10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38503

Iterum Therapeutics plc

(Exact name of registrant as specified in its charter)

Ireland

98-1283148

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

Fitzwilliam Court 1st Floor,

Leeson Close,

Dublin 2, Ireland

(Address of principal executive offices)

Not applicable

(Zip Code)

(+353) 1 669-4820

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, $0.01 par value per share	ITRM	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, the registrant had 13,041,041 ordinary shares, $0.01 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Cash Flows	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	96
	Signatures	97

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our use of cash reserves;

•

the design, initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs including the ongoing Phase 3 clinical trial being conducted in response to the Complete Response Letter (CRL) received from the U.S. Food and Drug Administration in July 2021 in connection with our New Drug Application (NDA) for oral sulopenem;

•

our ability to resolve the issues set forth in the CRL and resubmit our NDA;

•

our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

•

our ability to advance product candidates into, and successfully complete, clinical trials;

•

the potential advantages of our product candidates;

•

the timing or likelihood of regulatory filings and approvals, including with respect to the potential resubmission of our NDA for oral sulopenem;

•

the commercialization of our product candidates, if approved;

•

our manufacturing plans;

•

our sales, marketing and distribution capabilities and strategy;

•

market acceptance of any product we successfully commercialize;

•

the pricing, coverage and reimbursement of our product candidates, if approved;

•

the implementation of our business model, strategic plans for our business and product candidates;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and our ability to defend and enforce any such intellectual property rights;

•

our ability to enter into strategic arrangements, collaborations and/or commercial partnerships in the United States and other territories and the potential benefits of such arrangements;

•

our estimates regarding expenses, capital requirements and needs for additional financing;

•

our expectations regarding how far into the future our cash on hand will fund our ongoing operations;

•

our ability to continue as a going concern;

•

our financial performance;

•

developments relating to our competitors and our industry;

•

our ability to maintain compliance with listing requirements of the Nasdaq Capital Market;

•

the impact of general economic conditions, including inflation; and

•

the outcome, impact, effects and results of our evaluation of corporate, strategic, financial and financing alternatives, including the terms, timing, structure, value, benefits and costs of any corporate, strategic, financial or financing alternative and our ability to complete one at all.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report to conform these statements to new information, actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report and the documents that we have filed with the Securities and Exchange Commission (SEC), as exhibits to this Quarterly Report with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

This Quarterly Report also contains industry, market and competitive position data from our own internal estimates and research as well as industry and general publications and research surveys and studies conducted by third parties. Industry publications, studies, and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source. The industry in which we operate is subject to a high degree of uncertainty and risks due to various factors, including those described in the section titled “Risk Factors”.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ITERUM THERAPEUTICS PLC

Condensed Consolidated Balance Sheets

(In thousands except share and per share data)

(Unaudited)


	June 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	13,734		$	21,092
Short-term investments		30,998			39,712
Income taxes receivable		7			302
Prepaid expenses and other current assets		2,914			1,338
Total current assets		47,653			62,444
Intangible asset, net		861			1,719
Property and equipment, net		69			69
Restricted cash		34			34
Other assets		2,404			2,567
Total assets	$	51,021		$	66,833
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	3,715		$	2,774
Accrued expenses		5,171			4,346
Derivative liability		154			196
Other current liabilities		1,789			1,748
Total current liabilities	$	10,829		$	9,064
Long-term debt, less current portion		11,666			10,094
Royalty-linked notes		20,251			18,372
Other liabilities		1,146			1,304
Total liabilities	$	43,892		$	38,834
Commitments and contingencies (Note 15)
Shareholders’ equity
Undesignated preferred shares, $0.01 par value per share: 100,000,000 shares authorized at June 30, 2023 and December 31, 2022; no shares issued at June 30, 2023 and December 31, 2022		—			—
Ordinary shares, $0.01 par value per share: 80,000,000 shares authorized at June 30, 2023; 20,000,000 shares authorized at December 31, 2022, 13,028,403 shares issued at June 30, 2023; 12,598,641 shares issued at December 31, 2022		130			126
Additional paid-in capital		452,084			451,150
Accumulated deficit		(445,059	)		(422,927	)
Accumulated other comprehensive loss		(26	)		(350	)
Total shareholders' equity		7,129			27,999
Total liabilities and shareholders’ equity	$	51,021		$	66,833

The accompanying notes are an integral part of these condensed consolidated financial statements.

ITERUM THERAPEUTICS PLC

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	(8,964	)	$	(3,984	)	$	(15,396	)	$	(7,424	)
General and administrative		(1,858	)		(4,066	)		(3,956	)		(7,999	)
Total operating expenses		(10,822	)		(8,050	)		(19,352	)		(15,423	)
Operating loss		(10,822	)		(8,050	)		(19,352	)		(15,423	)
Interest expense, net		(324	)		(766	)		(723	)		(1,805	)
Adjustments to fair value of derivatives		(960	)		2,155			(1,838	)		7,332
Other income, net		50			269			91			431
Total other (expense) / income		(1,234	)		1,658			(2,470	)		5,958
Loss before income taxes		(12,056	)		(6,392	)		(21,822	)		(9,465	)
Income tax expense		(187	)		(343	)		(310	)		(770	)
Net loss	$	(12,243	)	$	(6,735	)	$	(22,132	)	$	(10,235	)
Net loss per share – basic and diluted	$	(0.95	)	$	(0.55	)	$	(1.73	)	$	(0.84	)
Weighted average ordinary shares outstanding – basic and diluted		12,942,969			12,224,324			12,812,398			12,208,961
Statements of Comprehensive Income
Net loss	$	(12,243	)	$	(6,735	)	$	(22,132	)	$	(10,235	)
Other comprehensive income:
Unrealized gain on marketable securities		105			—			324			—
Comprehensive loss	$	(12,138	)	$	(6,735	)	$	(21,808	)	$	(10,235	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ITERUM THERAPEUTICS PLC

Condensed Consolidated Statements of Cash Flows

(In thousands, except share and per share data)

(Unaudited)


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(22,132	)	$	(10,235	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation		16			55
Amortization of intangible asset		858			858
Share-based compensation expense		503			3,879
Interest on short-term investments		54			(123	)
Amortization of debt discount and deferred financing costs		1,162			1,157
Interest on exchangeable notes - non-cash		410			410
Adjustments to fair value of derivatives		1,838			(7,332	)
Other		946			1,894
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(2,729	)		(1,366	)
Accounts payable		942			(92	)
Accrued expenses		812			1,797
Income taxes		302			(128	)
Other liabilities		(204	)		(443	)
Net cash used in operating activities		(17,222	)		(9,669	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(16	)		(10	)
Purchases of short-term investments		(26,859	)		(34,858	)
Proceeds from sale of short-term investments		36,328			28,600
Net cash provided by (used in) investing activities		9,453			(6,268	)
Cash flows from financing activities:
Repayments of long-term debt		—			(2,251	)
Proceeds from issuance of ordinary shares, net of transaction costs		435			—
Net cash provided by / (used in) financing activities		435			(2,251	)
Effect of exchange rates on cash and cash equivalents		(24	)		(49	)
Net (decrease) / increase in cash, cash equivalents and restricted cash		(7,358	)		(18,237	)
Cash, cash equivalents and restricted cash, at beginning of period		21,126			27,510
Cash, cash equivalents and restricted cash, at end of period	$	13,768		$	9,273
Supplemental Disclosure of Cash Flow Information:
Income taxes paid - U.S.	$	11		$	898
Interest paid	$	—		$	22

The accompanying notes are an integral part of these condensed consolidated financial statements.

ITERUM THERAPEUTICS PLC

Condensed Consolidated Statements of Stockholders' Equity

(In thousands, except share and per share data)

(Unaudited)


	Ordinary Shares				Additional					Accumulated Other
	Shares		Amount		Paid in Capital		Accumulated Deficit			Comprehensive Income (Loss)			Total
Balance at March 31, 2023		12,805,833	$	128	$	451,776	$	(432,816	)	$	(131	)	$	18,957
Issuance of ordinary shares, net		222,570		2		198								200
Share-based compensation expense						110								110
Net loss								(12,243	)					(12,243	)
Unrealized gain on available-for-sale securities											105			105
Balance at June 30, 2023		13,028,403	$	130	$	452,084	$	(445,059	)	$	(26	)	$	7,129

	Ordinary Shares				Additional					Accumulated Other
	Shares		Amount		Paid in Capital		Accumulated Deficit			Comprehensive Income (Loss)			Total
Balance at December 31, 2022		12,598,641	$	126	$	451,150	$	(422,927	)	$	(350	)	$	27,999
Issuance of ordinary shares, net		429,762		4		431								435
Share-based compensation expense						503								503
Net loss								(22,132	)					(22,132	)
Unrealized gain on available-for-sale securities											324			324
Balance at June 30, 2023		13,028,403	$	130	$	452,084	$	(445,059	)	$	(26	)	$	7,129


	Ordinary Shares				Additional					Accumulated Other
	Shares		Amount		Paid in Capital		Accumulated Deficit			Comprehensive Income (Loss)		Total
Balance at March 31, 2022		12,223,561	$	122	$	430,506	$	(381,993	)	$	—	$	48,635
Issuance of ordinary shares, net		9,813		—		2		—			—		2
Share-based compensation expense		—		—		1,984		—			—		1,984
Net loss		—		—		—		(6,735	)				(6,735	)
Unrealized loss on available-for-sale securities		—		—		—		—			—		—
Balance at June 30, 2022		12,233,374	$	122	$	432,492	$	(388,728	)	$	—	$	43,886

	Ordinary Shares				Additional