It has been a roller coaster 2020 so far for nano-cap biotech Iterum Therapeutics (ITRM).
Over the past two trading sessions, ITRM shares surged nearly 85% after a regulatory path was outlined for the company’s oral tablet sulopenem for the treatment of uncomplicated urinary tract infections (uUTI) in patients with a quinolone-resistant pathogen. However, Iterum’s 2020 has been a hard slog so far, as even after the week's outsized gains, the stock is still down by 73% year-to-date.
Iterum announced it will submit the NDA (new drug application) for sulopenem after the FDA provided management with the requirements and the areas of focus for the treatment in a pre-NDA meeting.
So, with the latest good news, is the scene set for more upside? H.C. Wainwright analyst Ed Arce is not sure.
In June, the company announced topline results from its Phase 3 trial of sulopenem for the treatment of uncomplicated urinary tract infections (uUTI) that achieved one primary endpoint but missed on another. As a result, Iterum then decided to pursue sulopenem's approval for a narrower uUTI patient sub-population with a quinolone-resistant pathogen.
Arce points out the problem the narrower indication represents: “Although sulopenem's confirmed regulatory pathway for uUTI represents a significant achievement, we note that its market potential is now reduced to a subset of uUTI patients (we estimate 40-50% of cases are quinolone-resistant) and does not include any complicated UTI (cUTI) or complicated intraabdominal infections (cIAI) indications.”
What’s more, Arce believes Iterum “continues to face a significant financial hurdle.” Management estimates it has enough cash to fund operations into 4Q20, which is “at most 3 months from now.”
Arce also believes the company needs to work with a bigger marketing partner “to meaningfully penetrate the community setting and serve as an important validation of sulopenem's market potential.”
Therefore, “while Iterum works to extend its cash runway while seeking to secure a partnership for sulopenem,” Arce remains on the sidelines with a Neutral (i.e. Hold) rating without suggesting a price target. (To watch Arce’s track record, click here)
Over the past 3 months, two other analysts have posted a review of Iterum’s prospects, also suggesting a Hold. However, the Hold consensus rating might as well be a Buy, as given the average price target clocks in at $2, the potential is for 46% upside over the coming months. (See ITRM stock analysis on TipRanks)
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