Iterum Therapeutics plc
Q4 2020 Earnings Call Transcript

Published: 12 Mar 2021

[Louise Barrett:]

Good morning everyone and welcome to Iterum Therapeutics Fourth Quarter and Full Year 2020 Financial Results and Corporate Update Conference Call. Our press release with the Company’s fourth quarter and full year 2020 results was issued earlier this morning, and can be found on our website. We’re joined this morning by Corey Fishman, our CEO; and Judy Matthews CFO. Corey will provide opening remarks, Judy will provide details on our financial results, and then we’ll open the lines for Q&A. Before we begin, I’d like to remind you that this call will contain forward-looking statements concerning our plans, strategies and prospects for our business including with respect to the timing of review by the FDA of our NDA for oral sulopenem, our expectations for potential approval on the PDUFA date, the market potential for sulopenem, commercialization activities including the ability to enter into a definitive agreement with respect to commercialization services, the ability to expand any approved label for oral sulopenem, including adding additional indication, and the sufficiency of our cash resources to execute our strategy.

[Corey Fishman:]

Thanks very much, Louise. Welcome, and thanks for joining us today. As this is our first financial results and business update conference call, I’d like to start with a very brief overview of Iterum and the market we’re addressing with our lead drug candidate, oral sulopenem, before I go into details of our more recent accomplishments and the outlook for 2021 and beyond. Iterum developed an oral and IV antibiotic, called sulopenem, to address the growing crisis of multidrug resistant pathogens and growing antibiotic resistance. Sulopenem is from a class of drugs, called penem antibiotics that have an excellent place in the treatment paradigm for infections as an often used, very efficacious and safe class. However, this class of drugs is currently available only in IV form, and that provides us a very unique position in the market in that we have an oral formulation of a penem antibiotic. Having the oral will allow sulopenem to be used in the community, and potentially over time as a stepdown therapy in hospitals to allow patients to be discharged sooner. Importantly, the oral formulation for use in the community should generate a substantially different revenue profile than many of the other antibiotics that have launched in the last few years that only had an IV formulation for the hospital. Our first indication, which is currently under review by the FDA, is for the treatment of uncomplicated urinary tract infections in patients with quinolone non-susceptible pathogens. I’d like to spend a minute and talk about our Phase 3 study with oral sulopenem in uncomplicated urinary tract infections. In this study, oral sulopenem achieved its endpoint and showed statistical superiority to the standard of care product, ciprofloxacin with the p value less than 0.001 in patients with the quinolone non-susceptible pathogens. Additionally, although not an FDA endpoint, we ran an analysis, which included the entire population of patients in the study, those with pathogens susceptible to quinolones and patients with pathogens not susceptible to quinolones. And this analysis of sulopenem showed non-inferiority to cipro, which is very important data for folks to understand.

[Judy Matthews:]

Thanks, Corey. First, I will begin with a brief explanation of our results for the fourth quarter and full year 2020 versus the prior year. Next, I will talk about our capital structure and current cash position and runway. And finally, we will provide some guidance on spend in the first half of 2021. R&D costs were $2.4 million for the quarter compared to $20.9 million for the same period in 2019. The R&D category includes expenses for our clinical and development programs, our CMC costs, and our regulatory expenses. The primary driver of the $18.5 million decrease in R&D costs was the substantial completion of enrollment in our Phase 3 program in 2019. Full year R&D costs were $21.1 million in 2020, versus $90.8 million in 2019 as the vast majority of the over 3,700 patients enrolled in our Phase 3 program were treated in 2019. G&A costs were $2.3 million for the fourth quarter of 2020, which is the same amount as G&A costs for the fourth quarter of 2019. Full year G&A costs were $11.1 million for 2020 compared to $11.3 million in 2019 or $200,000 decrease due to lower consulting spend on pre-commercialization activities and lower G&A headcount, partially offset by higher share-based compensation expense. Interest expense was $4.2 million for the fourth quarter of 2020 compared to $400,000 in 2019. Full-year interest expense was $15.1 million in 2020 versus $900,000 in 2019. Let me take just a moment to explain this largely non-cash line item. The primary reason for the increase in interest expense for both the fourth quarter and full-year year was non-cash interest expense related to the amortization of the discount and the financing fees associated with the exchangeable note and royalty linked notes issued in 2020, as well as the 6.5% interest accrued on the exchangeable note, which is not due until January 2025, unless the notes are exchanged prior to that. To date, we have elected to pay the interest owed on the exchangeable notes that have been exchanged in the form of ordinary shares. On a strictly cash basis, we paid interest related to our term loan with SVB of approximately $1 million in 2020 versus $1.4 million in 2019. The reduction in cash interest is due to lower interest rates in 2020 and a lower principal balance on our term loan, as monthly amortization began in the fourth quarter of 2019 and will continue until our final payment in March 2022. At the end of the year, we had cash on hand of $14.5 million. In February 2021, we completed two equity financings that raised just over $74 million on a net basis. And we have had warrant exercises through the end of February that have generated over $14 million in 2021. As a result, we had just over $100 million in cash as of the end of February 2021. And based on our current plan, we have cash into the first half of 2023. Therefore, we have the ability to continue our pre-launch activities with EVERSANA, complete the FDA review, which includes an Advisory Committee meeting in June, launch oral sulopenem in the U.S., if approved, potentially initiate a registration trial for complicated urinary tract infections, and operate into 2023, without incremental funding. As of February 28, 2021, we had approximately 176 million ordinary shares outstanding. Also, as of the end of February, we had 8.3 million warrants outstanding at an average price of $1.53 per share, and $16.2 million of exchangeable notes still outstanding, which can be exchanged for approximately 20.8 million shares at the option of the note holder. Now, let’s turn to guidance for spending in the first half of 2021. With regard to R&D, spend in the first half of 2021 will consist largely of costs associated with the FDA review, as well as the manufacture of tablets for process validation purposes that are able to be used commercially. As such, we expect our R&D spending in the first half of 2021 to be between $6 million and $8 million. Our SG&A spending includes all commercial infrastructure and costs related to the pre-launch activities for oral sulopenem, as well as corporate costs and infrastructure to run and maintain our public company. We expect SG&A expense for the first half of 2021 to be between 2021 to be between $9 million and $11 million with the step up from our current run rate due to an increase in pre-commercialization activities. Now, I will turn it back over to Corey for some closing comments.

[Corey Fishman:]

Thank you, Judy. 2021 is clearly a transformational year for Iterum as we transition from a pure development stage company to a commercial organization with potential development programs to enhance our initial indication and add new indications. And very importantly, we have cash to execute on our launch strategy and continue the development of sulopenem. Now, I’d like to open the line for questions.

[Operator:]

Our first question comes from Gregory Renza from RBC Capital Markets. Your line is now open.

[Gregory Renza:]

Hey, Corey and team. Congratulations on all the progress, and thanks for taking the questions. Corey, I just wanted to see if you could just provide some context on how you’re approaching the Ad Com and your preparations there. I’m just curious, firstly, any feedback or topics that have been delivered from FDA in your conversations since? And really, in regards to the focus of the discussion, what do you see as a point of focus and what is your confidence level and the strength of the data package that you’re presenting there? Thank you.

[Corey Fishman:]

Sure. Thanks for the question, Greg. With regard to the Ad Com, the review has been ongoing. I would call it a pretty standard review, based on the questions we’ve gotten and our ability to respond to them. There hasn’t been anything flagged by FDA to us as this will be a topic for the discussion at the Advisory Committee. I think, we feel very good that we have a very robust data package for our indications. And as I mentioned, the data that has been provided in other studies and even in places where we didn’t hit the endpoint, has continued to be highly supportive. So, I categorize this product as the type of product that works very well. This missed the endpoint because of the asymptomatic bacteriuria in two studies. And it’s sort of a bit of a microbiologic anomaly. And so, I think, the overall package is extremely supportive. And I think from an Ad Com perspective, we’re going in, will be prepared to discuss the course the data package, and everything around it. But, I think, we feel good about coming out of there in good shape.

[Gregory Renza:]

Got it. That’s helpful. Just one more from me. Certainly heavy focus of late from regulatory bodies on CMC and manufacturing and site inspections and whatnot. Just curious if you can perhaps just remind us or give us the latest developments and context around the tablet development for sulopenem. Thank you.

[Corey Fishman:]

Yes. So, with regard to the FDA’s perspective, I know that overall, there’s been an increased focus on parenteral products. There’s a significant amount of work that goes on, and I know that there’s been some conversations with the agency about doing inspections, and can we get there in person? Typically, what has happened for us is they’ve requested a significant amount of data from our manufacturer, and then we’ll -- we’ve submitted all that data to them, and we’re just going to wait and see whether there’s a desk review, whether there’s a virtual review or whether they’re going to require an in-person inspection. We don’t know that answer. But, we haven’t gotten any indication that anything is off track. We continue to get indications that we’re still on track for everything we’ve said to-date. And the information we’ve provided has been pretty extensive. So, we’ll just have to wait and see. Both as of today, we don’t have any indication that anything is different than what we had expected.

[Operator:]

Our next question comes from Ed Arce from H.C. Wainwright. Your line is now open.

[Ed Arce:]

Great. Thanks for taking my questions, and congrats as well on all the recent progress. First question for me is I suppose a similar one. Corey, with your Ad Com now set for June 2nd, I’m wondering if -- how you feel prepared for the inevitable questions by the panel on the higher rates of asymptomatic bacteriuria and the impact that that had on the clinical response rates, vis-à-vis the position of the FDA as inclusion of that response rate and the relevance in clinical practice, any thoughts that you might have there, not only for the current application, but any potential that that might have on the other indications?

[Corey Fishman:]

Yes. Thanks, Ed. That’s a great question. And I’ll share with you a couple of things that I think are important. You mentioned clinical practice. And I think that should be and is at the highest point of concern for FDA. And in this case, with regard to asymptomatic bacteriuria, as I mentioned in the remarks, the Infectious Disease Society of America comes out and says, don’t look for it, don’t test for it and don’t treat it. It’s just a non-issue. So, I think, the reality is that the FDA understands that practicing physicians are much more concerned about patient’s health and wellness, how they feel, and of course, not having a re-infection, which this doesn’t cause. So, I think there’s an acknowledgement of that. And during our discussion with the agency, in our pre-engineering meeting, I think there was an acknowledgement that there is a conversation to be had about how come everything else seems to look pretty darn good. And the a asymptomatic bacteriuria causes you to miss the final endpoint. So, I think there’s some interest by the FDA in understanding that better. We’ve tried to help them significantly over the last three or four months of having the data and put together quite a nice package. And your question regarding, how do we feel about it at the Ad Com, we’ll be very prepared to have a full conversation on that. And I think what people will see is that when you look at all the data, as a whole, you’ll see that this drug works extremely well. Clinical curates in the complicated UTI study for sulopenem were in the high 80s as was IV ertapenem. I mean, it’s a very good drug. And unfortunately, this is an area in uncomplicated urinary tract infections that hasn’t been had a clinical study done in over 20-years. So, there really hasn’t been much focus on it. I think this is going to bring it to light. And I think that certainly the agency is aware of that and is thinking about what that means, and I think we’ll be able to help the Ad Com and the FDA certainly understand our perspective. Of course, I’ll never say what the FDA is going to do, because we don’t know that answer. But, we certainly feel good that there’s a very practical and logical discussion to be had regarding why asymptomatic bacteriuria is something that occurs, and is just not a significant issue for patients.

[Ed Arce:]

Okay, great. And then, the other question I had is around pricing. You mentioned that, of course, this is intended to be a five-day course of treatment, and you’ve stated the daily WACC price, as it stands now, you expect to fall within the range of 150 to 200. You also said that you intend to conduct a formal pricing study closer to the launch, I guess to more formalize -- to more formally conclude your analysis of pricing. So, question is, within -- in the context of a potential launch in the fourth quarter, are there any other activities such as this pricing study that you intend to undertake between now and launch?

[Corey Fishman:]

Yes. The answer is yes. There’s an enormous amount of work to get done between now and the launch. And as I mentioned, it’s highlighted a handful of kind of the key priorities, but you can imagine that we have a significant amounts of work to do on sales force targeting to figure out the number of reps, to figure out the optimal places to put these folks, to figure out the split between commercial reps in the field, and inside sales reps, which as you know, during a COVID period has been very well used and has been very effectively used by a number of companies. Additionally, we have a lot of preparation to do on marketing and sales materials and support materials. As I mentioned, we have an awareness campaign that’s upcoming here in the next few months. There’s an awful lot that we’ll be doing to finalize the strategy and utilizing EVERSANA who’s had this experience from kind of going through a very rapid preparation period for other products to get launched. It’s going to be incredibly helpful to have them on our side and to have their resources behind this as well, because there’s a lot to do. But we feel pretty confident that we can get it all done assuming approval, of course, and get this product out to the market in that fourth quarter. So, there’s a lot to do. But, we feel pretty good that we’re going to get there.

[Ed Arce:]

Great. One last question, actually, Corey. Do you know yet, has the agency told -- advised you whether this Ad Com is a full day or a half day? And if so, when?

[Corey Fishman:]

No, I don’t have that information. I think, there were some meetings going to occur in the next week or two with the point person at FDA for the Ad Com to go through some of the logistics. I do believe it’s going to be a virtual meeting though, not in-person. But other than that, I don’t think we’ve been given the more specifics around that, Ed.

[Ed Arce:]

Thanks so much.

[Corey Fishman:]

Thank you.

[Operator:]

Our final question comes from Kevin Kedra from the Gabelli Research. Your line is now open.

[Kevin Kedra:]

Hi. Thanks for hosting the call and taking the questions. Corey, I want to talk about the issue of antibiotic stewardship. You mentioned some of the challenges that other launches have had. You don’t -- you think you might be able to get around those and have a more successful launch. It seems like stewardship has kind of been at the heart of that issue. When we think about penem, they’re often used as the last line of defense against various multi-drug resistant bacteria in the hospital. So, how would you anticipate responding to the concern that by having a penem product for uncomplicated urinary tract infections, it would sort of -- it would seemingly go against some of the stewardship guidelines to reserve products of this nature towards some of the more serious infections in order to preserve their efficacy against MDRs?

[Corey Fishman:]

Yes. Thanks for the question, Kevin. I think, we’re actually pretty aligned with stewardship. And I’ll tell you why. Generally, stewardship says use the right product for the right infection. And you’re right. Doctors in the hospital tend to reserve and do all things. And unfortunately, that’s what tends to make those launches less successful is that doctors are sort of reluctant to use the new products in the hospital. I think, the community is very different. I think, generally, physicians in the community are much more concerned about treating patients well and getting them out. And the other couple of pieces are, as we said earlier, and all along, we plan to use this product, we are planning to use it in the right patients. And those are people who have quinolone-resistant pathogens, and high risk patients. So, we’re not recommending that this is used for every single UTI that occurs for healthy young women. What we would say is, certainly, when you’re in those highly resistant areas and there’s a very good likelihood that that patient is going to have a quinolone resistant or quinolone non-susceptible pathogen, that’s something you really want to look at in terms of use of sulo. Additionally, the high-risk patients, the elderly, the diabetic folks, the folks with comorbidities, people in nursing homes, all of that’s critically important to treating this correctly the first time. And we know that the hospitalization rate for those patients goes up by a factor of two, if they’re treated with the wrong infection -- I’m sorry with the wrong therapy. So, it’s important that we continue to put that message out into the market. And I believe that’s very aligned with stewardship, because you really want to make sure you’re treating that patient population well and taking care of them. The last piece I’ll mention is that, I think, people have a tendency to say, oh, it’s only UTI. We know a lot of folks unfortunately end up in the hospital from UTIs. Additionally, in our clinical study, almost 5% of the patients were resistant to every existing oral therapy that is in use today for UTI, 5%. That’s 1 million patients when you look at 22 million total population. 5% of that is 1 million patients have no oral therapy to take, nothing. So, we’re there to say we are able to help treat those patients as well. So, I think, you’re absolutely right. Stewardship does tend to be an important topic. And I think the good news is, we feel very-aligned with that in the regard to the use of sulopenem in those appropriate patients.

[Kevin Kedra:]

Thanks. I appreciate the color on that. I did want to ask, if you’ve seen any change in your interactions with the FDA, really over the past month since they’ve accepted the filing. It seems like a few other companies in the industry have kind of been caught off guard by some changes in the tone of their conversations or interactions with the FDA. So, wondering if you’ve seen anything like that or has it been fairly consistent, since they’ve accepted the filing?

[Corey Fishman:]

Yes. No, I would say, unfortunately, we’ve all sort of kept up to date on what’s happening in other places. But I would say, as we sit here today, we feel like this has been a pretty standard kind of review. And there’s been no shift in the last month or six weeks, in terms of tone or anything like that. We’re getting information requests, which is very typical. We’re responding to those on the timelines suggested. And I think we feel like there’s been no change in our review at this point. And nothing points us in a direction that looks anything like that, as we sit -- as we’re talking today.

[Kevin Kedra:]

Great. And then, maybe one for Judy. You mentioned the cash runway into 2023. I was wondering what that incorporates in terms of some of these expansion opportunities that you see for sulopenem, either in non -- or quinolone susceptible, UTI patients or work in complicated UTI? What does that cash runway include in terms of additional clinical work that you might need to do around those indications?

[Judy Matthews:]

Yes. As I said, it does include beginning some type of trial for the cUTI and possibly uUTI. But we will know more of course when we’ve got the meeting next quarter on the cUTI to see the size of trial, et cetera and what they’ve required to get that done in our label. And then, we will have the meeting in the second half of 2021 on the uUTI expansion. So, we will know more. But as part of what we’re forecasting, there is money in there to get us into 2023 to start these trials. But again, we’ll know more and we continue to refine the guidance, as we know more from the FDA.

[Kevin Kedra:]

Great, thanks.

[Operator:]

We have no further questions.

[Louise Barrett:]

Sorry, go ahead -- no further questions. Yes, just a couple of quick comments, and we’ll be all set. First and foremost, I really like to thank everyone for joining us today. This was our first call. And we’re really excited about where we are as a company, and the prospect of bringing this product to patients is really driving a ton of enthusiasm here at Iterum. And so, we’re super excited to be here. It’s been a bit of a long road. We’ve been able to work through a number of the challenges that we faced. And now, we have a line of sight to get this potentially approved and to continue the development work to bring sulopenem to even more patients. And we’re really looking forward to the coming quarter. So, thanks again for joining us. And have a great day.