Iterum Therapeutics plc (NASDAQ:ITRM) Q4 2023 Earnings Call Transcript

Iterum Therapeutics plc (NASDAQ:ITRM) Q4 2023 Earnings Call Transcript March 28, 2024

Iterum Therapeutics plc beats earnings expectations. Reported EPS is $-0.94, expectations were $-1.02. ITRM isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello, everyone, and welcome to the Iterum Therapeutics Fourth Quarter and Full Year 2023 Financial Results and Business Update. My name is Emily, and I’ll be coordinating your call today. [Operator Instructions] I will now turn the call over to our host, Louise Barrett, Senior Vice President of Legal Affairs. Louise, please go ahead.

Louise Barrett: Thank you, Emily. Good morning, and welcome to Interim Therapeutics’ fourth quarter and full year 2023 financial results and business update conference call. A press release with our fourth quarter full year results was issued earlier this morning and can be found on our website. We are joined this morning by Chief Executive Officer, Corey Fishman; and our Chief Financial Officer, Judy Matthews. Cory will provide some opening remarks, Judy will provide details on our financial results, and then we’ll open the lines for Q&A. Before we begin, I would like to remind you that some of the information presented on this conference call will contain forward-looking statements concerning our plans, strategies and prospects for our business, including the development, therapeutic and market potential of oral sulopenem, our ability to address the deficiencies set out in the complete response letter received from the FDA in July 2021, the expected timing of resubmission of our NDA, the expected timing of review by the of the resubmission by the FDA, the sufficiency of our cash resources to fund our operating expenses into 2025, the term and coverage provided by our patent and other intellectual property rights, and the company’s strategic process to sell, license, or otherwise dispose of its rights to sulopenem to maximize shareholder value.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors outside our control, including uncertainties inherent in the design initiated and conduct of clinical and nonclinical 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 for oral sulopenem; changes in public policy or legislation; commercialization plans and timelines of oral sulopenem is approved; the accuracy of our expectations regarding how far into the future our cash in hand will fund ongoing operations; our ability to maintain our listing on the NASDAQ Capital Market; risks and uncertainties concerning the outcome impact effects and results of our pursuit of strategic alternative — alternatives; including the terms, timing, structure, value, benefits, and cost of any strategic process; and our ability to complete one at all whether on attractive terms or at all.

And other factors discussed under the caption Risk Factors in our annual report on Form 10-K filed with the SEC this morning. 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 obligation to update such statements. We will also be referencing non-GAAP financial measures during the call. We’ve provided a reconciliation of GAAP reported to non-GAAP adjusted information in the press release issued this morning. With that said, I’ll turn it over to you now, Corey, for your opening remarks.

Corey Fishman: Thanks, Louise. Good morning, and thanks for joining us today. I’d like to provide a brief recap of 2023 and outline our key activities and milestones for 2024. Overall, 2023 was a very good year for Iterum as we completed enrollment in our confirmatory Phase 3 clinical trial in adult women with uncomplicated urinary tract infections called the REASSURE clinical trial. As a reminder, this trial was conducted under special protocol assessment agreement with the FDA and compared oral sulopenem to oral Augmentin. As many of you know, we were very pleased to recently announce that the REASSURE trial demonstrated that oral sulopenem was non-inferior to Augmentin with respect to the trial’s primary endpoint, which was overall response, which is the combined clinical cure plus microbiologic eradication at the test of cure visit in the microbiological modified intent to treat susceptible population.

Additionally, oral sulopenem also demonstrated statistically significant superiority to Augmentin in the same patient population. Oral sulopenem also showed consistent efficacy for all key secondary endpoints. Lastly, sulopenem demonstrated a very solid safety profile. With regards to the sulopenem patent estate, in addition to the in license patents we obtained in our original license agreement with Pfizer, we continue to seek opportunities to enhance the long-term protection of sulopenem. We now have issued patents directed to the composition of the bilayer tablet of oral sulopenem granted in the U.S., Japan, Korea, Australia, and these patents will expire no earlier than 2039. We also have an issued patent in the U.S. directed to the method of use of oral sulopenem in treating multiple diseases, including uncomplicated urinary tract infections, which is due to expire no earlier than 2039.

In addition to the in licensed and issued patents, we have a number of pending patent applications in the U.S., and other jurisdictions including Europe and China. We believe that these patents plus our potential data exclusivity would allow oral sulopenem a long runway to capture value. I’ll spend just a moment now and talk a bit about the market dynamics into which we see sulopenem potentially entering. The uncomplicated urinary tract market is quite large with an estimated 40 million prescriptions annually in the U.S. It’s estimated that approximately two-thirds of those prescriptions are for elevated risk patients, which are the patients that sulopenem would target. Elevated risk patients are elderly, patients with diabetes, patients with a history of recurrent infections or patients that have comorbidities that negatively impact their immune system.

There’s a significant need for new, efficacious and safe oral products to treat uncomplicated urinary tract infections as the existing older oral products are experiencing high and increasing resistance rates as well as exhibiting subpar safety profiles. If approved, oral sulopenem would be the first oral penem approved in the United States, and one of the first new branded treatments approved in the U.S. for uncomplicated urinary tract infections since the turn of the century. Regarding our upcoming milestones, we plan to resubmit our NDA to the FDA in the first half of the second quarter of this year, provided that the resubmitted NDA addresses all of the deficiencies identified in the complete response letter we received from the FDA in July 2021, we expect the FDA will complete its review and take action in the first half of the fourth quarter of this year, which would be six months from the date the FDA received the resubmitted NDA.

As we look at our cash position, based on our current operating plan, we have cash on hand to operate the company through the expected PDUFA date early in the fourth quarter of 2024 and into 2025. Lastly, as previously stated, we have initiated a strategic process to sell, license or otherwise dispose of our rights to sulopenem with the goal of maximizing value for our stakeholders and have engaged a financial advisor to assist management and the Board in evaluating strategic alternatives. Our Board has not set a timetable for completion of this evaluation process and we do not intend to disclose further developments unless and until it is determined that further disclosure is appropriate or necessary. I’ll now turn the call over to Judy for details on our financial results.

Judy Matthews : Thanks, Corey. Total operating expenses were $11.4 million and $47.5 million in the fourth quarter and full year 2023 compared to $7.9 million and $30.4 million in the fourth quarter and full year 2022. Operating expenses include research and development expenses and general and administrative expenses. R&D costs were $9.7 million for the fourth quarter and $40 million for the full year 2023, compared to $5.8 million and $17.6 million for the same periods in 2022. The primary driver of the increase in R&D expense for the fourth quarter and full year was cost to support our REASSURE trial, which began enrollment in October 2022 and completed enrollment in October 2023, enrolling 2,222 patients. G&A costs were $1.7 million in the fourth quarter of 2023, which is $400,000 lower than G&A cost of $2.1 million in the fourth quarter of 2022 due primarily to lower legal fees and insurance costs.

Full year G&A costs were $7.5 million in 2023, which is $5.3 million lower than G&A costs of $12.8 million in 2022. Primarily due to lower share based compensation expense for employees and directors, lower insurance costs, lower rent expense, and a decrease in legal fees associated with the lawsuit filed in August 2021, which was dismissed with prejudice in January 2023, which means the case cannot be brought back to court. Our net loss on a U.S. GAAP basis was $12.4 million for the fourth quarter of 2023 and $38.4 million for the full year. Impacting the full year net loss was a non-cash adjustment of $11.1 million included in other income and expense in connection with the fair value assessment of our royalty linked notes. 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 $10.7 million and $43.8 million for the fourth quarter and full year 2023, compared to our non-GAAP net loss of $6.4 million and $22.9 million in the fourth quarter and full year 2022. The $4.3 million and $20.9 million increase in our non-GAAP net loss for the fourth quarter and full year was primarily a result of higher R&D expenses related to our REASSURE trial, as the bulk of the 2,222 patients were enrolled in 2023. At the end of December, we had cash, cash equivalents and short-term investments of $23.9 million, which based on our current operating plan and including amounts raised under our ATM agreement through the end of February 2024, will provide a cash runway into 2025, including through the expected PDUFA date in the first half of the fourth quarter of 2024.

We expect to resubmit to the FDA, the NDA for oral sulopenem for the treatment of uUTI in the first half of the second quarter of 2024 or over the next 4 to 6 weeks. As of February 29, 2024, we had approximately 16.4 million ordinary shares outstanding. Also as of the end of February 2024, we had approximately $11.1 million of exchangeable notes outstanding, which can be exchanged at the option of the noteholder for approximately 1.2 million shares. If the notes are not exchanged prior to maturity, we will be obligated to pay the noteholders $11.1 million plus accrued interest in January 2025. Now, I will turn it back over to Corey.

Corey Fishman: Thanks, Judy. We’ll go ahead and open the line for questions now.

Operator: [Operator Instructions] Our first question today comes from Ed Arce with H. C. Wainwright.

See also 20 Most Populated Countries in Africa and Wall Street Analysts See Upside Potential for 10 Stocks with Rising Price Targets.

Q&A Session

Thomas Yip: Hi, good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking the questions. So first question we have, just wondering, do you have any specific dates or triggering events to decide on your strategic options considering that PDUFA is expected as you specified earlier — early fourth quarter and then cash runway into 2025? It seems that you have some flexibility there.

Corey Fishman: Thanks, Thomas. Appreciate the question. We don’t have any specific dates or triggering events with regard to the strategic options and primarily because as most folks know, these processes take whatever time is required on a counterparty side to figure out whether there’s something that is of interest to them, and we just don’t know how long that process takes. So as we said in our remarks, we’re not going to talk about it on each of our calls because, at the appropriate time, if and when there’s something to disclose, we will, of course, do that. But until then, we don’t have any specific dates or timelines on that.

Thomas Yip: Understood. Perhaps, while, we understand the date, the timing details is still up in the air. Will you consider an option, whether it’s indication specific as we understand the NDA resubmission for uncomplicated uUTI, will you consider carving out other indications for oral sulopenem and also for geographic areas as well, or should we consider sulopenem as a single package?

Corey Fishman: Yes, it’s another good question and we have flexibility on all of those fronts, depending on how those conversations go. You bring up a very good point, there’s potential for carving up different areas depending on transaction and there’s also potential on other indications as well. So we have flexibility on the company side and again, it’s just all a matter of the conversations with other parties as to what they’re looking for. But the short answer is yes, we’d certainly consider any or all of those options as potential opportunities.

Operator: The next question comes from Jason McCarthy with Maxim Group.

Jason McCarthy: Is Iterum still actively or planning to engage physicians and practices, I guess, on an educational level, to talk about sulopenem ahead of any type of divestiture or partnering? Or is the focus just getting the NDA done, getting to the finish line and seeking to divest or sell a license?

Corey Fishman: Yes. Thanks, Jason for the question. The primary focus is going to be around the strategic opportunities. There is a little bit of work ongoing on the commercial side to continue to refine the parameters of a potential commercialization, which could, of course, be used by a counterparty at the appropriate time. I don’t think you’ll see us at this point spending an awful lot of time out in the physician world, but we will, of course, continue to do things like present at conferences, put together manuscripts, etcetera, which also help get that message out that that is still ongoing and will be ongoing as we continue down the road with sulo.

Jason McCarthy: And, does sulo qualify or could it qualify ultimately under the Pasteur Act, if it should get cleared by congress obviously, there’s always challenges in getting things done in congress these days, but it is one of the pure bipartisan bills that is out there in the senate and it’s I’ve heard that it’s getting closer and closer, and I wonder if sulo could be in that discussion for a kind of quote/unquote critical need antimicrobial drug?

Corey Fishman: Yes. I believe I believe sulo would because of the coverage that it’s got on those critical pathogens. Much like we have qualified infectious disease product designation from the FDA through the GAIN Act, I believe that sulo would be applicable for anything that would come through under the Pasteur Act as well.

Operator: We have no further questions, so I’ll turn the call back to Corey for closing remarks.

Corey Fishman: Thank you. We appreciate you joining us today. 2023 was a strong year for Iterum, and we’re looking forward to 2024, which we will and which will include resubmitting our NDA for oral sulopenem, working with the FDA during the review period with an eye toward potentially bringing this important treatment to patients and physicians in the underserved market of uncomplicated urinary tract infections. Thanks again, and have a good day.

Operator: Thank you everyone for joining us today. This concludes our call. You may now disconnect your lines.