Iterum Therapeutics plc (NASDAQ:ITRM) Q3 2022 Earnings Call Transcript

Iterum Therapeutics plc (NASDAQ:ITRM) Q3 2022 Earnings Call Transcript November 10, 2022

Iterum Therapeutics plc beats earnings expectations. Reported EPS is $-0.97, expectations were $-1.05.

Operator: Ladies and gentlemen, welcome to the Iterum Therapeutics Third Quarter 2022 Financial Results Call. My name is Maxine, and I’ll be coordinating the call today. I will now hand you over to Louise Barrett, SVP of Legal Affairs to begin. Louise, please go ahead when you’re ready.

Louise Barrett: Thank you, Maxine. Good morning, and welcome to Iterum Therapeutics third quarter 2022 financial results call. A press release of our third quarter were issued earlier this morning and can be filed on our website. We are joined this morning by Corey Fishman, CEO; and Judy Matthews, CFO. Corey will provide some opening remarks. Judy will provide details of our financial results and then we’ll open the floor for Q&A. Before we begin, I would like to remind you that this call will contain forward-looking statements concerning plans, strategies and prospects for our business, including some therapies in our potential sulopenem, the timing, conduct, progress and results of our REASSURE clinical trial, our expectations with regard to its ability to resolve the matters set forth in the Complete Response Letter received by us in July 2021 and to obtain approval for oral sulopenem, the expected timing of resubmission of our NDA, the term and coverage provided by our patent and other intellectual property rights and the sufficiency of our cash resources.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including uncertainties inherent in the design, initiation and conduct of clinical and non-clinical development, including the REASSURE clinical trial and non-clinical development being conducted trials in response to the CRL receipt in July 2021, the availability and timing of data from the REASSURE clinical trial and the ongoing non-clinical development, changes in regulatory requirements or decisions of regulatory authorities, the timing or likelihood of regulatory filings and approvals, including the potential resubmission of our NDA, changes in public policy or legislation, commercialization plans and timelines, if oral sulopenem is approved, the actions of third-party clinical research organizations, suppliers and manufacturers, the accuracy of our expectations regarding how far into the future our cash on hand will fund our ongoing operations, and other risk factors set out in our filings with the SEC, including the quarterly report filed today.

In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. We will also be referencing non-GAAP financial measures during the call. We’ve provided a reconciliation of applicable €“ to non-GAAP adjusted information in the press release issued earlier this morning. With that said, I’ll turn it over now to you Corey for your opening remarks.

Corey Fishman: Great. Thanks, Louise. Welcome, and thanks for joining us today. I’d like to share some very exciting company highlights with you this morning. First, we are thrilled to have begun enrollment in our new Phase 3 clinical trial for uncomplicated urinary tract infections. We have named this trial REASSURE. The REASSURE trial is designed as a non-inferiority trial comparing oral sulopenem and oral Augmentin in the Augmentin susceptible population. We are conducting this trial to address certain deficiencies the FDA noted in their Complete Response Letter that we received in July of 2021. The trial is expected to enroll approximately 1,966 patients and is being conducted under a Special Protocol Assessment, SPA, agreement with the FDA.

The SPA agreement provides that the design and planned analysis of the trial as set out in the protocol submitted to the FDA adequately addresses the objectives necessary to support the potential resubmission of the company’s new drug application for oral sulopenem. In the REASSURE trial, patients will be randomized to receive either oral sulopenem twice daily for five days or oral Augmentin twice daily for five days. The primary endpoint is the overall response, which is the clinical and microbiologic combined response at day 12 of the trial. We expect to complete enrollment in the first half of 2024. And if successful, we’ll resubmit our NDA to the FDA in the second half of 2024. If the resubmission addresses all deficiencies in the Complete Response Letter we received in July of 2021 from the FDA, then the FDA action should occur six months from receipt of our resubmission.

It’s important to note that there are approximately 33 million uncomplicated urinary tract infections in the U.S. annually and approximately 30% of those infections are caused by a quinolone non-susceptible organism. Additionally, about 1% of all infections are caused by pathogens that are resistant to all commonly available classes of oral antibiotics. And as a result, the need for new oral antibiotics in this therapy area remains very high. On the intellectual property front, Iterum has been granted a U.S. patent directed to the composition of the bilayer tablet of oral sulopenem, which contains sulopenem etzadroxil and probenecid in a single bilayer tablet. This is an incredibly important milestone as this patent will extend our existing patent protection until at least 2039, which provides a substantial runway to protect the long-term commercial value of oral sulopenem in the U.S. Outside the U.S., we have pending patent applications, including Europe, China, Japan and parts of South America, which were submitted following receipt of the written opinion of the International Search Authority, indicating that several claims directed to the composition of the bilayer tablet of oral sulopenem are novel and inventive.

We are beginning to explore potential new areas where there is an unmet medical need and where sulopenem could be an important potential alternative in treating those patients. We are currently evaluating a number of potential new indications and subject to that review are planning an initial discussion with the FDA in the first half of 2023. We will share further details as and when this plan develops further. On the corporate front, we regained compliance with the NASDAQ bid price rule by affecting a 1-for-15 reverse share split in August. Lastly, but quite importantly, our cash position remains solid with a balance of $64 million as of September 30. As we have stated in our press release, we expect this existing cash to fund operations into 2024, including through the top line data readout from the REASSURE trial.

In summary, we are excited to have begun enrollment in the REASSURE clinical trial and are looking forward to potentially bringing the first new oral penem to the market in order to help address a serious medical need in the community. We are also looking forward to potentially expanding the utility of sulopenem into other areas that are in need of new treatment alternatives. Now I’ll turn the call over to Judy for details on our financial results.

Judy Matthews: Thanks, Corey. Total operating expenses were $7 million and $22.4 million in the third quarter and year-to-date 2022 compared to $4.9 million and $17.7 million in the third quarter year-to-date 2021. Operating expenses include research and development expenses and general and administrative expenses. R&D costs were $4.4 million for the third quarter of 2022 compared to $1.8 million for the same period in 2021. The primary driver of the $2.6 million increase in R&D costs was the initiation of our REASSURE trial, which began enrollment in October 2022. Year-to-date, R&D costs were $11.8 million in 2022 versus $7 million in 2021 as a result of the cost to support our REASSURE trial. G&A costs were $2.7 million for the third quarter of 2022, which is $300,000 lower than G&A costs of $3 million in the third quarter of 2021 due primarily to lower share-based compensation expense, partially offset by higher legal fees associated with the class action lawsuit filed in August 2021 following the receipt of the CRL from the FDA in July 2021.

Year-to-date, G&A costs were $10.7 million in 2022 compared to $10.7 million in 2021 or flat. Higher consultant spend on pre-commercialization activities through the first half of 2021, prior to receiving the CRL, were offset by higher share-based compensation expense and legal fees in 2022. Moving on to non-operating items. Interest expense was $600,000 for the third quarter of 2022 compared to $800,000 in the third quarter of 2021. The primary reason for the $200,000 decrease in interest expense was the repayment of our SVB loan in March 2022. Our net loss on a U.S. GAAP basis was $29.1 million for the third quarter of 2022 and $39.3 million for the year-to-date period. Impacting the third quarter and year-to-date net loss was a non-cash charge of $17.4 million included in other income and expense in connection with the cancellation of share options.

In July 2022, certain executives and employees agreed to the surrender and cancellation of previously granted share options in order to make available additional shares under the company’s equity incentive plan, giving rise to this non-cash charge. There was no impact of this adjustment on cash or cash runway, which I will turn to in a moment. On a non-GAAP basis, which excludes certain non-cash adjustments, our net loss of $5.3 million and $16.5 million in the third quarter and year-to-date 2022 compared to our non-GAAP net loss of $3.7 million and $16.1 million in the third quarter and year-to-date 2021. The $1.5 million and $0.4 million increase in our non-GAAP net loss for the third quarter and year-to-date, respectively, was primarily a result of higher R&D expenses related to our REASSURE trial.

At the end of September, we had cash, cash equivalents and short-term investments of $64.3 million. Based on our current operating plans, we expect to have cash into 2024, which includes through top line data readout for the REASSURE trial. If the REASSURE trial is successful, a resubmission to the FDA of the NDA for oral sulopenem for the treatment of uUTI is expected in the second half of 2024. As of September 30, 2022, we had approximately 12.2 million ordinary shares outstanding. As mentioned in August 2022, we expected a 1-for-15 reverse share split, and as a result, we gained compliance with NASDAQ’s Bid Price Rule in September 2022. Also as of the end of September 2022, we had approximately 0.5 million warrants outstanding at an average price of $24.09 per share and $12.6 million of exchangeable notes, which can be exchanged at the option of the noteholder for approximately 1.3 million shares, which includes accrued interest.

If the notes are not exchanged, we will pay the noteholders $12.6 million plus accrued interest in January 2025. Now I will turn it back over to Corey for some closing comments.

Corey Fishman: Great. Thank you, Judy. We would like to open up the lines for any questions now.

Q&A Session

Operator: Thank you. Our first question comes from Ed Acre from H.C. Wainwright. Please go ahead. Your line is now open.

Ed Acre: Hi, good morning. Thanks for taking our questions and congrats on the recent initiation of REASSURE. Firstly, I wanted to ask about the powering of the study given it’s roughly 2,000 patients randomized one to one. And perhaps talk a little bit about how you came to that determination, given this is a lot Augmentin versus the other comparator for the prior study. And then I wanted to ask also about the new patent. I know it’s described as a composition. But is this actually a composition of matter patent for the combination of sulopenem and probenecid or is it really a formulation? And then I have a follow-up. Thanks.

Corey Fishman: Great. Thanks for the question, Ed. We’ll start with the powering question. We are powering the study based on a set of assumptions, which include things like the point estimate for sulopenem as well as Augmentin at 90%. So we will endeavor to keep that power. We do have an interim analysis at the 50% enrollment point where the data management committee will look at the blinded data and assess where we are with regard to potential power. But as of right now, we are powering the study at 90%. The second question you had was regarding the patent. And our attorneys have told us that this is essentially a composition of matter patent for the bilayer tablet. So it’s not really a formulation patent per se. It is more of a composition of matter patent with a combination of sulopenem etzadroxil and probenecid.

So we feel pretty good about it. It’s not a used patent per se, anything like that. And so we think that there is a very strong patent situation for us that would get us out into a very healthy runway assuming we launch the product in the next couple of years. Our patent wouldn’t expire €“ that particular patent wouldn’t expire in the U.S. until at least 2039.

Ed Acre: Great, that’s helpful and then a couple more, if I may. First, I just wanted to clarify the cash runway. Given that you’ve stated you expect enrollment to complete in the first half of 2024, and if successful would be filing your NDA or resubmitting the NDA in the second half of 2024. It seems pretty clear that the data €“ top line data release would be sometime around the middle of the year, mid 2024, but you state that the runway is into 2024. Is it not at least halfway or more into the year? And then the other question is, if you could just provide any commentary or details around what’s going on with the class action lawsuit. Thanks so much.

Corey Fishman: Sure. So yes, we’re not trying to be clever with our words with regard to being €“ saying cash into 2024. It’s more a factor of we feel confident that we will have cash to get through the top line data, and that just becomes a question of when does that occur, right? So to your point, could it be mid-year or a little earlier or whatever it is, our general sense is that we’ve got cash to get through that. And so we’re not being specific about a particular quarter because we just don’t know that answer based on enrollment yet. But I think what you can take away from this is we feel confident that we’ve got the cash to get us through the top line data at this point. And with regard to the lawsuit, I don’t think there is any new information.

We do have a conference on December 7th on the litigation matter and we’re just waiting on that date. Obviously, we’ve done a lot of work preparing for that and we’re waiting on that date just to see what happens there.

Ed Acre: Great, thanks so much, Corey. I appreciate it.

Corey Fishman: Thank you, Ed.

Operator: Thank you. This concludes our Q&A session. So I’ll hand you back to Corey Fishman for closing remarks.

Corey Fishman: Great. Well, thanks for joining us today. We remain confident in the value of oral sulopenem to treat multidrug-resistant infections. We are looking forward to completing our ongoing clinical work, and if successful, resubmitting our NDA to the FDA for this really important treatment option for physicians and patients in the uncomplicated urinary tract infection therapy area. So thank you very much for attending this morning, and we wish you all a great day.

Operator: Thank you, ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines.