Recent history suggests that buying Iterum Therapeutics (NASDAQ:ITRM) stock is too risky at this point for long-term investors.
Although the FDA could approve the company’s lead drug candidate by its July 25 deadline, two companies whose similar drugs were approved by the FDA in recent years subsequently went bankrupt.
Iterum’s top candidate is Sulopenem, an antibiotic that the company is trying to convince the FDA to approve for the treatment of certain patients with uncomplicated urinary tract infections (uUTI).
Specifically, Iterum wants its drug to be approved for the treatment of uUTIs that are not susceptible to quinolones, a type of antibiotic that is commonly used to treat UTIs. The company wants the agency to approve the oral version of the drug, which can be delivered orally or through an IV.
In a Phase 3 clinical trial that started in 2018, the overall response rate of uUTI patients treated with oral Sulopenem came in at 62.6%, compared with 36% for those treated with Ciprofloxacin, a quinolone that’s the current standard of care in uUTIs. The difference was statistically significant.
However, the drug did not show superiority over Ciprofloxacin in patients with uUTIs that were susceptible to quinolones.
In two other trials involving patients with other types of UTIs, Sulopenem did not show statistically significant superiority versus a combination of an IV antibiotic called Ertapenem and oral Ciprofloxacin.
A Closer Look at ITRM Stock
The FDA could potentially have qualms about approving Sulopenem for uUTIs that are not susceptible to quinolones because of the three related endpoints that the drug did not meet.
However, on a positive note, Fierce Biotech reported the FDA accepted Sulopenem for priority review. The fact that the agency made that move, I believe, indicates that it is likely leaning towards approving the drug.
The big problem with investing in ITRM stock now is that, as I mentioned earlier, in the last few years, two companies with similar products have gone belly-up.
In 2019, antibiotic maker Achaogen (OTC:AKAOQ) declared bankruptcy. The company had developed plazomicin for “the treatment of complicated urinary tract infections caused by multidrug-resistant Enterobacteriaceae,” CIDRAP noted at the time.
Melinta marketed Baxdela, a drug designed to treat acute skin infections and skin structure infections in adults. As with Achaogen, the company declared bankruptcy in 2019.
“Antibiotic biotechs often struggle to turn their products into commercial triumphs,” wrote Fraiser Kansteiner in Fierce Pharma.
Some Potential Good News
UTIs result in six million doctor’s office visits each year in the U.S. Moreover, in a study published in 2012, it was reported that, in North America, nearly 25% of “gram-negative urinary pathogens from hospitalized patients” were resistant to quinolones.
Iterum CEO Corey Fishman said in a statement in January that Sulopenem would be the first oral penem antibiotic that could treat multi-drug resistant infections.
The Bottom Line on ITRM Stock
Some American antibiotic makers have clearly had difficulty making money.
I’m not sure whether that’s because of tough competition in the space or other factors. For example, maybe hospitals aren’t willing to pay much for antibiotics given that treating patients with infections is not very lucrative.
I think it’s not a great idea to invest in a pharma company that’s making a type of drug that has proven not to be very profitable in the past.
There’s a very good chance that the FDA will approve Iterum’s Sulopenem antibiotic later this year, but in light of the fairly recent bankruptcies of Achaogen and Melinta, I think longer-term investors should avoid Iterum for now.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GM, Roku, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
