Iterum Therapeutics PLC (ITRM) 2021 Q2 法說會逐字稿

Hello, and welcome to Iterum Therapeutics Q2 Financial Results Conference Call. (Operator Instructions)

I now have the pleasure of handing over to Louise Barrett, Senior Vice President of Legal Affairs.

Thank you, Hannah. Good morning, and welcome to Interim Therapeutics Second Quarter 2021 Financial Results and Business Update Conference Call. A press release with the company's 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 floor 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 planned interactions and communications with the FDA following receipt of the Complete Response Letter in July 2021, our expectations with regard to our ability to resolve the matters set forth in the Complete Response Letter and obtain approval for oral sulopenem, the conduct of potential future clinical and nonclinical development of sulopenem, the potential timing for resuming pre-commercialization activities and the sufficiency of our cash resources.

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 initiation and conduct of clinical and nonclinical development; availability and timing of data from clinical trials and nonclinical development; 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; the actions of third-party clinical research organization, suppliers and manufacturers; the accuracy of our expectations regarding how far into the future, the company's cash on hand will fund our ongoing operations; the impact of COVID-19 and related response measures thereto; and other risk factors set out in our filings with the SEC, including the most recently filed quarterly report on 10-Q.

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 obligations to update such statements.

With that, I'll turn the call over to Corey for his opening remarks.

Thanks, Louise. Welcome, and thanks for joining us today. I want to begin by discussing the Complete Response Letter we received from FDA in late July in response to our new drug application of sulopenem for the treatment of uncomplicated urinary tract infections for patients with a known or suspected quinolone nonsusceptible organism. As we noted in our press release, we are disappointed in this outcome and believe our data package was adequate for approval of sulopenem.

In the Complete Response Letter, the FDA acknowledged that the statistical significance was demonstrated for the difference in overall response rate by treatment arm in the ciprofloxacin-resistant population. In other words, demonstrated statistical significance in difference of overall response rates compared to ciprofloxacin in the quinolone-resistant population. However, the FDA determined that additional data are necessary to support approval and recommended that Iterum conduct at least 1 additional adequate and well-controlled clinical trial, potentially with a different comparator drug.

They also recommended further nonclinical investigation to determine the optimal dosing regimen, although the FDA stated that this recommendation does not raise an approvability issue. There were no CMC issues identified in the Complete Response Letter, nor were there any safety issues identified in the over 1,800 patients treated with sulopenem across the company's clinical development program.

Along with our outside advisers, we have been reviewing the Complete Response Letter as well as putting together a meeting request for a Type A meeting with the FDA and accompanying briefing book and will submit this document shortly. Assuming our meeting request is granted, and the time line set out in FDA guidelines for such meeting requests are followed, we'd expect the meeting to be held by the end of the third quarter. Our hope and expectation is that we leave that meeting with a go-forward plan that aligns with FDA requirements to address the issues noted in the complete response letter to support a potential resubmission of the NDA and note that the FDA has indicated their willingness to work with us on the design of any additional clinical trial to be conducted. It's important to note that we remain confident in the value of and the unmet medical need for oral sulopenem to treat multidrug-resistant infections.

With regard to pre-commercialization activities undertaken with our partner, EVERSANA, to date, we have completed a great deal of research and planning that will ultimately be valuable when commercialization activities are to be resumed following resolution of the issues identified in the Complete Response Letter. However, given the Complete Response Letter and the current uncertainty regarding what additional clinical work may need to be done prior to an NDA resubmission in order to reduce operating expenses and conserve cash resources, we halted any remaining pre-commercial activities and paused negotiations on the definitive agreement for commercialization services.

Lastly, I want to reiterate that with over $90 million of cash on our balance sheet at the end of Q2 and based on the current operating plan, subject to final determination of the design and additional clinical and nonclinical development work required to support a potential resubmission, we believe we are well positioned financially to fund our operation into the second half of 2023.

Now I'll turn the call over to Judy for details on our financial results.

Thanks, Corey. Total operating expenses were $7 million in the second quarter of 2021 compared to $8.3 million in the second quarter of 2020. Operating expenses include research and development expenses and general and administrative expenses.

R&D costs were $2.7 million for the second quarter of 2021 compared to $5 million for the same period in 2020. The R&D category includes expenses for our clinical and development programs, our CMC costs and our regulatory expenses. The primary driver of the $2.3 million decrease in R&D costs was the completion of our Phase III program in 2020.

G&A costs were $4.3 million for the second quarter of 2021, which is $1.1 million higher than G&A costs of $3.2 million in the second quarter of 2020 due to higher spend on pre-commercialization activities and higher consulting costs to support administrative functions, partially offset by lower G&A headcount. As Corey mentioned, we have put on hold any further pre-commercialization activities following receipt of the CRL in July.

Moving on to nonoperating items. Interest expense was $1 million for the second quarter of 2021 compared to $4.1 million in the second quarter of 2020. The primary reason for the $3.1 million decrease in interest expense was noncash interest expense associated with a lower outstanding exchangeable notes balance of $12.6 million as of June 30, 2021, versus $51.6 million as of June 30, 2020.

On a strictly cash basis, we paid interest related to our term loan with SVB of approximately $120,000 in the second quarter of 2021 versus approximately $250,000 in the second quarter of 2020. The reduction in cash interest is largely due to 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. As of June 30, 2021, there was a remaining balance of $4.7 million on our term loan with SVB.

Our net income on a U.S. GAAP basis was $7.8 million -- of $7.8 million was driven by a $15.8 million noncash adjustment to record our royalty-linked notes at fair value. 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 noncash adjustments, including adjustments to record derivatives at their fair value, our net loss was -- of $7.2 million for the second quarter of 2021 was $1.6 million less than our non-GAAP net loss of $8.8 million in the second quarter of 2020 as a result of the lower operating expenses previously discussed.

At the end of June, we had cash and short-term investments of $91.5 million. Based on our current operating plan and subject to final determination of the design and planned conduct of potential additional clinical and nonclinical development for sulopenem, we have cash into the second half of 2023. As I mentioned, we have halted pre-commercialization activities and plan to limit spending to essential costs required in connection with the potential resubmission of the NDA.

As of June 30, 2021, we had approximately 183 million ordinary shares outstanding. Also, as of the end of June, we had 7.2 million warrants outstanding at an average price of $1.61 per share and $12.6 million of exchangeable notes, which can be exchanged for approximately 17.7 million shares, which includes accrued interest at the option of the note holder.

Now I will turn the call back over to Corey for some closing comments.

Thanks, Judy. I'd like to open the call now for any questions that folks may have.

(Operator Instructions) Our first question today comes from Gregory Renza of RBC Capital Markets.

I just wanted to perhaps take a step back, Corey. And as you and the team prepare for the Type A meeting, just curious if you could comment on just how you're thinking about the company strategically and really what inputs you will be considering, of course, aside from the feedback that you received from FDA on the path forward and a potentially new trial. I'm just thinking, Corey, about how the competitive landscape, both on market and more importantly, developmentally has evolved since you certainly engaged in the penem trials a few years ago and over that time.

Thanks, Greg. It's a great question. And here's how we look at this. We are still very enthusiastic and optimistic about the opportunity for oral sulopenem in the uncomplicated UTI market. And so we are going to work with the agency to try to develop a go-forward plan together in alignment with them, that would allow us to participate in that market. We don't know exactly what they're looking for. And obviously, that's part of the reason we're having a Type A meeting to really try to nail down exactly what the deficiencies in our submission were so we can respond appropriately. And after that, I think, importantly, we'll be able to pull together a plan that, thankfully, we've got plenty of cash to be able to execute against and put ourselves into a position to be able to hopefully compete in that market in the near term.

And I think your competitive question is a really important one, and I think there's good news on that front. The landscape has not changed dramatically in the last couple of years with regard to potential competition in the uncomplicated urinary tract space. There are really only 2 products that are potential market entrants, one of which is a product from Glaxo that is under clinical trials now and isn't expected to be complete with those until end of '22, early '23, which would put the time line for them launching probably into the '24 time frame. And then one is a product from UTILITY Therapeutics that they have brought over from Europe. It is not approved here in the U.S., and they are planning on submitting an NDA, fourth quarter, I believe, is what they said at the end of this year.

So I think the good news is in a market with the scale of uncomplicated urinary tract infection and unfortunately, with the resistance profile of the existing oral products, we will be in a very solid position to be able to capture a very reasonable share of that market and make sulopenem a very important part of the treatment paradigm.

That's very helpful, Corey. Appreciate the color and look forward to the updates later this year.

Our next question today comes from Ed Arce of H.C. Wainwright.

This is Thomas Yip asking a couple of questions for Ed. First, regarding CRL, the FDA suggested using a different comparator drug. Just wondering if there are some possibilities that you have in mind regarding these comparators? And are there any expected changes to the proposed product label based on this new comparator?

Yes. So it's a good question. And actually, it's a really important one, Thomas, because we are working on an analysis of all the existing products as we have done before. And part of the challenge that the marketplace in general has is many of these products are not working very well. And therefore, that's going to be the part of the -- very important part of the conversation with the agency. And we could choose any of the number of 3 or 4 different oral competitors. But I think the agency is going to want to see a product that is still working well. And we know that almost all the products, with regard to the orals in the market, are having problems with resistance with some of the pathogens that exist. So it's going to make that a little bit more challenging.

Just as a point of reference, Glaxo has used nitrofurantoin. That is their comparator. So that's a potential. The other products in the space are Bactrim. Others that, again, have been around for a long time, but have a lot of resistance. And so that's part of what we really want to think about and what we want to talk about. The guidance also that FDA has put out also talks about doing a placebo-controlled trial with superiority as your endpoint. And so that's something that we're thinking about talking to the agency about as well because that's a potential for another route forward with the agency, given that it's in the guidance.

The other important question you raised is label. We don't know what that label is going to look like if we have a noninferiority study against an active comparator, a superiority study against a placebo. We don't know those answers yet. We would have that conversation and certainly hope to understand better once we come out of that meeting, what a potential label would look like, but that's really importantly, kind of the crux of the discussion is if we're not using Cipro, not doing a similar trial, then we have to understand what does the label look like and work forward from there.

Perhaps a question on cash runway. In the press release you said, into second half of 2023. I just wonder if -- does that include cost of expected trials subject to be confirmed in Type A meeting and of course (inaudible) of course, it needs to be confirmed in the meeting, but can go over some ballpark assumptions for the study in the meantime.

Yes. So the question -- it was a little hard to hear you, but I think it was regarding cash and whether that includes an estimate for a clinical trial. The short answer is, it does. To your point, we don't know exactly what that looks like. But barring anything really unusual, I think we would be in a reasonably good spot to be able to get into that second half of 2023. Again, that's part of what we'll update as soon as we have some clarity around the discussion with the agency and the protocol for a potential new study, if that's what is required. But we are planning to -- in this kind of cash runway, we certainly plan to do additional clinical work and that cost is covered in there.

Thank you all for your questions. I will now hand over to Corey Fishman to conclude today's call.

Great. Well, thanks again for joining us today. Although receiving a Complete Response Letter has certainly left all of us greatly disappointed, we will work diligently with the FDA to align on a path forward that provides the agency the additional data they require in the most efficient manner possible. As we stated earlier, we remain confident in the value of and the unmet medical need for oral sulopenem to treat multidrug-resistant infections. And importantly, we believe our cash provides Iterum the ability to do this additional work, subject to our discussions with the FDA, without the need for additional capital.

So thanks again for joining us and enjoy the day.

Thank you for joining. Today's call has now concluded, and you may now disconnect your lines.