Q3 2023 Iterum Therapeutics PLC Earnings Call
Participants
Louise Barrett; SVP, Legal Affairs; Iterum Therapeutics plc
Corey Fishman; CEO; Iterum Therapeutics plc
Judy Matthews; CFO; Iterum Therapeutics plc
Thomas Yip; Analyst; H.C. Wainwright & Co, LLC
Presentation
Operator
Hello, everyone, and welcome to the Iterum Therapeutics third-quarter 2023 financial results and business update. My name is Harry, and I'll be your operator today. (Operator Instructions) And I will now hand the call over to Louise Barrett, Senior Vice President, Legal Affairs. To begin, please go ahead.
Louise Barrett
Thank you, Harry. Good morning, and welcome to Iterum Therapeutics' third-quarter 2023 financial results and business update conference call. A press release with our third-quarter results was issued earlier this morning and can be fined on our website. We are joined this morning by Corey Fishman, CEO, and Judy Matthews, CFO. Cory will provide some opening remarks, Judo will provide details on our financial results, and then we'll open the lines for Q&A.
In addition, we'll be extending the Q&A portion to answer a few questions we've been routinely receiving from some of our shareholders. Before we begin, I would like to remind you that some of the information presented on this conference call today will contain forward-looking statements concerning our plans, strategies and prospects for our business, including the development, therapeutic and market potential levels, will depend on the timing and results of top line data from our REASSURE clinical trial, our ability to address its deficiencies set out in the complete response letter received from the FDA in July 2021, the expected timing of resubmission of our NDA and timing of review of the NDA by the FDA.
The term and coverage provided by our patents, the sufficiency of our cash resources and evaluation of corporate strategic and financing strategies and alternatives to fund future development operations, including the issue of new shares for cash.
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, initiation and conduct of clinical and nonclinical development, availability and timing of data from the REASSURE clinical 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 (inaudible)
Changes in public policy or legislation, the accuracy of our expectations regarding how far into the future, our cash-in-hand will fund ongoing operations risk and uncertainties concerning the outcome impact facts and results of our evaluation of financing alternatives to fund future development operations, including the terms, timings, structure, value benefits and costs of any such alternatives under our ability to complete with it all.
Our ability to maintain our listing on the NASDAQ capital market and other factors included and discussed under the caption risk factors in our quarterly report on Form 10-Q 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 upon as representing our views as of any subsequent date, and we specifically disclaim any obligation to update such statements.
We will also be referencing non-GAAP financial measures during the call. We provide a reconciliation of GAAP reported non-GAAP adjusted information in the press release issued this morning. That said, I'll turn it over to you now, Corey, for your opening remarks.
Corey Fishman
Thanks, Louise. Welcome and thanks for joining us today, I want to share some exciting highlights about the business and our ongoing activities.
Let's begin by talking a bit about our upcoming key milestones and associated timing. Overall, we want to share with you that the timing for these key milestones has been moved forward by an entire quarter versus our previous guidance. We are very pleased to report then in October, we completed enrollment in our pivotal Phase 3 trial of oral Sulopenem for the treatment of uncomplicated urinary tract infections in adult women, our REASSURE clinical trial.
The REASSURE trial completed enrollment in just 12 months, which is quite remarkable given how long it takes uncomplicated urinary tract infection studies to complete enrollment from our experience and based on other recent uUTI studies. With enrollment in the REASSURE trial complete, our next key milestone will be reporting top line data, which we now expect will occur early in the first quarter of 2024.
Subject to our analysis of the data, we expect to resubmit our NDA to the FDA in the second quarter of 2024, provided that our resubmission addresses the deficiencies identified in our complete response letter. We expect the FDA to complete its review and take action six months from the date of resubmission or in the fourth quarter of 2024.
Now I'd like to take a moment and share the results of our interim analysis and the impact on our overall enrollment. As previously announced, once we achieved our halfway point of enrollment. The blinded interim analysis was conducted by an independent data monitoring committee to determine whether a sample size adjustment was recommended.
The interim analysis showed that based on the blinded data review, we were within the 80% to 90% power range outlined in our special protocol assessment agreement with the FDA. We chose to enroll an additional 263 patients for a total of 2,229 patients, in order to finish the study with a power figure towards the top end of that range based on the blinded data. Importantly, we were able to add these incremental patients and still complete enrollment in the trial of full quarter ahead of our previous guidance.
On the patent front, we are happy to inform you that we continue to enhance our patent estate, which provides a substantial runway to protect the value of oral Sulopenem in the US and other countries. In this quarter, we have been granted a patent in career directed to the composition of the bilayer tablet of oral Sulopenem.
This patent is scheduled to expire no earlier than 2039. Additionally, we were granted a patent in Australia, which is also directed to the composition of the bilayer tablet of oral Sulopenem and its related uses. As a reminder, in addition to the newly granted Korean and Australian patents and our in-license patents, interim owns two US patents for all oral Sulopenem and the Japanese patents all expiring in 2039, barring any extensions.
One US patent and the Japanese patent is directed to the composition of the bilayer tablet and its related preparations and or uses. And the other US 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 US and other jurisdictions, including Europe and China.
As of September 30, we had cash and cash equivalents of $36 million. 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, given our accelerated timeline, we expect our existing cash to be able to fund operations through the top line data readout as well as a potential NDA resubmission.
In summary, we are very pleased to have completed enrollment well ahead of our previous guidance and are looking forward to our upcoming milestones on the accelerated time line I have just laid out for you. As mentioned, based on our current projections, we expect to have the cash on hand to fund operations through top line data readout and the potential resubmission of our NDA. We continue to explore opportunities to efficiently and cost effectively raise capital to ensure that we can fund operations into the future.
Lastly, we remain excited about potentially bringing the first new oral treatment for uncomplicated urinary tract infections to the market in the US in over 20 years.
Now I'll turn the call over to Judy for details on our financial results.
Judy Matthews
Thanks, Cory. Total operating expenses were $16.7 million in the third quarter 2023, compared to $7 million in the third quarter 2022. Operating expenses include research and development expenses and general and administrative expenses. R&D costs were $14.9 million for the third quarter compared to $4.4 million for the same period in 2022.
The primary driver of the increase in R&D expense for the third quarter was cost to support our REASSURE trial, which began enrollment in October 2022, and completed enrollment last month. G&A costs were $1.8 million for the third quarter of 2023, which is $900,000 lower than G&A costs of $2.7 million in the third quarter of 2022, due primarily to lower share-based compensation expense and a decrease in legal fees incurred in connection with the lawsuit filed in August 2021, which was dismissed with prejudice in January 2023, which means the case cannot be brought back the quarter.
Our net loss on a US GAAP basis was $3.9 million for the third quarter of 2023, and $29.1 million for the same period in 2022. On a non-GAAP basis, which excludes certain noncash adjustments, our net loss of $15.7 million in the third quarter 2023, compared to our non-GAAP net loss of $5.3 million in the third quarter of 2022.
The $10.4 million increase in our non-GAAP net loss for the third quarter was primarily a result of higher R&D expenses related to our REASSURE trials. At the end of September, we had cash, cash equivalents and short-term investments of $35.9 million, which based on our current operating plan, will provide a cash runway into the third quarter of 2024.
We expect to report top line data early in the first quarter of 2024. And if the REASSURE trial is successful, we expect to resubmit to the FDA, the NDA for oral Sulopenem for the treatment of uUTI in the second quarter of 2024, provided that the resubmitted NDA addresses all of the deficiencies identified in the CRL.
We expect that the FDA will complete its review and take action six months from the date the FDA received the resubmitted NDA or during the fourth quarter of 2024. As of September 30, 2023, we had approximately 13 million ordinary shares outstanding.
Also, as of the end of September, 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 note holders $12.6 million plus accrued interest in January 2025. Operator, please open the line for questions.
Question and Answer Session
Operator
Thank you. We will now take questions from the audience.
Ed Arce, H.C. Wainwright.
Thomas Yip
Hi, good morning. This is Thomas Yip asking a couple of questions for Ed. Thank you so much for the kind of questions. So, first, perhaps a discussion for the Phase 2 study with over 2,200 patients enrolled versus the target of 1966 and also Korea, as you mentioned earlier, one quarter ahead, very impressive. Can you discuss what the main drivers of this open enrollment and also accelerated pace was some initial feedback for this study?
Corey Fishman
Yes. Thanks for the question, Thomas. The interim analysis was the real driver in terms of determining power. That's a very complicated. It was blinded. Of course, and it was a very complicated as all the interim analyses are set of analyses based on a variety of factors, including actual data and understanding where our power calculation was.
And what the reason we overenrolled, as you say, is we wanted to be at the higher end of that power calculation, which was between 80% and 90% per our SPA agreement with the FDA. So, we were able to do that in a very efficient manner and keep that timeline to basically one year for full enrollment, but we took that opportunity to increase the power, or the expected power of the study based on the data from interim analysis.
Thomas Yip
Got it. And then trying to narrow down the early first quarter 2024, readout timeline a little bit? Or would this be a kind of January or late January, February timeframe?
Corey Fishman
Yeah. We we're obviously still working on that we don't have any definitive date other than we believe it will be earlier in the quarter versus later in the quarter.
Thomas Yip
Understood, understood. Let's Just one more question from us or we've seen us she announce multiple new patent issue both in US and ex-US. Can discuss where some actions (inaudible) for ex U.S. markets?
Corey Fishman
Yeah, we will start looking at those conversations, when we have our data in terms of ex US, we know that the market is very large and we know that the majority of prescribing for oral products is in a handful, just like it is in the US, a handful of therapies.
And so what we really have to do is get the data, determine the best route of conversation for potential partnerships outside the US and then begin those conversations in earnest. The good news is the market is very large, there's I don't remember the exact number, but somewhere around 15 million or 17 million infections for uncomplicated UTI is what used to be called the Big Five.
And so, we know that there is an opportunity there. It's just a question of having conversations with partners who are appropriate to make sure that we can optimize what we have outside of the US as well.
Thomas Yip
Understood. Thank you again for taking your questions and we look forward to the data readout in first quarter.
Corey Fishman
Thanks, Thomas.
Operator
Thank you. And we have no further questions on the line today. So, I'd like to hand back to Louise Barrett to continue.
Louise Barrett
Great. Thanks, Harry. At this time, Corey and Judy will take questions that we've been receiving from some of our shareholders. And so, Cory, first question for you.
When do you expect that oral Sulopenem will be approved?
Corey Fishman
Thanks, Louise. We expect, as we mentioned, to report top line data in the early part of Q1 and then subject to our analysis of that data would expect to resubmit the NDA to the FDA in the second quarter of 2024, provided that our resubmission does address the deficiencies that were identified in our complete response letter, we would expect the time line the FDA to operate under would be to complete its review and take action six months from the date of that resubmission and therefore, a potential approval would occur in the fourth quarter of 2024.
Louise Barrett
Great. Thanks, Corey. And one for you Judy and how long can the company operate with it earn cash on hand?
Judy Matthews
Yeah, thanks, Louise. Yeah, based on our current productions, our cash on hand is sufficient to allow us to operate into the third quarter of 2024. As we said, that should allow us to fund our operations through the top line data as well as the NDA resubmission. However, additional funds are needed to get to approval in the fourth quarter.
Louise Barrett
Great. Thank you. And so, Corey, Judy has talked about cash runway. What about the long-term financing strategy of the company. Can you talk to us a little bit about that?
Corey Fishman
Sure. And thanks. Thanks for the question, investors. Because this is one, we get quite frequently, and we want to address it head-on. We're constantly evaluating a variety of financing strategies to ensure that we can continue to fund operations through '24 and over the next few years.
One such strategy is to take advantage of opportunities to raise capital through share issuances or cash. As we've discussed previously, as an Irish incorporated company, our shareholders must approve the disapplication of statutory preemption rights over the authorized, but on issued share capital, including the additional ordinary shares that were approved at the Annual General Meeting in May.
And this is otherwise known as the waiver of preemption rights. This waiver provides us with the ability to more efficiently and cost effectively access the capital necessary to continue to execute on our business plan and strategy. Without this waiver, our ability to raise additional capital for cash is severely limited under our existing authority, which did not cover the new shares that were approved at the Annual General Meeting in May.
As you may know, we did ask shareholders to approve this waiver earlier this year at our Annual General Meeting and at a subsequent extraordinary meeting in August. And while we received over 60% support of the vote on both occasions, we did not receive the affirmative vote of at least 75% of the votes cast as is required under Irish law.
Simply stated, without this waiver extending to all authorized and uninsured shares, in order to issue shares and raise sufficient capital in the equity markets, we'd be required to either seek a transaction-specific waiver from shareholders every time we want to issue shares that would entail an extraordinary general meeting each time and significantly impede the timing of a financing transaction and our likely ability to do a deal efficiently or at all.
Alternatively, we can attempt to issue shares through a rights offering by first offering the shares to all existing shareholders for a period of time and then perhaps finding additional investors willing to take any shares that are not subscribed for on the same terms as the rights offer.
The rights offering is also quite time-consuming, costly, and there can be no guarantee that we would raise sufficient capital via this process. We strongly believe that having the flexibility to quickly take advantage of opportunities to raise capital through share issuances for cash in order to fund the continued execution of our business plans and strategies is critical to interim success and our ability to bring oral Sulopenem, if approved to market.
While we will also continue to pursue other corporate strategic financial and financing alternatives, including partnerships and debt financings, we plan to go back to you our shareholders in the near future seek approval for the waiver of preemption rights over a portion of the authorized, but on issued shares.
Louise Barrett
Great. Thanks, Corey. That's all the questions for now. So, I'll pass it back to you Corey, just for your closing remarks.
Corey Fishman
Great. Thank you, Louise. Thanks for joining us today. We've taken the opportunity to address some of the questions we get most frequently from investors in order to provide as much clarity as we can regarding our upcoming milestones and timelines and to reiterate the importance of obtaining a waiver of preemption rights from shareholders with regard to the long term financing of the company.
We continue to remain confident in the value of oral Sulopenem to treat multidrug resistant infections in the community. We look forward to our upcoming top line data readout and subject to our analysis of the data resubmitting our NDA to the FDA for this important treatment option for physicians and patients. Thanks again for joining us today and have a good day.
Operator
This concludes today's call. Thank you all for joining. You may now disconnect your lines.
