Fellow penny flippers, a week or 2 ago, someone posted about ITRM and it grabbed my attention immediately. Partially because its a Bio stock and another reason is the technical setup/gaps looked promising. I have dived into the company further and posting my DD:
Provide DD for bullish sentiment
Iterrum Therapeutics is a Biotech company backed by some very well known prominent industry veterns / team. There primary product is Sulopenum which is developed by Pfizer in the 1980s, shelved due to Pfizers other product focus. ITRM's staff is compromised of the well known bio legend - Alex Denner who owns Sarissa Capital. Alex Denner is more prominently known as the head of Carl Ichans bio division who spearheaded his portfolio and knows the Bio industry inside/out. Denner left Ichan's bio portfolio to spinoff Sarissa Capital and leverage his decades of knowledge. Sarissa Capitals' main focus in investing in bio stocks with the intention of buyouts (Denner & MDCO --- Medicines company buyout $9.7 billion.
A large majority of ITRM staff and board are from a very well known company back in 2005 Duratta / Vicuron boards. Back in 2005, Vicuron was developing a drug that passed the NDA for andidulafungin for fungal infections. Pfizer jumped in after NDA approval and bought Vicuron out for $1.8 billion as it was a revolutionary drug.
source: Pfizer buy out Vicuron $1.9 billion merger
What ended up happening at Pfizer was Vicuron had to now go through FDA approvals. From the little research available back then, it appears Vicuron ended up getting shelved as there was a lot of R&D involved and too expensive to push forward (Dunne link below shows Pfizer splitting off from R&D, trial, FDA approval costs). Vicuron ended up being bought by Durata (source: https://www.pharmaceutical-business-review.com/news/durata_acquires_vicuron_from_pfizer_091221-2/. Duratta picks up where Pfizer left off, conducted the studies, R&D, and NDA/FDA process. When Vicuron's drug become close, Duratta reached back out to Pfizer to continue the trial study to keep moving forward. Pfizer had to fork up another $6million apart of their licensing deal
(source: Faded star at Pfizer leads to discounted $68M IPO for Durata
What ended up happening 2 years later in 2014? Actavis buys out Durata for $675 million @ $23 a share, prior to buyout, stock was trading at $11. (source: Durata stock graph.
source: Actavis snaps up Durata, newly approved antibiotic in $675M buyout
After this buyout in 2014, ITRM was formed. A large amount of the Board of Directors, Senior Management are from the previous buyout. There prior Durata employees and now focusing their efforts on ITRM.
source: ITRM Board of Directors & Senior Mgmt
Pzier chief scientist Michael Dunne left Pfizer to work at ITRM. He was the scientist behind a lot of Pfizer's major drugs. He currently resigned from ITRM for a new opportunity -- working as Chief Scientist at the Bill & Melinda Gates Foundation. Back in 2017 as he was speaking on behalf of ITRM / Sulopenum, he had a very strong positive sentiment to the drug when it gets the NDA / FDA passed:
While this is an old compound, sulopenem has good patent protection. The IV product should garner ten years of regulatory exclusivity in the U.S. due to its status as a “Qualified Infectious Disease Product”. Given that the oral form of sulopenem is an NCE, patent protection for this version exists through 2028 with the possibility of Hatch-Waxman as well as pediatric use extensions.
Source: Former Pfizer Scientist Is Resurrecting Projects To Solve The Multidrug Resistant Bacteria Problem
NDA approval is set for end of January or potentially first week of February. They had a preliminary meeting back in Sept 2020.
Positive Pre-NDA Meeting with FDA for Sulopenem - 95% approval from ITRM Board
The same board members, staff, and ties on the Duratta deal are now working at ITRM. Almost all of ITRM employees are from Durrata. During the NDA filing review, Pfizer had some senior members during the NDA review with FDA (pre filing). Some names -- Treacy Vargas (worked at Pfizer for 17yrs, retired, and ITRM brought her out of retirement to be head of their submission applications). They brought her in on contract, then after they submitted the NDA in October, she left.
Sarissa Capital & Alex Denner
Alex & Sarissa are known from above link and many others of turning Bio companies in to large profitable buyouts. Sarissa currently owns 33% of ITRM with a special clause for obtaining 60% total ownership of the outstanding shares.
Sarissa discloses 33% ownership of ITRM
Alex& Sarissa have a clause where after Jan 21, they can invoke the exchange of exchangeable notes to take FULL ownership of ITRM after NDA approval. Sarissa AGM meeting for exchangeable notes. So they have a additional 27% ish to exchange if they want. Starting of the ability to exercise I think is Jan 21 from the filing: ITRM AGM Meeting & Sarissa Ownership clause vote
Current outstanding shares is roughly 70-85% are owned by Sarissa, RA Capital, and other institutions / insiders.
source:ITRM Share distribution / ownership
If you haven't read between the lines this far and clued the pieces together, this may be a potential buyout under the covers. Past Durata employees are familiar with what it takes to pass NDA / FDA approvals. Chief Scientist Michael Dunne has been developing this drug and trials since 2015, he also advocates that a NDA approval and distribution would cause this drug to have a EconomicMoat (Warren Buffet talks a lot about Economic Moat companies).
The potential here is after NDA and possibly prior to the FDA or PDUFA approval in Mar/Apr, this could have Pfizers eye along with a few large pharma companies. The current market cap of ITRM is around $100 million which is absolutely peanuts when compared to a blockbuster drug (500-1billion market cap). This could potentially mean a large buyout anywhere from $10-20 / share. However a fair warning, this is very speculative play but given the consensus of Durata previous staff now at ITRM, Pfizer drug that is in a market sector that has no new competitor in 20years, and Sarisa / Alex Denner eyeing for a ownership stake of ITRM, the sentiments are pointing to a positive influx of catalysts over the coming months.
This is a 1st mover advantage in a market that has traditionally been stagnant. My wife works in the medical field and a lot of the verbage is confusing, so I had her review Supolenum. Her findings were this is a fairly well received new drug and something that is much needed in the space. General UTI drugs have terrible side effects and cause intestine and gut bacteria which results in additional anti-biotics. Selopenum has similar side effects, however, much lower then the older products on the market.
****************************ITRM> Institutional ownership. ~70%. You don't see this type of ownership level very often with small cap biopharma companies
**************************Received a CRL from FDA in July last. Something about revising data submitted. PR from ITRM said they didn't have the financing to complete the study. Sarissa Cap and R A Capital invested in Sept/ Sarissa to the tune of 40% ownership with rights to buy more. (activist investment). ITRM recently applied and was given NDA approval for their drug. PDUFA date for approval of drug is early July 21. The company is set up for a buyout. They only have 4 employees/ no sales staff/ Denner from Sarissa is a turnaround-buyout specialist/ ITRM recently partnered with an outside company to market and sell drug (IMO just to increase buyout price/ and just did a shelf BOUGHT offering, possibly so Sarissa can exercise it's right to buy more (just my theory)/ and by increasing number of shares it also increases buyout price. If they went in to a buyout negotiation with only 4 employees and no sales infrastructure they would get raped on the price, hence the recent moves. Fascinating!
I'm sure someone will correct a fact here or there but that's it in a nutshell.