Quarterly report [Sections 13 or 15(d)]

Fair Value of Financial Assets and Liabilities

v3.25.1
Fair Value of Financial Assets and Liabilities
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

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 RLNs, promissory note to Pfizer (the Promissory Note) and Exchangeable Notes and indicates the fair value hierarchy of the valuation inputs utilized to determine the approximate fair value:

 

March 31, 2025

 

Book

 

 

Approximate

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

Value

 

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Royalty-linked notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term royalty-linked notes

 

$

124

 

 

$

124

 

 

$

—

 

 

$

—

 

 

$

124

 

Total current liabilities

 

$

124

 

 

$

124

 

 

$

—

 

 

$

—

 

 

$

124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term promissory note

 

$

20,705

 

 

$

20,803

 

 

$

—

 

 

$

20,803

 

 

$

—

 

Revenue Futures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty-linked notes

 

 

11,196

 

 

 

11,196

 

 

 

—

 

 

 

—

 

 

 

11,196

 

Total long-term liabilities

 

$

31,901

 

 

$

31,999

 

 

$

 

 

 

$

20,803

 

 

$

11,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

Book

 

 

Approximate

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

Value

 

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Exchangeable Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term exchangeable notes

 

$

14,463

 

 

$

14,444

 

 

$

—

 

 

$

14,444

 

 

$

—

 

Total current liabilities

 

$

14,463

 

 

$

14,444

 

 

$

—

 

 

$

14,444

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term promissory note

 

$

20,300

 

 

$

20,412

 

 

$

—

 

 

$

20,412

 

 

$

—

 

Revenue Futures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty-linked notes

 

 

10,771

 

 

 

10,771

 

 

 

—

 

 

 

—

 

 

 

10,771

 

Total long-term liabilities

 

$

31,071

 

 

$

31,183

 

 

$

—

 

 

$

20,412

 

 

$

10,771

 

The fair value of the Promissory Note was determined using DCF analysis using the fixed interest rate outlined in the license agreement with Pfizer for the worldwide exclusive rights to research, develop, manufacture and commercialize sulopenem (Pfizer License), which represents a Level 2 basis of fair value measurement (see Note 10 – Debt).

The fair value of Exchangeable Notes was determined using DCF analysis using the fixed interest rate outlined in the indenture governing the Exchangeable Notes (Exchangeable Notes Indenture), without consideration of transaction costs, which represents a Level 2 basis of fair value measurement.

The Level 3 liabilities held as of March 31, 2025 consist of a separate financial instrument, that was issued as part of the Units, the RLNs (see Note 11 – Royalty-Linked Notes).

At any time on or after January 21, 2021 through January 31, 2025, subject to specified limitations, the Exchangeable Notes were exchangeable for the Company’s ordinary shares, cash or a combination of ordinary shares and cash. Beginning on January 21, 2021 to January 31, 2025, certain noteholders of $40,691 aggregate principal amount of Exchangeable Notes completed a non-cash exchange of their notes for an aggregate of 3,760,155 of the Company’s ordinary shares, which included accrued and unpaid interest relating to such notes. On January 31, 2025, the Exchangeable Notes matured and Iterum Bermuda repaid to the holders thereof an aggregate principal amount of $11,117 together with accrued interest of $3,628.

The RLN liability is carried at fair value on the condensed consolidated balance sheet (see Note 11 – Royalty-Linked Notes). The total fair value of $11,320 was determined using DCF analysis, without consideration of transaction costs, which represents a Level 3 basis of fair value measurement. The key inputs to valuing the RLNs were the terms of the indenture governing the RLNs (the RLN Indenture), the expected cash flows to be received by holders of the RLNs based on management’s revenue forecasts of U.S. sulopenem sales and a risk-adjusted discount rate to derive the net present value of expected cash flows. The RLNs will be subject to a maximum return amount, including all principal and payments and certain default interest in respect of uncurable defaults, of $160.00 (or 4,000 times the principal amount of such note). The discount rate applied to the model was 22%. Fair value measurements are highly sensitive to changes in these inputs and significant changes in these inputs could result in a significantly higher or lower fair value.

There have been no transfers of assets or liabilities between the fair value measurement levels.