Iterum Therapeutics Seeking FDA Approval.
Iterum Therapeutics $ITRM is a clinical stage pharmaceutical company focused on developing therapies and anti-infectives to treat multi drug resistant pathogens. The company is currently developing Sulopenem, an oral anti infective compound to treat complicated urinary tract infections, and is currently in phase 3 of clinical trials.
But what does this mean for investors? Like most companies in the healthcare industry, stock movement generally depends on one event: speculation of FDA approval.
The company is seeking an approval decision in July, and if successful, Iterum can expect millions in sales if not more in a billion dollar market. Share prices have spiked last week, sitting at $2.18 so far as of this week from $1.25 just two weeks ago.
Historically, the stock has not performed well, falling from $4.20 in May 2020 to below $0.5 in late 2020. Share prices have begun to climb this year, amidst the positive news but investors should be aware of the company’s previous failures. Results from previous trials have failed to meet endpoints of non inferiority to competing antibiotics.
The company struggles financially, accumulating a deficit of $275.7 million with reported cash of only $8.7 million, which could indicate cash and liquidity issues going forward.
Despite all this, investors are optimistic that the company will attain approval and can move forward with pushing Sulopenem as a solid treatment for UTIs. However, FDA approval is not the end goal.
The antibiotic industry is a competitive sector in which companies often find it difficult to market their product and establish enough product sales to sustain the company.
Iterum Therapeutics is well aware of the challenges they face and if they are successful in gaining approval, management is already planning a launch campaign and is looking to reach peak sales of around $1 billion, but a more realistic figure is likely around $300 million. With institutional ownership at over 70% (including both insider and institutional ownership based on the proxy letter from December 2020) this could be another positive indicator of a bullish future.
Sarissa Capital, a company with a strong and proven track record in the biopharma industry, holds over a 30% stake in the company, with intentions to expand to a 60% ownership through a direct private offering.
From the investor perspective, this stock is definitely a risk, but the risk may reap great rewards. For risk averse investors, it’s important to recognize that the future of the company heavily depends on FDA approval. If Iterum Therapeutics fails to gain approval, this will likely indicate the end of the company. With a 5 year monthly beta of 1.37, the company is quite volatile which poses another risk for investors. But if you are looking to take a risk and gain exposure in the healthcare sector, Iterum Therapeutics is an opportunity to get in low in hopes of a bright future. Share prices can still move up amidst the speculation and if approval is granted and product sales are established, this positive trend will likely continue and possibly push past the $4.20 highs of last year.
So is this risk worth it to you?
Let us know what you think!
Written by: Jessica Fang
