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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 September 30, 2024

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: 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.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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 November 4, 2024, the registrant had 27,515,926 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 5.

Other Information

94

Item 6.

Exhibits

95

 

Signatures

96

 

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:

our use of cash reserves;
our ability to continue as a going concern;
the design, initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;
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;
the commercialization of our product candidates, if approved;
our manufacturing plans;
our sales, marketing and distribution capabilities and strategy;
the market opportunity for and the potential market acceptance of ORLYNVAH™ for uncomplicated urinary tract infections (uUTIs) caused by certain designated microorganisms in adult women who have limited or no alternative oral antibacterial treatment options;
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 and 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 financial performance;
developments relating to our competitors and our industry;
our ability to regain and maintain compliance with listing requirements of the Nasdaq Capital Market;
the impact of general economic conditions, including inflation;
our strategic process to sell, license, or otherwise dispose of our rights to ORLYNVAH™ to maximize value for our stakeholders and the outcome, impact, effects and results of our pursuit of strategic alternatives, including the terms, timing, structure, value, benefits and costs of any strategic process and our ability to complete one at all; and
our ability to successfully prepare and implement commercialization plans for ORLYNVAH™ with a commercial partner or directly, including our ability to build and maintain a sales force and prepare for commercial launch of ORLYNVAH™, if we are unsuccessful at entering into or completing a strategic transaction.

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

ii


 

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)

 

 

September 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,406

 

 

$

6,071

 

Short-term investments

 

 

1,096

 

 

 

17,859

 

Income taxes receivable

 

 

208

 

 

 

38

 

Prepaid expenses and other current assets

 

 

1,144

 

 

 

1,628

 

Total current assets

 

 

15,854

 

 

 

25,596

 

Property and equipment, net

 

 

30

 

 

 

51

 

Restricted cash

 

 

34

 

 

 

34

 

Other assets

 

 

6

 

 

 

578

 

Total assets

 

$

15,924

 

 

$

26,259

 

Liabilities and Shareholders’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

835

 

 

$

4,996

 

Accrued expenses

 

 

3,492

 

 

 

7,761

 

Exchangeable notes

 

 

13,708

 

 

 

 

Other current liabilities

 

 

668

 

 

 

761

 

Total current liabilities

 

$

18,703

 

 

$

13,518

 

Exchangeable notes

 

 

 

 

 

11,453

 

Royalty-linked notes

 

 

8,728

 

 

 

7,503

 

Other liabilities

 

 

 

 

 

188

 

Total liabilities

 

$

27,431

 

 

$

32,662

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Shareholders’ deficit

 

 

 

 

 

 

Undesignated preferred shares, $0.01 par value per share: 100,000,000 shares
authorized at September 30, 2024 and December 31, 2023;
no shares issued at September 30, 2024 and December 31, 2023

 

 

 

 

 

 

Ordinary shares, $0.01 par value per share: 80,000,000 shares authorized at September 30, 2024 and December 31, 2023, 22,705,994 shares issued at September 30, 2024; 13,499,003 shares issued at December 31, 2023

 

 

227

 

 

 

135

 

Additional paid-in capital

 

 

467,754

 

 

 

454,759

 

Accumulated deficit

 

 

(479,490

)

 

 

(461,298

)

Accumulated other comprehensive income

 

 

2

 

 

 

1

 

Total shareholders' deficit

 

 

(11,507

)

 

 

(6,403

)

Total liabilities and shareholders’ deficit

 

$

15,924

 

 

$

26,259

 

 

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)

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

(3,107

)

 

$

(14,852

)

 

$

(9,159

)

 

$

(30,248

)

General and administrative

 

 

(1,780

)

 

 

(1,833

)

 

 

(5,867

)

 

 

(5,789

)

Total operating expenses

 

 

(4,887

)

 

 

(16,685

)

 

 

(15,026

)

 

 

(36,037

)

Operating loss

 

 

(4,887

)

 

 

(16,685

)

 

 

(15,026

)

 

 

(36,037

)

Interest expense, net

 

 

(590

)

 

 

(300

)

 

 

(1,648

)

 

 

(1,023

)

Adjustments to fair value of derivatives

 

 

(433

)

 

 

13,199

 

 

 

(1,226

)

 

 

11,361

 

Other (expense) / income, net

 

 

(48

)

 

 

70

 

 

 

(77

)

 

 

161

 

Total other (expense) / income

 

 

(1,071

)

 

 

12,969

 

 

 

(2,951

)

 

 

10,499

 

Loss before income taxes

 

 

(5,958

)

 

 

(3,716

)

 

 

(17,977

)

 

 

(25,538

)

Income tax expense

 

 

(136

)

 

 

(161

)

 

 

(215

)

 

 

(471

)

Net loss

 

$

(6,094

)

 

$

(3,877

)

 

$

(18,192

)

 

$

(26,009

)

Net loss per share – basic and diluted

 

$

(0.30

)

 

$

(0.30

)

 

$

(1.05

)

 

$

(2.02

)

Weighted average ordinary shares outstanding – basic and diluted

 

 

20,044,270

 

 

 

13,039,437

 

 

 

17,352,918

 

 

 

12,888,869

 

Statements of Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(6,094

)

 

$

(3,877

)

 

$

(18,192

)

 

$

(26,009

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

  Unrealized gain on marketable securities

 

 

3

 

 

 

29

 

 

 

1

 

 

 

353

 

Comprehensive loss

 

$

(6,091

)

 

$

(3,848

)

 

$

(18,191

)

 

$

(25,656

)

 

 

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)

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(18,192

)

 

$

(26,009

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

23

 

 

 

23

 

Amortization of intangible asset

 

 

 

 

 

1,287

 

Share-based compensation expense

 

 

274

 

 

 

645

 

Interest on short-term investments

 

 

1

 

 

 

55

 

Lease termination adjustments

 

 

 

 

 

473

 

Amortization of debt discount and deferred financing costs

 

 

1,713

 

 

 

1,753

 

Interest on exchangeable notes - non-cash

 

 

542

 

 

 

615

 

Financing transaction costs included in financing activities

 

 

1,977

 

 

 

 

Adjustments to fair value of derivatives

 

 

1,226

 

 

 

(11,361

)

Other

 

 

1,233

 

 

 

974

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,575

)

 

 

(2,560

)

Accounts payable

 

 

(4,161

)

 

 

2,741

 

Accrued expenses

 

 

(4,270

)

 

 

4,778

 

Income taxes

 

 

(4

)

 

 

355

 

Other liabilities

 

 

(301

)

 

 

(256

)

Net cash used in operating activities

 

 

(22,514

)

 

 

(26,487

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(2

)

 

 

(13

)

Purchases of short-term investments

 

 

(12,390

)

 

 

(36,002

)

Proceeds from sale of short-term investments

 

 

29,500

 

 

 

45,828

 

Net cash provided by investing activities

 

 

17,108

 

 

 

9,813

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of ordinary shares, net of transaction costs

 

 

12,814

 

 

 

445

 

Net cash provided by financing activities

 

 

12,814

 

 

 

445

 

Effect of exchange rates on cash and cash equivalents

 

 

(73

)

 

 

(47

)

Net increase / (decrease) in cash, cash equivalents and restricted cash

 

 

7,335

 

 

 

(16,276

)

Cash, cash equivalents and restricted cash, at beginning of period

 

 

6,105

 

 

 

21,126

 

Cash, cash equivalents and restricted cash, at end of period

 

$

13,440

 

 

$

4,850

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

Income taxes paid - U.S.

 

$

220

 

 

$

120

 

 

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

3


 

ITERUM THERAPEUTICS PLC

Condensed Consolidated Statements of Stockholders' Equity / (Deficit)

(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 June 30, 2024

 

 

16,584,029

 

 

$

166

 

 

$

462,318

 

 

$

(473,396

)

 

$

(1

)

 

 

(10,913

)

Issuance of ordinary shares, net

 

 

6,121,965

 

 

 

61

 

 

 

2,651

 

 

 

 

 

 

 

 

 

2,712

 

Issuance of warrants for ordinary shares, net

 

 

 

 

 

 

 

 

2,718

 

 

 

 

 

 

 

 

 

2,718

 

Share-based compensation expense

 

 

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

67

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(6,094

)

 

 

 

 

 

(6,094

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Balance at September 30, 2024

 

 

22,705,994

 

 

$

227

 

 

$

467,754

 

 

$

(479,490

)

 

$

2

 

 

$

(11,507

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Additional

 

 

 

 

 

Accumulated Other

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Paid
in Capital

 

 

Accumulated Deficit

 

 

Comprehensive Income (Loss)

 

 

Total

 

Balance at December 31, 2023

 

 

13,499,003

 

 

$

135

 

 

$

454,759

 

 

$

(461,298

)

 

$

1

 

 

$

(6,403

)

Issuance of ordinary shares, net

 

 

9,177,847

 

 

 

92

 

 

 

9,974

 

 

 

 

 

 

 

 

 

10,066

 

Issuance of warrants for ordinary shares, net

 

 

 

 

 

 

 

 

2,718

 

 

 

 

 

 

 

 

 

2,718

 

Exercise of share options

 

 

29,144

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Share-based compensation expense

 

 

 

 

 

 

 

 

274

 

 

 

 

 

 

 

 

 

274

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(18,192

)

 

 

 

 

 

(18,192

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Balance at September 30, 2024

 

 

22,705,994

 

 

$

227

 

 

$

467,754

 

 

$

(479,490

)

 

$

2

 

 

$

(11,507

)

 

 

 

Ordinary Shares

 

 

Additional

 

 

 

 

 

Accumulated Other

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Paid
in Capital

 

 

Accumulated Deficit

 

 

Comprehensive Income (Loss)

 

 

Total

 

Balance at June 30, 2023

 

 

13,028,403

 

 

$

130

 

 

$

452,084

 

 

$

(445,059

)

 

$

(26

)

 

$

7,129

 

Issuance of ordinary shares, net

 

 

12,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

 

 

 

 

 

 

151

 

 

 

 

 

 

 

 

 

151

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,877

)

 

 

 

 

 

(3,877

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

29

 

Balance at September 30, 2023

 

 

13,041,041

 

 

$

130

 

 

$

452,235

 

 

$

(448,936

)

 

$

3

 

 

$

3,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

442,400

 

 

 

4

 

 

 

440

 

 

 

 

 

 

 

 

 

444

 

Share-based compensation expense

 

 

 

 

 

 

 

 

645

 

 

 

 

 

 

 

 

 

645

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(26,009

)

 

 

 

 

 

(26,009

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

353

 

 

 

353

 

Balance at September 30, 2023

 

 

13,041,041

 

 

$

130

 

 

$

452,235

 

 

$

(448,936

)

 

$

3

 

 

$

3,432

 

 

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 focused on delivering differentiated anti-infectives aimed at combating the global crisis of multi-drug resistant pathogens to significantly improve the lives of people affected by serious and life-threatening diseases around the world. The Company is advancing the development of its first compound, sulopenem, a novel penem anti-infective compound, with an oral formulation and IV formulation.

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 (the 2020 Rights Offering) pursuant to which its wholly owned subsidiary, Iterum Therapeutics Bermuda Limited (Iterum Bermuda) issued and sold approximately $51.8 million aggregate principal amount of 6.500% Exchangeable Senior Subordinated Notes due 2025 (Exchangeable Notes) and $0.1 million aggregate principal amount of Limited Recourse Royalty-Linked Subordinated Notes (the RLNs and, together with the Exchangeable Notes, the Securities), which Securities were sold in units consisting of an Exchangeable Note in the original principal amount of $1,000 and 50 RLNs (the Units). The Company has not generated any product revenue. The Company is subject to risks and uncertainties common to early-stage companies in the pharmaceutical industry, including, but not limited to, the ability to secure additional capital to fund operations, failure to successfully develop and commercialize its product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology and compliance with government regulations.

Even with receipt of FDA approval, 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.

The Company filed a universal shelf registration statement on Form S-3 with the SEC, which was declared effective on October 17, 2022 (File No. 333-267795), and pursuant to which the Company registered for sale up to $100.0 million of any combination of debt securities, ordinary shares, preferred shares, subscription rights, purchase contracts, units and/or warrants from time to time and at prices and on terms that the Company may determine. On October 7, 2022, the Company entered into a sales agreement with H.C. Wainwright & Co., LLC (HC Wainwright), as agent, pursuant to which the Company may offer and sell ordinary shares, nominal value $0.01 per share, for aggregate gross sales proceeds of up to $16.0 million (subject to the availability of ordinary shares), from time to time through HC Wainwright by any method permitted that is deemed to be an "at the market offering" as defined in Rule 415 (a)(4) promulgated under the Securities Act of 1933, as amended (the "Sales Agreement").

On August 9, 2024, the Company completed a rights offering (the 2024 Rights Offering) in which it sold an aggregate of 6,121,965 units ("Units") at a subscription price of $1.21 per whole Unit, consisting of (a) one ordinary share, (b) a warrant to purchase 0.50 ordinary shares, at an exercise price of $1.21 per whole ordinary share from the date of issuance through its expiration one year from the date of issuance (the "1-year warrants") and (c) a warrant to purchase one ordinary share, at an exercise price of $1.21 per whole ordinary share from the date of issuance through its expiration five years from the date of issuance (the "5-year warrants" and, together with the 1-year warrants, the “warrants”). The Company's net proceeds from the 2024 Rights Offering, after deducting placement agent fees and other offering expenses payable by the Company, were approximately $5.4 million. The warrants are exercisable upon issuance at a price of $1.21 per ordinary share. The 1-year warrants expire on August 9, 2025 and the 5-year warrants expire on August 9, 2029.

In accordance with Accounting Standards Update (ASU) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date of issue of these quarterly condensed consolidated financial statements.

The Company has funded its operations to date primarily with proceeds from the sale of preferred shares and ordinary shares, warrants, debt raised under its financing arrangement with SVB including the PPP loan (both of which have been repaid), payments received under the CARB-X program and proceeds of the Private Placement and 2020 Rights Offering. The Company has incurred operating losses since inception, including net losses of $18,192 and $26,009 for the nine months ended September 30, 2024 and

5


ITERUM THERAPEUTICS PLC

Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share data)

 

2023, respectively, and a net loss of $38,371 for the year ended December 31, 2023. The Company had an accumulated deficit of $479,490 as of September 30, 2024 and expects to continue to incur net losses for the foreseeable future. The Company’s future cash flows are dependent on key variables such as its ability to secure additional sources of funding in the form of public or private financing of debt or equity or collaboration agreements. Based on its available cash, cash equivalents and short-term investments, including amounts raised subsequent to the period-end under the "at-the market"agreement (see Note 16 Subsequent Events), the Company does not have cash on hand to fund its current operations and capital expenditure requirements for the next 12 months from the date of this Quarterly Report on Form 10-Q. This condition raises substantial doubt about the Company’s ability to continue as a going concern for one year from the date these condensed consolidated financial statements are issued.

The Company plans to address this condition by raising funding through the possible sale of the Company’s equity or debt through public or private equity financings. Although management intends to pursue plans to obtain additional funding to finance its operations, and the Company has successfully raised capital in the past, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all. In addition, in parallel, the Company is evaluating its corporate, strategic, financial and financing alternatives, with the goal of maximizing value for its stakeholders. These alternatives could potentially include the licensing, sale or divestiture of the Company’s assets or proprietary technologies or another strategic transaction involving the Company. The evaluation of corporate, strategic, financial and financing alternatives may not result in any particular action or any transaction being pursued, entered into or consummated, and there is no assurance as to the timing, sequence or outcome of any action or transaction or series of actions or transactions.

If the Company is unable to obtain funding, it could be forced to significantly delay, scale back or discontinue the development and commercialization of its sulopenem program, or otherwise change its strategy, which could adversely affect its business prospects, or the Company may be unable to continue operations. Based on the Company’s operating losses since inception, the expectation of continued operating losses for the foreseeable future, and the need to raise additional capital to finance its future operations, management has concluded there is substantial doubt about the Company’s ability to continue as a going concern within one year from the date these condensed consolidated financial statements are issued.

The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Interim Financial Information

The condensed consolidated balance sheet at December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2024, and results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023 have been made. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024.

2. Summary of Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of expenses during the reporting period and the assessment of the Company’s ability to continue as a going concern. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the valuation of the RLNs. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Actual results could differ materially from those estimates.

6


ITERUM THERAPEUTICS PLC

Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share data)

 

Specifically, management has estimated variables used to calculate the discounted cash flow analysis (DCF) to value the RLN liability (see Note 3 – Fair Value of Financial Assets and Liabilities).

Cash and Cash Equivalents

The Company’s cash and cash equivalents consist of cash balances and highly liquid investments with maturities of three months or less at the date of purchase. Accounts held at U.S. financial institutions are insured by the Federal Deposit Insurance Corporation up to $250, while accounts held at Irish financial institutions are insured under the Deposit Guarantee Scheme up to $111 (€100).

Cash accounts with any type of restriction are classified as restricted cash. If restrictions are expected to be lifted in the next twelve months, the restricted cash account is classified as current. Included within restricted cash on the Company’s condensed consolidated balance sheet is $17 as of September 30, 2024 relating to the warrants issued on June 5, 2020 pursuant to the securities purchase agreement (June 3, 2020 SPA) from the June 3, 2020 registered direct offering (June 3, 2020 Offering), $6 as of September 30, 2024 relating to the warrants issued on July 2, 2020 pursuant to the securities purchase agreement (June 30, 2020 SPA) from the June 30, 2020 registered direct offering (June 30, 2020 Offering) and $11 as of September 30, 2024 relating to warrants issued in the underwritten offering in October 2020 (October 2020 Offering). These restricted cash amounts are unchanged from December 31, 2023. On the closing date of each of the registered direct offerings in June 2020 (June 3 Offering) and July 2020 (June 30 Offering) and the underwritten offering in the October 2020 Offering, each investor deposited $0.01 per warrant issued being the nominal value of the underlying ordinary share represented by each warrant. This amount will be held in trust by the Company pending a decision by the relevant investor to exercise the warrant by means of a “cashless exercise” pursuant to the terms of the warrant, in which case the $0.01 will be used to pay up the nominal value of the ordinary share issued pursuant to the warrant. Upon the exercise of the warrants other than by means of a "cashless exercise", the amount held in trust will be returned to the relevant investor in accordance with the terms of the applicable purchase agreement or prospectus.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company has most of its cash, cash equivalents and short-term investments at three accredited financial institutions in the United States and Ireland, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Net Loss Per Ordinary Share

Basic and diluted net loss per ordinary share is determined by dividing net loss attributable to ordinary shareholders by the weighted-average ordinary shares outstanding during the period in accordance with Accounting Standard Codification (ASC) 260, Earnings per Share. For the periods presented, the following ordinary shares underlying the options, unvested restricted share units, warrants and the Exchangeable Notes have been excluded from the calculation because they would be anti-dilutive.

 

 

Three and Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

Options to purchase ordinary shares

 

 

913,988

 

 

 

1,108,988

 

Unvested restricted share units

 

 

 

 

 

33,965

 

Warrants

 

 

9,663,125

 

 

 

480,186

 

Exchangeable Notes

 

 

2,541,786

 

 

 

1,404,721

 

Total

 

 

13,118,899

 

 

 

3,027,860

 

 

Segment and Other Information

The Company determines and presents operating segments based on the information that is internally provided to the Chief Executive Officer and Chief Financial Officer, who together are considered the Company’s chief operating decision maker, in accordance with ASC 280, Segment Reporting. The Company has determined that it operates as a single business segment, which is the development and commercialization of innovative treatments for drug resistant bacterial infections.

7


ITERUM THERAPEUTICS PLC

Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share data)

 

The distribution of total operating expenses by geographical area was as follows:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

Operating expenses

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Ireland

 

$

4,072

 

 

$

15,201

 

 

$

11,602

 

 

$

31,754

 

U.S.

 

 

815

 

 

 

1,484

 

 

 

3,390

 

 

 

4,260

 

Bermuda

 

 

 

 

 

 

 

 

34

 

 

 

23

 

Total

 

$

4,887

 

 

$

16,685

 

 

$

15,026

 

 

$

36,037

 

The distribution of long-lived assets by geographical area was as follows:

 

Long-lived assets

 

September 30, 2024

 

 

December 31, 2023

 

Ireland

 

$

15

 

 

$

342

 

U.S.

 

 

21

 

 

 

287

 

Total

 

$

36

 

 

$

629

 

 

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

On November 27, 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, or ASU 2023-07, which enhances segment disclosures and requires additional disclosures of segment expenses. This ASU is effective for annual periods in fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is not expected to have a material impact on the consolidated financial statements.

On October 9, 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, or ASU 2023-06, which incorporates into the Codification several disclosures and presentation requirements currently residing in SEC Regulations S-X and S-K. For entities subject to the existing SEC disclosure requirements, including those preparing for sale or issuance of securities, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later, with early adoption permitted. ASU 2023-06 is not expected to have a material impact on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, or ASU 2023-09, which enhances the annual income tax disclosures for the effective tax rate reconciliation and income taxes paid. The amendments are effective for public business entities, for annual periods beginning after December 15, 2024 and for annual periods beginning after December 15, 2025 for all other entities. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The ASU applies on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is assessing what impact ASU 2023-09 will have on the condensed consolidated financial statements.

3. Fair Value of Financial Assets and Liabilities

The following table presents information about the Company’s financial assets that were carried at fair value on a recurring basis on the condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value.

8


ITERUM THERAPEUTICS PLC

Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share data)

 

 

September 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

  U.S. Treasury bonds

 

$

1,096

 

 

$

 

 

$

1,096

 

 

$

 

 

 

$

1,096

 

 

$

 

 

$

1,096

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

  Corporate bonds

 

$

1,179

 

 

$

 

 

$

1,179

 

 

$

 

  Commercial paper

 

 

3,287

 

 

 

 

 

 

3,287

 

 

 

 

  U.S. Treasury bonds

 

 

13,393

 

 

 

 

 

 

13,393

 

 

 

 

 

 

$

17,859

 

 

$

 

 

$

17,859

 

 

$

 

 

See Note 4 for details on the short-term investments. The carrying amounts reported in the condensed consolidated balance sheets for prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate their fair value based on the short-term maturity of these instruments.

The following table presents information about the Company’s Exchangeable Notes and RLNs and indicates the fair value hierarchy of the valuation inputs utilized to determine the approximate fair value:

 

<

September 30, 2024

 

Book

 

 

Approximate

 

 

 

 

 

 

 

 

 

 

Short-term Liabilities

 

Value

 

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Exchangeable Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchangeable note

 

$

13,708

 

 

$

13,744

 

 

$

 

 

$

13,744

 

 

$

 

Total short-term liabilities

 

$

13,708

 

 

$

13,744

 

 

$

 

 

$

13,744

 

 

$

 

Long-term Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Futures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty-linked notes

 

 

8,728

 

 

 

8,728

 

 

 

 

 

 

 

 

 

8,728

 

Total long-term liabilities

 

$

8,728

 

 

$

8,728

 

 

$

 

 

$

 

 

$

8,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

Book

 

 

Approximate

 

 

 

 

 

 

 

 

 

 

Long-term Liabilities

 

Value

 

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Exchangeable Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term exchangeable note

 

$

11,453

 

 

$

11,645

 

 

$

 

 

$

11,645

 

 

$

 

Revenue Futures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty-linked notes

 

 

7,503

 

 

 

7,503

 

 

 

 

 

 

 

 

 

7,503

 

Total long-term liabilities