Earnings Call Transcript - ITRM Q2 2023

Operator, Operator

Good morning, and welcome to the Iterum Therapeutics Second Quarter 2023 Financial Results Call. My name is Carla, and I will be the operator for today's call. I would now like to pass the conference over to our host, Louise Barrett, to begin. Louise, please go ahead when you're ready.

Louise Barrett, Host

Thank you, Carla. Good morning, and welcome to Iterum Therapeutics second quarter 2023 financial results. A press release with our second quarter results was issued earlier this morning and can be found 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 on our financial results and then we'll open the lines for Q&A. Before we begin, I would like to remind you that 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 massive potential of sulopenem, the timing, conduct, progress and results of our ongoing REASSURE clinical trial, including the ability to complete planned enrollment within the projected time frame and the timing of top line results, the expected timing of resubmission of our NDA, the term and coverage provided by our patent and sufficiency of our cash resources and our valuation of corporate strategic and financing strategies and alternatives to fund future development operations. 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 development, including the REASSURE clinical trial, availability and timing of data from the REASSURE trial, 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, if oral sulopenem is approved, and the accuracy of expectations regarding how far into the future our cash in hand can fund ongoing operations. Risks and uncertainties concerning the outcome, impact, effects, and results of our evaluation of financing alternatives to fund future developments, including the term, timing, structure, value, benefits, and cost of any such alternatives and our ability to complete one at all and other factors discussed under the caption Risk Factors in our quarterly report filed with the SEC today. In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied on as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. We will also be referring to non-GAAP financial measures during the call. We've provided a reconciliation of GAAP results to non-GAAP adjusted information in the press release issued this morning. With that said, I'll turn it over now to Corey for some opening remarks.

Corey Fishman, CEO

Thanks very much, Louise. Welcome, and thanks for joining us today. I want to share some exciting highlights about the business and our ongoing activities. I'm pleased to inform you that enrollment in our ongoing pivotal Phase 3 trial of oral sulopenem for the treatment of uncomplicated urinary tract infections, our REASSURE trial, is going very well. We have very recently reached our 50% enrollment target, which is 983 patients. Now that we have achieved this target, we will conduct a blinded interim analysis for sample size re-estimation as specified in our special protocol assessment or SPA agreement with the FDA. We have over 140 clinical sites open to enrollment in the U.S. Based on our current projections, we expect to complete enrollment in our pivotal Phase 3 REASSURE clinical trial in the first quarter of 2024, have top line data available in the second quarter of 2024, and potentially resubmit our oral sulopenem NDA for the treatment of uncomplicated urinary tract infections to the FDA in the second half of 2024. On the patent front, we are happy to inform you that we continue to enhance our patent strategy, which provides a substantial runway to protect the value of oral sulopenem in the U.S. and other countries. We have recently been granted a patent in Japan directed to the composition of the bilayer tablet of oral sulopenem and its preparation. This patent is scheduled to expire no earlier than 2039. As a reminder, in addition to in-licensed patents, Iterum owns two U.S. patents for oral sulopenem, both expiring in 2039 barring any extensions. One U.S. patent is directed to the composition of the bilayer tablet and its related uses, and the other patent is directed to the method of use of oral sulopenem in treating multiple diseases, including uncomplicated urinary tract infections. Additionally, we have a number of pending patent applications in the U.S. and other jurisdictions, including Europe, China, and Australia. Our cash position remains strong with a balance of approximately $45 million as of June 30, 2023. Based on our current operating plan, we expect that our current cash, cash equivalents, and short-term investments will be able to fund our operations into the third quarter of 2024. Therefore, as stated earlier, with the top line data readout expected in Q2 2024, we expect to be able to fund operations through the data readout. On a longer-term basis, as we look towards potential NDA resubmission, potential approval, and potential commercialization, we continue to evaluate a variety of financing strategies to ensure we can continue to fund our operations over the next few years. At the recent extraordinary general meeting of the company, we asked our shareholders to renew the disapplication of statutory preemption rights over the authorized but unissued share capital, including the additional ordinary shares approved at the AGM in May, which would provide us with the ability to more efficiently and cost-effectively access the capital that we believe will be necessary in the future to continue to execute our business plan and strategy. This approval is required under Irish law solely because we are incorporated in Ireland. Although we received over 62% support of the votes cast, we did not receive the affirmative vote of at least 75% of the votes cast as required under Irish law for the passing of special resolutions. We strongly believe that having the flexibility to quickly take advantage of opportunities to raise capital through share issuances for cash to fund the execution of our business plans and strategies eliminates the competitive disadvantage we are placed at compared to non-Irish NASDAQ listed public companies and the risks associated with seeking transaction-specific shareholder approvals or having to first offer those shares to all existing shareholders in a time-consuming and expensive rights offering. As our growth strategy depends on our ability to research, develop, and commercialize our product candidates, which require significant capital, we will continue to explore our options in this regard. In summary, we are very pleased with the progress of our pivotal Phase 3 REASSURE clinical trial. We're expecting to have top line data from that trial in less than 10 months. And based on our current projections, we will have the cash on hand to fund operations through that data readout. We continue to look forward to potentially bringing the first new oral penem to the market in order to help address a serious medical need in the community. Now I'll turn the call over to Judy for details on our financial results.

Judy Matthews, CFO

Thanks, Corey. Total operating expenses were $10.8 million in the second quarter of 2023, compared to $8.1 million in the second quarter of 2022. Operating expenses include research and development expenses and general and administrative expenses. R&D costs were $9 million for the second quarter, compared to $4 million for the same period in 2022. The primary driver of the increase in R&D expense for the second quarter was cost to support our REASSURE trial, which began enrollment in October 2022. G&A costs were $1.9 million for the second quarter of 2023, which is $2.2 million lower than G&A costs of $4.1 million in the second quarter of 2022, due primarily to lower share-based compensation expense, as well as a decrease in legal fees incurred in connection with the lawsuit filed in August 2021, which was dismissed with prejudice in January 2023, meaning the case cannot be brought back to court. Our net loss on a U.S. GAAP basis was $12.2 million for the second quarter of 2023, compared to $6.7 million for the same period in 2022. On a non-GAAP basis, which excludes certain non-cash adjustments, our net loss was $10 million in the second quarter of 2023, compared to our non-GAAP net loss of $5.7 million in the second quarter of 2022. The $4.3 million increase in our non-GAAP net loss for the second quarter was primarily a result of higher R&D expenses related to our REASSURE trial. At the end of June, we had cash, cash equivalents, and short-term investments of $44.7 million, which based on our current operating plan, will provide a cash runway into the third quarter of 2024. We expect to complete enrollment in the REASSURE trial in the first quarter of 2024, report top line data in the second quarter of 2024, and if successful, we expect to resubmit through the FDA the NDA for oral sulopenem for the treatment of uncomplicated urinary tract infections in the second half of 2024. As of June 30, 2023, we had approximately 13 million ordinary shares outstanding. Also as of the end of June, we had approximately $12.6 million of exchangeable notes outstanding, which can be exchanged at the option of the noteholder for approximately 1.1 million shares. 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, CEO

So we'll now open up the lines for questions.

Operator, Operator

Thank you. Our first question is from Ed Arce from H.C. Wainwright. Ed, your line is now open. Please go ahead.

Thomas Yip, Analyst

Hi. Good morning, everyone. This is Thomas Yip asking a quick question for Ed. Thank you very much for taking our questions and congratulations on the progress of REASSURE so far. So first question from us with REASSURE now 50% enrolled, can you give us some time estimate on when you expect to conduct the interim analysis? And also, in addition to sample size assessment, would there be any safety data? And also when should we expect an announcement of the analysis outcome?

Corey Fishman, CEO

Thank you for the questions. Regarding the timing, it will likely take about eight weeks until we receive the recommendation from the data monitoring committee. After reaching the enrollment target, there will be an additional four weeks of treatment and follow-up. The treatment lasts five days, but follow-up visits extend through day 28. It will take about another month for the teams to compile all necessary blinded data to present to the data monitoring committee. Therefore, we anticipate having that recommendation in early Q4. It's important to note that this is based on a blinded evaluation and is not focused on safety, which we continuously monitor. The key aspect is the re-estimation of sample size, and we expect to receive that recommendation from the data monitoring committee in early Q4.

Thomas Yip, Analyst

Okay. Got it. Thank you, Corey. And then perhaps just a couple of more questions from us. So, congratulations on the Japanese patent issuance that was announced today. Did you expect positive data from REASSURE to also fulfill other regulatory agencies in addition to the FDA for approval, and can you talk about any preliminary discussions on that front so far?

Corey Fishman, CEO

Yes, we've been very focused on the U.S., as you can imagine, and making sure that we're satisfying the U.S. requirements. Our plan will be, once we have that data, and to your point, assuming it's positive, we will then pull our team together, talk with our regulatory folks and outside experts as well, and see what the ability is to file with our existing data, whether that be in Europe or in Japan, which would need an additional study based on the Japanese population. So that's really about looking at the opportunity to partner outside of the U.S. in those situations. We're focused on the U.S.; we're not saying we wouldn't go into Europe or other countries, but we do certainly have the opportunity to do that. Now with patents in Japan, and hopefully some others coming up in the next couple of quarters, we feel like there's a very good opportunity to bring sulopenem to other countries, working with potentially partners to either submit, depending on the ability to do that with existing data or to work with them on doing an additional Phase 3 study and getting approved in various countries.

Thomas Yip, Analyst

Understood. Thank you for taking the questions again and looking forward to hearing REASSURE progress in the coming months.

Corey Fishman, CEO

Thanks. Thanks for the questions, Thomas. We appreciate it. I'll just wrap up today. Thank you very much for joining us. We appreciate the interest in Iterum, and we continue to remain confident in the value of oral sulopenem to treat multidrug-resistant infections in the community. We're very pleased with our progress on REASSURE to date, and we look forward to completing our ongoing clinical work. If successful, we will resubmit our NDA to the FDA for this very important treatment option for physicians and patients.

Operator, Operator

This concludes today's call. Thank you for your participation. You may now disconnect your lines.