UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of October 31, 2023, the registrant had
Table of Contents
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Page |
PART I. |
1 |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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3 |
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4 |
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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. |
37 |
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Item 4. |
37 |
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PART II. |
38 |
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Item 1. |
38 |
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Item 1A. |
38 |
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Item 6. |
99 |
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100 |
i
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:
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.
ii
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)
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September 30, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Income taxes receivable |
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— |
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Prepaid expenses and other current assets |
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Total current assets |
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Intangible asset, net |
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Property and equipment, net |
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Restricted cash |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Derivative liability |
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Other current liabilities |
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Income taxes payable |
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— |
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Total current liabilities |
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$ |
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$ |
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Long-term debt, less current portion |
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Royalty-linked notes |
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Other liabilities |
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Total liabilities |
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$ |
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$ |
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(Note 15) |
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Shareholders’ equity |
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Undesignated preferred shares, $ |
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Ordinary shares, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive income / (loss) |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
ITERUM THERAPEUTICS PLC
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Operating expenses: |
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Research and development |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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General and administrative |
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( |
) |
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( |
) |
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( |
) |
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( |
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Total operating expenses |
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( |
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( |
) |
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( |
) |
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( |
) |
Operating loss |
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( |
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( |
) |
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( |
) |
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( |
) |
Interest expense, net |
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( |
) |
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( |
) |
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( |
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( |
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Adjustments to fair value of derivatives |
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( |
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Cancellation of share options |
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— |
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( |
) |
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— |
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( |
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Other income, net |
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Total other income / (expense) |
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( |
) |
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( |
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Loss before income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
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Income tax (expense) / benefit |
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( |
) |
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( |
) |
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( |
) |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
Net loss per share – basic and diluted |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Weighted average ordinary shares outstanding – basic and diluted |
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Statements of Comprehensive Loss |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Other comprehensive income: |
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Unrealized gain on marketable securities |
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— |
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— |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
ITERUM THERAPEUTICS PLC
Condensed Consolidated Statements of Cash Flows
(In thousands, except share and per share data)
(Unaudited)
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Nine Months Ended September 30, |
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to cash used in operating activities: |
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Depreciation |
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Amortization of intangible asset |
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Share-based compensation expense |
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Cancellation of share options |
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— |
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Interest on short-term investments |
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( |
) |
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Lease termination adjustments |
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— |
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Amortization of debt discount and deferred financing costs |
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Interest on exchangeable notes - non-cash |
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Adjustments to fair value of derivatives |
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( |
) |
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( |
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Other |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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( |
) |
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( |
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Accounts payable |
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Accrued expenses |
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Income taxes |
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( |
) |
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Other liabilities |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities: |
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Purchases of property, plant and equipment |
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( |
) |
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( |
) |
Purchases of short-term investments |
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( |
) |
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( |
) |
Proceeds from sale of short-term investments |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Repayments of long-term debt |
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— |
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( |
) |
Proceeds from issuance of ordinary shares, net of transaction costs |
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— |
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Net cash provided by / (used in) financing activities |
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( |
) |
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Effect of exchange rates on cash and cash equivalents |
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( |
) |
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( |
) |
Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
) |
Cash, cash equivalents and restricted cash, at beginning of period |
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Cash, cash equivalents and restricted cash, at end of period |
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$ |
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$ |
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Supplemental Disclosure of Cash Flow Information: |
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Income taxes paid - U.S. |
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$ |
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$ |
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Interest paid |
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$ |
— |
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$ |
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|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ITERUM THERAPEUTICS PLC
Condensed Consolidated Statements of Stockholders' Equity
(In thousands, except share and per share data)
(Unaudited)
|
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Ordinary Shares |
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Additional |
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Accumulated Other |
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Shares |
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Amount |
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Paid |
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Accumulated Deficit |
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Comprehensive Income (Loss) |
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Total |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of ordinary shares, net |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Unrealized gain on available-for-sale securities |
|
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— |
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— |
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— |
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— |
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||
Balance at September 30, 2023 |
|
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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|||||
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||||||
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Ordinary Shares |
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Additional |
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Accumulated Other |
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Shares |
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Amount |
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Paid |
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Accumulated Deficit |
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Comprehensive Income (Loss) |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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||||
Issuance of ordinary shares, net |
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— |
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— |
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— |
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|||
Share-based compensation expense |
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— |
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— |
|
|
|
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|
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— |
|
|
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— |
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||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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( |
) |
|
|
— |
|
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( |
) |
Unrealized loss on available-for-sale securities |
|
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— |
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— |
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|
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— |
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— |
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||
Balance at September 30, 2023 |
|
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|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
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$ |
|
|||||
|
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Ordinary Shares |
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Additional |
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Accumulated Other |
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Shares |
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Amount |
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Paid |
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Accumulated Deficit |
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Comprehensive Income (Loss) |
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Total |
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||||||
Balance at June 30, 2022 |
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|
$ |
|
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$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
Issuance of ordinary shares, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Share-based compensation expense |
|
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— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
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||
Cancellation of share options |
|
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— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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||
Net loss |
|
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— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Unrealized loss on available-for-sale securities |
|
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— |
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|
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— |
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|
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— |
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|
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— |
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|
|
— |
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— |
|
Balance at September 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
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|
$ |
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||||
|
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||||||
|
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Ordinary Shares |
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Additional |
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Accumulated Other |
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|||||||||
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Shares |
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Amount |
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Paid |
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|
Accumulated Deficit |
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Comprehensive Income (Loss) |
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Total |
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||||||
Balance at December 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
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|
$ |
|
||||
Issuance of ordinary shares, net |
|
|
|
|
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— |
|
|
|
|
|
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— |
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— |
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Share-based compensation expense |
|
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— |
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— |
|
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|
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|
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— |
|
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— |
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Cancellation of share options |
|
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— |
|
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— |
|
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|
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|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at September 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ITERUM THERAPEUTICS PLC
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
1. Basis of Presentation
Description of Business
Iterum Therapeutics plc (the Company) was incorporated under the laws of the Republic of Ireland in June 2015 as a limited company and re-registered as a public limited company on March 20, 2018. The Company maintains its registered office at Fitzwilliam Court, 1st Floor, Leeson Close, Dublin 2, Ireland. The Company commenced operations in November 2015. The Company licensed global rights to its novel anti-infective compound, sulopenem, from Pfizer Inc. (Pfizer). The Company is a clinical-stage pharmaceutical company dedicated to developing and commercializing sulopenem to be potentially the first oral penem available in the United States and the first and only oral and intravenous (IV) branded penem available globally.
Liquidity and Going Concern
Since inception, the Company has devoted substantially all of its efforts to research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of ordinary and convertible preferred shares, debt raised under a financing arrangement with Silicon Valley Bank (SVB) including the Paycheck Protection Program loan (PPP loan), a sub-award from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARB-X) program and the proceeds of a private placement (Private Placement) and subsequent rights offering (Rights Offering) pursuant to which its wholly owned subsidiary, Iterum Therapeutics Bermuda Limited (Iterum Bermuda) issued and sold approximately $
Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of the Company and its subsidiaries.