods, techniques, protocols, formulas, data, inventions, know-how, trade secrets and results, patentable or otherwise, including physical, chemical, biological, toxicological, pharmacological, safety, and pre-clinical and clinical data, dosage regimens, control assays, and product specifications, but excluding any Patents.

1.47 “Licensed Field” means all therapeutic uses in humans.

1.48 “Licensed Know-How” means all Know-How that Spero Controls as of the Effective Date or during the Term that is necessary or reasonably useful for the Development, Manufacture, Commercialization or other Exploitation of the Compound or any Licensed Product for use in the Licensed Field in the Pfizer Territory, including all Spero Sole Inventions, Spero’s interest in any Joint Inventions in the Pfizer Territory, Spero Development Data and Spero’s Regulatory Documentation (with respect to the Compound or a Licensed Product), but excluding any Know How that Spero has licensed together with Infringed IP pursuant to an Excluded In-License Agreement.

1.49 “Licensed Patents” means all Patents Controlled by Spero as of the Effective Date or during the Term that are necessary or reasonably useful for the Development, Manufacture, Commercialization, or other Exploitation of the Compound or any Licensed Product for use in the Licensed Field in the Pfizer Territory, including any Spero Sole Invention Patents and Spero’s interest in any Joint Patents in the Pfizer Territory, but excluding any Patents included in Infringed IP that Spero has licensed pursuant to an Excluded In-License Agreement. The Spero Patents existing as of the Effective Date are listed on Exhibit A.

1.50 “Licensed Product” means any pharmaceutical product that contains the Compound, alone or in combination with one or more other molecules or agents in any dosage form or formulation. For purposes of this Agreement, with respect to a Licensed Product that has been approved for an initial indication, the approval of such Licensed Product for one or more additional indications shall not constitute a new and separate Licensed Product.

1.51 “Licensed Product Agreement” means, with respect to the Compound or any Licensed Product, any agreement entered into by and between Pfizer or any of its Affiliates or its or their Sublicensees, on the one hand, and one or more Third Parties, on the other hand, that is necessary for the Exploitation of the Compound or a Licensed Product in the Licensed Field in the Pfizer Territory, including any agreement (other than this Agreement) pursuant to which Pfizer, any of its Affiliates or any of its or their Sublicensees receives any license or other rights to Exploit the Compound or a Licensed Product.

1.52 “Licensed Technology” means the Licensed Patents and the Licensed Know-How and, if applicable in accordance with the provisions of Section 2.4(b) (In-License Agreements), Infringed IP that Third Parties have licensed to Spero under the relevant In-License Agreements.

1.53 “MAA” or “Marketing Authorization Application” means an application to the appropriate Regulatory Authority for approval to market a Licensed Product (but excluding Pricing Approval) in any particular jurisdiction, and all amendments, renewals and supplements thereto, including an NDA filed with the FDA in the U.S. or an NDA-equivalent application filed with the EMA in the Pfizer Territory.

1.54 “Manufacture” and “Manufacturing” means all activities related to the production, manufacture, processing, filling, finishing, packaging, labeling, in-process and finished testing, shipping, storing, or release of a product or any ingredient or intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, test method development and stability testing, formulation, quality assurance and quality control of the any compound, product or intermediate, and regulatory affairs with respect to the foregoing.

1.55 “NDA” means a New Drug Application (as more fully defined in 21 C.F.R. §314.5 et seq. or successor regulation) and all amendments and supplements thereto filed with the FDA and any other equivalent filings in the Pfizer Territory.

1.56 “Necessary Patent” means a Patent of a Third Party that would, in Pfizer’s good faith reasonable opinion, be infringed by the Development, Manufacture, Commercialization, or use of a Licensed Product in the form such Licensed Product exists at the time that the Third Party license agreement is executed.

1.57 “Net Sales” (a) with respect to a Licensed Product that is not a Combination Product, gross receipts from sales by Pfizer and its Affiliates and Sublicensees of such Licensed Product to Third Parties in the Pfizer Territory (including for clarity gross receipts from sales of or attributable to Licensed Products under government-sponsored and government subsidized programs), less in each case (i) bad debts and (ii) sales returns and allowances actually paid, granted or accrued, including trade, quantity and cash discounts and any other adjustments, including those granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers, chain pharmacies, mass merchandisers, staff model HMO’s, pharmacy benefit managers or other institutions, adjustments arising from consumer discount programs or other similar programs, customs or excise duties, sales tax, consumption tax, value added tax, and other

taxes (except income taxes) or duties relating to sales, any payment in respect of sales to any Government or Governmental Authority, or with respect to any government-subsidized program or managed care organization, and freight and insurance (to the extent that Pfizer, its Affiliates or its Sublicensees bear the cost of freight and insurance for the Licensed Product); and (b) with respect to a Licensed Product that is a Combination Product, that percentage of the Net Sales of such Combination Product (as determined in accordance with clause (a)) that relates to the Licensed Compound as Pfizer may reasonably determine based on the wholesale acquisition costs of the Licensed Compound contained in a Combination Product and the other active ingredient(s) in such Combination Product when sold separately, or other similar approach. Net Sales will be determined from books and records maintained in accordance with GAAP, as consistently applied by Pfizer with respect to sales of the Licensed Product.

1.58 “Patent” means all patents and patent applications, including all provisionals, divisionals, reissues, reexaminations, renewals, continuations, continuations-in-part, substitute applications, priority applications and inventors’ certificates, extensions and supplemental certificates and any and all foreign equivalents of the foregoing.

1.59 “Person” means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity

1.60 “Pfizer Development Data” means any (a) pharmacology, toxicology and other biological data Controlled by Pfizer related to the Compound or any Licensed Product or otherwise included in, or filed in support of, the Regulatory Documentation filed by Pfizer in the Pfizer Territory and (b) clinical data Controlled by Pfizer related to the Compound or any Licensed Product or otherwise included in, or filed in support of, the Regulatory Documentation filed by Pfizer in the Pfizer Territory.

1.61 “Pfizer Know-How” means all Know-How made, generated, conceived or otherwise discovered solely by employees of, or consultants or service providers to, Pfizer, at any time during the Term of this Agreement and that (i) is made, generated, conceived or otherwise discovered as a result of a Pfizer exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or independent contractors and (ii) is necessary or reasonably useful for the Development, Manufacture, Commercialization or other Exploitation of the Compound or any Licensed Product, including Pfizer Development Data and Pfizer’s Regulatory Documentation.

1.62 “Pfizer Quarter” means each of the four (4) thirteen (13) week periods (a) with respect to the United States, commencing on January 1 of any Pfizer Year and (b) with respect to any country other than the United States, commencing on December 1 of any Pfizer Year.

1.63 “Pfizer Sole Inventions” means any Inventions that are conceived and reduced to practice solely by employees of, or consultants or service providers to, Pfizer, at any time during the Term of this Agreement and that are made, generated, conceived or otherwise invented as a result of a Party exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or independent contractors.

1.64 “Pfizer Sole Invention Patents” means any Patents that contain one or more claims that cover Pfizer Sole Inventions.

1.65 “Pfizer Technology” means the Pfizer Sole Invention Patents and the Pfizer Know-How.

1.66 “Pfizer Territory” means all countries and territories of the world, other than the Excluded Territory.

1.67 “Pfizer Year” means the twelve month fiscal periods observed by Pfizer (a) commencing on January 1 with respect to the United States and (b) commencing on December 1 with respect to any country other than the United States.

1.68 “Phase 1 Clinical Trial” means a human clinical trial that would satisfy the requirements for a Phase 1 study as defined in 21 CFR § 312.21(a) (or any amended or successor regulations) or any equivalent regulations in jurisdictions in the Pfizer Territory, regardless of where such clinical trial is conducted.

1.69 “Phase 2 Clinical Trial” means a human clinical trial that would satisfy the requirements for a Phase 2 study as defined in 21 C.F.R. § 312.21(b) (or in any amended or successor regulations) or any equivalent regulations in jurisdictions in the Pfizer Territory, regardless of where such clinical trial is conducted.

1.70 “Phase 3 Clinical Trial” means a human clinical trial that would satisfy the requirements for a Phase 3 study as defined in 21 CFR § 312.21(c) (or any amended or successor regulations) or any equivalent regulations in jurisdictions in the Pfizer Territory, regardless of where such clinical trial is conducted. For clarity, in the case of a “Phase 2/3” clinical trial, (a) such Phase 2/3 clinical trial shall be deemed to be a Phase 3 Clinical Trial upon the date that such Phase 2/3 clinical trial first satisfies the criteria set forth in this definition and (b) the filing of an IND for a Licensed Product in a Phase 3 Clinical shall be deemed to occur upon the filing of the IND for the Phase 2 portion of such “Phase 2/3” clinical trial.

1.71 “Pricing Approval” means such governmental approval, agreement, determination or decision establishing prices for a Licensed Product that can be charged and/or reimbursed in a regulatory jurisdiction where the applicable Government Authority approves or determines the price and/or reimbursement of pharmaceutical products.

1.72 “Product Trademarks” means the Trademark(s) used by Pfizer or its Affiliates for the Commercialization of Licensed Products in the Licensed Field in the Pfizer Territory and any registrations thereof or any pending applications relating thereto in the Pfizer Territory (excluding, in any event, any Corporate Names and any Trademarks that consist of or include any corporate name or corporate logo of any Party, its Affiliates or its or their Sublicensees.

1.73 “Reimbursement Rate” means, with respect the costs to Spero of providing services to Pfizer on an FTE based compensation rate or any similar FTE-based cost to be paid by Pfizer pursuant to Section 6.2, an FTE-based compensation rate of $[***] per annum.

1.74 “Regulatory Approval” means, with respect to a jurisdiction in the Pfizer Territory, any and all approvals (including approvals of Marketing Authorization Applications), licenses, registrations or authorizations of any Regulatory Authority necessary to commercially distribute, sell or market a Licensed Product in such jurisdiction, including, where applicable: (a) Pricing Approval in such jurisdiction; (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto); and (c) labelling approval.

1.75 “Regulatory Authority” means any applicable Government Authority responsible for granting Regulatory Approvals for any Licensed Product, including the FDA, the EMA, and any corresponding national or regional regulatory authorities.

1.76 “Regulatory Documentation” means: all (a) applications (including all Regulatory Filings, INDs, CTAs and Marketing Authorization Applications), registrations, licenses, authorizations and approvals (including Regulatory Approvals); (b) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents with respect thereto, including all adverse event files and complaint files; and (c) clinical and other data contained or relied upon in any of the foregoing; in each case (a), (b) and (c) relating to the Compound or a Licensed Product.

1.77 “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a pharmaceutical product other than Patents, and including, without limitation, orphan drug exclusivity, new chemical entity exclusivity, data exclusivity or pediatric exclusivity.

1.78 “Regulatory Filings” means, with respect to the Compound or Licensed Products, any submission to a Regulatory Authority of any appropriate regulatory application specific to the Compound or Licensed Products, and shall include, without limitation, any submission to a regulatory advisory board and any supplement or amendment thereto. For the avoidance of doubt, Regulatory Filings shall include any IND, CTA, NDA, MAA, Regulatory Approval or the corresponding application in any other country or jurisdiction.

1.79 “Relevant Factors” means all relevant factors that may affect the Development, Regulatory Approval or Commercialization of the Compound or Licensed Products, including (as applicable): actual and potential issues of safety, efficacy or stability; product profile (including product modality, category and mechanism of action); stage of development or life cycle status; actual and projected Development, Regulatory Approval, Manufacturing, and Commercialization costs; any issues regarding the ability to Manufacture or have Manufactured the Compound or Licensed Products; the likelihood of obtaining Regulatory Approvals (including satisfactory Price Approvals); the timing of such approvals; the current guidance and requirements for Regulatory Approval for the Compound and Licensed Products and similar products and the current and projected regulatory status; labeling or anticipated labeling; the then-current competitive environment and the likely competitive environment at the time of projected entry into the market; past performance of a Licensed Product or similar products; present and future market potential; the ability to obtain adequate supply of the Compound or Licensed Products, or any component thereof, from any Third Party as may be required to Develop, secure Regulatory Approval for or

Commercialize the Compound or Licensed Products; Patents of a Third Party; existing or projected pricing, sales, reimbursement and profitability; pricing or reimbursement changes in relevant countries; proprietary position, strength and duration of patent protection and anticipated exclusivity; and other relevant scientific, technical, operational and commercial factors.

1.80 “Respective Territory” means, in the case of Pfizer, the Pfizer Territory, and in the case of Spero, the Excluded Territory.

1.81 “Retained Rights” means (a) with respect to the Compound and Licensed Products, the rights of Spero, its Affiliates and its and their licensors, Sublicensees and contractors to: (i) perform its and their obligations under this Agreement; (ii) Manufacture, have Manufactured, Develop and have Developed the Compound or Licensed Products, within the Pfizer Territory solely for Exploitation outside the Pfizer Territory; and (iii) Develop, Manufacture, Commercialize and otherwise Exploit the Compound and Licensed Products for any and all purposes outside the Pfizer Territory; and (b) with respect to any compounds other than the Compound and any products other than the Licensed Products, the rights of Spero, its Affiliates and its and their licensors, (sub)licensees and contractors to make, use, import, export, research, develop, manufacture, hold or keep, or have made, used, imported, exported, researched, developed, manufactured, held or kept, such other compounds and products within the Pfizer Territory solely for marketing, offering for sale or commercialization outside the Pfizer Territory.

1.82 “Spero CMO” has the meaning set forth in Section 6.2 (Manufacturing Technology Transfer)

1.83 “Spero Development Data” means any (a) pharmacology, toxicology and other biological data Controlled by Spero related to the Compound or any Licensed Product or otherwise included in, or filed in support of, any Regulatory Documentation and (b) clinical data Controlled by Spero related to the Compound or any Licensed Product or otherwise included in, or filed in support of, any Regulatory Documentation.

1.84 “Spero Sole Inventions” means any Inventions that are conceived and reduced to practice solely by employees of, or consultants or service providers to, Spero, at any time during the Term of this Agreement and that are made, generated, conceived or otherwise invented as a result of a Party exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or independent contractors.

1.85 “Spero Sole Invention Patents” means any Patents that contain one or more claims that cover Spero Sole Inventions.

1.86 “Spero Trademarks” means any corporate name or corporate logo of Spero or its Affiliates, and any Trademark that consists of or includes any corporate name or corporate logo of Spero or its or their Affiliates, including the Spero Trademarks, names and logos identified on Exhibit B hereto and such other Trademarks, names and logos as Spero may designate in a writing sent to Pfizer from time to time during the Term.

1.87 “SPR206” means the compound known as SPR206 and having the chemical structure shown in Exhibit C and [***].

1.88 “Sublicense” means a license or sublicense granted by a Party (or a Sublicensee) to Exploit the Compound or any Licensed Product, including any license given to any of the rights granted to Pfizer under Section 2.1 (Licenses to Pfizer) or any of the rights granted to Spero under Section 2.2 (Licenses to Spero).

1.89 “Sublicensee” means a Third Party to whom a Party or its Affiliates has granted a Sublicense in accordance with the terms of this Agreement.

1.90 “Tax” or “Taxes” means (a) all federal, provincial, territorial, state, municipal, local, foreign or other taxes, imposts, rates, levies, assessments and other charges in the nature of a tax (and all interest and penalties thereon and additions thereto imposed by any Government Authority), including without limitation all income, excise, franchise, gains, capital, real property, goods and services, transfer, value added, gross receipts, windfall profits, severance, ad valorem, personal property, production, sales, use, license, stamp, documentary stamp, mortgage recording, employment, payroll, social security, unemployment, disability, escheat, estimated or withholding taxes, and all customs and import duties, together with all interest, penalties and additions thereto imposed with respect to such amounts, in each case whether disputed or not; (b) any liability for the payment of any amounts of the type described in subsection (a) as a result of being or having been a member of an affiliated, consolidated, combined or unitary group; and (c) any liability for the payment of any amounts as a result of being party to any tax sharing agreement or arrangement or as a result of any express or implied obligation to indemnify any other person with respect to the payment of any amounts of the type described in subsection (a) or (b).

1.91 “Third Party” means any Person other than a Party or an Affiliate of a Party.

1.92 “Trademark” means any word, name, symbol, color, shape, designation or any combination thereof, including any trademark, service mark, trade name, brand name, sub-brand name, trade dress, product configuration rights, program name, delivery form name, certification mark, collective mark, logo, tagline, slogan, design or business symbol, that functions as an identifier of source, origin or quality, whether or not registered, and all statutory and common law rights therein and all registrations and applications therefor, together with all goodwill associated with, or symbolized by, any of the foregoing.

1.93 “U.S. Territory” means the United States and its territories and possessions (including the District of Columbia, Puerto Rico and the U.S. Virgin Islands).

1.94 “Valid Claim” means, with respect to any jurisdiction in the Pfizer Territory, (a) a claim of an issued and unexpired Patent (as may be extended through supplementary protection certificate or patent term extension or the like) that has not been cancelled, revoked, held invalid or unenforceable by a decision of a patent office or other Government Authority of competent jurisdiction from which no appeal can be taken (or from which no appeal was taken within the allowable time period) and which claim has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise; or (b) a claim of a Patent application that has not been cancelled, revoked, held invalid or unenforceable by a decision of a patent office or other Government Authority from which no appeal can be taken, provided that any claim in any Patent application pending for more than [***] years from the earliest date on which such Patent application claims priority shall not be considered a Valid Claim for purposes

of this Agreement from and after such [***] year period unless and until a Patent containing such claim issues from such patent application while another Valid Claim covers the relevant Licensed Product in the relevant country and such issued claim meets the requirements of clause (a).

1.95 Interpretation. In this Agreement, unless otherwise specified: (i) “includes” and “including” shall mean, respectively, includes without limitation and including without limitation; (ii) words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders; (iii) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear; and (iv) the Exhibits and other attachments form part of the operative provision of this Agreement and references to this Agreement shall include references to the Exhibits and attachments.

1.96 Index to Additional Defined Terms

INDEX \e " " \c "1" \z "1033"

[***] See 14.10(b)

Agreement See Preamble

Annual Net Sales See 8.4(a)

Auditor See 8.9

Bankruptcy Law See 2.9

Clinical Supply Agreement See 6.3

Commercial Supply Agreement See 6.3

Complaining Party See 14.10(b)

Cumulative Net Sales See 8.3(a)

Data Package See 4.5

Defending Party See 14.10(c)(1)

Development Activities See 4.3(a)

Development Plan See 4.2

Diligence Meeting See 4.3(b)

Diligence Meeting Date See 4.3(b)

Diligence Target Dates See 4.3(a)

Disclosing Party See 10.1(a)

Dispute See 14.10(a)

Draft Clinical Study Report See 4.5

Effective Date See Preamble

Excluded Claim See 14.10(g)

Excluded In-License Agreement See 2.4(b)

Executive Officers See 3.2(d)

Existing Licensed Patents See 12.3(a)

Expert See 8.1(b)

Final Clinical Study Report See 4.5

First Diligence Notice See 4.3(b)

force majeure See 4.3

HAP/VAP Indication See 8.2

IND Acceptance See 8.1(a)

IND Submission Date See 8.1(a)

Indemnification Claim Notice See 13.3(a)

Indemnified Party See 13.3(a)

Indemnifying Party See 13.3(a)

Initial Development Plan See 4.2

Initial Term See 11.1

In-License Agreement See 2.4(b)

Issued Patent See 9.2(c)

JDC See 3.1

Joint Development Committee See 3.1

License Maintenance Fee See 8.1(a)

Licensed Manufacturing Know-How See 6.2

Manufacturing Transfer Period See 6.2

[***] See 4.3(a)(1)

Non-Notifying Party See 2.4(b)

Non-Prosecuting Party See 9.4(b)

Non-Publishing Party See 10.4

Notifying Party See 2.4(b)

Other Infringement See 9.4(b)

Parties See Preamble

Party See Preamble

Pfizer See Preamble

Pfizer Indemnitees See 13.1

Phase 3 Start See 8.1(a)

Phase 3 Success See 8.1(a)

Pivotal Trial See 4.5

[***] See 4.3(a)(3)

[***] See 4.3(a)(2)

Product Infringement See 9.4(a)

Prosecuting Party See 9.4(b)

Publishing Party See 10.4

[***] See 11.3(a)(2)

Receiving Party See 10.1(a)

Regulatory Activities See 5.1

Representatives See 10.1(c)

[***] See 2.10(a)

Royalty Term See 8.4(b)

Sales Milestone Event See 8.3

SEC See 10.5(a)

Spero See Preamble

Spero CMO See 6.1

Spero Development Territory See 4.1

Spero Indemnities See 13.2

Subcontractor See 2.7

Successive Term See 11.1

Term See 11.1

Third Party Infringement Claim See 9.5

Third Party Payments See 8.4(d)(2)

Triggering Event See 8.1(a)

Triggering Event Notice See 8.1(a)

[***] See 2.10(a)

VAT See 8.7(b)

Violating Party See 11.2(c)

ARTICLE 2 LICENSES

2.1 Licenses to Pfizer.

(a) Subject to the terms and conditions of this Agreement, effective as of the Effective Date, Spero hereby grants to Pfizer an exclusive (even as to Spero except to the extent necessary to perform Spero’s Development obligations under Article 4 hereof), royalty-bearing license under the Licensed Technology solely to Exploit the Compound and Licensed Products in the Licensed Field in the Pfizer Territory, with the right to grant Sublicenses in accordance with Section 2.3 (Sublicense Rights).

(b) The United States federal government retains rights in certain of the Licensed Patents pursuant to 35 U.S.C. §§ 200-212 and 37 C.F.R. § 401 et seq., and any right granted in this Agreement greater than that permitted under 35 U.S.C. §§ 200-212 or 37 C.F.R. § 401 et seq. will be deemed modified as may be required to conform to the provisions of those statutes and regulations.

2.2 License to Spero. Subject to the terms and conditions of this Agreement, Pfizer hereby grants to Spero an exclusive (except to Pfizer and its Affiliates), royalty-free, fully paid-up license under the Pfizer Technology and any Infringed IP licensed to Pfizer under an In-License Agreement pursuant to Section 2.4(b), in each case solely to Exploit the Compound and Licensed Products in the Licensed Field in the Excluded Territory, with the right to grant Sublicenses in accordance with Section 2.3 (Sublicense Rights). For the avoidance of doubt, any Patents, Know-How, Inventions, Regulatory Documentation and other intellectual property rights that are licensed to Pfizer under an Excluded In-License Agreement pursuant to Section 2.4(b), shall be excluded from the license granted to Spero pursuant to this Section 2.2.

2.3 Sublicense Rights.

(a) Affiliates. Subject to the terms of this Section 2.3 (Sublicense Rights), Pfizer may grant a Sublicense through multiple tiers to Affiliates of Pfizer without prior notice to or the prior consent of Spero; provided that (i) Pfizer shall cause each Affiliate to comply with the applicable terms and conditions of this Agreement, as if such Affiliate were a Party to this Agreement; and (ii) Pfizer shall be responsible for all actions, activities and obligations to Spero of such Affiliate. Subject to the terms of this Section 2.3 (Sublicense Rights), Spero may grant a Sublicense through multiple tiers to Affiliates of Spero without prior notice to or the prior consent

of Pfizer; provided that Spero shall cause each Affiliate to comply with the applicable terms and conditions of this Agreement, as if such Affiliate were a Party to this Agreement and Spero shall be responsible for all actions, activities and obligations to Pfizer of such Affiliate.

(b) Third Parties. Upon the prior written consent of Spero, such consent not to be unreasonably withheld, conditioned, or delayed, Pfizer may grant a Sublicense through multiple tiers to any Third Party; provided that (i) Licensed Know-How may only be sublicensed along with the Licensed Patents (other than in the case of a Sublicense to a fee-for-service Subcontractor in the context of subcontracting pursuant to Section 2.7 (Subcontracting)); (ii) each Sublicense granted to a Third Party shall be in writing, and shall incorporate terms and conditions that are consistent with, and expressly made subject to, the terms and conditions of this Agreement; (iii) Spero shall be provided by Pfizer with a copy of such Sublicense agreement within [***] days of execution, which copy may redact any financial or other proprietary terms; and (iv) Pfizer shall be responsible to Spero for a breach of this Agreement due to the breach by such Third Party of such Sublicense agreement. Pfizer hereby waives any requirement that Spero exhaust any right, power or remedy, or proceed against any such Sublicensee for any obligation or performance under this Agreement prior to proceeding directly against Pfizer. Upon the prior written consent of Pfizer, such consent not to be unreasonably withheld, conditioned, or delayed, Spero may grant a Sublicense through multiple tiers to any Third Party; provided that (i) each Sublicense granted to a Third Party shall be in writing, and shall incorporate terms and conditions that are consistent with, and expressly made subject to, the terms and conditions of this Agreement; (ii) Pfizer shall be provided by Spero with a copy of such Sublicense agreement within [***] days of execution, which copy may redact any financial or other priority terms; and (iii) Spero shall be responsible to Pfizer for a breach of this Agreement due to the breach by such Third Party of such Sublicense agreement. Spero hereby waives any requirement that Pfizer exhaust any right, power or remedy, or proceed against any Sublicensee for any obligation or performance under this Agreement prior to proceeding directly against Spero. For the avoidance of doubt, Pfizer hereby consents to Spero’s grant of a Sublicense of the rights granted under the license in Section 2.2 (License to Spero) through multiple tiers to Everest pursuant to the Everest License Agreement, a copy of which has been provided to Pfizer in accordance with this Section 2.3(b) (Sublicense Rights – Third Parties).

(c) A copy of each Sublicense agreement with any Third Party shall, without redaction, be made available to (i) pursuant to Section 8.8 (Financial Records and Audit), any independent certified public accountant for the purpose of verifying for Spero the accuracy of the financial reports furnished by Pfizer under this Agreement or of any payments made, or required to be made, by Pfizer to Spero pursuant to this Agreement and (ii) pursuant to Section 8.9 (Audit Dispute), any Auditor resolving a financial disagreement between the Parties.

(d) As of the Effective Date, Pfizer shall become a Sublicensee of Everest Technology (as defined on the Everest License Agreement), including Everest’s interests in the Everest Development Data (as defined in the Everest License Agreement), solely to Exploit Licensed Products in the Licensed Field in the Pfizer Territory and Pfizer hereby acknowledges and agrees that this Agreement incorporates terms and conditions that are consistent with, and expressly made subject to, the terms and conditions of the Everest License Agreement in respect of such Sublicense.

2.4 Spero’s Retained Rights; In-License Agreements.

(a) Retained Rights of Spero. Notwithstanding anything to the contrary in this Agreement and without limitation of any rights granted or reserved to Spero pursuant to any other term or condition of this Agreement, Spero hereby expressly retains, on behalf of itself and its Affiliates all right, title and interest in and to the Licensed Patents, the Licensed Know-How, Spero Development Data, Spero’s interests in and to Joint Patents and Joint Know-How, Regulatory Documentation of Spero and the corporate names of Spero and its Affiliates, in each case, for purposes of performing or exercising the Retained Rights.

(b) In-License Agreements. If a Party identifies any Infringed IP and determines to negotiate with a Third Party at arms’ length to obtain a license to such Infringed IP in such Party’s Respective Territory, then such Party (the “Notifying Party XE "Notifying Party" \t "See 2.4(b)" ”) shall promptly notify the other Party (the “Non-Notifying Party XE "Non-Notifying Party" \t "See 2.4(b)" ”) and identify such Third Party’s Infringed IP in reasonable detail. If, the Non-Notifying Party determines that such Third Party’s Infringed IP is necessary or useful for the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field in its Respective Territory, then it shall inform the Notifying Party of its determination and (x) the Parties shall cooperate in good faith to negotiate and execute a license to such Infringed IP in the Pfizer Territory and the Excluded Territory (an “In-License Agreement XE "In-License Agreement" \t "See 2.4(b)" ”), (y) the Parties shall mutually agree on the portion, if any, of the costs associated with such In-License Agreement to be borne by each Party and this Agreement shall be amended or supplemented to reflect such mutual agreement and (z) upon the execution and delivery of such In-License Agreement, such Infringed IP shall be included in the licenses granted under Section 2.1(a) (License to Pfizer) or Section 2.2 (License to Spero), as applicable. The Parties shall cooperate with each other in good faith to support each other in complying with such other Party’s obligations under each In-License Agreement, and shall comply with any applicable reporting, payment, subleasing or other requirements under each In-License Agreement. Nothing in this Section 2.4(b) shall prevent a party from negotiating or entering into an In-License Agreement with a Third Party with respect to Infringed IP solely with respect to such Party’s Respective Territory. If the Non-Notifying Party determines that it does not wish to obtain a license to such Third Party’s Infringed IP, then the Identifying Party shall have the right, but not the obligation, to negotiate and execute a license to such Infringed IP in any Territory including the other Party’s Respective Territory (an “Excluded In-License Agreement XE "Excluded In-License Agreement" \t "See 2.4(b)" ”) at its cost and expense, in which case such other Party shall not be obligated to pay any costs associated with such Excluded In-License Agreement and such Infringed IP shall not be included in the licenses granted under Section 2.1 (License to Pfizer) or Section 2.2 (License to Spero), as applicable.

2.5 No Implied Licenses. Except as set forth herein, no Party shall acquire any license or other intellectual property interest, by implication or otherwise, under any Know-How, Patents, trademarks or other intellectual property rights owned or Controlled by any other Party.

2.6 Non-Diversion. Each of Pfizer and Spero covenants and agrees that it will not, and will ensure that its Affiliates will not, and will ensure its Sublicensees and subcontractors are bound by contractual obligations not to, either directly or indirectly, promote, market, solicit, distribute, import, sell or have sold Licensed Products outside their Respective Territory. In

furtherance of the foregoing, each of Pfizer and Spero covenant and agree that it will not and will ensure that its Affiliates do not, and will use Commercially Reasonable Efforts to ensure that its or their Sublicensees or distributors do not knowingly distribute, market, promote, offer for sale or sell the Compound or any Licensed Product directly or indirectly to any Person outside their Respective Territory or to any Person inside their Respective Territory that such Party or any of its Affiliates or any of its or their Sublicensees or distributors knows has directly or indirectly distributed, marketed, promoted, offered for sale or sold, or has reasonable grounds to believe intends to directly or indirectly distribute, market, promote, offer for sale or sell, the Compound or Licensed Products for use outside such Party’s Respective Territory. If either Party or any of its respective Affiliates receives or becomes aware of the receipt by it or any Sublicensee or distributor of any orders for the Compound or Licensed Products for use outside such Party’s Respective Territory, such Person shall refer such orders to such other Party.

2.7 Subcontracting. Subject to Section 2.3 (Sublicense Rights), Pfizer may subcontract on a fee-for-service basis with a Third Party to perform any or all of its obligations hereunder (a “Subcontractor XE "Subcontractor" \t "See 2.7" ”), including by appointing one or more distributors; provided that (a) no such permitted subcontracting shall relieve Pfizer of any obligation hereunder (except to the extent satisfactorily performed by such Subcontractor) or any liability and Pfizer shall be and remain fully responsible and liable therefor; (b) the agreement pursuant to which Pfizer engages any Subcontractor must be consistent in all material respects with this Agreement, including terms consistent with the confidentiality, restrictions on use and intellectual property provisions of this Agreement, and (c) Pfizer shall be responsible to Spero for the breach of this Agreement due to breach of any subcontracting agreement by its Subcontractors. Pfizer hereby waives any requirement that Spero exhaust any right, power or remedy, or proceed against any Subcontractor for any obligation or performance under this Agreement prior to proceeding directly against Pfizer. Subject to Section 2.3 (Sublicense Rights), Spero may subcontract on a fee-for-service basis with a Subcontractor to perform any or all of its obligations hereunder, including by appointing one or more distributors; provided that (a) no such permitted subcontracting shall relieve Spero of any obligation hereunder (except to the extent satisfactorily performed by such Subcontractor) or any liability and Spero shall be and remain fully responsible and liable therefor, (b) the agreement pursuant to which Spero engages any Subcontractor must be consistent in all material respects with this Agreement, including terms consistent with the confidentiality, restrictions on use and intellectual property provisions of this Agreement, and (c) Spero shall be responsible to Pfizer for the breach of this Agreement due to breach of any subcontracting agreement by its Subcontractors. Spero hereby waives any requirement that Pfizer exhaust any right, power or remedy, or proceed against any Subcontractor for any obligation or performance under this Agreement prior to proceeding directly against Spero.

2.8 Statements and Compliance with Applicable Laws. Each of Spero and Pfizer shall and shall cause its Affiliates and its and their respective Sublicensees to comply with all Applicable Laws, including GxP, with respect to the Exploitation of Licensed Products. Each of Spero and Pfizer shall, and shall cause its Affiliates to, and shall use Commercially Reasonable Efforts to cause its and their Sublicensees, employees, representatives, agents, and distributors to avoid taking, or failing to take, any actions that the Party knows or reasonably should know would jeopardize the goodwill or reputation of the other Party or such other Party’s Affiliates or the Licensed Products or any Trademark associated therewith. Each of Spero and Pfizer shall in all material respects conform its practices and procedures relating to the Commercialization of the

Licensed Products and educating the medical community in the such Party’s Respective Territory with respect to the Licensed Products to any applicable industry association regulations, policies and guidelines, as the same may be amended from time to time, and Applicable Laws.

2.9 Section 365(n). All rights and licenses granted under or pursuant to this Agreement by Spero or Pfizer are, and will otherwise be deemed to be, for the purposes of Section 365(n) of the U.S. Bankruptcy Code, and any similar Applicable Law (“Bankruptcy Law XE "Bankruptcy Law" \t "See 2.9" ”), licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or any similar Bankruptcy Laws. The Parties agree that the Parties, as licensees of such rights under this Agreement, will retain and may fully exercise all of their rights and elections under the Bankruptcy Laws. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under any Bankruptcy Law, the Party that is not a party to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, will be promptly delivered to them (a) upon any such commencement of a bankruptcy proceeding upon their written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under (a) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject party.

2.10 [***] for U.S. Rights.

(a) If at any time during the Term, Spero intends to enter into a Covered Transaction, Spero shall [***].

(b) If Pfizer elects not to [***].

ARTICLE 3 GOVERNANCE

3.1 Joint Development Committee. Within [***] days after the Effective Date, the Parties shall establish a joint development committee (the “Joint Development Committee XE "Joint Development Committee" \t "See 3.1" ” or the “JDC XE "JDC" \t "See 3.1" ”), composed of [***] representatives of Spero (if Spero elects to participate) and [***] representatives of Pfizer, to coordinate the Development of the Compound and Licensed Products in the Licensed Field in the Parties’ Respective Territories. Each JDC representative shall have appropriate knowledge and expertise and sufficient seniority within the applicable Party to make decisions arising within the scope of the JDC’s responsibilities. For the purposes of participation in the JDC, Spero has the right but not the obligation to participate in the JDC. If Spero does not participate in establishing the JDC or appoint members to the JDC, Pfizer shall have the votes and the decision-making power of Spero with respect to the JDC or may, at its election suspend the operation of the JDC, unless and until Spero appoints members thereto. The JDC shall:

(a) serve as a forum for discussing Development of the Compound and Licensed Products in the Licensed Field in the Parties’ Respective Territories, including by reviewing and agreeing on the Development Plan, pivotal trial study protocol(s) and statistical analysis plan(s) and coordinating the conduct of the Development activities;

(b) serve as a forum for discussing the Manufacture and supply of the Compound and Licensed Products in the Licensed Field in the Pfizer Territory, including by reviewing the Development strategy for the Pfizer Territory and coordinating the conduct of the Manufacturing and supply activities;

(c) serve as a forum for discussing and supervising Development of the Compound and Licensed Products in the Licensed Field in the Parties’ Respective Territories, including by (i) providing each Party with a forum to disclose such Party’s, or its Affiliates’ or Sublicensees’ activities with respect to achieving Regulatory Approvals of Licensed Products in or outside the Pfizer Territory; material clinical study results; and the Marketing Authorization Applications that such Party or any of its Affiliates or Sublicensees reasonably expect to make, seek or attempt to obtain; (ii) reviewing the current Development Plan and, with the JDC’s approval, making any amendments or updates to the Development Plan; and (iii) coordinating the conduct of the Development activities;

(d) coordinate the activities of Spero and Pfizer under this Agreement, including the activities of any other licensee of Licensed Patents or Licensed Know-How in the Excluded Territory, including Everest; and

(e) perform such other functions as are set forth herein or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.

The JDC shall have only such powers as are expressly assigned to it in this Agreement, and such powers shall be subject to the terms and conditions of this Agreement. For clarity, the JDC shall not have any right, power or authority: (i) to determine any issue in a manner that would conflict with the express terms and conditions of this Agreement; or (ii) to modify or amend the terms and conditions of this Agreement.

3.2 JDC Membership and Meetings.

(a) JDC Chair and Membership. The chair for each meeting shall rotate between Spero and Pfizer, with one of each Party’s JDC representatives acting as chairperson of the JDC on a rotating basis. Each Party may replace its JDC representatives on written notice to the other Party, but each Party shall strive to maintain continuity.

(b) JDC Meetings. The JDC members (or their designees) shall jointly prepare and circulate the meeting agenda at least [***] Business Days in advance of each meeting, and shall also promptly, but in no event later than [***] Business Days after such meeting, prepare and circulate for review and approval of the Parties the minutes of such meeting. The JDC will hold its first meeting within [***] days of establishment of the JDC pursuant to Section 3.1 (Joint Development Committee). At this first meeting, the JDC will address the Initial Development Plan, and any other topics the Parties deem appropriate. Thereafter, the JDC shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than

[***] per Calendar Year. Meetings may be held in person, or by audio or video teleconference; provided, that unless otherwise agreed by Spero and Pfizer, at least [***] meeting per year shall be held in person, and all in-person JDC meetings shall be held at locations mutually agreed upon by Spero and Pfizer. Each Party shall be responsible for all of its own expenses of participating in JDC meetings.

(c) Non-Member Attendance. Each of Spero and Pfizer may from time to time invite a reasonable number of participants, in addition to its representatives, to attend JDC meetings in a non-voting capacity; provided, that if either Spero or Pfizer intends to have any Third Party (including any consultant) attend such a meeting, such Party shall provide at least [***] days prior written notice to the other Party and obtain the other Party’s approval for such Third Party to attend such meeting, which approval shall not be unreasonably withheld or delayed. Such Party shall ensure that such Third Party is bound by confidentiality and non-use obligations consistent with the terms of this Agreement and provide the other Party with a copy of such confidentiality agreement. The Party inviting any such Third Party shall be responsible for all of such Third Party’s costs and expenses of participating in JDC meetings, unless such invitation is mutually made by Spero and Pfizer, in which case they shall equally share such costs and expenses.

(d) JDC Decision-Making. All decisions of the JDC shall be made by unanimous vote, with Spero’s representatives and Pfizer’s representatives each collectively having [***] vote. If after reasonable discussion and good faith consideration of each of their views on a particular matter before the JDC, the representatives of Spero and Pfizer cannot reach an agreement as to such matter within [***] Business Days after such matter was brought to the JDC for resolution, such disagreement shall be referred to the Chief Executive Officer of Spero (or his or her designee) and the Global President, Hospital Business Unit of Pfizer (or his or her designee) (collectively, the “Executive Officers XE "Executive Officers" \t "See 3.2(d)" ”) for resolution, who shall use good faith efforts to resolve such matter within [***] Business Days after it is referred to them and, if such matter is resolved by the Executive Officers, such resolution shall be implemented by and binding on the Parties. If the Executive Officers are unable to reach consensus on any such matter during such [***] Business Day period, then:

(1) the Chief Executive Officer of Spero shall have the right to make the final decision if such matter (A) involves the Development of, or Regulatory Approval for, a Licensed Product solely outside the Pfizer Territory and (B) could not reasonably be expected to have a material adverse effect on the Development of, Regulatory Approval for, Commercialization or Exploitation of the Compound or a Licensed Product inside the Pfizer Territory;

(2) the Global President, Hospital Business Unit of Pfizer shall have the right to make the final decision if such matter (A) involves the Development of, Regulatory Approval for, a Licensed Product solely in the Pfizer Territory and (B) does not involve Spero’s Retained Rights and (C) could not reasonably be expected to have a material adverse effect on the Development of, Regulatory Approval for, Commercialization or Exploitation of the Compound or a Licensed Product outside the Pfizer Territory;

(3) in all other cases, such matter will be resolved in accordance with Section 14.10 (Dispute Resolution).

ARTICLE 4 DEVELOPMENT

4.1 General. Subject to the terms and conditions of this Agreement, (i) Spero shall be responsible at its expense for the Development of the Licensed Product in the United States, the European Union and the United Kingdom (the “Spero Development Territory XE "Spero Development Territory" \t "See 4.1" ”), including the performance of preclinical and clinical studies of the Compound or any Licensed Product in accordance with the Development Plan; and (ii) Pfizer shall have the right, but no obligation, to Develop the Compound or any Licensed Product in the Licensed Field in the Pfizer Territory.

4.2 Development Plan. Spero shall conduct all Development of the Compound and Licensed Products in accordance with a comprehensive development plan, the initial version of which is attached to this Agreement as Exhibit D (the “Initial Development Plan XE "Initial Development Plan" \t "See 4.2" ”, and as amended from time to time in accordance with this Agreement, the “Development Plan XE "Development Plan" \t "See 4.2" ”). The Development Plan will be focused on efficiently obtaining Regulatory Approval for a Licensed Product in the Spero Development Territory for the HAP/VAP Indication. From time to time, but at least [***] per Calendar Year, the Parties will, with the assistance of the JDC, update the Development Plan and submit such updated plan to the JDC for review, discussion, and approval. The then-current Development Plan will at all times contain the detail and cover the matters reasonably requested by Pfizer. If any updated Development Plan is not approved by the JDC, any disagreement or dispute shall be resolved by the JDC in the manner set forth in Section 3.2(d)(JDC Decision-Making). If any updated or new terms of the Development Plan contradict, or create inconsistencies or ambiguities with, the terms of this Agreement, then the terms of this Agreement shall govern.

4.3 Development Diligence Obligations

(a) Spero Diligence. Spero, directly and/or with or through its Affiliates or Sublicensees, shall use Commercially Reasonable Efforts to Develop the Compound and Licensed Products in the European Union and the United Kingdom in accordance with the this Agreement and the Development Plan, including the completion of the following activities (each, a “Development Activity XE "Development Activities" \t "See 4.3(a)" ”) with respect to the Compound and Licensed Products in each case on or prior to the applicable target date (the “Target Dates XE "Diligence Target Dates" \t "See 4.3(a)" ”):

(1) Within [***] after the Effective Date, [***];

(2) Within [***] after the Effective Date, [***]; and

(3) Within [***] after the Effective Date [***].

Except as set forth in this Article 4, Spero shall not be obligated, financially or otherwise, to Develop the Compound or any Licensed Product.

(b) Diligence Notices, Meetings and Pfizer Termination. If Spero reasonably believes that it will not complete a Development Activity on or prior to the applicable Target Date, Spero shall notify Pfizer in writing as far in advance of the applicable Target Date as reasonably practicable (a “First Diligence Notice XE “First Diligence Notice” \t “See 4.3(b)” ”), which First Diligence Notice shall address the reasons for not timely achieving the relevant Development Activity (including whether there is any reason constituting a “force majeure” as described in Section 14.6 (Force Majeure), the efforts Spero is continuing to expend toward meeting such Development Activity and suggesting a reasonable extension to such Target Date for achieving such Development Activity. Within [***] days following receipt of a First Diligence Notice, Pfizer may inform Spero in writing that either (i) Pfizer accepts the provisions of such First Diligence Notice (which Pfizer shall do in the event that the delay is agreed to be attributable to a reason of “force majeure XE "force majeure" \t "See 4.3" ”), in which case the Parties agree to promptly amend Section 4.3(a) (Spero Diligence) to incorporate a new mutually agreed Target Date or (ii) Pfizer desires to have further discussions with Spero concerning such Development Activity and the efforts of Spero to complete such Development Activity, in which case, within [***] Business Days following receipt of such notice from Pfizer, the Executive Officers of each Party shall set a date within the following [***] days (the “Diligence Meeting Date XE "Diligence Meeting Date" \t "See 4.3(b)" ”) for a meeting (a “Diligence Meeting XE "Diligence Meeting" \t "See 4.3(b)" ”), at which Diligence Meeting each Party shall present its views concerning, and evidence (if applicable) as to, whether Spero has used and will continue to use Commercially Reasonable Efforts to complete such Development Activity, together with any other relevant information. If the Parties are able to reach agreement at such Diligence Meeting as to modifications to Section 4.3(a), then the Parties shall promptly amend this Agreement accordingly. If the Parties are unable to reach agreement at such Diligence Meeting, then Spero shall have [***] days to complete such Development Activity or to demonstrate, to the reasonable satisfaction of Pfizer, that it has continually used Commercially Reasonable Efforts to complete such Development Activity by the end of such [***]-day period. If, following such [***] day period, Spero has still not completed such Development Activity or demonstrated, to the reasonable satisfaction of Pfizer, that it has continually used Commercially Reasonable Efforts to achieve such Development Activity by the end of such [***]-day period, then, in addition to any other rights or remedies available to Pfizer, Pfizer may terminate this Agreement pursuant to Section 11.2(b) (Termination for Cause) of this Agreement without regard to any cure periods set forth therein.

4.4 Development Records. Each Party shall, and shall cause its Affiliates and its and their Sublicensees to, maintain, in good scientific manner, complete and accurate books and records pertaining to Development of the Licensed Product hereunder, in sufficient detail for such other Party to verify such Party’s compliance with its obligations under this Agreement. Such books and records shall (i) be appropriate for patent and regulatory purposes; (ii) be in compliance with Applicable Laws and GxP; (iv) properly reflect all work done and results achieved in the performance of its Development activities hereunder; (v) record only such activities and not include or be commingled with records of activities outside the scope of this Agreement; and (vi)

be retained by for at least [***] years after the expiration or termination of this Agreement in its entirety or for such longer period as may be required by Applicable Laws.

4.5 Pivotal Trial Completion and Data Package. No later than [***] months before the anticipated Completion of the Phase 3 Clinical Trial of a Licensed Product for HAP/VAP Indication (the “Pivotal Trial XE "Pivotal Trial" \t "See 4.5" ”), the Parties shall define and agree on the format and substantive content of the draft clinical study report and the final clinical study report in accordance with the ICH E3 industry guidelines for Structure and Content of Clinical Study Report (respectively, the “Draft Clinical Study Report XE "Draft Clinical Study Report" \t "See 4.5" ” and the “Final Clinical Study Report XE "Final Clinical Study Report" \t "See 4.5" ”). Notwithstanding the foregoing, it is understood and agreed that the Draft Clinical Study Report and the Final Clinical Study Report will include all tables, listings and figures, as well as all safety narratives in sufficient detail so as to reasonably demonstrate whether efficacy and safety has been achieved in accordance with the criteria specified in the Development Plan and whether any findings would preclude further Development of the Compound or Licensed Products. Along with the Final Clinical Study Report, Spero shall provide to Pfizer the completed Case Report Forms from the Pivotal Trial. Following Completion of the Pivotal Trial, on a rolling basis Spero will take all actions within its control to provide the final tables, listings and figures generated under the statistical analysis plan to Pfizer as soon as reasonably practicable. Spero will provide top line data consisting of key efficacy and safety results from the Pivotal Trial, including supportive tables, listings and figures, within [***] Business Days of such data becoming available to Spero. Spero will provide the complete set of tables, listings, and figures within [***] Business Days of such data becoming available. In addition, unless otherwise agreed by the JDC, Spero will provide the Draft Clinical Study Report as soon as reasonably practicable, but no later than [***] months from the availability of the final tables and listings. Spero will take all actions within its control to complete and deliver the Final Clinical Study Report within [***] months from the availability of the final tables and listings. As soon a reasonably available, Spero shall provide to Pfizer the additional non-clinical, CMC, safety and other data and information identified on Schedule 4.5 and such additional information then in the possession of or available to Spero as Pfizer may reasonably require regarding or in connection with European Regulatory Approval, and Spero shall promptly provide or make available to Pfizer any such additional information (the information delivered under this Section 4.5 and Schedule 4.5 being collectively, the “Data Package XE "Data Package" \t "See 4.5" ”).

4.6 Disclosure of Results. As soon as reasonably practicable, each Party will disclose to the other Party the results of any Development activities conducted by or on behalf of such Party or its Affiliates in a reasonable manner as such results are obtained. Each Party will provide reports and analyses to the JDC as soon as practicable after the Completion of a clinical trial detailing the current status of the Licensed Product together with a summary of the data generated by Pfizer.

4.7 Confidentiality of Results, Reports and Analyses. The results, reports, analyses and other information regarding the Licensed Product disclosed by one Party to the other Party pursuant hereto constitute Confidential Information and may be used only in accordance with the rights granted and other terms and conditions under this Agreement. Any information of a Party to which the other Party obtains access pursuant to this ARTICLE 4 shall, subject to ARTICLE 10 (Confidentiality; Publication), be deemed the Confidential Information of such first Party.

ARTICLE 5 REGULATORY

5.1 Regulatory Responsibilities. Except as set forth in this ARTICLE 5, Pfizer shall have the right, but not the obligation, at its cost and subject to the Retained Rights, to conduct all regulatory activities necessary to prepare, obtain and maintain Marketing Authorization Applications, Regulatory Filings and other Regulatory Approvals for the Compound and Licensed Products in the Licensed Field in any country in the Pfizer Territory (the “Regulatory Activities XE "Regulatory Activities" \t "See 5.1" ”). Pfizer shall keep Spero reasonably informed of any Regulatory Activities in which it is engaged via the JDC. Spero shall conduct on Pfizer’s behalf and at Pfizer’s cost and expense, those Regulatory Activities reasonably requested by Pfizer and mutually agreed by Spero (such agreement by Spero not to be unreasonably withheld, conditioned or delayed).

5.2 Regulatory Diligence Obligations. Following Phase 3 Success and receipt of the Data Package from Spero, Pfizer, directly and/or with or through Affiliates or Sublicensees, shall use Commercially Reasonable Efforts to seek European Regulatory Approval for the HAP/VAP Indication.

5.3 Regulatory Cooperation. Each Party shall notify the other of all material Regulatory Documentation related to the Compound or Licensed Products submitted or received by such Party or its Affiliates or Sublicensees in such Party’s Respective Territory reasonably prior to such submission or reasonably after receipt. Each Party shall consider all comments of the other in good faith, taking into account the best interests of the Development, Regulatory Approval and/or Commercialization of the Compound or Licensed Products in such Respective Territory, but has no obligation to accept any comments of the other Party, except to the extent that ignoring such comment could reasonably be expected to have a material adverse effect on the Development of, Regulatory Approval for, or Commercialization or Exploitation of the Compound or Licensed Products in such Party’s Respective Territory. Spero and its Affiliates shall, and shall use its Commercially Reasonable Efforts to negotiate an agreement with any Sublicensee (including Everest) to, make available to Pfizer copies of all material Regulatory Documentation related to the Compound or Licensed Products outside the Pfizer Territory that are Controlled by Spero, its Affiliates or such Sublicensee; provided that (i) Spero shall not provide any of Pfizer’s Regulatory Documentation to any of Spero’s Sublicensees (including Everest) who does not agree to permit its Regulatory Documentation to be shared with Pfizer and (ii) Spero shall not be required to make available to Pfizer any Regulatory Documentation of any Sublicensee (including Everest) related to the Compound or Licensed Products Territory if Pfizer has not agreed to permit its Regulatory Data to be shared with such Sublicensee (including Everest). In the event that Pfizer grants a Sublicense, Pfizer and its Affiliates shall, and shall use its Commercially Reasonable Efforts to negotiate an agreement with any Sublicensee to, make available to Spero copies of all material Regulatory Documentation related to the Compound or Licensed Products in the portions of the Pfizer Territory that are Controlled by such Sublicensee; provided that Pfizer shall not provide any of Spero’s Regulatory Documentation to any of Pfizer’s Sublicensees who does not agree to permit its Regulatory Documentation to be shared with Spero. Any information of a Party to which the other Party obtains access pursuant to this Section 5.3 (Regulatory Cooperation) shall, subject to ARTICLE 10 (Confidentiality; Publication), be deemed the Confidential Information of such first Party.

5.4 Rights of Reference. Each Party hereby grants to the other Party and its Affiliates, and any current or future direct or indirect Sublicensee a Right of Reference and Use, as that term is defined in 21 C.F.R. § 314.3(b) and any foreign counterpart to such regulation, to such Party’s Development Data and Regulatory Documentation to the extent (i) necessary or reasonably useful for such Party or its Affiliates or Sublicensees to Develop, Manufacture, obtain Regulatory Approval of, or Commercialize the Compound or Licensed Product in such Party’s Respective Territory. Each Party shall ensure that any Sublicense agreement or subcontract agreement contains provisions that require current or future Sublicensees or subcontractors that generate any Regulatory Documentation or any Development Data in relation to the Development, Manufacturing, Commercialization and Exploitation of the Compound or Licensed Products arising from the performance of the relevant Sublicense agreement or subcontract agreement relating to the Compound or Licensed Products to make available to such other Party (and its Affiliates and Sublicensees) copies of all such Regulatory Documentation or Development Data solely for such Party to Develop, Manufacture, Commercialize and otherwise Exploit the Compound or Licensed Products in such Party’s Respective Territory. Each Party will provide a signed statement to this effect, if requested by the other Party (or such Party’s Affiliates or Sublicensees), pursuant to 21 C.F.R. § 314.50(g)(3) or any foreign counterpart to such regulation, in the case of a request by either Party, for the limited purpose described in this Section 5.4 (Rights of Reference). Any information of a Party to which the other Party obtains access pursuant to this Section 5.4 (Rights of Reference) shall, subject to Sections 10.1 (Duty of Confidence) and 10.2 (Exceptions), be deemed the Confidential Information of such first Party. For avoidance of doubt, a Party’s submission of information of the other Party to which such Party obtains access pursuant to this Section 5.4 (Rights of Reference) shall be governed by and subject to the terms of ARTICLE 10 (Confidentiality; Publication).

5.5 Recalls, Suspensions or Withdrawals. Each Party shall notify the other Party promptly following its determination that any event, incident or circumstance has occurred that would reasonably be expected to result in the need for a recall, market suspension or market withdrawal of a Licensed Product in the Licensed Field in such Party’s Respective Territory and shall include in such notice the reasoning behind such determination and any supporting facts. As between the Parties, each Party shall have the right to make the final determination whether to voluntarily implement any such recall, market suspension or market withdrawal in the Licensed Field in such Party’s Respective Territory; provided that prior to any implementation of such a recall, market suspension or market withdrawal, the Parties shall consult with each other and shall consider comments of the other in good faith. If a recall, market suspension or market withdrawal is mandated by a Regulatory Authority in the Pfizer Territory, as between the Parties, Pfizer shall initiate such a recall, market suspension or market withdrawal in compliance with Applicable Laws. If a recall, market suspension or market withdrawal is mandated by a Regulatory Authority in the Excluded Territory, as between the Parties, Spero shall initiate such a recall, market suspension or market withdrawal in compliance with Applicable Laws. For all recalls, market suspensions or market withdrawals undertaken pursuant to this Section 5.5 (Recalls, Suspensions or Withdrawals), as between the Parties, each Party shall be solely responsible for the execution thereof in such Party’s Respective Territory. Subject to ARTICLE 13 (Indemnification; Liability), each Party shall be responsible for all costs and expenses of any such recall, market suspension or market withdrawal in such Party’s Respective Territory.

5.6 Pharmacovigilance Agreement; Global Safety Database. At least [***] days prior to the earlier of (a) Initiation of a clinical trial by Pfizer involving the Compound or a Licensed Product or (b) the Commercialization by Pfizer of a Licensed Product in any country in the Pfizer Territory, the Parties shall enter into a pharmacovigilance agreement providing for the terms pursuant to which (i) the Parties shall establish, hold and maintain the global safety database for Licensed Products and (ii) each Party shall timely provide the other Party with information in the possession and Control of such Party as necessary for such other Party to comply with its pharmacovigilance responsibilities in such Party’s Respective Territory, including, as applicable, any adverse drug experiences (including those events or experiences that are required to be reported to the FDA under 21 C.F.R. sections 312.32 or 314.80 or to foreign Regulatory Authorities under corresponding Applicable Laws outside the United States), from pre-clinical or clinical laboratory, animal toxicology and pharmacology studies, clinical studies and commercial experiences with a Licensed Product. The costs of establishing and maintaining such global database shall be borne by the Party holding and maintaining such global safety database. The costs of a Party supplying such information to such other Party shall be the sole cost and expense of the Party supplying such information.

5.7 Regulatory Inspections. If any Regulatory Authority (i) contacts a Party, its Affiliates or their respective Sublicensees with respect to the alleged improper Development, Manufacture or Commercialization of any Licensed Product; (ii) conducts, or gives notice of its intent to conduct, an inspection at a Party’s, its Affiliate’s, Sublicensee’s or subcontractor’s facilities used in the Development or Manufacturing of the Licensed Product or (iii) takes, or gives notice of its intent to take, any other regulatory action with respect to any activity of such Party, its Affiliates, Sublicensees or subcontractors, in each case that could reasonably be expected to materially adversely affect any Development, Manufacture or Commercialization activities with respect to the Licensed Product, then such Party will promptly notify the other Party of such contact, inspection or notice.

ARTICLE 6 MANUFACTURING AND SUPPLY

6.1 Manufacturing Responsibilities. Pfizer shall have the right to Manufacture the Compound and Licensed Products inside the Pfizer Territory, or outside the Pfizer Territory but solely for Development and Commercialization of the Compound in the Pfizer Territory under this Agreement, at its sole expense. Pfizer may conduct such manufacturing activities itself, through a Spero CMO, or through another Subcontractor subject to Section 2.9 (Subcontracting). Upon request from Pfizer, Spero will arrange for any Subcontractors who Manufacture Compounds or Licensed Products for Spero (each, a “Spero CMO XE "Spero CMO" \t "See 6.1" ”) to discuss the Manufacture and supply of the Compound and/or Licensed Products for Pfizer.

6.2 Manufacturing Technology Transfer. In order to enable Pfizer to Manufacture or have Manufactured the Compound and Licensed Products consistent with the terms of Section 6.1 (Manufacturing Responsibilities), upon a written request from Pfizer, during a mutually agreed time period of no more than [***] days (the “Manufacturing Transfer Period XE "Manufacturing Transfer Period" \t "See 6.2" ”), Spero shall (a) make available and transfer to Pfizer, copies of existing embodiments of the Licensed Know-How in Spero’s Control and possession that are necessary or reasonably useful in the Manufacture of the Compound and

Licensed Products (the “Licensed Manufacturing Know-How XE "Licensed Manufacturing Know-How" \t "See 6.2" ”) solely for Pfizer and/or its Subcontractor to Manufacture the Compound and Licensed Products in accordance with the terms and conditions of this Agreement; (b) identify in writing any Spero CMO; and (c) provide technical assistance (both on site and otherwise) in the transfer and demonstration of the Licensed Manufacturing Know-How. To the extent that any Licensed Manufacturing Know-How is in the Control of Spero but is in the possession of a Spero CMO (and is not in Spero’s possession), then during the Manufacturing Transfer Period, upon Pfizer’s request, Spero will use Commercially Reasonable Efforts to facilitate the transfer of such Licensed Manufacturing Know-How from such Spero CMO to Pfizer, and/or cause such Spero CMO to make such Licensed Manufacturing Know-How available to Pfizer. Pfizer, in its sole discretion and at its sole expense, may contract with any such Spero CMO for technical assistance (both on site and otherwise) in the transfer and demonstration of the Licensed Manufacturing Know-How that is necessary to Manufacture the Compound and Licensed Products. After the Manufacturing Transfer Period, if requested by Pfizer, Spero will in good faith endeavor to provide additional technical assistance in the transfer of Licensed Manufacturing Know-How to Pfizer; provided that Pfizer shall be responsible for the costs and expenses of Spero’s technical assistance following the Manufacturing Transfer Period and shall pay or reimburse Spero at the Reimbursement Rate following a written invoice in reasonable detail.

6.3 Supply Agreements. If requested in writing by Pfizer, Spero and Pfizer agree to negotiate in good faith within [***] days following such written request an agreement concerning the clinical supply of the Compound for Pfizer’s Development use (including preclinical (e.g., MIC testing) and/or clinical use) (the “Clinical Supply Agreement XE "Clinical Supply Agreement" \t "See 6.3" ”) and/or supply of the Compound and Licensed Products for Pfizer’s Commercialization use (the “Commercial Supply Agreement XE "Commercial Supply Agreement" \t "See 6.3" ”) with Pfizer’s cost of the Compound and/or the Licensed Products being equal to [***]. Notwithstanding the foregoing, nothing in this Agreement, the Clinical Supply Agreement or the Commercial Supply Agreement shall restrict, impair or otherwise limit Spero’s ability to manufacture the Compound or Licensed Product in the Pfizer Territory for use outside the Pfizer Territory.

ARTICLE 7 COMMERCIALIZATION

7.1 General. Subject to the terms and conditions of this Agreement, Pfizer shall be responsible for all aspects of the Commercialization of the Licensed Products in the Licensed Field in the Pfizer Territory, including: (a) developing and executing a commercial launch and pre-launch plan, (b) negotiating with applicable Government Authorities regarding the price and reimbursement status of the Licensed Product and obtaining and maintaining Pricing Approvals; (c) marketing, medical affairs, and promotion; (d) booking sales and distribution and performance of related services; (e) subject to the provisions of Section 5.5 (Recalls, Suspensions or Withdrawals) handling all aspects of order processing, invoicing and collection, inventory and receivables; (f) providing customer support, including handling medical queries, and performing other related functions; and (g) conforming its practices and procedures to Applicable Laws relating to the marketing, detailing and promotion of Licensed Products in the Licensed Field in the Pfizer Territory. As between the Parties, Pfizer shall be solely responsible for the costs and

expenses of Commercialization of the Licensed Products in the Licensed Field in the Pfizer Territory.

7.2 Commercial Diligence. Following European Regulatory Approval, Pfizer, directly and/or with or through Affiliates or Sublicensees, shall use Commercially Reasonable Efforts to Commercialize one Licensed Product in at least one of France, Germany, Italy or Spain.

ARTICLE 8 FINANCIAL PROVISIONS

8.1 License Maintenance Fees.

(a) Triggering Events and Notice. Within [***] days after the first achievement of each event below (a “Triggering Event XE "Triggering Event" \t "See 8.1(a)" ”), Spero shall notify Pfizer in writing of the achievement of such Triggering Event (a “Triggering Event Notice XE "Triggering Event Notice" \t "See 8.1(a)" ”). Each Triggering Event Notice will include the additional information set forth on Schedule 8.1(a). Within [***] days following receipt of a Triggering Event Notice, Pfizer shall inform Spero in writing that either Pfizer accepts or disputes the occurrence of the Triggering Event. If Pfizer accepts the occurrence of the Triggering Event, then such acceptance will trigger the corresponding non-refundable, non-creditable License Maintenance Fee due to Spero (a “License Maintenance Fee XE "License Maintenance Fee" \t "See 8.1(a)" ”) and Spero shall submit an invoice to Pfizer for the applicable License Maintenance Fee as shown below and Pfizer shall, as additional consideration of the rights granted by Spero to Pfizer hereunder, remit payment within [***] days of the receipt of such invoice, as described in Section 8.4 (Currency; Exchange Rate; Payments).

Triggering Event	License Maintenance Fee (in Dollars)
[***]	$[*];<br><br>or<br><br>$[*].
[***]	$[*];<br><br>or<br><br>$[];<br><br>or<br><br>$[**].
[***]	$[*];<br><br>or<br><br>$[];<br><br>or<br><br>$[**].
[***]	$[*];<br><br>or<br><br>$[*].

For clarity, each License Maintenance Fee set forth in this Section 8.1(a) (Triggering Events and Notice) shall be payable only once for all Licensed Products, upon the first achievement of the applicable Triggering Event.

(b) Disputes Regarding Achievement of a Triggering Event. If Pfizer notifies Spero that it disputes the occurrence of the Triggering Event, then the Parties shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within [***] Business Days, the dispute shall be submitted for resolution to an independent Third Party with expertise in development of pharmaceutical products similar to the Compound and Licensed Products (the “Expert XE "Expert" \t "See 8.1(b)" ”). The Expert shall be jointly selected by the Parties or, if the Parties cannot agree on an Expert within [***] Business Days, then each Party shall designate an Expert and the two designated Experts shall together choose a third Expert to whom the dispute will be submitted for resolution. The Expert shall only have the authority to decide whether or not Triggering Event has occurred, and the decision of the Expert shall be final. The fees and expenses of the Expert shall be borne by (i) Pfizer, in the event that the Expert decides that such Triggering Event has occurred and (ii) Spero, in the event that the Expert decides that such Triggering Event did not occur.

(c) Termination for Convenience. Notwithstanding the occurrence of a Triggering Event, Pfizer may at any time elect to terminate this Agreement for convenience by giving Spero notice of such termination pursuant to Section 11.2(a). Following notice of

termination, Pfizer shall have no obligation to pay any License Maintenance Fees, including with respect to any Triggering Event that occurred prior to the notice of termination.

8.2 Development Milestones. If Pfizer has paid the License Maintenance Fee with respect to the Phase 3 Success pursuant to Section 8.1(a), then within [***] days following the achievement of the Milestone Event listed below, Pfizer shall notify Spero of the achievement of such Milestone Event and Spero shall invoice Pfizer for the corresponding non-refundable, non-creditable Milestone Payment set forth below and Pfizer shall remit payment to Spero within [***] days of the receipt of such invoice, as described in Section 8.5 (Currency; Exchange Rate; Payments):

Milestone Event	Milestone Payment (in Dollars)
[***]	$[*];<br><br>or<br><br>$[];<br><br>or<br><br>$[**].

8.3 Commercial Milestones.

(a) Within [***] days after the end of the first Pfizer Quarter in which aggregate Net Sales of all Licensed Products in the Pfizer Territory (“Cumulative Net Sales XE "Cumulative Net Sales" \t "See 8.3(a)" ”) reach any threshold indicated in the table below (each, a “Sales Milestone Event XE "Sales Milestone Event" \t "See 8.3" ”), Pfizer shall notify Spero of the achievement of such Sales Milestone Event and Spero shall invoice Pfizer for the corresponding non-refundable, non-creditable Milestone Payment set forth below and Pfizer shall remit payment to Spero within [***] days of the receipt of such invoice, as described in Section 8.5 (Currency; Exchange Rate; Payments).

Cumulative Net Sales Milestone Events	Milestone Payments (in Dollars)
[*] Dollars ($[*])	$[***]
[*] Dollars ($[*])	$[***]
[*] Dollars ($[*])	$[***]

(b) For the purposes of determining whether a Sales Milestone Event has been achieved, Net Sales of all Licensed Products in the Pfizer Territory shall be aggregated. For clarity, the Sales Milestone Payments set forth in this Section 8.3 (Commercial Milestones) shall be payable only once for all Licensed Products, upon the first achievement of the applicable Milestone Event.

(c) For the avoidance of doubt, if more than one Sales Milestone Event occurs in a single Pfizer Quarter, then the corresponding Milestones Payments for all such Sales Milestone Events shall be made with respect to such Pfizer Quarter. By way of example, (i) if Cumulative Net Sales exceeds both $[***] and $[***] thresholds during a single Pfizer Quarter, then the total Milestone Payment payable for such Pfizer Quarter would be $[***]and (ii) if Cumulative Net Sales exceeds the $[***], $[***] and $[***] thresholds during a single Pfizer Quarter, then the Milestone Payment for such Pfizer Quarter would be $[***].

(d) In the event that, notwithstanding the fact that Pfizer has not given such a notice, Spero believes any such Milestone Event has occurred, it shall so notify Pfizer in writing and shall provide to Pfizer data, documentation or other information that supports its belief. Any dispute under this Section 8.2(d) (Commercial Milestones) that relates to whether or not a Milestone Event has occurred shall be subject to resolution in accordance with Section 14.10 (Dispute Resolution). The Net Sales Milestone Payments made for each Milestone Event shall be non-creditable and non-refundable.

8.4 Royalty Payments.

(a) Royalty Rate. In partial consideration of the rights granted by Spero to Pfizer hereunder, Pfizer shall pay to Spero, on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis, non-refundable, non-creditable royalties based on the aggregate Net Sales of all Licensed Products sold by Pfizer, its Affiliates and/or its or their respective Sublicensees in the Pfizer Territory during a Pfizer Year (“Annual Net Sales XE "Annual Net Sales" \t "See 8.4(a)" ”) at the rates set forth in the table below. The obligation to pay royalties will be imposed only once with respect to the same unit of a Licensed Product. Each Royalty Rate set forth in the table below will apply only to that portion of the Annual Net Sales of a given Licensed Product in the applicable country or countries in the Pfizer Territory during a given Pfizer Year that falls within the indicated range.

Annual Net Sales (in Dollars) for all Licensed Products in the Pfizer Territory	Royalty Rates as a Percentage (%) of Net Sales
Annual Net Sales up to and including $[***]	[***]%
Annual Net Sales to the extent exceeding $[*], up to and including $[*]	[***]%
Annual Net Sales to the extent exceeding $[*], up to and including $[*]	[***]%
Annual Net Sales to the extent exceeding $[***]	[***]%

(b) Royalty Term. Royalties under this Section 8.4 (Royalty Payments) shall be payable on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis from the First Commercial Sale of a Licensed Product in a jurisdiction until the latest to occur of: (i) expiration of the last-to-expire Licensed Patent that contains a Valid Claim in such jurisdiction in

the Pfizer Territory; (ii) expiration of Regulatory Exclusivity for such Licensed Product in such jurisdiction in the Pfizer Territory; and (iii) [***] years after the First Commercial Sale of the Licensed Product in such jurisdiction in the Pfizer Territory (the “Royalty Term XE "Royalty Term" \t "See 8.4(b)" ” for such Licensed Product and country). For the avoidance of doubt, the Royalty Term for a given Product in a given country in the Pfizer Territory (x) will not begin until the First Commercial Sale of such Licensed Product in such country and (y) if not previously expired, will expire immediately upon expiration or termination of this Agreement.

(c) Fully Paid-Up, Royalty Free License. Following expiration of the Royalty Term for any Product in a given country, no further royalties will be payable in respect of sales of such Licensed Product in such country and, thereafter the license granted to Pfizer under Section 2.1 with respect to such Licensed Product in such country will automatically become fully paid-up, perpetual, irrevocable and royalty-free.

(d) Royalty Adjustments. The following adjustments will be made, on a Licensed Product-by-Licensed Product and country-by-country basis, to the royalties payable pursuant to this Section 8.4:

(1) Expiry of Valid Claim Coverage. In the event that, with respect to any particular Product in any particular country in the Pfizer Territory, the Royalty Term for such Licensed Product in such country extends beyond the date on which such Licensed Product is not covered by any Valid Claim in such country, royalties in any such country shall be reduced by [***]% for the remainder of the applicable Royalty Term.

(2) Third Party Patents. In the event that Pfizer cannot Develop, Manufacture, Commercialize or use a Licensed Product (whether directly or through any Pfizer Affiliate or Sublicensee) without first obtaining a license from a Third Party for a Necessary Patent and if Pfizer or its Affiliates or Sublicensee actually pays a royalty to a Third Party for the right to use such Necessary Patent (the “Third Party Payments XE "Third Party Payments" \t " See 8.4(d)(2)" ”), then Pfizer may credit [***]percent ([***]%) of such Third Party Payments against the Royalties owed and payable on the Net Sales for the corresponding Licensed Product. In the event Pfizer determines that it is desirable to obtain a license from a Third Party to one or more Patents that do not constitute Necessary Patents in order to Develop, Manufacture, Commercialize or use a Licensed Product (whether directly or through any Pfizer Affiliate or Sublicensee) and Pfizer, its Affiliates or Sublicensees actually pays a royalty to a Third Party for the right to use such Patents, then Pfizer may credit [***] percent ([***]%) of such royalties payable to the Third Party against the Royalties owed and payable on Net Sales for the corresponding Licensed Product.

(3) No Adjustment for Spero Third Party Agreements. Spero will be solely responsible for (i) all obligations (including any royalty or other obligations that relate to the Spero Sole Inventions, Spero Sole Invention Patents, or Spero’s interest in Joint Inventions and Joint Patents) under its agreements with Third Parties that are in effect as of the Effective Date (including the Everest License Agreement) and (ii) all payments to inventors (other than inventors that are Representatives of Pfizer) of Spero Sole Inventions and Joint Inventions, including payments under inventorship compensation Laws.

(4) Generic Entry. Notwithstanding the foregoing, for Net Sales based on sales of a Licensed Product in a country in the Pfizer Territory any payments owed with respect to such Licensed Product pursuant to this Section 8.4 will be reduced by [***]% for the remainder of the applicable Royalty Term, such reduction to be prorated appropriately for the then-current Pfizer Quarter, if at any time when Generic Products have, in the aggregate, achieved more than [***] percent ([***]%) of the market share in such country by unit volume (based on data provided by a reliable Third Party data source mutually agreed by the Parties) of combined unit sales of the Licensed Products and all Generic Products.

(5) Limit on Reductions. During the Royalty Term, in no event will the aggregate royalty reductions under this Section 8.4(d) reduce the Royalties payable to Spero on Net Sales of Licensed Products in any given Pfizer Quarter to an amount that is less than [***] percent ([***]%) of the applicable royalty rate. Notwithstanding the foregoing, any excess amounts that would have otherwise been deducted in such Pfizer Quarter with respect to a Licensed Product shall be deducted from the Royalties payable to Spero on Net Sales of such Licensed Product in successive Pfizer Quarters until such excess amounts have been deducted in full.

(e) Royalty Reports and Payment. Within [***] days after each Pfizer Quarter, in each case commencing with the Pfizer Quarter during which the First Commercial Sale of any Licensed Product is made anywhere in the Pfizer Territory, Pfizer shall provide Spero with a report that contains the following information for the most recent Pfizer Quarter on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis: (A) Net Sales in the Pfizer Territory during such Pfizer Quarter; (B) a calculation of the royalty payment due on Net Sales in the Pfizer Territory; (C) the basis for any adjustments to the royalty payable, and (D) the exchange rates used. The total royalty due for the sale of all such Licensed Products during such Pfizer Quarter will be remitted at the time such report is made; provided that to the extent any royalties are payable by Pfizer hereunder on Net Sales of a Licensed Product in a country solely due to a Valid Claim covering such Licensed Product in such country that is subject to a revocation, invalidity or unenforceability ruling that is appealable or being appealed, during the time of such appeal or appealability, such royalties payable by Pfizer shall be placed into an escrow account and either (x) returned to Pfizer upon a final, unappealable determination that such revocation, invalidity or unenforceability ruling is upheld or (y) released to Spero in the event such revocation, invalidity or unenforceability ruling is not upheld in a final, unappealable determination. No such reports will be due for any such Licensed Product (i) before the First Commercial Sale of such Licensed Product or (ii) after the Royalty Term for such Licensed Product has expired in all countries in the Territory. If, during the following Pfizer Quarter, Pfizer discovers that it reported an incorrect amount of Net Sales in the Pfizer Territory and/or the amounts payment due on such Net Sales in the immediately preceding Pfizer Quarter, then Pfizer may, subject to review by Spero, adjust and reconcile any such calculation of Net Sales and/or any such underpayment or overpayment of royalty payments due, and shall timely report the same within [***] days after such following Pfizer Quarter.

8.5 Currency; Exchange Rate; Payments. All amounts payable and calculations under this Agreement will be in Dollars. As applicable, Net Sales and any royalty deductions will be translated into Dollars at the exchange rate used by Pfizer for public financial accounting purposes. Except as permitted pursuant to this Section 8.48.5, each payment hereunder will be made by electronic transfer in immediately available funds via either a bank wire transfer, an ACH

(automated clearing house) mechanism, or any other means of electronic funds transfer, at Pfizer’s election, to such bank account as Spero will designate in writing to Pfizer at least [***] days before the payment is due. If, due to restrictions or prohibitions imposed by national or international authority, a given payment cannot be made as provided in this ARTICLE 8, the Parties will consult with a view to finding a prompt and acceptable solution. If the Parties are unable to identify a mutually acceptable solution regarding such payment, then Pfizer may elect, in its sole discretion, to deliver such payment in the relevant jurisdiction and in the local currency of the relevant jurisdiction. All invoice or billing related questions should be referred to Pfizer’s Accounting Department at [***] or go to the Accounts Payable Invoice Portal at [***].

8.6 Late Payments. Any payments or portions thereof due hereunder that are not paid on the date such payments are due under this Agreement shall bear interest at an annual rate equal to the prime rate as published by The Wall Street Journal or any successor thereto on the first day of each Pfizer Quarter in which such payments are overdue calculated on the number of days such payment is delinquent.

8.7 Taxes.

(a) Taxes on Income. Notwithstanding anything else set forth in this Section 8.6 (Taxes), each Party shall solely bear and pay all Taxes imposed on such Party’s net income or gain (however denominated) arising directly or indirectly from the activities of the Parties under this Agreement.

(b) VAT and Withholding. It is understood and agreed between the Parties that any payments made under this Agreement are exclusive of any value added or similar tax (“VAT XE "VAT" \t "See 8.7(b)" ”), which shall be added thereon as applicable. Where VAT is properly added to a payment made under this Agreement, the Party making the payment will pay the amount of VAT only on receipt of a valid tax invoice issued in accordance with the laws and regulations of the country in which the VAT is chargeable. In addition, in the event any of the payments made by Pfizer pursuant to this Agreement become subject to withholding taxes under Applicable Law, Pfizer shall deduct and withhold the amount of such taxes for the account of Spero, to the extent required by Applicable Law, such amounts payable to Spero shall be reduced by the amount of taxes deducted and withheld, and Pfizer shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to Spero an official tax certificate or other evidence of such tax obligations together with proof of payment from the relevant Governmental Authority of all amounts deducted and withheld sufficient to enable Spero to claim such payment of taxes. Any such withholding taxes required under Applicable Law to be paid or withheld shall be an expense of, and borne solely by, Spero. Pfizer will provide Spero with reasonable assistance to enable Spero to recover such taxes as permitted by Applicable Law. Notwithstanding anything in this Agreement to the contrary, (i) if an action (including but not limited to any assignment or sublicense of its rights or obligations under this Agreement, or any failure to comply with Applicable Laws or filing or record retention requirements) by a Party leads to the imposition of withholding tax liability or VAT on the other Party that would not have been imposed in the absence of such action or in an increase in such liability above the liability that would have been imposed in the absence of such action, then the sum payable by that Party (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that the other Party receives a sum equal to the sum which it would have

received had no such action occurred, (ii) otherwise, the sum payable by that Party (in respect of which such deduction or withholding is required to be made) shall be made to the other Party after deduction of the amount required to be so deducted or withheld, which deducted or withheld amount shall be remitted in accordance with Applicable Law.

8.8 Financial Records and Audit. Pfizer shall (and shall ensure that its Affiliates and Sublicensees will) maintain complete and accurate books and records pertaining to the Commercialization of Licensed Products hereunder, including books and records of invoiced sales and Net Sales of Licensed Products, in sufficient detail to calculate and verify all amounts payable hereunder and in sufficient detail to permit Spero to confirm the accuracy of all Payments paid or payable under this Agreement. Pfizer shall and shall cause its Affiliates and its and their Sublicensees to, retain such books and records until the later of (a) [***] years after the end of the period to which such books and records pertain; (b) the expiration of the applicable tax statute of limitations (or any extensions thereof); and (c) for such period as may be required by Applicable Laws. Upon at least [***] Business Days’ prior notice, such records shall be open for examination, during regular business hours, for a period of [***] Pfizer Years from the end of the Pfizer Year to which such records pertain, and not more often than once each Pfizer Year, by an independent certified public accountant selected by Spero and reasonably acceptable to Pfizer, for the sole purpose of verifying for Spero the accuracy of the financial reports furnished by Pfizer under this Agreement or of any payments made, or required to be made, by Pfizer to Spero pursuant to this Agreement. The independent public accountant shall disclose to Spero only (x) the accuracy of Net Sales reported and the basis for royalty, Milestone Payments and any other payments made to Spero under this Agreement and (y) the difference, if any, by which such reported and paid amounts vary from amounts determined as a result of the Audit and the details concerning such difference. Except as required by Applicable Laws, no other information shall be provided to Spero. No record may be audited more than once. Spero shall bear the full cost of such audit unless such audit reveals an underpayment by Pfizer of more than [***] ([***] %) of the amount actually due for any Pfizer Year being audited, in which case Pfizer shall reimburse Spero for the reasonable costs and expenses for such audit. Unless disputed pursuant to Section 8.9 (Audit Dispute), Pfizer shall pay to Spero any underpayment discovered by such audit within [***] days after delivery of the accountant’s report. If the audit reveals an overpayment by Pfizer, then at Pfizer’s option, either Spero will refund such overpayments to Pfizer within [***] days after delivery of the accountant’s report or Pfizer may take a credit for such overpayment against any future payments due to Spero.

8.9 Audit Dispute. If Pfizer disputes the results of any audit conducted pursuant to Section 8.8 (Financial Records and Audit), the Parties shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within [***] Business Days, the dispute shall be submitted for resolution to a certified public accounting firm jointly selected by each Party’s certified public accountants or to such other Person as the Parties shall mutually agree (the “Auditor XE "Auditor" \t "See 8.9" ”). The decision of the Auditor shall be final and the costs of such procedure as well as the initial audit shall be borne between the Parties in such manner as the Auditor shall determine. If the Auditor determines that there has been an underpayment by Pfizer, Pfizer shall pay to Spero the underpayment within [***] days after the Auditor’s decision. If the Auditor determines that there has been an overpayment by Pfizer, then at Pfizer’s option, either Spero will refund such overpayments to

Pfizer within [***] days after delivery of the Auditor’s decision or Pfizer may take a credit for such overpayment against any future payments due to Spero.

ARTICLE 9 INTELLECTUAL PROPERTY RIGHTS

9.1 Ownership of Intellectual Property

(a) Ownership of Technology. As between the Parties:

(1) Spero shall solely own on a worldwide basis all right, title and interest in and to any and all Spero Sole Inventions, whether or not patented or patentable, and any and all Spero Sole Invention Patents; and

(2) Pfizer shall solely own on a worldwide basis all right, title and interest in and to any and all Pfizer Sole Inventions, whether or not patented or patentable, and any and all Pfizer Sole Invention Patents.

For clarity, each Party shall own on a worldwide basis and retain all right, title and interest in and to any and all Know-How, Inventions, Patents and other intellectual property rights that are owned or otherwise Controlled (other than pursuant to the license grants set forth in Section 2.1 (Licenses to Pfizer) and 2.2 (License to Spero)) by such Party or its Affiliates or its or their Sublicensees (as applicable) outside of this Agreement.

(b) Ownership of Joint Patents and Joint Inventions. As between the Parties:

(1) Each of Spero and Pfizer shall own an equal, undivided interest in any and all Joint Inventions and Joint Invention Patents; and

(2) Each of Spero and Pfizer shall promptly disclose to the other in writing, and shall cause its Affiliates and its and their respective Sublicensees to so disclose, the development, making, conception or reduction to practice of any Joint Inventions, in the case of Spero, such notification shall be provided to Pfizer after an invention disclosure is received by Spero’s patent counsel and in the case of Pfizer, such notice shall be provided to Spero after an invention disclosure is received by Pfizer’s Patent Department. Subject to the licenses granted under Section 2.1 (License to Pfizer) and Section 2.2 (License to Spero), each of Spero and Pfizer shall have the right to Exploit the Joint Inventions and Joint Invention Patents, without the consent of and without accounting to the other Party.

(c) United States Law. The determination of whether Inventions, Know-How and other intellectual property rights are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall, for purposes of this Agreement, be made in accordance with Applicable Laws in the United States as such law exists as of the Effective Date irrespective of where or when such conception, discovery, development or making occurs; provided that if the application of such United States Applicable Law prevents or materially impairs the proper prosecution or maintenance of Patent Rights in any jurisdiction in the Pfizer Territory, then the Parties shall mutually agree to the application of an appropriate Applicable Law in order to best

advance and maintain the prosecution and maintenance of such Patents in such jurisdiction in the Pfizer Territory. Each of Spero and Pfizer shall, and does hereby, assign, and shall cause its Affiliates and its and their Sublicensees to so assign, to the other Party, without additional compensation, such right, title and interest in and to any Inventions, Know-How, Patents and other intellectual property rights with respect thereto, as is necessary to fully effect, as applicable, the sole or joint ownership as provided for in Section 9.1(a) (Ownership of Technology) or 9.1(b) (Ownership of Joint Patents and Joint Inventions).

(d) Assignment Obligation. Each Party shall cause all Persons who perform Development activities, Manufacturing activities or regulatory activities for such Party under this Agreement or who conceive, discover, develop or otherwise make any Inventions, Know-How or other intellectual property rights by or on behalf of either Party or its Affiliates or its or their or Sublicensees under or in connection with this Agreement to be under an obligation to assign to such Party their rights in any Inventions, Know-How, Patents and other intellectual property, except where Applicable Laws requires otherwise and except in the case of governmental, not-for-profit and public institutions that have standard policies against such an assignment (in which case, a suitable license or right to obtain such a license, shall be obtained).

(e) Ownership of Product Trademarks. As between the Parties, (i) Pfizer shall own all right, title and interest in and to the Product Trademarks in the Pfizer Territory, (ii) Pfizer shall have the right to market the Licensed Products in the Licensed Field in the Pfizer Territory under the Product Trademarks and all goodwill associated therewith will inure to the benefit of Pfizer and (iii) Spero may not use the Product Trademarks without obtaining a proper trademark license from Pfizer (except to the extent necessary to perform its obligations under this Agreement).

(f) Ownership of Corporate Names. As between the Parties, each Party shall retain all right, title and interest in and to its corporate names.

(g) Ownership of Development Data. Subject to ARTICLE 2 (Licenses), Pfizer shall own Pfizer Development Data and Spero shall own Spero Development Data.

9.2 Patent Prosecution and Maintenance.

(a) Prosecution of Licensed Patents and Joint Patents Prior to Issuance. Subject to Section 9.2(c) below, Spero shall control the preparation, filing and prosecution of all Licensed Patents and Joint Patents in the Pfizer Territory, by counsel selected by Spero, except that such counsel shall be acceptable to Pfizer (such acceptance not to be unreasonably withheld, delayed or conditioned). Spero shall consult with Pfizer and keep Pfizer reasonably informed of the status of such Patents in the Territory and shall promptly provide Pfizer with all material correspondence received from any patent authority in the Territory in connection therewith. In addition, Spero shall promptly provide Pfizer with drafts of all proposed material filings and correspondence to any patent authority in the Territory with respect to such Patents for Pfizer’s review and comment prior to the submission of such proposed filings and correspondence. Spero shall confer with Pfizer and consider in good faith Pfizer’s comments prior to submitting such filings and correspondence, provided that Pfizer provides such comments within [***] Business Days (or a shorter period not less than [***] Business Days reasonably designated by Spero if

[***] Business Days is not practicable given a non-extendable filing deadline) of receiving the draft filings and correspondence from Spero. The costs and expenses of such preparation, filing and prosecution of the Licensed Patents and Joint Patents in the Pfizer Territory shall be borne by Spero. Spero shall be responsible for the costs and expenses of preparation, filing, prosecution and maintenance of the Licensed Patents and Joint Patents outside the Pfizer Territory.

(b) Abandonment by Spero. In the event that Spero desires to abandon or cease prosecution of any Licensed Patent or Joint Patent in the Pfizer Territory (or any jurisdiction therein), Spero shall provide reasonable prior written notice to Pfizer of such intention to abandon (which notice shall, to the extent possible, be given no later than [***] Business Days prior to the next deadline for any action that must be taken with respect to any such Patent in the relevant patent office in the Pfizer Territory or such jurisdiction). In such case, upon Pfizer’s written election provided no later than [***] Business Days after such notice from Spero, Pfizer shall have the right to assume prosecution of such Licensed Patent or Joint Patent at Pfizer’s sole cost and expense. If Pfizer does not provide such election within [***] Business Days after such notice from Spero, Spero may discontinue prosecution and maintenance of such Patent in the Pfizer Territory (or the relevant jurisdiction).

(c) Prosecution and Maintenance of Licensed Patents and Joint Patents following Issuance. Following the issuance by the relevant patent office or Government Authority in any jurisdiction in the Pfizer Territory of a Licensed Patent or a Joint Patent (an “Issued Patent XE "Issued Patent" \t "See 9.2(c)" ”), Pfizer shall control the prosecution (including any reissue proceedings and reexaminations) and maintenance of all Issued Patents in the Pfizer Territory by counsel of its own choice, except that such counsel in such jurisdiction in the Pfizer Territory shall be acceptable to Spero (such acceptance not to be unreasonably withheld, delayed or conditioned). For clarity, it is agreed that Pfizer may use internal patent counsel and agents, filing clerks, and paralegals employed by Pfizer for coordinating the prosecution and maintenance of the Issued Patents, and for directly instructing outside counsel and patent agents, including by providing draft responses, and that Pfizer may employ its preferred outside counsel and patent agents to conduct such activities as required for the prosecution and maintenance of the Issued Patents. Pfizer shall consult with Spero and keep Spero reasonably informed of the status of such Issued Patents and shall promptly provide Spero with all correspondence received from any patent authority in such jurisdiction in the Pfizer Territory in connection therewith. In addition, Pfizer shall promptly provide Spero with drafts of all proposed filings and correspondence to any patent authority in such jurisdiction in the Pfizer Territory with respect to such Issued Patents for Spero’s review and comment prior to the submission of such proposed filings and correspondence. Pfizer shall confer with Spero and consider in good faith Spero’s comments prior to submitting such filings and correspondence, provided that Spero provides such comments within [***] Business Days (or a shorter period not less than [***] Business Days reasonably designated by Pfizer if [***] Business Days is not practicable given a non-extendable filing deadline) of receiving the draft filings and correspondence from Pfizer. The costs and expenses of such prosecution and maintenance of the Issued Patents and Joint Patents shall be borne by Pfizer.

(d) Abandonment by Pfizer. In the event that Pfizer desires to abandon or cease maintenance of any Issued Patent in any jurisdiction in the Pfizer Territory, Pfizer shall provide reasonable prior written notice to Spero of such intention to abandon (which notice shall, to the extent possible, be given no later than [***] Business Days prior to the next deadline for any action

that must be taken with respect to any such Issued Patent in the relevant patent office in such jurisdiction in the Pfizer Territory). In such case, upon Spero’s written election provided no later than [***] Business Days after such notice from Pfizer, Spero shall have the right to assume prosecution and maintenance of such Issued Patent at Spero’s sole cost and expense, in which case the license to Pfizer under Section 2.1 (License to Pfizer) as to such Issued Patent shall be terminated. If Spero does not provide such election within [***] Business Days after such notice from Pfizer, Pfizer may discontinue prosecution and maintenance of such Issued Patent in such jurisdiction in the Pfizer Territory, and in either case the license to Pfizer under Section 2.1 (License to Pfizer) as to such Issued Patent shall be terminated.

9.3 Cooperation of the Parties. Each Party agrees to cooperate fully in the preparation, filing, prosecution and maintenance of Patents under Section 9.2 (Patent Prosecution and Maintenance), at its own cost. Such cooperation includes: (a) executing all papers and instruments, or requiring its employees or contractors, to execute such papers and instruments, so as enable the applicable Party to apply for and to prosecute patent applications in any country as permitted by Section 9.2 (Patent Prosecution and Maintenance); and (b) promptly informing the other Party of any matters coming to such Party’s attention that may affect the preparation, filing, prosecution or maintenance of any such patent applications.

9.4 Infringement by Third Parties.

(a) Notice. In the event that either Spero or Pfizer becomes aware of any infringement or threatened infringement, misappropriation or other violation by a Third Party of any Licensed Patent or Joint Patent in the Licensed Field, which infringing activity or misappropriation involves the using, making, importing, offering for sale or selling of the Compound or Licensed Products (regardless of whether or not such Party is then Developing using, making, importing, offering for sale, selling, or otherwise Commercializing the Compound or such Licensed Product in the applicable Territory), or the submission to a Party or a Regulatory Authority of an application for a product referencing a Licensed Product, or any declaratory judgment or equivalent action challenging any Licensed Patent or Joint Patent (including any certification filed pursuant to any statutory or regulatory requirement in any country similar to 21 U.S.C. § 355(b)(2)(A)(iv) or § 355(j)(2)(A)(vii)(IV)) then, in connection with any such infringement (each, a “Product Infringement XE "Product Infringement" \t "See 9.4(a)" ”), it will promptly notify the other Party in writing to that effect. Any such notice shall include evidence to support an allegation of infringement or threatened infringement, or declaratory judgment or equivalent action, by such Third Party.

(b) Enforcement of Licensed Patents and Joint Patents. The Party that is prosecuting the Licensed Patents and Joint Patents in any jurisdiction in the Pfizer Territory pursuant to Section 9.2 (the “Prosecuting Party XE "Prosecuting Party" \t "See 9.4(b)" ”) shall have the first right, as between the Parties, but not the obligation, to bring an appropriate suit or take other action against any Person or entity engaged in, or to defend against, such Product Infringement, or any other legal action in connection with any infringement that is not a Product Infringement or any alleged or threatened assertion of invalidity or unenforceability of any of the Licensed Patents or Joint Patents (“Other Infringement XE "Other Infringement" \t "See 9.4(b)" ”), at its own expense and by counsel of its own choice and the other Party (the “Non-Prosecuting Party XE "Non-Prosecuting Party" \t "See 9.4(b)" ”) shall have the right, at its own expense, to be

represented in any such action by counsel of its own choice, and the Non-Prosecuting Party and its counsel will reasonably cooperate with the Prosecuting Party and its counsel in strategizing, preparing and prosecuting any such action or proceeding. If the Prosecuting Party fails to bring an action or proceeding in any jurisdiction in the Pfizer Territory with respect to such Product Infringement or Other Infringement within (A) [***] Business Days following the notice of alleged infringement or declaratory judgment or (B) [***] Business Days before the time limit, if any, set forth in the Applicable Laws for the filing of such actions, whichever comes first, the Non-Prosecuting Party shall have the right, but not the obligation, to bring and control any such action in such jurisdiction in the Pfizer Territory at its own expense and by counsel of its own choice, and the Prosecuting Party shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Except as otherwise agreed by the Parties as part of a cost-sharing arrangement, any recovery or damages realized as a result of such action or proceeding with respect to Product Infringement or Other Infringement, or settlement of the same, shall be used (A) first, to reimburse the Parties’ documented out-of-pocket legal expenses relating to the action or proceeding; and (B) any remainder after such reimbursement is made shall be shared by Pfizer and Spero, in proportion to (1) [***] percent ([***]%) shall be allocated to the Party prosecuting and/or defending such suit or action and (2) [***] percent ([***]%) shall be allocated to the Party not prosecuting and/or defending such action; provided, that any amounts allocated to Pfizer, or any award or settlement (whether by judgment or otherwise) awarded and paid to Pfizer, other than punitive damages, shall be considered Net Sales for purposes of (and subject to the royalty obligations under) Section 8.4 (Royalty Payments) and Cumulative Net Sales for purposes of the Sales Milestone Events set forth in Section 8.3 (Commercial Milestones). In the event a Party brings an action in accordance with this Section 9.4 (Infringement by Third Parties), the other Party shall cooperate fully, including, if required to bring such action, the furnishing of a power of attorney or being named as a party to such action.

9.5 Infringement Claims by Third Parties. If the Exploitation of a Licensed Product in the Licensed Field in the Pfizer Territory pursuant to this Agreement results in, or is reasonably expected to result in, any claim, suit or proceeding by a Third Party against Pfizer or any of its Affiliates or Sublicensees alleging infringement by Pfizer or any of its Affiliates or its or their Sublicensees, distributors or customers (a “Third Party Infringement Claim XE "Third Party Infringement Claim" \t "See 9.5" ”), including any defense or counterclaim in connection with a Product Infringement action initiated pursuant to Section 9.4(b) (Enforcement of Licensed Patents and Joint Patents), the Party first becoming aware of such alleged infringement shall promptly notify the other Party thereof in writing. As between the Parties, subject to ARTICLE 13 (Indemnification; Liability): (a) Pfizer shall have the first right, but not the obligation, to defend any such claim, suit or proceeding at its sole cost and expense, using counsel of Pfizer’s choice; (b) Spero may participate in any such claim, suit or proceeding with counsel of its choice at its sole cost and expense; provided that Pfizer shall retain the right to control such claim, suit or proceeding; (c) Spero shall, and shall cause its Affiliates to, assist and co-operate with Pfizer, as it may reasonably request from time to time, in connection with its activities set forth in this Section 9.5 (Infringement Claims by Third Parties), including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that Pfizer shall reimburse Spero for its reasonable and verifiable out-of-pocket costs and expenses incurred in connection therewith; (d) Pfizer shall keep Spero reasonably informed of all material developments in connection with any such claim, suit

or proceeding; (e) Pfizer agrees to provide Spero with copies of all material pleadings filed in such action and to allow Spero reasonable opportunity to participate in the defense of the Claims. If Pfizer fails to defend such claim, suit or proceeding in any jurisdiction in the Pfizer Territory within (A) [***] Business Days following the notice of alleged infringement or (B) [***] Business Days before the time limit, if any, set forth in the Applicable Laws for the filing of such actions, whichever comes first, Spero shall have the right, but not the obligation, to bring and control any such action in such jurisdiction in the Pfizer Territory at its own expense and by counsel of its own choice, and provisions of the preceding sentence shall apply mutatis mutandis to such proceeding and the conduct thereof. Any damages, or awards, including royalties, incurred or awarded in connection with any Third Party Infringement Claim defended under this Section 9.5 (Infringement Claims by Third Parties) shall be shared by Pfizer and Spero, in proportion to (1) [***] percent ([***]%) shall be allocated to the Party prosecuting and/or defending such suit or action and (2) [***] percent ([***]%) shall be allocated to the Party not prosecuting and/or defending such action; provided, that any amounts awarded and paid to Pfizer (whether by settlement, judgment, award or otherwise), other than punitive damages, shall be considered Net Sales for purposes of (and subject to the royalty obligations under) Section 8.4 (Royalty Payments) and Cumulative Net Sales for purposes of the Sales Milestone Events set forth in Section 8.3 (Commercial Milestones), in each case subject to ARTICLE 13 (Indemnification; Liability).

9.6 Consent for Settlement. Neither Party shall unilaterally enter into any settlement or compromise of any action or proceeding under this ARTICLE 9 (Intellectual Property Rights) that that admits the invalidity or unenforceability of any Licensed Patent or requires the abandonment of a Licensed Patent without the prior written consent of such other Party, which shall not be unreasonably withheld, conditioned or delayed.

9.7 Common Ownership under Joint Research Agreement. Notwithstanding anything to the contrary in this ARTICLE 9, no Party shall have the right to make an election under 35 U.S.C. 102(c) when exercising its rights under this ARTICLE 9 without the prior written consent of the other Party. With respect to any such permitted election, the Parties shall co-ordinate their activities with respect to any submissions, filings or other activities in support thereof. The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in 35 U.S.C. 100(h).

9.8 Patent Extensions. Pfizer shall have the exclusive right, but not the obligation, to seek, in Spero’s name if so required, patent term restoration, supplemental protection certificates or their equivalents, and patent term extensions with respect to the Licensed Patents and Joint Patents in the Pfizer Territory where applicable. Spero and Pfizer will cooperate in connection with all such activities. Pfizer will give due consideration to all suggestions and comments of Spero regarding any such activities, but in the event of a disagreement between the Parties, Pfizer will have the final decision-making authority; provided, however, that Pfizer will seek (or allow Spero to seek) to extend any Licensed Patents or Joint Patents at Spero’s request, including through the use of supplemental protection certificates and the like, unless in Pfizer’s reasonable legal determination such Licensed Patents or Joint Patents may not be extended under Applicable Law without limiting Pfizer’s right to extend any other Patent.

9.9 Orange Book Information. Pfizer will have the sole right, but not the obligation, to submit to all applicable Governmental Authorities patent information pertaining to Licensed

Products pursuant to any statutory or regulatory requirement in any country in the Pfizer Territory similar to 21 U.S.C. § 355(b)(1)(G) (or any amendment or successor statute thereto); provided, that, the Parties shall collaborate in good faith to determine whether any Licensed Patent Rights are required to be included in any such intended filings and, prior to making any such filing, Pfizer shall notify Spero of any such filing and discuss in good faith any issues or comments Spero may have with respect to such filing and Pfizer shall take into consideration Spero’s reasonable comments.

9.10 Trademarks. Spero and Pfizer shall provide to the other Party prompt written notice of any actual or threatened infringement of the Product Trademarks or Spero Trademarks in the Pfizer Territory and of any actual or threatened Claim that the use of the Product Trademarks or Spero Trademarks in the Pfizer Territory violates the rights of any Third Party, in each case, of which such Party becomes aware. Pfizer shall own and be responsible, at its expense, for all Product Trademarks, trade names, branding or logos related to the Compound or Licensed Products in the Licensed Field in the Pfizer Territory. Pfizer shall have the sole right to take such action as Pfizer deems necessary against a Third Party based on any alleged, threatened or actual infringement, dilution, misappropriation or other violation of or unfair trade practices or any other like offense relating to, the Product Trademarks by a Third Party in the Pfizer Territory at its sole cost and expense and using counsel of its own choice and Pfizer shall retain any damages or other amounts collected in connection therewith.

9.11 Spero Trademarks. If Pfizer is lawfully required by any Regulatory Authority to use any of the Spero Trademarks or any other Trademark used by Spero to market, promote, distribute and/or sell any Licensed Product in the Licensed Field outside the Pfizer Territory for the purpose of Commercialization of the relevant Licensed Product in a jurisdiction in the Pfizer Territory, Pfizer shall promptly notify Spero, and Spero shall immediately grant Pfizer a non-exclusive, fully-paid, royalty-free and sublicensable license to use such Spero Trademark or such other Trademark solely in connection with the Commercialization of the relevant Licensed Product in the Licensed Field in such jurisdiction in the Pfizer Territory; provided that any such license shall automatically terminate on the early to occur of (i) the expiration or termination of this Agreement; (ii) the abandonment by Pfizer of such Licensed Product in such jurisdiction; and (iii) the abandonment by Pfizer of such Licensed Product in the Pfizer Territory. Except as provided for in the previous clause, if Pfizer wishes to obtain a license under Spero Trademarks to use such Spero Trademarks with respect to the Commercialization of the Licensed Products in the Licensed Field in the Pfizer Territory, Pfizer shall notify Spero thereof and the Parties shall negotiate a license with respect thereto, with license terms consistent with this Agreement.

ARTICLE 10 CONFIDENTIALITY; PUBLICATION

10.1 Duty of Confidence. Subject to the other provisions of this ARTICLE 10 (Confidentiality; Publication):

(a) all Confidential Information disclosed by a Party (the “Disclosing Party XE "Disclosing Party" \t "See 10.1(a)" ”) or its Affiliates under this Agreement will be maintained in confidence and otherwise safeguarded by the recipient Party (the “Receiving Party XE "Receiving Party" \t "See 10.1(a)" ”) and its Affiliates using at least the same standard of care as the Receiving

(b) the Receiving Party, its Affiliates and Representatives may only use any such Confidential Information for the purposes of performing its obligations or exercising its rights under this Agreement; and

(c) the Receiving Party may disclose Confidential Information of the Disclosing Party only to: (i) the Receiving Party’s Affiliates; and (ii) employees, directors, agents, contractors, Subcontractors, consultants and advisers of the Receiving Party and its Affiliates and its and their Sublicensees, in each case to the extent reasonably necessary for the purposes of, and for those matters undertaken pursuant to, this Agreement (collectively, the “Representatives XE "Representatives" \t "See 10.1(c)" ”); provided, that such Representatives are bound to maintain the confidentiality, and not to make any unauthorized use, of the Confidential Information in a manner consistent with this ARTICLE 10 (Confidentiality; Publication).

10.2 Exceptions. The foregoing obligations as to particular Confidential Information of a Disclosing Party shall not apply to the extent that the Receiving Party can demonstrate by competent evidence that such Confidential Information:

(a) is known by the Receiving Party at the time of its receipt, and not through a prior disclosure by the Disclosing Party, as demonstrated by documentation or other competent proof of the Receiving Party, but excluding Joint Inventions or the terms of this Agreement;

(b) is in the public domain by use and/or publication before its receipt from the Disclosing Party, or thereafter enters the public domain through no fault of, or breach of this Agreement by, the Receiving Party;

(c) is subsequently disclosed to the Receiving Party on a non-confidential basis by a Third Party who, to the Receiving Party’s knowledge after reasonable inquiry, may lawfully do so and is not under an obligation of confidentiality to the Disclosing Party; or

(d) is developed by the Receiving Party independently and without use of or reference to any Confidential Information disclosed to, or materials provided to, it by or on behalf of the Disclosing Party, as shown by contemporaneous written documents of the Receiving Party.

10.3 Authorized Disclosures. Notwithstanding the obligations set forth in Section 10.1 (Duty of Confidence), the Receiving Party may disclose Confidential Information of the Disclosing Party and the terms of this Agreement to the extent such disclosure is reasonably necessary for such Disclosing Party to perform its obligations or exercise its rights under this Agreement, in the following instances:

(a) filing or prosecuting of Patents as permitted by this Agreement;

(b) enforcing the Receiving Party’s rights under this Agreement or performing the Receiving Party’s obligations under this Agreement;

(d) prosecuting or defending litigation as permitted by this Agreement;

(e) to actual or potential investors, investment bankers, lenders, other financing sources, acquirers, licensees or Sublicensees (and attorneys and independent accountants thereof) in connection with potential investment, acquisition, license, collaboration, merger, public offering, due diligence or similar investigations by such Third Parties or in confidential financing documents; provided, in each case, that any such Third Party agrees to be bound by terms of confidentiality and non-use (or, in the case of the Receiving Party’s attorneys and independent accountants, such Third Party is obligated by applicable professional or ethical obligations) that are no less stringent than those contained in this Agreement (except to the extent that a shorter confidentiality period is customary in the industry); and

(f) such disclosure is required by court order, judicial or administrative process or Applicable Laws; provided that in such event the Receiving Party shall promptly inform the Disclosing Party of such required disclosure and provide the Disclosing Party an opportunity to challenge or limit the disclosure obligations. Confidential Information that is disclosed as required by court order, judicial or administrative process or Applicable Laws shall remain otherwise subject to the confidentiality and non-use provisions of this ARTICLE 10 (Confidentiality; Publication), and the Receiving Party shall take all steps reasonably necessary, including seeking of confidential treatment or a protective order, to ensure the continued confidential treatment of such Confidential Information.

10.4 Publication. Prior to publishing or presenting the results of any studies with respect to the Compound or Licensed Products, a Party (the “Publishing Party XE "Publishing Party" \t "See 10.4" ”) shall submit the draft of the publication or presentation to the other Party (the “Non-Publishing Party XE "Non-Publishing Party" \t "See 10.4" ”) for comments no later than [***] Business Days prior to the planned submission for publication or presentation. The Publishing Party shall: (a) consider in good faith any comments thereto provided by the Non-Publishing Party within such [***] Business Day period; and (b) remove any Party’s Confidential Information of the Non-Publishing Party if so requested. The Non-Publishing Party shall be deemed to have consented to such publication or presentation if it has not sent any response to the Publishing Party within [***] Business Days of receipt of the request. The Non-Publishing Party may request a reasonable delay in publication or presentation in order to protect patentable information. If a delay is requested, then the Publishing Party shall, and shall ensure that its Affiliate(s) or Sublicensee(s) shall, delay submission or presentation for a period of [***] Business Days (or such shorter period as may be mutually agreed by the Parties) to enable the Non-Publishing Party to file patent applications protecting such Party’s rights in such information.

10.5 Publicity/Use of Names. The Parties intend to agree upon the content of one (1) or more press releases, the release of which the Parties shall coordinate in order to accomplish such release promptly upon execution of this Agreement. Other than as set forth in the prior sentence, no other disclosure of the existence, or the terms, of this Agreement may be made by either Party or its Affiliates, and neither Party shall use the name, trademark, trade name or logo of the other Party, its Affiliates or their respective employee(s) in any publicity, promotion, news

release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by Applicable Laws. Notwithstanding the above, each Party and its Affiliates may disclose on its website, in news releases, its promotional materials and other disclosures relating to this Agreement that the other Party is a development partner of such Party for the Licensed Products in the Pfizer Territory and may use the other Party’s name and logo in conjunction with such disclosure. Notwithstanding the foregoing:

(a) A Party may disclose this Agreement and its terms, and material developments or material information generated under this Agreement, in news releases and securities filings with the U.S. Securities and Exchange Commission (“SEC XE "SEC" \t "See 10.5(a)" ”) (or equivalent foreign agency) to the extent required by Applicable Laws after complying with the procedure set forth in this Section 10.5 (Publicity/Use of Names). In such event, the Party seeking to make such disclosure will prepare a draft of such disclosure together with, if applicable, a confidential treatment request to request confidential treatment for this Agreement and proposed redacted version of this Agreement, and the other Party agrees to promptly (and in any event, no less than [***] Business Days after receipt of such request and, if applicable, proposed redactions) give its input in a reasonable manner in order to allow the Party seeking disclosure to file its request within the time lines prescribed by applicable SEC regulations. The Party seeking such disclosure shall exercise Commercially Reasonable Efforts to obtain confidential treatment of this Agreement from the SEC as represented by the redacted version reviewed by the other Party.

(b) Further, each Party acknowledges that the other Party may be legally required, or may be required by the listing rules of any exchange on which the other Party’s or its Affiliate’s securities are traded or advised by its counsel, to make public disclosures (including in filings with the SEC or other agency) of certain material developments or material information generated under this Agreement and agrees that each Party may make such disclosures as required by law, listing rules or advice; provided that the Party seeking such disclosure shall provide the other Party with a copy of the proposed text of such disclosure sufficiently in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment thereon.

(c) If either Party desires to issue a press release or make a public announcement concerning the material terms of this Agreement or the Development, Commercialization or Exploitation of the Compounds or a Licensed Product under this Agreement, such as the achievement of Regulatory Approvals of the Licensed Product or data from a clinical trial, such Party shall provide the other Party with the proposed text of such announcement for prior review and, except to the extent such press release or public announcement is permitted by subsection (a) or (b) above, approval by such other Party.

ARTICLE 11 TERM AND TERMINATION

11.1 Term. Unless earlier terminated as permitted by this Agreement, the initial term of this Agreement (the “Initial Term XE "Initial Term" \t "See 11.1" ”) will commence upon the Effective Date and continue in full force and effect, on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis, for [***] years, and, unless earlier terminated as permitted by

this Agreement, shall automatically renew for successive [***] year terms (each, a “Successive Term XE "Successive Term" \t "See 11.1" ”), in each case unless earlier terminated as permitted by the Agreement, until expiration of the last Royalty Term for the final Licensed Product in the Pfizer Territory (the Initial Term, together with all Successive Terms, being the “Term XE "Term" \t "See 11.1" ”). Following the expiration (but not the earlier termination) of the Royalty Term for a Licensed Product in a jurisdiction in the Pfizer Territory, the grants in Section 2.1 (Licenses to Pfizer) shall become exclusive, perpetual, fully-paid, royalty-free, sublicensable and irrevocable for such Licensed Product in such jurisdiction. For clarity, (a) upon the expiration (but not the earlier termination) of the Term, the grants in Section 2.1 (Licenses to Pfizer) shall become exclusive, fully-paid, royalty-free, and irrevocable in their entirety solely as to the Licensed Products in the Pfizer Territory at the time of such expiration and (b) upon the expiration (but not the earlier termination) of the Term, the grant in Section 2.2 (License to Spero) shall become an exclusive, perpetual, fully-paid, royalty-free, sublicensable and irrevocable license to the Pfizer Technology to Exploit Licensed Products in the Licensed Field outside the Pfizer Territory.

11.2 Termination.

(a) Termination by Pfizer for Convenience. At any time, Pfizer may terminate this Agreement, at its sole discretion and for any reason or no reason, by providing written notice of termination to Spero, which notice includes an effective date of termination at least [***] days after the date of the notice. Notwithstanding the foregoing, Pfizer’s obligation to pay License Maintenance Fees pursuant to Section 8.1 shall terminate immediately upon giving notice of such termination to Spero.

(b) Termination for Cause. If either Spero or Pfizer believes that the other Party is in material breach of its obligations hereunder, then the non-breaching Party may deliver notice of such breach to the other Party. The allegedly breaching Party shall have (i) [***] days in the case of a payment breach and or (ii) [***] in the case of a non-payment breach, to cure such breach from the receipt of the notice. If the allegedly breaching Party fails to cure that breach within the applicable period set forth above, then the Party originally delivering the notice of breach may terminate this Agreement on written notice of termination. Any right to terminate this Agreement under this Section 11.2(b) (Termination for Cause) shall be stayed and the applicable cure period tolled in the event that, during such cure period, the Party alleged to have been in material breach shall have initiated dispute resolution in accordance with Section 14.10 (Dispute Resolution) with respect to the alleged breach, which stay and tolling shall continue until such dispute has been resolved in accordance with Section 14.10 (Dispute Resolution). If a Party is determined to be in material breach of this Agreement, the other Party may terminate this Agreement if the breaching Party fails to cure the breach within [***] days after the conclusion of the dispute resolution procedure (and such termination shall then be effective upon written notification from the notifying Party to the breaching Party).

(c) Termination for Cause following Certain Violations. This Agreement may be terminated at any time during the Term by either Party immediately upon notice to the other Party (the “Violating Party XE "Violating Party" \t "See 11.2(c)" ”) if: (i) the Violating Party is convicted of violating any Anti-Corruption Law in connection with the performance of its obligations under this Agreement; (ii) the Violating Party enters into a settlement or other resolution that includes an admission of liability under such Anti-Corruption Law in connection

with this Agreement; or (iii) the Violating Party materially breaches any of its covenants in Section 12.2(b) of this Agreement; provided that the Violating Party has not cured such material breach through diligent investigation and remediation, including appropriate disciplinary action, within [***] days after written notice delivered by the non-Violating Party to the alleged Violating Party requesting cure of the breach.

(d) Termination for Bankruptcy. This Agreement may be terminated at any time during the Term by either Party upon the other Party’s filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided that in the case of any involuntary bankruptcy proceeding such right to terminate shall only become effective if the Party consents to the involuntary bankruptcy or such proceeding is not dismissed within [***] days after the filing thereof.

11.3 Effect of Termination.

(a) Termination by Spero for Cause or Bankruptcy; Termination by Pfizer for Convenience. If this Agreement is terminated by Spero pursuant to Section 11.2(b) (Termination for Cause), Section 11.2(c) (Termination for Cause following Certain Violations) or Section 11.2(d) (Termination for Bankruptcy), or by Pfizer pursuant to Section 11.2(a) (Termination by Pfizer for Convenience), the following consequences shall apply and shall be effective as of the effective date of such termination:

(1) Except as otherwise expressly provided herein, all rights and obligations of each Party hereunder shall cease (including Pfizer’s license under Section 2.1 (License to Pfizer));

(2) Spero may request, within [***] days of such termination, that Pfizer enter into good faith negotiations for no more than[***] days concerning the terms of an agreement with Pfizer granting to Spero an exclusive license under the Pfizer Technology and Product Trademarks to continue to Develop, make, have made, use, import, offer for sale, sell and otherwise Commercialize or Exploit [***]. If no agreement is reached, then the license to Spero under Section 2.2 (License to Spero) shall terminate. If such agreement is reached, then such license agreement shall include, among other things, the following provisions:

(i) Spero, its Affiliates and/or its or their respective Sublicensees, as applicable, shall pay to Pfizer, on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis, non-refundable, non-creditable royalties based on the aggregate Net Sales of all Licensed Products sold by Spero, its Affiliates and/or its or their respective Sublicensees in the Pfizer Territory during a Calendar Year at the rates set forth in the table below; provided that the obligation to pay royalties will be imposed only once with respect to the same unit of a [***]:

Calendar Year Net Sales (in Dollars) for [***] in the Pfizer Territory	Royalty Rates as a Percentage (%) of Net Sales
[***]	[***]%
[***]	[***]%

(ii) Provisions substantially similar to those contained in Sections 8.4(d) (Royalty Adjustments) through 8.9 (Audit Dispute) shall also be included in such license agreement.

(3) Pfizer and its Affiliates and its and their Sublicensee shall have the right to continue to sell their existing inventory of Licensed Products (if any) for a period not to exceed [***] days after the effective date of such termination, and Spero shall continue to receive royalties with respect to such sales.

(4) Pfizer shall and shall cause its Affiliates and its and their Sublicensees to (i) return to Spero or destroy, at Pfizer’s election, all Confidential Information of Spero, including all copies thereof and all materials, substances and compositions delivered or provided by or on behalf of Spero to Pfizer; (ii) deliver to Spero all Regulatory Filings and Regulatory Approvals for the Compound and any Licensed Product, and all Pfizer Development Data; (iii) at Spero’s request and election, use Commercially Reasonable Efforts to facilitate negotiations between Spero and Pfizer’s Third Party providers of clinical research, manufacturing and/or distribution services and to assign any contracts with such entities to Spero (but only to the extent such contract relates exclusively to the Compound or Licensed Products); (iv) promptly provide a copy to Spero of all Licensed Product Agreements, and, to the extent requested by Spero in writing, use Commercially Reasonable Efforts to assign to Spero any Licensed Product Agreement (but only to the extent such Licensed Product Agreement relates exclusively to the Compound or Licensed Products); and (v) transfer to Spero all units of the Compound and the Licensed Products in its possession, provided that Spero shall reimburse Pfizer for the Cost of Goods of such units.

(5) Pfizer shall disclose to Spero all Pfizer Development Data and all Joint Inventions to the extent not already known to Spero specifically relation to the [***] and, at Spero’s request and at Spero’s cost, provide reasonable technical assistance and transfer all Pfizer Development Data and Joint Inventions necessary to Manufacture the Compound or Licensed Products to Spero or its designee.

(6) All Confidential Information of Pfizer relating to the Compound or any Licensed Product, including without limitation all Pfizer Development Data, shall become Confidential Information of Spero, with Spero considered the Disclosing Party and Pfizer considered the Receiving Party and Pfizer may not rely on its or any of its Affiliates’ or any Sublicensee’s possession or development thereof as an exception under ARTICLE 10 (Confidentiality; Publication).

(b) Termination by Pfizer for Cause. If this Agreement is terminated by Pfizer pursuant to Section 11.2(c) (Termination for Cause following Certain Events), then (i) all licenses granted under this Agreement by Spero to Pfizer shall become fully paid-up, perpetual, irrevocable

and royalty-free; and (ii) except as otherwise provided herein, all other rights and obligations of each Party with respect to the Licensed Product shall cease.

11.4 Survival. Expiration or termination of this Agreement shall not relieve any Party of any obligation accruing prior to such expiration or termination, nor shall expiration or any termination of this Agreement preclude either Party from pursuing all rights and remedies it may have under this Agreement, at law or in equity, with respect to breach of this Agreement. In addition, the provisions of ARTICLE 1 (Definitions), Section 5.4 (Rights of Reference), Section 8.7 (Taxes), Section 8.8 (Financial Records and Audit), Section 8.9 (Audit Dispute), Section 9.1 (Ownership of Intellectual Property); ARTICLE 10 (Confidentiality; Publicity), Section 11.3 (Effect of Termination), this Section 11.4 (Survival), ARTICLE 13 (Indemnification; Liability), and ARTICLE 14 (General Provisions) hereof shall survive the expiration or termination of this Agreement.

11.5 Termination Not Sole Remedy. Termination is not the sole remedy under this Agreement and, whether or not termination is effected and notwithstanding anything contained in this Agreement to the contrary, all other remedies will remain available except as agreed to otherwise herein.

ARTICLE 12 REPRESENTATIONS, WARRANTIES AND COVENANTS

12.1 Representations and Warranties of Each Party. Each Party represents and warrants to each other Parties as of the Effective Date that:

(a) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder;

(b) this Agreement has been duly executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it;

(c) this Agreement is a legal, valid and binding obligation of such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);

(d) it is not under any obligation, contractual or otherwise, to any Person that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations hereunder; and

(e) neither it nor any of its Affiliates has been debarred or is subject to debarment pursuant to Section 306 of the FFDCA.

12.2 Mutual Covenants.

(a) Debarment. Each Party covenants to the other Party that it will not during the Term, employ or use the services of any person who is debarred or disqualified, under the FFDCA as may be amended, or comparable laws in any country or jurisdiction other than the U.S in connection with activities relating to the Compound or any Licensed Product.

(b) Compliance. Each Party covenants as follows:

(1) In the performance of its obligations under this Agreement, such Party shall comply and shall cause its and its Affiliates’ employees and contractors to comply with all Applicable Laws, including all export control, anti-corruption and anti-bribery laws and regulations, and shall not cause such other Party’s Indemnitees to be in violation of any Applicable Laws.

(2) In connection with its activities under this Agreement, each Party and its and its Affiliates’ employees and contractors shall not, in connection with the performance of their respective obligations under this Agreement, directly or indirectly through Third Parties, pay, promise or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value to a Government Official or Government Authority or other person for purpose of improperly obtaining or retaining business for or with, or directing business to, any person, including, without limitation, either Party (, and each Party covenants that it and its Affiliates’ employees and contractors shall not, directly or indirectly, engage in any of the foregoing).

(3) Each Party shall not, during the Term, assign, transfer, convey or otherwise encumber its right, title and interest in (A) Licensed Technology, in the case of Spero, in a manner that is inconsistent with the exclusive license granted to Pfizer under Section 2.1 (Licenses to Pfizer) or (B) Pfizer Technology, in the case of Pfizer, in a manner that is inconsistent with the license granted to Spero under Section 2.2 (License to Spero), in each case without the prior written consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed).

(4) Each Party shall not grant any right to any Third Party under the (A) Licensed Technology (in the case of Spero) that would conflict with the rights granted to Pfizer hereunder, or (B) Pfizer Technology (in the case of Pfizer) that would conflict with the rights granted to Spero hereunder.

12.3 Representations and Warranties by Spero. Spero represents and warrants to Pfizer as of the Effective Date that:

(a) the patents and patent applications listed on Exhibit A constitute a true, correct and complete list of all Licensed Patents existing as of the Effective Date (the “Existing Licensed Patents XE "Existing Licensed Patents" \t "See 12.3(a)" ”) and each Existing Licensed Patent is in full force and effect and has been filed and prosecuted in good faith, and Spero or its Affiliates have timely paid all application, registration, maintenance and renewal fees payable with respect to all such Existing Licensed Patents that are pending or granted and all necessary documents and

certificates have been filed with the relevant agencies for the purpose of maintaining such Existing Licensed Patents;

(b) Spero has sufficient legal and/or beneficiary title, ownership or license, free and clear from any mortgages, pledges, liens, security interests, conditional and installment sales agreements, encumbrances, charges or claims of any kind, of or to the Licensed Technology to grant the licenses (or sub-licenses as the case may be) to Pfizer as purported to be granted under this Agreement;

(c) Spero has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Licensed Technology in a manner that is inconsistent with the exclusive license granted to Pfizer under Section 2.1 (Licenses to Pfizer);

(d) the Licensed Technology is complete, accurate, effective and capable of achieving the Development and Manufacturing of the Compound and the Licensed Products;

(e) Spero has not received any notice from a Third Party that the Development of the Compound or any Licensed Product conducted by Spero prior to the Effective Date has infringed any Patents of any Third Party or infringed or misappropriated any other intellectual property of any Third Party. The Development, Manufacture, use or sale of any Compound or any Licensed Product pursuant to this Agreement does not, to the knowledge of Spero, (y) infringe any Patents of any Third Party or (z) infringe or misappropriate any other intellectual property of any Third Party. No claim or action has been brought or, to Spero’s knowledge, threatened in writing, by any Governmental Authority or Third Party (i) that any Spero Trademark violates the rights of a Third Party or (ii) currently challenging the enforceability or validity of any Spero Trademark;

(f) Spero has not as of the Effective Date granted any right to any Third Party under the Licensed Technology that would conflict with the rights granted to Pfizer hereunder;

(g) Spero has no knowledge as of the Effective Date of any Third Party that is infringing or misappropriating any of the Licensed Technology;

(h) no claim or action has been brought or, to Spero’s knowledge, threatened in writing by any Third Party alleging that the issued patents in the Licensed Patent Rights are invalid or unenforceable, and none of the Existing Patent Rights is the subject of any interference, opposition, cancellation or other protest proceeding before the United States Patent and Trademark Office or any analogous foreign Governmental Authority;

(i) with respect to any Licensed Patents for which the U.S. federal government retains rights as identified in Section 2.1(c) (Licenses to Pfizer - subsection (c)), Spero has complied with all its obligations pursuant to 35 U.S.C. §§ 200-212 and 37 C.F.R. § 401 et seq., and has taken all steps required pursuant to 35 U.S.C. §§ 200-212 and 37 C.F.R. § 401 et seq. to grant the rights under such Licensed Patents to Pfizer as provided under 2.1 (Licenses to Pfizer);

(j) there is no Know-How Controlled by Spero that is necessary for the Exploitation of the Compound or Licensed Products that is not within the Licensed Know-How;

(k) except for the Everest License Agreement, there are no other agreements pursuant to which a Third Party has granted Spero or its Affiliates a license under any Know-How or Patent Rights that are necessary to Exploit the Compound or Licensed Products, and all such Patent Rights and Know-How are included in the Licensed Technology. The Everest License Agreement is in full force and effect, and Spero has provided Pfizer with true and complete copies of the Everest License Agreement and all amendments thereto. Neither Spero, its Affiliates nor, to Spero’s knowledge, Everest, is in default with respect to a material obligation under the Everest License Agreement, and none of such parties has claimed or has grounds upon which to claim that the other party is in default with respect to a material obligation under the Everest License Agreement;

(l) each Regulatory Filing filed by Spero or its Affiliates with respect to the Compound or the Licensed Products prior to the Effective Date was true, complete and accurate in all material respects and timely filed and all Regulatory Filings filed by Spero or its Affiliates with respect to the Compound or the Licensed Products have been provided to Pfizer in an appropriate electronic format prior to the Effective Date. Neither Spero nor any of its Affiliates or Sublicensees has received any written notice or allegation from any Regulatory Authority regarding (i) any actual, alleged, possible, or potential violation of or failure to comply with any Applicable Law, or (ii) any actual, proposed, or potential revocation, withdrawal, suspension, cancellation, termination, or modification of any Regulatory Filing for the Compound or Licensed Products, and, to Spero’s knowledge, there is no reasonable basis for any such notice or allegation;

(m) to Spero’s knowledge, true, complete and correct copies of all material information with respect to the safety and efficacy of the Compound and the Licensed Products that are not otherwise publicly available have been provided to Pfizer

(n) to Spero’s knowledge, (x) all preclinical and clinical trials conducted by Spero or its Affiliates prior to the Effective Date have been in compliance in all material respects with all Applicable Laws and GxP, and (y) no data or other information generated or otherwise received from such preclinical and clinical trials conducted up to the Effective Date has, or is reasonably expected to have, any materially negative impact on the Exploitation of any Licensed Product in the Pfizer Territory or the Excluded Territory. Neither Spero nor its Affiliates has received any written notice from the FDA, the EMA or any other Regulatory Authority performing functions similar to those performed by those with respect to any ongoing clinical or pre-clinical studies or tests of the Licensed Products requiring the termination, suspension or material modification of such studies or tests, and no Governmental Authority has commenced any action to place a clinical hold order on, or otherwise terminate or suspend, any ongoing clinical trial of any Licensed Product conducted by or on behalf of Spero or its Affiliates;

(o) to Spero’s knowledge, its and its Affiliates’ employees and contractors, have not directly or indirectly promised, offered or provided any corrupt payment, gratuity, emolument, bribe, kickback, illicit gift or hospitality or other illegal or unethical benefit to a Government Official or Government Authority or any other Person in connection with the performance of its obligations under this Agreement.

12.4 Representations and Warranties by Pfizer. Pfizer represents and warrants to Spero as of the Effective Date that except as set forth on Schedule 12.4, neither Pfizer nor any of

its Affiliates is, directly or indirectly, engaged in the research, Development, Manufacture or Commercialization of any [***], whether alone or in combination with other compounds, for any intravenous indication in the Licensed Field.

12.5 Covenants by Spero. From and after the Execution Date through the expiration or earlier termination of this Agreement, Spero hereby covenants to Pfizer that:

(a) Updates to Schedules and Exhibits. Upon Pfizer’s reasonable written request (such request not to be submitted to Spero more than [***] every Calendar Year), Spero will promptly update Exhibit A (Licensed Patent Rights, Exhibit B (Spero Trademarks), Exhibit C (SPR206) and Exhibit D (Initial Development Plan) and submit such amended Exhibits to Pfizer.

(b) Everest License Agreement. Spero and its Affiliates, as applicable, has obtained and will at all times further obtain or maintain the necessary consents from Everest under the Everest License Agreement to enter into this Agreement and to grant the licenses to Pfizer hereunder, and will provide to Pfizer written evidence of same. Neither Spero, nor any of its respective Affiliates, will amend, modify, terminate, or waive any rights under the Everest License Agreement, in a manner that would adversely affect Pfizer’s rights or obligations under this Agreement without Pfizer’s prior written consent and Spero shall use its Commercially Reasonable Efforts to maintain the Everest License Agreement in full force and effect and to comply with its obligations thereunder in all material respects. In the event that Spero of any of its Affiliates receives a notice from Everest relating to any alleged breach or default by Spero or any of its Affiliates under the Everest License Agreement, Spero shall promptly (and in no event later than [***] Business Days’ receipt thereof), inform Pfizer of such notice and shall thereafter, subject to its confidentiality obligations to Everest, keep Pfizer informed in reasonable detail in writing as any material discussions between the applicable parties to the Everest License Agreement relating to the alleged breach, including any proposed resolution of the matter. Spero will notify Pfizer in writing within [***] Business Day’s after any such termination of the Everest License Agreement.

(c) Conflicting Agreements. Spero will not enter into any agreement or other obligation with any Third Party, or amend an existing agreement with a Third Party, in each case, that would have an adverse effect on Spero’s ability to grant the licenses (or sublicenses as the case may be) to Pfizer, or perform its obligations, under this Agreement.

(d) Future Encumbrances. Spero shall not, and shall cause its Affiliates not to, incur or permit to exist, with respect to any Licensed Technology, any lien, encumbrance, charge, security interest, mortgage, liability, assignment, grant of license or other obligation that is or would be inconsistent with the licenses and other rights granted to Pfizer under this Agreement.

12.6 No Other Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO PARTY MAKES, AND EACH PARTY EXPRESSLY DISCLAIMS, ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENTS, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

ARTICLE 13 INDEMNIFICATION; LIABILITY

13.1 Indemnification by Spero. Spero shall indemnify, defend and hold Pfizer, its Affiliates, Sublicensees and Subcontractors and its and their respective officers, directors, agents and employees (“Pfizer Indemnitees XE "Pfizer Indemnitees" \t "See 13.1" ”) harmless from and against any Claims against them to the extent arising or resulting from:

(a) the material breach by Spero of any representation, warranty or covenant made by Spero in this Agreement;

(b) the gross negligence or willful misconduct on the part of Spero or its Affiliates or its or their respective officers, directors, agents or employees in exercising its rights or performing its obligations under this Agreement; or

(c) the Exploitation by Spero or any of its Affiliates or its or their Sublicensees or its or their distributors or contractors of the Compound or the Licensed Products outside the Pfizer Territory or inside the Pfizer Territory prior to the Effective Date;

except, in each case (a), (b) and (c) above, for those Claims for which Pfizer has an obligation to indemnify Spero pursuant to Section 13.2 (Indemnification by Pfizer) hereof or, to the extent such Claims result from the material breach by Pfizer of any covenant, representation, warranty or other agreement made by Pfizer in this Agreement or the gross negligence or willful misconduct of any Pfizer Indemnitee.

13.2 Indemnification by Pfizer. Pfizer shall indemnify, defend and hold Spero, its Affiliates, Sublicensees (including Everest) and Subcontractors and their respective officers, directors, agents and employees (“Spero Indemnities XE "Spero Indemnities" \t "See 13.2" ”) harmless from and against any Claims arising under or related to this Agreement against them to the extent arising or resulting from:

(a) the material breach by Pfizer of any representation, warranty or covenant made by Pfizer in this Agreement;

(b) the gross negligence or willful misconduct on the part of Pfizer or its Affiliates or its or their respective officers, directors, agents or employees in exercising its rights or performing its obligations under this Agreement; or

(c) the Exploitation by Pfizer or any of its Affiliates or its or their Sublicensees or its or their distributors or contractors of the Compound or the Licensed Products in the Pfizer Territory;

except, in each case (a), (b) and (c) above, those Claims for which Spero has an obligation to indemnify Pfizer pursuant to Section 13.1 (Indemnification by Spero) hereof or, to the extent such Claims result from the material breach by Spero of any covenant, representation, warranty or other agreement made by Spero in this Agreement or the negligence or willful misconduct of any Spero Indemnitee.

13.3 Indemnification Procedure

(a) Notice of Claim. All indemnification claims in respect of a Pfizer Indemnitee or a Spero Indemnitee by such Party to this Agreement (the “Indemnified Party XE "Indemnified Party" \t "See 13.3(a)" ”). The Indemnified Party shall give the other Party (the “Indemnifying Party XE "Indemnifying Party" \t "See 13.3(a)" ”) a prompt written notice (an “Indemnification Claim Notice XE "Indemnification Claim Notice" \t "See 13.3(a)" ”) of any Claims or discovery of fact upon which such Indemnified Party intends to base a request for indemnification under this ARTICLE 13 (Indemnification; Liability), but in no event shall the Indemnifying Party be liable for any Claims to the extent that such Claims result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the Claim and the nature and amount of such Claim (to the extent that the nature and amount of such Claim is known at such time).

(b) Control of Defense. The Indemnifying Party shall have the right to assume the defense of any Claim by giving written notice to the Indemnified Party within [***] days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify the Indemnified Party in respect of the Claim, nor shall it constitute a waiver by the Indemnifying Party of any defenses it may assert against the Indemnified Party’s claim for indemnification. Upon assuming the defense of a Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Claim any legal counsel selected by the Indemnifying Party; provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). In the event the Indemnifying Party assumes the defense of a Claim, upon the Indemnifying Party’s relevant notice the Indemnified Party shall immediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Claim. Should the Indemnifying Party assume the defense of a Claim, except as provided in Section 13.3(c) (Right to Participate in Defense), the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Claim unless specifically requested and approved in writing by the Indemnifying Party. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all reasonable and verifiable out-of-pocket costs and expenses (including attorneys’ fees and costs of suit) incurred by the Indemnifying Party in accordance with this ARTICLE 13 (Indemnification; Liability) in its defense of the Claim.

(c) Right to Participate in Defense. Any Indemnified Party shall be entitled to participate in the defense of such Claim and to employ counsel of its choice for such purpose; provided that such employment shall be at the Indemnified Party’s sole cost and expense unless (i) the employment thereof has been specifically authorized in writing in advance by the Indemnifying Party (in which case, the defense shall be controlled as provided in Section 13.3(b) (Control of Defense), with such provisions applying mutatis mutandis; (ii) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 13.3(b) (Control of Defense) (in which case the Indemnified Party shall control the defense, with the reasonable out-of-pocket expense with respect thereto borne by the Indemnifying Party); or (iii) the interests of the indemnitee and the Indemnifying Party with respect to such Claim are sufficiently adverse

to prohibit the representation by the same counsel of both Parties under Applicable Laws, ethical rules or equitable principles (in which case, the Indemnified Party shall control its defense, with the reasonable out-of-pocket expense with respect thereto borne by the indemnifying Party).

(d) Settlement. With respect to any Claims relating solely to the payment of money damages in connection with a Claim that shall not result in the applicable indemnitee(s) becoming subject to injunctive or other relief or otherwise adversely affect the business or interests of the Indemnified Party in any manner and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify the applicable indemnitee hereunder, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Claim, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Claims in connection with Claims, where the Indemnifying Party has assumed the defense of the Claim in accordance with Section 13.3(b) (Control of Defense), the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Claim; provided, it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). If the Indemnifying Party does not assume and conduct the defense of a Claim as provided above, the Indemnified Party may defend against such Claim; provided, that the Indemnified Party shall not settle any Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).

(e) Cooperation. If the Indemnifying Party chooses to defend or prosecute any Claim, the Indemnified Party shall and shall cause each indemnitee to, cooperate in the defense or prosecution thereof and furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the indemnifying Party in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Claim and making the Indemnified Party, the indemnitees and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and the indemnifying Party shall reimburse the Indemnified Party for all of its, its Affiliates’ and its and their Sublicensees’ or their respective directors’, officers’, employees’ and agents’, as applicable, reasonable and verifiable out-of-pocket expenses in connection therewith.

(f) Expenses. Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party and its Affiliates and its and their Sublicensees and their respective directors, officers, employees and agents, as applicable, in connection with any Claim shall be reimbursed on a Calendar Quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

13.4 Mitigation of Loss. Each Indemnified Party will take and will procure that its Affiliates take all such reasonable steps and action as are reasonably necessary or as the Indemnifying Party may reasonably require in order to mitigate any Claims (or potential losses or

damages) under this ARTICLE 13 (Indemnification; Liability). Nothing in this Agreement shall or shall be deemed to relieve any Party of any common law or other duty to mitigate any losses incurred by it.

13.5 Special, Indirect and Other Losses. EXCEPT IN THE EVENT OF A BREACH OF SECTION 2.6 (NON-DIVERSION) OR ARTICLE 10 (CONFIDENTIALITY; PUBLICATION), NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; provided, that this Section 13.5 shall not be construed to limit either Party’s indemnification obligations under Section 13.1 (Indemnification by Spero) or Section 13.2 (Indemnification by Pfizer), as applicable.

13.6 Insurance. Each Party, at its own expense, shall maintain product liability and other appropriate insurance (or self-insure) in an amount consistent with sound business practice and reasonable in light of its obligations under this Agreement during the Term. Each Party shall provide a certificate of insurance (or evidence of self-insurance) evidencing such coverage to the other Party upon request. Each Party further agrees to obtain and maintain, during the Term, commercial general liability insurance, including products liability insurance (or clinical trials insurance, if applicable), with minimum “A-” A.M. Best rated insurance carriers to cover its indemnification obligations under Section 13.1 or Section 13.2, as applicable, in each case with limits of not less than $[***] ([***] Dollars) per occurrence and in the aggregate. All deductibles and retentions will be the responsibility of the named insured. Pfizer and its Affiliates will be an additional insured on Spero’s commercial general liability and products liability policies (or clinical trials insurance, if applicable), and be provided with a waiver of subrogation. For U.S. exposures, additional insured status on Spero’s commercial general liability and products liability policies shall be via form CG20101185 or its equivalent. Products liability coverage shall be maintained for [***] years following termination of this Agreement. To the extent of its culpability or negligence, all coverages of Spero will be primary and non-contributing with any similar insurance, carried by Pfizer. Notwithstanding any provision of this Section 13.6 to the contrary, Pfizer may meet its obligations under this Section 13.6 through self-insurance. Neither Party’s insurance will be construed to create a limit of liability with respect to its indemnification obligations under this ARTICLE 13.

ARTICLE 14 GENERAL PROVISIONS

14.1 Governing Law. This Agreement shall be governed by and construed in accordance with the law of [***] without reference to conflicts of laws principles; provided that with respect to matters involving the enforcement of intellectual property rights, the Laws of the applicable country will apply. The provisions of the United Nations Convention on Contracts for the International Sale of Goods will not apply to this Agreement or any subject matter hereof.

14.2 Assignment.

(a) Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either Party without the prior

written consent of the other Party (which consent shall not be unreasonably withheld); provided that either Party may assign or otherwise transfer this Agreement and its rights and obligations hereunder without the other Party’s consent: (a) in connection with the transfer or sale of all or substantially all of the business or assets of such Party to which this Agreement relates to a Third Party, whether by merger, consolidation, divesture, restructure, sale of stock, sale of assets or otherwise; provided that in the event of any such transaction (whether this Agreement is actually assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse triangular merger)), intellectual property rights of the acquiring party to such transaction (if other than one of the Parties to this Agreement) and its Affiliates existing prior to the transaction shall not be included in the technology licensed hereunder; or (b) to an Affiliate, provided that the assigning Party shall remain liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate; and provided, further, that in any such case the assigning Party shall provide written notice to the other Party within [***] calendar days after such assignment or transfer. The rights and obligations of the Parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the Parties (except as otherwise expressly set forth herein), and the name of a Party appearing herein will be deemed to include the name of such Party’s successors and permitted assigns to the extent necessary to carry out the intent of this section. Any assignment not in accordance with this Section 14.2 (Assignment) shall be null and void.

(b) The rights to information, materials and intellectual property (y) Controlled by a Third Party permitted assignee of a Party that immediately prior to such assignment were Controlled by such Third Party (other than as a result of a license or other grant of rights, covenant or assignment by such Party or its Affiliates to, or for the benefit of, such Third Party); or (z) Controlled by an Affiliate of a Party that becomes an Affiliate through any Change of Control of such Party that were Controlled by such Affiliate (and not such Party) immediately prior to such Change of Control (other than as a result of a license or other grant of rights, covenant or assignment by such Party or its other Affiliates to, or for the benefit of, such Affiliate), shall, with respect to each of clauses (y) and (z) above, be automatically excluded from the rights licensed or granted to the other Party under this Agreement.

14.3 Entire Agreement; Modification. This Agreement is both a final expression of the Parties’ agreement and a complete and exclusive statement with respect to all of its terms. This Agreement supersedes all prior and contemporaneous agreements and communications, whether oral, written or otherwise, concerning any and all matters contained herein. No amendment, modification, release or discharge shall be binding on the Parties unless in writing and duly executed by authorized representatives of each of Spero and Pfizer. In the event of any inconsistencies between this Agreement and any schedules or other attachments hereto, the terms of this Agreement shall control.

14.4 Relationship among the Parties. The Parties’ relationship with one another, as established by this Agreement, is solely that of independent contractors. This Agreement does not create any partnership, joint venture or similar business relationship between the Parties. Neither Party is a legal representative of the other Party.

14.5 Non-Waiver. The failure of a Party to insist upon strict performance of any provision of this Agreement or to exercise any right arising out of this Agreement shall neither

impair that provision or right nor constitute a waiver of that provision or right, in whole or in part, in that instance or in any other instance. Any waiver by a Party of a particular provision or right shall be in writing, shall be as to a particular matter and, if applicable, for a particular period of time and shall be signed by such Party. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein.

14.6 Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than an obligation to make payments) when such failure or delay is caused by or results from events beyond the reasonable control of the non-performing Party, including fires, floods, earthquakes, hurricanes, embargoes, shortages, pandemics, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any governmental authority (including expropriation, seizure of works, requisition, nationalization, exercise of march-in rights or compulsory licensing, except to the extent such delay results from the breach by the non-performing Party or any of its Affiliates of any term or condition of this Agreement) and any material change in the Applicable Laws of a Regulatory Authority that results in a development, clinical or regulatory delay of [***] Business Days of more. The non-performing Party shall notify the other Party of such force majeure within [***] Business Days after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use Commercially Reasonable Efforts to remedy its inability to perform.

14.7 Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Laws. Spero hereby undertakes to use Commercially Reasonable Efforts to obtain necessary licenses (if required) for exporting the Compound, the Licensed Products and the Licensed Technology from the United States or other countries.

14.8 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby: (a) such provision shall be fully severable; (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance here from; and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable

provision as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by Applicable Laws, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid or unenforceable in any respect.

14.9 Notices. Any notice to be given under this Agreement must be in writing and delivered either (a) in person, (b) by air mail (postage prepaid) requiring return receipt, (c) by overnight courier, or (d) by e-mail with delivery and return receipts requested and confirmation of delivery thereafter, to the Party to be notified at its address(es) given below, or at any address such Party may designate by prior written notice to the other. Notice shall be deemed sufficiently given for all purposes upon the earliest of: (i) the date of actual receipt; (ii) if air mailed, [***] days after the date of postmark; (iii) if delivered by overnight courier, the next day the overnight courier regularly makes deliveries or (iv) if sent by e-mail, the date of confirmation of receipt.

If to Spero:

Spero Therapeutics, Inc.

675 Massachusetts Avenue, 14th Floor

Cambridge MA 02139

Attention: Ankit Mahadevia, President and CEO

Email: [***]

with a copy (which shall not constitute notice) to:

Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.

One Financial Center, 40th Floor

Boston, MA 02111

Attention: Lewis J. Geffen

Email: [***]

If to Pfizer:

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Attention: Debbie Baron, SVP Worldwide Business Development

Email: [***]

With a copy to (which shall not constitute notice):

Pfizer Inc.

235 East 42nd Street

New York, NY 1007

Attention: Andrew J. Muratore, Esq.

Email: [***]

14.10 Dispute Resolution.

(a) Except for Excluded Claims as set forth in subsection 14.10(g) below, if a dispute arises within the JDC with respect to any decision under the jurisdiction of such committee that remains unresolved pursuant to Section 3.2(d) (JDC Decision-Making), or otherwise between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (collectively, a “Dispute XE "Dispute" \t "See 14.10(a)" ”), then either Party shall have the right to refer such Dispute to the Executive Officers for attempted resolution by good faith negotiations during a period of [***] Business Days. Any final decision mutually agreed to in writing by the Executive Officers shall be conclusive and binding on the Parties.

(b) The Executive Officers shall negotiate in good faith and use reasonable efforts to settle any Dispute arising from or related to this Agreement or the breach thereof within such [***] Business-Day period. Subject to Section 14.10(h) (Dispute Resolution - subsection (h)), in the event the Executive Officers cannot fully resolve or settle such Dispute within such period, and a Party wishes to pursue the matter further (a “Complaining Party XE "Complaining Party" \t "See 14.10(b)" ”), each such Dispute that is not an Excluded Claim (defined in Section 14.10(g) (Dispute Resolution - subsection (g)) below) shall be finally resolved by binding arbitration under the [***] by three (3) arbitrators appointed in accordance with the said Rules and subsection (c) below, and judgment on the arbitration award may be entered in any court having jurisdiction thereof.

(c) Any arbitration hereunder shall be conducted by a panel of three (3) neutral arbitrators experienced in the pharmaceutical business, none of whom shall be a current or former employee or director, or a current stockholder, of either Party or any of their respective Affiliates or any Sublicensee. Within [***] days after initiation of arbitration by a Complaining Party, each Party shall select [***] person to act as arbitrator and the [***] Party-selected arbitrators shall select a [***] arbitrator within [***] days of their appointment. If the arbitrators selected by the Parties are unable or fail to agree upon the [***] arbitrator, the [***] arbitrator shall be appointed by the [***] in accordance with the then-current [***] rules, except as modified in this Agreement. The place of arbitration shall be in [***], and all proceedings and communications shall be in English. The decision or award rendered by the Arbitrators shall be final, binding, conclusive and non-appealable, and judgment may be entered upon it in accordance with Applicable Laws in the [***] or any other court of competent jurisdiction. Any arbitration commenced pursuant to this Section 14.10 will be conducted in accordance with the following rules:

(1) Within [***] days following the designation of the arbitrators, the Complaining Party shall serve, by immediate facsimile, upon the other Party (the “Defending Party XE "Defending Party" \t "See 14.10(c)(1)" ”) and the arbitrators, its factual and legal submission, together with all documents it wishes to be considered by the arbitrators, in support of its proposed resolution of the Dispute.

(2) Within [***] days following the service of the submission referred to in sub-subsection (1) above, the Defending Party shall serve, by immediate facsimile, upon the Complaining Party, its factual and legal submission together with all documents it wishes to be considered by the arbitrators, in support of its proposed resolution of the Dispute.

(3) Within [***] days after service of the Defending Party’s submission, either Party may request from the other Party any specifically identified document in the other Party’s possession which the requesting Party believes is relevant and important for the arbitrator to consider in deciding the Dispute. Within [***] days after receiving such request, the other Party shall either provide the requested documents or notify the requesting Party and arbitrators that it opposes the request or some part thereof, in which case the arbitrators shall hold a conference call with the Parties within [***] days, hear the Parties’ arguments, and decide and provide the Parties with a copy of a written decision, under the general principles followed in [***] proceedings, within [***] days, what documents must be provided. Within [***] days after such decision by the arbitrator, all documents required to be produced shall be delivered to the requesting Party. In the event of a Party’s failure to timely produce documents pursuant to the arbitrators’ ruling, the arbitrator shall have discretion to disallow or limit the claim or defense of that Party.

(4) Within [***] days after production of all documents by the Parties as provided for herein, the arbitrators shall request, by facsimile to the Parties, any further factual or legal information from the Parties that the arbitrators believe to be necessary to decide the matters in issue. The Parties shall provide such information to the arbitrators and to each other within [***] days of said request.

(5) Within [***] days after the completion of document production, the arbitrator shall hold a hearing at a location of the arbitrators’ choosing in [***]. The length of such hearing, the number of witnesses, the number of documents to be considered, and all other aspects of such hearing shall be determined by the arbitrator such that such hearing does not last for more than [***] days, including weekends.

(6) Within [***] days after the close of the hearing, either Party may submit to the arbitrators, with service upon the other, further written arguments based upon evidence heard at the hearing.

(7) Within [***] days after the close of the hearing, the arbitrators shall render their written decision, sent by facsimile to the Parties, on all issues submitted for decision. The arbitrators shall state briefly the facts and reasons for such decision.

(8) Within [***] days after receiving the decision, either Party may submit a request to the arbitrator, with service by facsimile on the other Party, for reconsideration of the decision, setting forth all factual and legal arguments in support of such request. Within [***] days thereafter, the other Party may submit to the arbitrator, with service by facsimile on the other Party, an opposition or other response to the request.

(9) Within [***] days after receipt of any such requests for reconsideration and responses thereto, the arbitrator shall render her/his decision as to such request and a final ruling on the merits of all claims heard in the arbitration. This decision will be final and binding upon the Parties as to all issues decided in the arbitration, subject only to judicial review under the Federal Arbitration Act.

(10) In addition to the specific powers and responsibilities set forth herein, the arbitrator shall have all powers and discretion customarily exercised in arbitrations under the Commercial Rules of the [***].

(d) Either Party may also apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that Party pending the arbitration award. The arbitrators’ authority to award punitive or any other type of damages not measured by a Party’s compensatory damages shall be subject to the limitation set forth in Section 13.5 (Special, Indirect and Other Losses). Each Party shall bear its own costs and expenses and attorneys’ fees and an equal share of the arbitrators’ fees and any administrative fees of arbitration.

(e) Except to the extent necessary to confirm or enforce an award or as may be required by law, neither Party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of the other Party. In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable [***] statute of limitations.

(f) The Parties further agree that:

(1) in the event of a dispute over the nature or quality of performance under this Agreement, neither Party may terminate this Agreement until final resolution of the dispute through arbitration or other judicial determination;

(2) any payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due;

(3) any disputed performance or suspended performances pending the resolution of the arbitration that the arbitrators determine to be required to be performed by a Party must be completed within a reasonable time period following the final decision of the arbitrator;

(4) any monetary payment to be made by a Party pursuant to a decision of the arbitrators shall be made in Dollars, free of any tax or other deduction; and

(5) the decision of the arbitrators shall be the sole, exclusive and binding remedy between them regarding determination of the matters presented to the arbitrator, subject only to judicial review under the Federal Arbitration Act.

(g) As used in this Section, the term “Excluded Claim XE "Excluded Claim" \t "See 14.10(g)" ” means a dispute, controversy or claim that concerns the construction, scope, validity, enforceability, inventorship or infringement of a patent, patent application, trademark or copyright.

(h) Nothing contained in this Agreement shall deny either Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing discussions between the Parties or any ongoing arbitration

proceeding. In addition, either Party may bring an action in any court of competent jurisdiction to resolve disputes pertaining to the construction, scope, validity, enforceability, inventorship or infringement of a patent, patent application, trademark or copyright, and no such claim shall be subject to arbitration pursuant to subsections (b) and (c) of this Section 14.10 (Dispute Resolution). Both Parties agree to waive any requirement that the other post a bond or other security as a condition for obtaining any such relief.

14.11 Performance by Affiliates. Each Party may discharge any obligations and exercise any rights hereunder through any of its Affiliates. Each Party shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement shall be deemed a breach by such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party’s Affiliate.

14.12 Headings. The captions to the several Articles, Sections and subsections hereof are not a part of this Agreement but are merely for convenience to assist in locating and reading the several Articles and Sections hereof.

14.13 Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

14.14 Business Day Requirements. In the event that any notice or other action or omission is required to be taken by a Party under this Agreement on a day that is not a Business Day then such notice or other action or omission shall be deemed to require to be taken on the next occurring Business Day.

14.15 English Language. This Agreement has been prepared in the English language, and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the Parties regarding this Agreement shall be in the English language.

14.16 No Benefit to Third Parties. Except as provided in ARTICLE 13 (Indemnification; Liability), the covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns and they shall not be construed as conferring any rights on any other Persons.

14.17 Further Assurances. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

14.18 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the

same instrument. Counterparts may be signed and delivered by facsimile or digital (e.g., PDF, DocuSign) file, each of which will be binding when received by the applicable Party.

{Remainder of page intentionally left blank}

IN WITNESS WHEREOF, the Parties intending to be bound have caused this License Agreement to be executed by their duly authorized representatives.

Pfizer Inc. Spero Therapeutics, Inc.

By: /s/ Deborah Baron By: /s/ Ankit Mahadevia

Name: Deborah Baron Name: Ankit Mahadevia

Title: SVP Worldwide Business Development Title: President and CEO

Exhibit A

Licensed Patents Existing as of the Effective Date

Case	Country	Mewburn Ref.	Proprietor	Status	Application No.	Application Date	Publication No.
[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
---	---	---	---	---	---	---	---
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
---	---	---	---	---	---	---
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]

Exhibit B: Spero Trademarks

JURISDICTION	[***]
SERIAL NUMBER	[***]
MARK INFORMATION
*MARK	[***]
STANDARD CHARACTERS	[***]
USPTO-GENERATED IMAGE	[***]
LITERAL ELEMENT	[***]
MARK STATEMENT	[***]
JURISDICTION	[***]
---	---
SERIAL NUMBER	[***]
MARK INFORMATION
*MARK	[***]
SPECIAL FORM	[***]
USPTO-GENERATED IMAGE	[***]
COLOR MARK	[***]
*DESCRIPTION OF THE MARK (and Color Location, if applicable)	[***]

Exhibit C: SPR206

Exhibit D: Initial Development Plan

[***]

MODULE 1.1 – COMPREHENSIVE TABLE OF CONTENTS

[***]

Each Triggering Event Notice will include the corresponding additional information set forth below:

Triggering Event	Additional information to accompany Triggering Event Notice
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

[***]

IF " DOCVARIABLE "SWDocIDLocation" 3" = "3" " DOCPROPERTY "SWDocID" 114893784v.2" "" 114893784v.2

EX-10.2

Exhibit 10.2

SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (this “Agreement”) dated as of June 30, 2021 (the “Effective Date”) is made by and between Spero Therapeutics, Inc., a Delaware corporation (the “Company”), and Pfizer Inc., a Delaware corporation (the “Purchaser”).

WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act; and

WHEREAS, Purchaser desires to purchase from the Company, and the Company desires to sell and issue to Purchaser, shares of the common stock of the Company, par value $0.001 per share, (“Common Stock”), subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration, the parties hereby agree as follows:

1. Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to Purchaser, and Purchaser agrees to purchase at the Closing (as defined below), 2,362,348 shares of Common Stock (the “Shares”) at a purchase price per share of $16.9323 for an aggregate purchase price of $39,999,985.04 (the “Purchase Amount”).

2. Closing; Deliveries.

a. Closing. The closing of the sale and purchase of the Shares (the “Closing”) shall take place on the Effective Date, remotely via the exchange of documents and signatures, or at such other date or location as may be agreed upon by the Company and Purchaser. The date the Closing occurs is hereinafter referred to as the “Closing Date”.

b. Deliveries.

i. At the Closing, Purchaser will deliver to the Company the Purchase Amount by wire transfer of immediately available funds to a bank account designated by the Company in writing at least three (3) business days prior to the Closing. Purchaser will also deliver to Company at the Closing: (A) a duly executed cross receipt in form and substance reasonably satisfactory to each party (the “Cross Receipt”); and (B) a certificate in form and substance reasonably satisfactory to the Company duly executed by an authorized executive officer of Purchaser certifying that the conditions to Closing set forth in Section 5(b) of this Agreement have been fulfilled.

ii. At the Closing, the Company will instruct the transfer agent for the shares of Common Stock (the “Transfer Agent”) to register the issuance of the Shares to the Purchaser via book-entry or, upon the request of the Purchaser, the Company will instruct the Transfer Agent to deliver stock certificates to the Purchaser representing the Shares. The Company will also deliver to Purchaser at the Closing: (A) a duly executed Cross Receipt; (B) a certificate in form and substance reasonably satisfactory to Purchaser and duly executed on behalf of the Company by an authorized executive officer of the Company, certifying that the conditions to Closing set forth in Section 5(a) of this Agreement have been fulfilled; (C) a legal opinion of Company’s counsel in form and substance reasonably satisfactory to

Purchaser; (D) a certificate of the secretary of the Company dated as of the Closing Date certifying that attached thereto is a true and complete copy of all resolutions adopted by the Board of Directors of the Company authorizing the execution, delivery and performance of the Transaction Agreements and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by the Transaction Agreements as of the Closing Date and (E) a copy of Company’s irrevocable instructions to its Transfer Agent for the Common Stock instructing such Transfer Agent to register the issuance of the Shares to the Purchaser via book-entry or, upon the request of the Purchaser, to deliver the stock certificates to the Purchaser representing the Shares.

3. Representations and Warranties of the Company. The Company represents and warrants to Purchaser that the statements contained in this Section 3 are true and complete as of the Effective Date and the Closing Date:

c. Organization; Qualification and Good Standing.

iii. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate (as applicable) its properties and assets, to carry on its business as presently conducted and as proposed to be conducted in the Company’s SEC Reports (as defined below), to enter into this Agreement and the License Agreement entered into by the Company and Purchaser of even date herewith (the “License Agreement”, and collectively, the “Transaction Agreements”), to issue and sell the Shares and to carry out the transactions contemplated by the Transaction Agreements. The Company is duly qualified to transact business as a foreign entity and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except to the extent that any failure to be so qualified or in good standing would not (x) have, singularly or in the aggregate, or reasonably be expected to have, a material adverse effect on the business (as presently conducted or as proposed to be conducted in the Company’s SEC Reports), clinical or pre-clinical programs, properties, assets, liabilities, management, financial condition, stockholders’ equity, results of operations or prospects of the Company and its subsidiaries taken as a whole, or (y) impair in any material respect the ability of the Company to perform its obligations under the Transaction Agreements or to consummate any transactions contemplated by the Transaction Agreements (any such effect as described in clauses (x) or (y), a “Material Adverse Effect”).

iv. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in the Company’s SEC Reports. Each of the Company’s “subsidiaries” (for purposes of this Agreement, as defined in Rule 405 under the Securities Act) has been duly incorporated or organized, as the case may be, and is validly existing as a corporation or company in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite power and authority (corporate or other) to own, lease and operate (as applicable) its properties and assets, to carry on its business as presently conducted and as proposed to be conducted in the Company’s SEC Reports. Each of the Company’s subsidiaries is duly qualified as a foreign corporation or company to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except to the extent that any failure to be so qualified or in good standing would not have a Material Adverse Effect or a material adverse effect on the business, properties, assets, liabilities, management, financial condition, stockholders’ equity, results of operations or prospects of any of the Company’s subsidiaries.

d. No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in violation of its charter or by-laws (or analogous governing instrument, as applicable), (ii) in default in any respect in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument, whether written or oral, to

which it is a party or by which it is bound or to which any of its property or assets is subject or (iii) in violation in any respect of any law, statute, rule, regulation, ordinance, writ, injunction, Permit (as defined below), judgment, order or decree of any court or governmental or regulatory agency or body, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets (including, without limitation, the United States Food and Drug Administration of the U.S. Department of Health and Human Services (“FDA”) or any foreign, federal, state or local governmental or regulatory authority or any self-regulatory organizations performing functions similar to those performed by the FDA) (collectively, “Laws”) except, in the case of clauses (ii) and (iii) above, for any such violation or default that would not, singularly or in the aggregate, have a Material Adverse Effect. There exists no condition, event or act which after notice, lapse of time, or both, would constitute a default or violation by the Company under any of the foregoing, except, in the case of clauses (ii) and (iii) as would not have a Material Adverse Effect.

e. Absence of Certain Events. Since March 31, 2021, (i) the Company and each of its subsidiaries has conducted its business operations in the ordinary course of business consistent with past practice and (ii) there have been no events, occurrences or developments, or any binding commitment by the Company or its subsidiaries that have had a Material Adverse Effect. Except as set forth in the SEC Reports filed prior to the Effective Date, since March 31, 2021, the Company has not (A) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, or (B) sold, exchanged or otherwise disposed of any of its material assets or rights. Since March 31, 2021, the Company has not admitted in writing its inability to pay its debts generally as they become due, filed or consented to the filing against it of a petition in bankruptcy or a petition to take advantage of any insolvency act, made an assignment for the benefit of creditors, consented to the appointment of a receiver for itself or for the whole or any substantial part of its property, or had a petition in bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other laws of the United States or any other jurisdiction.

f. Capitalization. As of the Effective Date, the authorized capital of the Company consists of: (i) 60,000,000 shares of Common Stock, (x) 29,665,165 of which were issued and outstanding, (y) 520,302 shares were available for future issuance pursuant to the Company’s stock-based compensation plans and (z) 4,557,015 shares were issuable upon the exercise of stock options outstanding and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share, 3,218,152 of which were issued and outstanding and which are convertible into an aggregate of 6,367,000 shares of Common Stock, subject to the terms and conditions applicable thereto. All of the issued and outstanding capital shares of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All of the Company’s options, warrants and other rights to purchase or exchange any securities for shares of the Company’s capital stock have been duly authorized and validly issued and were issued in compliance with federal and state securities laws. None of the outstanding shares of the Company’s capital stock was issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. Except as set forth in this Section 3(d), as of the Effective Date there are no authorized or outstanding shares of capital stock, options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries. All of the authorized shares of Common Stock are entitled to one (1) vote per share. Neither the Company nor any of its subsidiaries owns or holds the right to acquire any stock, partnership, interest, joint venture interest or other equity interest in any individual, partnership, limited liability company, firm, corporation, trust, unincorporated organization, government or any department or agency thereof or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act (as defined below) (any of the foregoing, a “Person”).

g. Capitalization of Subsidiaries. Except as described in the SEC Reports, all the outstanding shares of capital stock (if any) of each subsidiary of the Company have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the Company directly or indirectly through one or more wholly-owned subsidiaries, free and clear of any pledge, claim, lien, encumbrance, mortgage, security interest, restriction upon voting or transfer or any other claim, including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights.

h. Authorization of Shares. The Shares, when issued and delivered in accordance with the terms of this Agreement against payment of the Purchase Amount as provided herein, will be duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, claim, lien, encumbrance, mortgage, security interest, restriction upon voting or transfer or any other claim, including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights.

i. Authorization; Due Execution; Enforceability. The Company has full legal right, power and authority to enter into the Transaction Agreements and perform the transactions contemplated hereby and thereby. All requisite corporate action on the part of the Company and its subsidiaries, and their respective directors and shareholders required by applicable Laws for the authorization, execution and delivery by the Company and its subsidiaries of the Transaction Agreements and the performance of all obligations of the Company and its subsidiaries hereunder and thereunder, including the authorization, issuance and delivery of the Shares, has been taken. The Transaction Agreements have been duly authorized, executed and delivered by the Company and are legal, valid and binding agreements of the Company enforceable in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general equitable principles. No stop order or suspension of trading of the Common Stock has been imposed by The Nasdaq Stock Market LLC, the Commission or any other governmental authority and remains in effect.

j. SEC Reports; Financial Statements; Internal Accounting Controls.

v. The Company has timely filed all forms, reports and documents required to be filed by it with the Commission. All such required forms, reports and documents are referred to in this Agreement as the “SEC Reports.” As of their respective filing dates, each of the SEC Reports (i) complied in all material respects with the requirements of the Securities Act, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission thereunder applicable to such SEC Reports and (ii) did not at the time they were filed, declared effective or mailed, as applicable (or if subsequently amended or superseded by a filing prior to the Effective Date, then on the date of such subsequent filing), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of the Effective Date, there are no outstanding or unresolved comments in comment letters received from the Commission or its staff and the Company has not been notified that any of the SEC Reports is the subject of ongoing Commission review or outstanding investigation. None of the Company’s subsidiaries is subject to the periodic reporting requirements of the Exchange Act.

vi. The financial statements of the Company included in the SEC Reports when filed complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, have been prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) (“GAAP”) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended. Except (i) as set forth in the SEC Reports or (ii) for liabilities incurred in the ordinary

course of business subsequent to the date of the most recent balance sheet contained in the SEC Reports, the Company has no material liabilities, whether absolute or accrued, contingent or otherwise.

vii. The Company is in compliance in all material respects with the requirements of the Sarbanes-Oxley Act of 2002, including the rules and regulations of the Commission promulgated thereunder, applicable to it as of the date hereof. As of the Effective Date, the Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

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k. No Consents. No authorization, consent, approval or other order of, declaration to, or filing with, any governmental agency or body or securities exchange or any other third party is required to be made or obtained by the Company in connection with the consummation of the transactions contemplated by the Transaction Agreements, or with the authorization, issuance and sale by the Company of the Shares, except such filings as may be required to be made with the Commission and with any state blue sky or securities regulatory authority, which filings shall be made in a timely manner in accordance with all applicable Laws.

l. No Conflicts. The execution, delivery and performance of the Transaction Agreements by the Company, the offering or sale of the Shares by the Company and the consummation of the transactions contemplated by the Transaction Agreements will not (with or without notice or lapse of time or both) (i) conflict with or result in a breach or violation of any of the terms or provisions of, constitute a default or a Repayment Event (as defined below) under, or result in the creation or imposition of any lien, encumbrance, security interest, claim or charge upon any property or assets of the Company or any subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement, lease or other agreement, arrangement or instrument, whether written or oral, to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws (or analogous governing instruments, as applicable) of the Company or any of its subsidiaries or (iii) result in the violation of any Laws, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any Person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

m. No Right of First Refusal; Voting Rights. No party has any right of first refusal, right of first offer, right of co-sale, pre-emptive right or other similar right regarding the securities of the Company or other agreements pursuant to which the Company is or may become obligated to issue, sell or repurchase any shares of its capital stock or any other securities of the Company. Except as described in

the SEC Reports, no party has any registration rights regarding the securities of the Company. There are no provisions of the Company’s Certificate of Incorporation, and no contracts, other than this Agreement, that (a) may affect or restrict the voting rights of Purchaser with respect to the Shares in its capacity as a shareholder of the Company, (b) restrict the ability of Purchaser, or any successor thereto or assignee or transferee thereof, to transfer the Shares, (c) would adversely affect the Company’s or Purchaser’s right or ability to consummate the transactions contemplated by the Transaction Agreements, or (d) require the vote of more than a majority of the Company’s issued and outstanding shares of Common Stock to take or prevent any corporate action, other than those matters requiring a different vote under Delaware law and that are described in the SEC Reports. There are no restrictions on the transfer of shares of the Company’s capital stock other than pursuant to state and federal securities laws. The Company is not a party to or subject to any agreement or understanding relating to the voting of shares of the Company’s capital stock or the giving of written consents by a shareholder or director of the Company.

n. Independent Accountants. The accountants who certified the financial statements and supporting schedules included in the SEC Reports are independent public accountants with respect to the Company as required by the Securities Act and Exchange Act, and the rules and regulations promulgated thereunder, and the Public Company Accounting Oversight Board.

o. Absence of Litigation. There is no claim, action, suit, arbitration or similar proceeding or, to the knowledge of the Company, investigation, pending against, or to the knowledge of the Company, threatened against or affecting, the Company, any of its subsidiaries, or any of their respective properties or, to the knowledge of the Company, any of their respective officers or directors, including any such claim, action, suit, arbitration or similar proceeding, or investigation that questions the validity of the Transaction Agreements or the right of the Company to consummate the transactions contemplated in the Transaction Agreements.

p. Possession of Intellectual Property; Patents and Patent Applications. The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent applications, patent rights, licenses, inventions, copyrights, know‑how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, domain names, technology or other intellectual property (collectively, “Intellectual Property”) necessary for the conduct of their respective businesses as currently conducted and as currently proposed to be conducted as disclosed in the SEC Reports, now operated by them, and neither the Company nor any of its subsidiaries has received any notice of any pending or, to the knowledge of Company, threatened, action, suit, proceeding or claim by others challenging the Company’s or its subsidiaries’ rights in or to any such Intellectual Property or is otherwise aware of any infringement, misappropriation, violation of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. To the Company’s knowledge, no employee of the Company or its subsidiaries is in or has ever been in violation of the term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment or actions undertaken by the employee while employed with the Company or its subsidiaries, except as such violation would not result in a Material Adverse Effect. All patents and patent applications owned by or licensed to the Company or its subsidiaries, under which the Company or its subsidiaries, has rights have, to the knowledge of the Company, been duly and properly filed and maintained. To the Company’s knowledge, the parties prosecuting such applications have complied with their duty of candor and disclosure to U.S. Patent and Trademark Office (the “USPTO”) in connection with such applications; and the Company is not aware of any facts required to be disclosed

to the USPTO that were not disclosed to the USPTO and which would preclude the grant of a patent in connection with any such application or would reasonably be expected to form the basis of a finding of invalidity with respect to any patents that have issued with respect to such applications.

q. Taxes. The Company and its subsidiaries each (i) have timely filed all required federal, state, local and foreign tax returns, and all such returns were true, complete and correct, (ii) have paid all federal, state, local and foreign taxes due and payable, for which it is liable, including, without limitation, all sales and use taxes and all taxes which the Company or any of its subsidiaries is obligated to withhold from amounts owing to employees, creditors and third parties, and (iii) do not have any tax deficiency or claims outstanding or assessed or, to its knowledge, proposed against any of them, except those, in each of the cases described in clauses (i), (ii) and (iii) above, that would not, singularly or in the aggregate, have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its subsidiaries in respect of any tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional tax for any years not finally determined, except to the extent of any inadequacy that would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the United States Internal Revenue Code of 1986, as amended (the “Code”). Neither the Company nor any of its subsidiaries is or has been a party to any “listed transaction” as defined in Section 6707A(c)(2) of the Code and U.S. Treasury Regulation § 1.6011-4(b)(2).

r. Environmental Laws. Except as described in the SEC Reports or would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and its subsidiaries have all permits, authorizations and approvals required for their operations under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the knowledge of the Company, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) to the knowledge of the Company there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or Governmental Entity, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws.

s. No Undisclosed Material Liabilities. There are no liabilities of the Company (including its subsidiaries) of the type required to be disclosed on a balance sheet prepared in accordance with GAAP, other than liabilities: (i) reflected in the financial statements (including footnotes thereto) included in the SEC Reports, (ii) created under, or incurred in connection with, this Agreement or (iii) incurred in the ordinary course consistent with past practice.

t. Finder’s Fees. Neither the Company nor any of the subsidiaries has incurred any liability for any finder’s fees, brokerage commissions or similar payments in connection with the transactions contemplated under the Transaction Agreements.

u. Listing. The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and is listed on The Nasdaq Global Select Market, and the Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from The Nasdaq Global Select Market, nor has the Company received any notification that the Commission, the Financial Industry Regulatory Authority or The Nasdaq Stock Market LLC is contemplating terminating such registration or listing. Except as set forth in the SEC Reports, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

v. No Integrated Offering. The Company has not, directly or through any agent, sold, offered for sale or solicited offers to buy any “security” (as defined in the Securities Act), or negotiated in respect of any of the foregoing, under any circumstances that would cause the offering of the Shares to be integrated with prior offerings by the Company for purposes of any applicable Laws or shareholder approval provisions.

w. Private Placement. Assuming the accuracy of the representations and warranties of the Purchaser set forth in Section 4, and in reliance thereon, the offer, sale and issuance of the Shares to the Purchaser as contemplated hereby is exempt from the registration requirements of the Securities Act and from the qualification or registration requirements of applicable state securities laws. Neither the Company, nor its subsidiaries nor any Person acting on behalf of the Company or its subsidiaries, has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Shares under the Securities Act, and neither the Company, nor its subsidiaries nor any Person acting on behalf of the Company or its subsidiaries will take any such action.

x. Investment Act. The Company is not, and immediately after receipt of payment for the Shares, will not be an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

y. Licenses and Other Rights; Compliance with Laws. The Company and its subsidiaries (as applicable) have all franchises, permits, licenses and other rights and privileges (“Permits”) necessary to permit them to own or lease their properties and to conduct their business as presently conducted and are in compliance thereunder, except where the failure to be in compliance does not and would not have a Material Adverse Effect. To the Company’s knowledge, neither the Company nor its subsidiaries have taken any action that would interfere with the Company’s or its subsidiaries’ ability to renew all such Permit(s), except where the failure to renew such Permit(s) would not have a Material Adverse Effect. The Company and its subsidiaries are and have been in compliance with all Laws applicable to their business, properties and assets, and to the products and services sold by them, except where the failure to be in compliance does not and would not have a Material Adverse Effect. The Company and its subsidiaries have made all material filings and obtained all such material approvals as may be required by the FDA or any committee thereof or by any other U.S. or foreign drug regulatory agency, or health care facility institutional review board (collectively “Regulatory Agencies”), to conduct their business as presently conducted, and the Company and its subsidiaries have operated and currently are in compliance in all material respects with all applicable rules and regulations of the Regulatory Agencies.

Neither the Company nor any of its subsidiaries has received any written notification of any pending or threatened action, suit, or investigation from any Regulatory Agency.

z. Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any Governmental Entity involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

aa. Insurance. The Company and its subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute and comparable size engaged in the same or similar business, and all such insurance is in full force and effect. The Company has no reason to believe that it or any of its subsidiaries will not be able (A) to renew its existing insurance coverage as and when such policies expire or (B) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect. Neither of the Company nor any of its subsidiaries has been denied any insurance coverage which it has sought or for which it has applied. Neither the Company nor its subsidiaries is in breach or default of any of their insurance policies, and neither the Company nor its subsidiaries has taken any action or failed to take any action that, with notice or lapse of time, would constitute a material breach or default, or permit termination or modification of any of such policies. The Company and its subsidiaries have not received any written notice of cancellation or threatened cancellation of any of their insurance policies or of any material claim pending regarding the Company or any of its subsidiaries as to which coverage has been questioned, denied or disputed by the underwriters of such policies.

bb. No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any of its controlled Affiliates (as defined below) or subsidiaries or any director, officer, manager, employee, agent, affiliate, representative or other Person acting on behalf of the Company or any controlled Affiliate or subsidiary (collectively, “Representatives”), has (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to foreign or domestic government officials or employees, political parties or campaigns, political party officials, or candidates for political office from corporate funds, (iii) promised, authorized, made any payment to, or otherwise contributed any item of value to, directly or indirectly, any non-U.S. government official, in each case, in violation of the U.S. Foreign Corrupt Practices Act (“FCPA”) or any other applicable anti-bribery or anti-corruption law or (iv) made any other unlawful bribe, rebate, payoff, influence payment, kickback, or other unlawful payment to any Person. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company and its subsidiaries to comply in all material respects with the FCPA or any other applicable anti-bribery or anti-corruption law.

cc. OFAC. None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or representative of the Company or any of its subsidiaries is a Person currently the subject or target of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company located, organized or resident in a country or territory that is the subject of Sanctions; and the Company will not directly or indirectly use the proceeds of the sale of the Shares, or lend, contribute or otherwise make available such

proceeds to any subsidiaries, joint venture partners or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. Within the last five (5) years, to the knowledge of the Company, neither the Company nor its subsidiaries has been the subject of any governmental investigation or inquiry regarding compliance with Sanctions nor has it been assessed any fine or penalty in regard to compliance with Sanctions.

dd. Related Party Transactions. The Company has not entered into any agreements with any shareholders or any transactions with “affiliates” (as defined in Rule 12b-2 under the Exchange Act) (“Affiliates”), except as specifically disclosed in the SEC Reports.

ee. Privacy Laws. The Company and its subsidiaries are, and at all prior times were, in material compliance with all applicable data privacy and security laws and regulations, including, without limitation, U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009; and the Company and its subsidiaries have taken all necessary actions to comply with the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively, “Privacy Laws”). To ensure compliance with the Privacy Laws, the Company and its subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling and analysis of Personal Data (the “Policies”). The Company provides accurate notice of its Policies to its customers, employees, third party vendors and representatives. The Policies provide accurate and sufficient notice of the Company’s then-current privacy practices relating to its subject matter and such Policies do not contain any material omissions of the Company’s then-current privacy practices. “Personal Data” means (i) a natural persons’ name, street address, telephone number, email address, photograph, social security number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) Protected Health Information as defined by HIPAA; (iv) “personal data” as defined by GDPR; and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. None of such disclosures made or contained in any of the Policies have been inaccurate, misleading, deceptive or in violation of any Privacy Laws or Policies in any material respect. The execution, delivery and performance of this Agreement or any other agreement referred to in this Agreement will not result in a breach of any Privacy Laws or Policies. Neither the Company nor any of its subsidiaries, (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposed any obligation or liability under any Privacy Law.

ff. IT Systems. To the knowledge of the Company, there has been no security breach or attack or other compromise of or relating to any of the Company’s and its subsidiaries’ information technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of them), equipment or technology (“IT Systems and Data”). The Company and its subsidiaries have (i) not been notified of, and have no knowledge of any event or condition that would reasonably be expected to result in any security breach, attack or compromise to their IT Systems and Data, (ii) complied, and are presently in compliance with, all applicable Laws or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized

use, access, misappropriation or modification, except as would not, in the case of this clause (ii), individually or in the aggregate, have a Material Adverse Effect on the Company, and (iii) implemented backup and disaster recovery technology consistent with industry standards and practice.

gg. Property; Title to Assets. Neither the Company nor its subsidiaries own any real property. Except as would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, (i) the Company and each of its subsidiaries has the right to use or occupy the Leased Real Property (defined below) under valid and binding leases and (ii) the Company and its subsidiaries have good and valid title to, or a valid license to use or leasehold interest in, all of their respective material tangible assets, free and clear of all liens. “Leased Real Property” means all leasehold or subleasehold estates and all other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company or its subsidiaries pursuant to any lease. The Company and its subsidiaries have good and marketable title in fee simple to, or have valid and marketable rights to lease or otherwise use, all real property and all personal property that is material to the business of the Company and the subsidiaries, in each case free and clear of all liens.

hh. Contracts. Except as would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of its subsidiaries is in violation, default or breach under any of its Material Contracts (defined below). All Material Contracts required to be filed with the SEC Reports have been timely filed. “Material Contracts” means any contract entered into by the Company or any of its subsidiaries that is required under the Exchange Act to be filed as an exhibit to any SEC Reports pursuant to Item 601(b)(10) of Regulation S-K.

ii. Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or any such subsidiary, and neither the Company nor any of its subsidiaries is a party to a collective bargaining agreement, and the Company and its subsidiaries believe that their relationship with their employees is good. To the knowledge of the Company, no executive officer of the Company or any subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its subsidiaries to any liability with respect to any of the foregoing matters. The Company and its subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

jj. Tests and Preclinical and Clinical Trials. The studies, tests and preclinical and clinical trials conducted by, or, to the knowledge of the Company on behalf of the Company, were and, if still ongoing, are being conducted in all material respects in accordance with experimental protocols, procedures and controls pursuant to accepted professional scientific standards and all Permits and applicable Laws including, as applicable, without limitation, the Federal Food, Drug and Cosmetic Act of 1938, as amended, and the rules and regulations promulgated thereunder; the descriptions of the results of such studies, tests and trials contained in the SEC Reports are, to the Company’s knowledge, accurate and complete in all material respects and fairly present the data derived from such studies, tests and trials, except to the extent disclosed in the SEC Reports. Except to the extent disclosed in the SEC Reports, (i) the Company is not aware of any studies, tests or trials, the results of which the Company believes reasonably call into question the study, test, or trial results described or referred to in the SEC Reports when viewed in the context in which such results are described and the clinical state of development; and (ii) the Company

has not received any notices or correspondence from the FDA, any Regulatory Agencies or any other governmental authorities requiring the termination or suspension of any studies, tests or preclinical or clinical trials conducted by or on behalf of the Company, other than ordinary course communications with respect to modifications in connection with the design and implementation of such trials.

4. Representations and Warranties of Purchaser. Purchaser represents and warrants to the Company that the statements contained in this Section 4 are true and complete as of the Effective Date and the Closing Date:

kk. Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted, to enter into the Transaction Agreements and to carry out the transactions contemplated by the Transaction Agreements.

ll. Authorization; Due Execution; Enforceability. Purchaser has full legal right, power and authority to enter into the Transaction Agreements and perform the transactions contemplated hereby and thereby. All requisite corporate action on the part of Purchaser and its directors and shareholders required by applicable Laws for the authorization, execution and delivery by Purchaser of the Transaction Agreements and the performance of all obligations of Purchaser hereunder and thereunder has been taken. The Transaction Agreements have been duly authorized, executed and delivered by Purchaser and are legal, valid and binding agreements of Purchaser enforceable in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.

mm. No Current Ownership in the Company. Other than the Shares acquired under this Agreement, none of Purchaser or any of its direct or indirect subsidiaries owns any shares of Common Stock or other securities of the Company or any direct or indirect rights or options to acquire any such securities or any securities convertible into such securities (collectively, “Company Securities”), provided that Purchaser or its direct or indirect subsidiaries may own shares or other ownership interests in Company indirectly through holdings in mutual or investment funds or similar entities for which Purchaser and its direct and indirect subsidiaries do not exercise control over the management or policies, which mutual or investment funds or similar entities own shares of Common Stock or other securities of the Company.

nn. Accredited Investor. Purchaser is an “accredited investor” as such term is defined in Rule 501 promulgated under the Securities Act.

oo. Purchase for Investment. Purchaser is acquiring the Shares for its own account, for investment and not for, with a view to, or in connection with, any distribution or public offering thereof within the meaning of the Securities Act. Purchaser has not been organized solely for purposes of acquiring the Shares.

pp. Knowledge and Experience; Economic Risk. Purchaser has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares to be purchased hereunder, is capable of protecting its interest in connection with the transactions contemplated by this Agreement and is able to bear the economic risk of the investment in the Shares, including a complete loss of the investment.

qq. Access to Information. Purchaser acknowledges that it has had the opportunity to review the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, the Company concerning the terms and conditions of the offering

of the Shares and the merits and risks of investing in the Shares and (ii) access to information about the Company and its financial condition, results of operations, business, properties and management sufficient to enable Purchaser to evaluate its investment. However, neither such inquiries nor any investigation conducted by or on behalf of Purchaser or its representatives or counsel will modify, amend or affect Purchaser’s right to rely on the truth, accuracy and completeness of the SEC Reports and the Company’s representations and warranties contained in the Transaction Agreements.

5. Conditions to Closing.

rr. Purchaser’s Conditions to Closing. Purchaser’s obligation to purchase the Shares at the Closing is subject to the fulfillment as of the Closing of the following conditions (unless waived in writing by Purchaser):

viii. Each of the representations and warranties of the Company contained in Section 3 shall be true and accurate in all respects.

ix. All covenants and agreements contained in this Agreement to be performed or complied with by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects.

x. The Company shall have duly executed and delivered to Purchaser the License Agreement, and there shall have been no termination of the License Agreement that, as of the Closing, has been delivered or is effective.

xi. From and after the Effective Date until the Closing Date (if later), there shall have occurred no event that has caused or would reasonably be expected to cause a Material Adverse Effect.

xii. All closing deliverables as required under Section 2(b)(ii) shall have been delivered to Purchaser.

xiii. No assessment, award, decision, judgment, ruling, order or verdict entered, issued, made or rendered by any court or other governmental authority shall be in effect preventing the consummation of the transactions contemplated by the Transaction Agreements.

ss. The Company’s Conditions to Closing. The Company’s obligation to issue and sell the Shares at the Closing is subject to the fulfillment as of the Closing of the following conditions (unless waived in writing by the Company):

xiv. Each of the representations and warranties of Purchaser contained in Section 4 shall be true and accurate in all respects.

xv. All covenants and agreements contained in this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects.

xvi. Purchaser shall have duly executed and delivered to the Company the License Agreement, and there shall have been no termination of the License Agreement that, as of the Closing, has been delivered or is effective.

xvii. All closing deliverables as required under Section 2(b)(i) shall have been delivered to the Company.

xviii. No assessment, award, decision, judgment, ruling, order or verdict entered, issued, made or rendered by any court or other governmental authority shall be in effect preventing the consummation of the transactions contemplated by the Transaction Agreements.

6. Additional Covenants and Agreements of the Company and Purchaser.

tt. Lock-Up.

Purchaser agrees that it will hold and will not sell any of the Shares (or otherwise make any short sale of, grant any option for the purchase of or enter into any hedging or similar transaction with the same economic effect as a sale of the Shares) until the one (1) year anniversary of the Closing Date (the “Holding Period”). Notwithstanding the foregoing, this Section 6(b) will not preclude, and Purchaser shall be permitted to transfer any portion or all of its Shares at any time under, the following circumstances: (i) transfers to any Affiliate, but only if the transferee agrees in writing for the benefit of the Company to be bound by the terms of this Agreement; (ii) transfers that have been approved in writing by the Company; (iii) if, following the Closing Date, (A) Purchaser exceeds 20% ownership of Company’s securities solely as a result of an action taken by the Company and (B) as a result of clause (A), Purchaser’s auditors determine that Company’s financial results must be consolidated with Company’s in Purchaser’s financial statements pursuant to the principles of consolidation under GAAP, transfers made in order to reduce Purchaser’s ownership of the Company’s voting securities to the greater of (y) 19.99% and (z) such amount as would not require such consolidation under GAAP; and (iv) sales of Shares by the Purchaser to a third party pursuant to a bona fide tender offer made by such third party for outstanding shares of Common Stock.

uu. Restrictions on Transfer.

xix. Purchaser acknowledges and agrees that (A) the issuance and sale of the Shares has not been, and will not be, registered under the Securities Act or any state securities law, by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act and such rules and regulations thereunder, (B) the Shares may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws, and (C) the certificate(s) for the Shares shall bear a legend as set forth in Section 6(b)(ii) (unless and until such legend is removed in accordance with Section 6(b)(iii)), and (D) appropriate stop transfer instructions may be issued against any transfer of the certificate(s) for the Shares in violation of this Section 6(b). Purchaser further understands that such exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent expressed in this Agreement.

xx. It is understood that the certificate(s) or book-entry position evidencing the Shares shall bear the following legend (or substantially similar legends) or stop order instructions, in the case of a book-entry position, until the time set forth in Section 6(b)(iii):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE “BLUE SKY” LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED

UNLESS THE REGISTRATION, QUALIFICATION AND FILING REQUIREMENTS OF ALL APPLICABLE JURISDICTIONS HAVE BEEN SATISFIED OR THE COMPANY HAS RECEIVED A CERTIFICATE AND/OR AN OPINION OF COUNSEL THAT THE PROPOSED TRANSACTION WILL BE EXEMPT FROM REGISTRATION, QUALIFICATION, AND FILINGS IN ALL SUCH JURISDICTIONS.”

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND CONDITIONS OF A STOCK PURCHASE AGREEMENT DATED JUNE 30, 2021, A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE.”

xxi. Purchaser may request that the Company shall authorize the removal of the restrictive legends and stop transfer instructions described in Section 6(b)(ii), and the Company agrees to authorize and instruct (including by causing any required legal opinion to be provided) the removal of any legend from the Shares, if permitted by applicable securities law, within two (2) business days of any such request; provided, however, each party will be responsible for any fees it incurs in connection with such request and removal.

vv. FCPA Compliance. The Company shall not, and shall not permit any of its controlled Affiliates or subsidiaries or any of its or their respective Representatives to, promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, any non-U.S. government official, in each case, in violation of the FCPA or any other applicable anti-bribery or anti-corruption law. The Company shall, and shall cause each of its controlled Affiliates and subsidiaries to, cease all of its or their respective activities, as well as remediate any actions taken by the Company, its controlled Affiliates or any of its or their respective Representatives, in violation of the FCPA or any other applicable anti-bribery or anti-corruption law. The Company shall, and shall cause each of its controlled Affiliates and subsidiaries to, maintain systems or internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA or any other applicable anti-bribery or anti-corruption law.

7. Miscellaneous.

ww. Fees and Expenses. Each party to this Agreement shall bear all of its own fees and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including all fees of such party’s legal counsel.

xx. Survival. The representations and warranties of the parties contained in this Agreement shall survive the Closing for a period of three (3) years.

yy. Entire Agreement. This Agreement and the License Agreement (including any schedule or exhibits thereto) contain the entire agreement among the parties with respect to the transactions contemplated hereby and thereby and supersede all prior negotiations, commitments, agreements and understandings among them, whether written or oral, with respect thereto.

zz. Notices. All notices, requests, consents and other communications hereunder to any party shall be contained in a written instrument addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor, and shall be deemed given (i) when delivered in person, (ii) five (5) days after being duly sent by first class mail postage

prepaid, or (iii) the next business day after being duly sent by Federal Express or other recognized express international courier service:

if to the Company, to:

Spero Therapeutics, Inc.

675 Massachusetts Avenue, 14th Floor

Cambridge MA 02139

Attention: Tamara Joseph, Esq., Chief Legal Officer

Email: tjoseph@sperotherapeutics.com

with a copy (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

One Financial Center

Boston, MA 02111

Attn: Mathew J. Gardella, Esq. and Lewis J. Geffen, Esq.

Email: mgardella@mintz.com; ljgeffen@mintz.com

if to Purchaser, to:

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Attention: Senior Vice President, Worldwide Business Development

Email: Deborah.baron@pfizer.com

with a copy (which will not constitute notice) to:

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Attention: Andrew J. Muratore

Email: andrew.j.muratore@pfizer.com

aaa. Amendments; Waivers. This Agreement may be amended, and compliance with the provisions of this Agreement may be omitted or waived, only by a written agreement executed by an authorized representative of each of the Company and Purchaser. Waiver by a party of a breach hereunder by the other party shall not be construed as a waiver of any subsequent breach of the same or any other provision. No delay or omission by a party in exercising or availing itself of any right, power or privilege hereunder shall preclude the later exercise of any such right, power or privilege by such party.

bbb. Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart shall be deemed to be an original instrument, and all such counterparts together shall constitute but one agreement. Any such counterpart may contain one or more signature pages. This Agreement may be executed and delivered by facsimile, by email in portable document format (.pdf) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.dogusign.com), and upon such delivery of the signature page by such method will be deemed to have the same effect as if the original signature had been delivered to the other party.

ccc. Headings; Interpretation. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. Except where the context expressly requires otherwise, (i) the use of any gender herein will be deemed to encompass references to all genders, and the use of the singular will be deemed to include the plural (and vice versa), (ii) the words “include,” “includes” and “including” will be deemed to be followed by the phrase “without limitation,” (iii) the word “will” will be construed to have the same meaning and effect as the word “shall,” (iv) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (v) any reference herein to any Person will be construed to include the Person’s successors and assigns, (vi) the words “herein,” “hereof” and “hereunder,” and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (vii) all references herein to Sections or Schedules will be construed to refer to Sections or Schedules of this Agreement, and references to this Agreement include all Schedules or exhibits hereto, (viii) provisions that require that a party or the parties “agree,” “consent” or “approve” or the like will require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (ix) references to any specific law, rule or regulation, or article, section or other division thereof, will be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, (x) any action or occurrence deemed to be effective as of a particular date will be deemed to be effective as of 11:59 PM ET on such date and (xi) the term “or” will be interpreted in the inclusive sense commonly associated with the term “and/or.”

ddd. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to its principles of conflicts of laws.

eee. Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party without the prior written consent of the non-assigning party; provided, however, that Purchaser may assign this Agreement without the Company’s consent to an Affiliate of Purchaser, provided that such Affiliate agrees in writing to be bound by the terms of this Agreement.

fff. Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, each of the successors and assigns of the parties and, except as otherwise expressly provided in this Agreement, each other Person who shall become a registered holder named in a certificate evidencing Shares transferred to such holder by Purchaser or its permitted transferees, and (except as aforesaid) its legal representatives, successors and assigns.

ggg. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. In such event, the parties shall consult and use all reasonable efforts to agree upon, and hereby consent to, any valid and enforceable modification of this Agreement as may be necessary to avoid any unjust enrichment of either party and to match the intent of this Agreement as closely as possible, including the economic benefits and rights contemplated herein.

hhh. Disclaimer. Except as expressly set forth in this Agreement and the License Agreement, neither party makes any representation or warranty to the other party of any nature, express or implied.

iii. No Third Party Rights or Obligations. No provision of this Agreement will be deemed or construed in any way to result in the creation of any rights or obligations in any Person not a party to this Agreement.

jjj. Further Actions. Each party hereto agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

kkk. No Strict Construction. The language used in this Agreement is deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against a party.

lll. Equitable Relief. Each of the Company and the Purchaser hereby acknowledges and agrees that the failure of the Company to perform its respective agreements and covenants hereunder will cause irreparable injury to the Purchaser, for which damages, even if available, will not be an adequate remedy. Accordingly, the Company hereby agrees that the Purchaser shall be entitled to seek the issuance of equitable relief by any court of competent jurisdiction to compel performance of the Company’s obligations.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed this Share Purchase Agreement as of the Effective Date.

SPERO THERAPEUTICS, INC.

By: /s/ Ankit Mahadevia

Name: Ankit Mahadevia

Title: Chief Executive Officer

PFIZER INC.

By: /s/ Deborah Baron

Name: Deborah Baron

Title: SVP Worldwide Business Development

EX-31.1

Exhibit 31.1

CERTIFICATIONS UNDER SECTION 302

I, Ankit Mahadevia, M.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spero Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2021

/s/ Ankit Mahadevia, M.D.
Ankit Mahadevia, M.D.
President and Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS UNDER SECTION 302

I, Satyavrat Shukla, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spero Therapeutics, Inc.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2021

/s/ Satyavrat Shukla
Satyavrat Shukla
Chief Financial Officer and Treasurer
(Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATIONS UNDER SECTION 906

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Spero Therapeutics, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report for the quarter ended June 30, 2021 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 5, 2021	/s/ Ankit Mahadevia, M.D.
	Ankit Mahadevia, M.D.
	President and Chief Executive Officer
	(Principal Executive Officer)
Dated: August 5, 2021	/s/ Satyavrat Shukla
---	---
	Satyavrat Shukla
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2021

Commission File Number: 001-38266

SPERO THERAPEUTICS, INC.

(857) 242-1600

Securities registered pursuant to Section 12(b) of the Act:

Forward-Looking STATEMENTS

Risk Factor Summary

iii

Spero Therapeutics, Inc.

Table of Contents

Item 1. Financial Statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of these condensed consolidated financial statements.

SPERO THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Basis of Presentation

Interim Financial Information

2. Summary of Significant Accounting Policies

Use of Estimates

Segment Information

Concentrations of Credit Risk and of Significant Suppliers

Cash Equivalents

Marketable Securities

Property and Equipment

Leases

Other Assets

Impairment of Long-Lived Assets

Fair Value Measurements

Revenue Recognition – Collaboration Revenue

Government Tax Incentives

Research and Development Costs

Clinical Trial and other Research Contract Costs and Accruals

Patent Costs

Share-Based Compensation

Comprehensive Loss

Net Loss per Share

Income Taxes

Recently Issued and Adopted Accounting Pronouncements

3. Fair Value Measurements and Marketable Securities

Marketable Securities

4. Accrued Expenses and Other Current Liabilities

5. Equity Transactions

Underwritten Public Offering

Rights Offering

6. Common Stock

7. Share-Based Compensation

Performance-based awards

Stock Options

Share-Based Compensation Expense

8. Commitments and Contingencies

License Agreements

Operating Leases

Indemnification Agreements

Legal Proceedings

9. Government Contracts

BARDA

U.S. Department of Defense

NIAID

10. License, Collaboration and Service Agreements

Cantab License Agreements

Vertex License Agreement

Meiji License Agreement

Everest Medicines License Agreement

Gates MRI Collaboration Agreement

Savior Service Agreement