Iterum Therapeutics plc (NASDAQ:ITRM), a pharmaceutical company, has announced its decision to defer a $20 million regulatory milestone payment to Pfizer Inc. (NYSE:PFE) This decision follows the U.S. Food and Drug Administration's (FDA) approval of Iterum's ORLYNVAH™ (sulopenem etzadroxil and probenecid) for the treatment of uncomplicated urinary tract infections in adult women with limited treatment options. The approval was granted on Monday, with Iterum notifying Pfizer of its deferral choice on Thursday.
Under the terms of the 2015 License Agreement with Pfizer, Iterum Therapeutics International Limited (ITIL), an Iterum subsidiary, was obligated to make this payment upon FDA approval. Instead, ITIL has issued a promissory note to Pfizer, maturing on October 25, 2026, with an annual interest rate of eight percent, compounded daily. ITIL retains the right to prepay the note without penalty and may assign the note to an affiliate or in the event of a change of control.
The deferral period extends until October 25, 2026, unless a change of control occurs, in which case Pfizer may demand immediate payment of the milestone and accrued interest. Iterum has guaranteed all payments due under the Pfizer License Agreement, including those under the promissory note.
This strategic move provides Iterum with financial flexibility as it launches its newly approved antibiotic treatment, ORLYNVAH™. The information disclosed is based on a press release statement filed with the Securities and Exchange Commission.
In other recent news, Iterum Therapeutics received approval from the U.S. Food and Drug Administration (FDA) for its new drug, ORLYNVAH™, an oral antibiotic for uncomplicated urinary tract infections (uUTIs) in adult women. The company also faces potential delisting from the Nasdaq Market due to an equity shortfall, but plans to present a strategy to regain compliance at a hearing with the Nasdaq Hearings Panel. H.C. Wainwright maintains a Buy rating on Iterum shares, as the company recently generated $5.8 million in net proceeds from a rights offering and reported a significant reduction in net loss. Shareholders have also approved the board's authority to issue shares for cash without pre-emptive rights. In addition, the company's primary drug candidate, sulopenem, was discussed at an FDA advisory committee meeting for its potential in treating uUTIs. These are the recent developments in Iterum Therapeutics' pursuit to advance its drug candidate through the regulatory process.
InvestingPro Insights
Iterum Therapeutics' decision to defer the $20 million milestone payment to Pfizer aligns with its current financial situation, as revealed by InvestingPro data. The company's market cap stands at a modest $27.57 million, indicating its relatively small size in the pharmaceutical industry. This context makes the $20 million payment a significant financial commitment, justifying the deferral strategy.
InvestingPro Tips highlight that Iterum is "quickly burning through cash" and that "short term obligations exceed liquid assets." These factors likely influenced the company's decision to postpone the payment, allowing it to maintain liquidity for the crucial launch phase of ORLYNVAH™.
The company's financial challenges are further underscored by its negative EBITDA of -$37.36 million for the last twelve months as of Q2 2023. This, coupled with the InvestingPro Tip that "analysts do not anticipate the company will be profitable this year," suggests that Iterum is prioritizing cash conservation to support its operations and product launch.
Despite these challenges, Iterum's stock has shown a "strong return over the last month" with a 21.7% price increase, possibly reflecting investor optimism about the FDA approval of ORLYNVAH™. However, the "high shareholder yield" noted in the InvestingPro Tips should be interpreted cautiously given the company's current financial position.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Iterum Therapeutics, providing deeper insights into the company's financial health and market position.
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