Earnings Call Transcript - ITRM Q2 2024

Operator, Operator

Good morning, everyone. Welcome to Iterum Therapeutics' Second Quarter 2024 Financial Results and Business Update. My name is Kiki, and I will be your conference operator today. I will now hand you over to your host, Louise Barrett, Senior Vice President, Legal Affairs, to begin. Louise, please go ahead.

Louise Barrett, Senior Vice President, Legal Affairs

Thank you, Kiki. Good morning, and welcome to Iterum Therapeutics' Second Quarter 2024 Financial Results and Business Update Conference Call. 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 our Chief Executive Officer, Corey Fishman; and our Chief Financial Officer, Judy Matthews. Corey will provide some opening remarks, Judy will provide details on our financial results, and then we will open the lines for Q&A. Before I begin, I'd 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. These include statements regarding the topics that will be covered at the upcoming advisory committee meeting in relation to our resubmitted NDA for oral sulopenem. The date by which the FDA will take action regarding our NDA, the expected use of proceeds from our recently completed rights offering, the planned extraordinary general meeting of shareholders to consider the disapplication of preemption rights, the efficiency of Iterum's cash resources to fund its operating expenses into 2025, and our strategic process to sell, license, or otherwise dispose of our rights to sulopenem to maximize stakeholder value. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors outside of our control, including uncertainties inherent in the design, initiation, and conduct of clinical and non-clinical development changes in regulatory requirements or decisions of regulatory authorities, the likelihood of regulatory filings and approvals, changes in public policy or legislation, commercialization plans and timelines of oral sulopenem approved. The accuracy of our expectations regarding how far into the future our cash on hand will fund our ongoing operations, the sufficiency of our cash resources and our ability to continue as a going concern, our ability to regain compliance and maintain our listing on the NASDAQ capital market and risks and uncertainties concerning the outcome, impact, effects and results of our pursuit of strategic alternatives, and those other factors discussed under the caption Risk Factors in our quarterly report on Form 10-Q filed with the SEC this morning. In addition, any forward-looking statements should be viewed 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, I'll turn it over to you now, Corey, for your opening remarks.

Corey Fishman, CEO

Thanks, Louise. Welcome, and thanks for joining us today. It continues to be a very busy and productive time for Iterum, and I'm pleased to share the following updates. We were pleased to have recently closed our rights offering, which generated $5.8 million of net proceeds after taking into account fees and expenses. This additional capital will allow us to continue to pursue our business plan and strategy, including funding our ongoing strategic process to maximize the value of sulopenem for our stakeholders. Now turning to upcoming milestones. On September 9, Iterum will meet with the FDA's Antimicrobial Drugs Advisory Committee to discuss our resubmitted new drug application for oral sulopenem for the treatment of uncomplicated urinary tract infections in adult women. The general function of the Antimicrobial Drugs Advisory Committee is to provide advice and recommendations to the FDA on regulatory issues. We have been working diligently to prepare materials for this upcoming meeting and are looking forward to the discussion. Another important date is October 25, that is the PDUFA action date assigned by the FDA to Iterum's resubmitted new drug application for oral sulopenem. We continue to work with the FDA during their review process. If the FDA completes its review within their general timeframe, on or about this date, we should receive a decision regarding the approvability of oral sulopenem for the treatment of uncomplicated urinary tract infections in adult women. If approved, oral sulopenem would be the first oral penem approved in the United States. We continue to expand our intellectual property estate. Most recently, we announced that two pending U.S. patent applications and one pending Canadian patent application were recently allowed. One allowed U.S. patent application is directed to the method of use of oral sulopenem in treating uncomplicated urinary tract infections. While the other allowed U.S. patent application is directed to the method of use of sulopenem etzadroxil, Probenecid, and Valproic acid in treating multiple diseases. The allowed Canadian patent application is directed to the bi-layer tablet of oral sulopenem and its related preparation and/or uses. Once these new patents issue, in addition to in-licensed patents, we will have owned patents in the U.S., Japan, Australia, Korea, and Canada with patent applications pending in Europe, China, and other key territories. As we look at our cash as of June 30, we had $11.7 million in cash and cash equivalents. Based on our current operating plan, we believe that the current cash, cash equivalents, and short-term investments, plus the newly raised cash from the rights offering, provide a runway into 2025, including through the expected PDUFA date in late October of this year. Looking to future capital requirements, we are once again seeking approval of our shareholders at an upcoming Extraordinary General Meeting of Shareholders to disapply the statutory preemption rights applicable to the increase in authorized share capital that was approved by our shareholders at our 2023 Annual General Meeting. This will enable us to quickly take advantage of opportunities to raise capital through share issuances for cash, which, in turn, allow us to fund the continued execution of our business plans and strategies further into 2025, including funding our ongoing strategic process and repayment of $14.7 million of principal and interest due in January 2025 on the outstanding 6.5% exchangeable senior subordinated notes. The granting of the preemption opt-out authority 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 that we propose to issue for cash to all our existing shareholders in a time-consuming and costly pro rata rights offer. As an example, our recently completed rights offering was both time-consuming and costly, taking approximately 3.5 months to implement with total costs in excess of $1.6 million, including dealer manager fees. Our Board of Directors continues to view this proposal as being in the best interest of the company and our shareholders and recommends a vote in favor thereof. Now I'll turn the call over to Judy Matthews for an update on our financial performance.

Judy Matthews, CFO

Thanks, Corey. Total operating expenses were $4 million in the second quarter of 2024, compared to $10.8 million in the second quarter of 2023. Operating expenses include research and development expenses and general and administrative expenses. R&D costs were $2.1 million for the second quarter compared to $9 million for the same period in 2023. The primary driver of the $6.9 million decrease in R&D expense for the second quarter was primarily due to higher costs incurred in 2023 to support our REASSURE trial, which began enrollment in October 2022 and completed enrollment in October 2023. G&A costs were $1.9 million for the second quarter of 2024, which is flat to G&A costs of $1.9 million in the second quarter of 2023. Our net loss on a U.S. GAAP basis was $5 million for the second quarter of 2024 compared to $12.2 million for the same period in 2023. On a non-GAAP basis, which excludes certain noncash adjustments, our net loss was $3.8 million in the second quarter of 2024 compared to our non-GAAP net loss of $10 million in the second quarter of 2023. The $6.2 million decrease in our non-GAAP net loss for the second quarter was primarily a result of lower R&D expenses related to our REASSURE trial, as enrollment in this Phase III trial was completed in October 2023. At the end of June, we had cash, cash equivalents and short-term investments of $11.7 million. Earlier this month, we completed the rights offering resulting in aggregate net proceeds of $5.8 million. Based on our current operating plan, we'll provide cash runway into 2025, including the potential FDA approval on October 25, 2024. We currently have approximately 22.7 million ordinary shares outstanding, which includes the shares issued in the recently completed rights offering. Also, we currently have approximately $11.1 million of exchangeable notes outstanding, which can be exchanged at the option of a noteholder for approximately 1.9 million shares. If the notes are not exchanged, we will be obligated to pay the noteholders $14.7 million, which includes accrued interest, in January 2025. Now we will open the line for questions.

Thomas, Analyst

This is Thomas asking a couple of questions for Ed. So first question, can you discuss your perspective on the two stated objectives of the outcome by the FDA, as the agency is very concerned about antibiotic resistance with the first oral penem, which is sulopenem. The agency is somewhat reluctant to consider this approval.

Corey Fishman, CEO

Thanks for the question, Thomas. I don't think they're reluctant to consider approving it. I think what they are thinking about is because it would be the first oral penem to be approved, whether it is getting to the right patients for this indication, which, of course, is consistent with our desires. And of course, any promotion would only be for our approved indication. So I don't think they're reluctant to approve it. I think this is just an area they haven't had to address recently, and therefore, they are being mindful of the opportunity to have a drug like an oral penem available, which is extremely efficacious and very safe, and not being more widely used than it would be natural given the approval that we might get.

Thomas, Analyst

Got it. And to that end, can you outline some topics of the date that you would expect at the Advisory Committee?

Corey Fishman, CEO

Yes. When the FDA sent us our note, and we have obviously talked about this publicly, they did mention two specific things they would like to discuss with us and the Advisory Committee about: stewardship and making sure the product is being used appropriately for the right patient. The second topic mentioned was the appropriate patient population. Obviously, we have done our study based on uncomplicated UTIs in adult women, and that could be the appropriate population. They are trying to get a sense from the advisory committee about that conversation. This is a little bit new ground for the FDA, not so much on whether it should be approved or not. Obviously, they'll make their own decision, but who uses this and how they use it. So those are the two topics they specifically mentioned in their correspondence to us regarding what topics they would like to discuss with the advisory committee.

Thomas, Analyst

Got it. And then as one more question from us: to provide evidence of sulopenem safety; are you allowed to include safety data from studies outside of U.K. patients, specifically the REASSURE study? Are you allowed to include other completed studies as well?

Corey Fishman, CEO

Yes, you are allowed to include safety data from studies outside of U.K. patients, and we've completed four Phase III studies that provide a comprehensive safety database across all those patients. From a safety perspective, sulopenem has shown a very clean safety profile, so that data will be part of the presentation.

Jason McCarthy, Analyst

Corey, this question is quite challenging without the Advisory Committee's briefing documents. However, considering there's a focus on stewardship and identifying the right patient population, do you think they're aiming to limit the label and indication to patients who are experiencing treatment failure with Augmentin or Ciprofloxacin, and are navigating the process to access sulopenem?

Corey Fishman, CEO

Yes. Thanks for the question, Jason. It's a really good one. I don't know the answer to that, but I can tell you we have studied the populations that we have researched. To your point, it might be a little difficult to try to narrow that label without having evidence of having studied that particular subgroup. However, I don't know what the FDA is going to do ultimately, of course, and I don’t know where they are headed. It just seems that it may be challenging, and that could potentially be why they want to talk with the advisory committee. To pick a subgroup and say you have to go through this and this in order to get sulopenem would not be reflective of what we studied. So it might be challenging for the FDA to create those guidelines if that's not the population we've studied. We want to work with the FDA and the advisory committee to come to some understanding. Clearly, getting the drug approved from our standpoint is paramount, and then, of course, what the label says is next in that conversation. Given the patient populations we've studied, we just don't know how that would happen. That’s not to say that the FDA won't come up with something because that is their prerogative. However, it isn't in our study material to state that you have to have had a prior infection or have failed on something else. We just didn't study it that way.

Jason McCarthy, Analyst

Got it. Do you think there will be some discussion around the REASSURE data? While it was non-inferior, meaning that the primary endpoint, there was statistical superiority, and there were instances in the prior SUR-1 trial of Ciprofloxacin where it was statistically superior in different analyses of the data. Do you believe a superiority aspect could end up in the label, which would be great?

Corey Fishman, CEO

It's another good question. I don't know if that would be something they would put in the label. It's certainly something that is a point of discussion with the FDA. The real question becomes the strength of the data. We feel very good that given the reassured data of not only the non-inferiority but also the superiority, we've got some compelling data. So it will be interesting to see if we reach that stage with the agency, where their heads are regarding the conversation about what does the label say? Is it the standard label you're approved for uncomplicated UTI, or is it something broader that says not only are you approved, but you've shown superiority to these other agents? Will that show up somewhere in the label? It’s possible. Thank you, Kiki. Thanks again for joining us today. We are very excited about our upcoming interactions with the FDA Antimicrobial Advisory Committee and the FDA as part of the continued review of our resubmitted new drug application and are looking forward to potentially bringing sulopenem, an important treatment option, to physicians and patients in the underserved market of uncomplicated urinary tract infections. Thanks again, and have a good day.

Operator, Operator

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