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Edited Transcript of PRTK.OQ earnings conference call or presentation 5-Nov-20 9:30pm GMT

·34 min read

Q3 2020 Paratek Pharmaceuticals Inc Earnings Call RICHMOND Nov 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Paratek Pharmaceuticals Inc earnings conference call or presentation Thursday, November 5, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Adam Woodrow Paratek Pharmaceuticals, Inc. - President & Chief Commercial Officer * Ben Strain Paratek Pharmaceuticals, Inc. - VP of of IR & Corporate Communications and Chief of Staff to the CEO * Evan Loh Paratek Pharmaceuticals, Inc. - CEO & Director * Randall B. Brenner Paratek Pharmaceuticals, Inc. - Chief Development & Regulatory Officer ================================================================================ Conference Call Participants ================================================================================ * Ami Fadia SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst * Robert Cummins Hazlett BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the Paratek Pharmaceuticals Third Quarter 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Ben Strain. Please go ahead, sir. -------------------------------------------------------------------------------- Ben Strain, Paratek Pharmaceuticals, Inc. - VP of of IR & Corporate Communications and Chief of Staff to the CEO [2] -------------------------------------------------------------------------------- Good afternoon, and welcome to Paratek's Third Quarter 2020 Earnings and Corporate Update Conference Call. A press release for the company's third quarter results was issued earlier today, and we've also posted slides on our website that will be referred to on this call. Both can be found at www.paratekpharma.com. Participants on today's call are Evan Loh, President and CEO; Adam Woodrow, President and Chief Commercial Officer; Randy Brenner, Chief Development and Regulatory Officer; Michael Bigham, Executive Chairman; and Sarah Higgins, Vice President of Finance, Controller and Principal Accounting Officer, will also be available for questions. Before I turn the call over to Evan, I would like to point out that we'll be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. Evan? -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Ben. Good morning, and thank you all for joining our 2020 third quarter earnings call and corporate update. Before I provide an overview of our corporate highlights, I would like to thank all of our employees and contractors who have worked tirelessly and courageously in today's challenging health care environment to ensure the success of Paratek and NUZYRA. I would also like to acknowledge and thank those selfless and dedicated health care professionals who are at the bedside each and every day, working to save the lives of patients in need. NUZYRA's once daily, well-tolerated oral and intravenous formulations, combined with NUZYRA's broad-spectrum antibiotic profile, offers a much needed new life-saving antibiotic for patients with serious community-acquired infections. The strong momentum seen in the first half of the year continued through the third quarter as NUZYRA generated net revenue of $10.9 million, a 35% increase over the second quarter. Importantly, we continued to execute against our objectives, targeting our priority hospitals and other adjacent sites of care, while providing scientific exchange education to ensure that physicians understand NUZYRA's unique profile. NUZYRA's differentiated profile and convenience-of-dosing attributes have been noted by clinicians as important for their prescribing decisions, resulting in positive clinical outcomes for patients. The fact that NUZYRA has continued to show strong quarter-over-quarter growth despite an environment where patient traffic to physician offices and institutions have been reduced by approximately 25% below pre-COVID levels, speaks to the importance of the NUZYRA attributes and on NUZYRA is addressing important unmet medical needs. We believe that these attributes represent the foundational flexibility that underpins the utility of NUZYRA in multiple settings of care. From a medical and scientific exchange perspective, we remain committed to sharing important data with clinicians at recently -- as recently included in a -- and had -- we had a significant presence at IDWeek last month. At this conference, 7 posters were showcased, highlighting clinically important attributes of NUZYRA. These data contained -- the data contained within these posters continues to build on the ever-expanding wealth of clinical data for this life-saving antibiotic. More specifically, one poster highlighted NUZYRA's ability to reduce Clostridium difficile infections when compared to the use of generic antibiotics, such as quinolones. And ultimately, this dynamic has the potential to improve outcomes and reduce overall hospitalization costs. Another poster published clinical outcomes data from a multicenter, real-world study evaluating NUZYRA in several infection types. In this study, the authors deemed NUZYRA to be both effective and well tolerated for a variety of serious infections that included multidrug-resistant, or MDR, and extensively drug-resistant, or XDR, gram-negative infections and pulmonary nontuberculous mycobacterium abscessus or NTM infections. You will hear more details about our NTM program from Randy in his upcoming remarks. At a time when current antibody treatment options against anthrax are limited, we also continue to make significant progress on our broad-based Project BioShield public-private partnership with the Biomedical Advanced Research and Development Authority, or BARDA. The supplemental mouse pharmacokinetic data and FDA response documents requested by FDA are in the final stages of publishing at BARDA and will be submitted imminently. While it's difficult to predict how long FDA will take to complete its final review, based upon multiple discussions with the agency, we believe FDA understands the importance of an efficient and timely review. Before I hand the call over to Adam, I would like to provide Paratek's third quarter 2020 financial highlights and review our updated 2020 financial guidance. Paratek generated $13.7 million in total revenue in the third quarter, primarily driven by the continued strong demand and growth in the net revenue of NUZYRA, which contributed $10.9 million. This third quarter revenue represents a 35% increase in NUZYRA net revenue versus the second quarter of 2020 and a greater than 200% increase versus the same quarter in 2019. Our confidence in the long-term commercial success of NUZYRA continues to grow based upon the performance of NUZYRA as we continued to see significant increases in demand in the hospital in adjacent types of care settings, driven primarily by our oral formulation. This strong and consistent growth in NUZYRA sales highlights NUZYRA's ability to continue to grow, despite the challenges of the COVID-19 environment. This is not only a significant achievement in a volatile and rapidly evolving health care setting, but a reflection of the clinical importance of NUZYRA in the hands of clinicians at the bedside. We also earned other revenue of approximately $2.8 million, which consisted principally of government contract service and grant revenue from BARDA. R&D expense was $6.7 million for the third quarter of 2020 compared to $8.4 million for the third quarter of 2019. The $1.7 million decrease was primarily the result of lower clinical study costs associated with the completion of the Phase II UTI program in 2019, partially offset by an increase in costs incurred under the BARDA contract and third-party manufacturing scaleup costs. SG&A expenses were $20.9 million for the third quarter of 2020 compared to $23.6 million for the second quarter of 2019. The $2.7 million decrease is primarily the result of lower personnel-related costs and a reduction in sales and marketing costs due to COVID-19. Now turning to our 2020 financial guidance. We now anticipate our full year 2020 total revenue to be at the higher end of the previously communicated range of $78 million to $83 million, driven by strong NUZYRA U.S. net revenue trends. Total revenue includes NUZYRA U.S. net sales, the initial BARDA procurement of NUZYRA for the SNS, government contract revenue earned under the BARDA contract and royalty and collaboration revenue. As noted earlier, this guidance assumes that the initial BARDA procurement of NUZYRA valued at approximately $38 million will occur by the end of 2020. The FDA could be completed as early as the end of this year but may slip into the first quarter. The first procurement is expected soon after completion of the FDA review. Accordingly, the first procurement will be recognized as early as late 2020 or in the first quarter of 2021. Excluding the R&D and offshoring of manufacturing expenses reimbursed by BARDA, our R&D and SG&A expense combined are expected to be lower when compared to 2019, highlighting our commitment to remain disciplined from an OpEx perspective. Thus, full year 2020 R&D and SG&A expense combined is now expected to be approximately $120 million compared to our previous guidance of approximately $135 million. This favorability is driven by a continued focus on operational efficiencies and the timing of certain expenses, driven by the COVID-19 pandemic, some of which will now occur in 2021. R&D and SG&A expense includes continued investment in our commercial infrastructure, while pursuing potential strategic life cycle investments in areas that will create long-term shareholder value, such as the nontuberculous mycobacterium abscessus program, or NTM program. Based upon our current operating plan, which includes estimating NUZYRA U.S. product revenue and cost reimbursement under the BARDA contract, we anticipate that our existing cash, cash equivalents and marketable securities of $149.5 million as of September 30, 2020, provide for a cash runway through the end of 2023 with a pathway to cash flow breakeven. This anticipated pathway assumes the company will be able to fund all company operating expenses, anticipated capital expenditures and debt service, including repayment in full of the Hercules Loan and Security Agreement. Our planned life cycle investments, including NTM, are also factored into our current cash runway guidance. I would now like to turn over the call to Adam. Adam? -------------------------------------------------------------------------------- Adam Woodrow, Paratek Pharmaceuticals, Inc. - President & Chief Commercial Officer [4] -------------------------------------------------------------------------------- Thanks, Evan. The U.S. launch of NUZYRA continues to progress well with continued strong quarter-over-quarter growth seen since launch even in the face of the challenging and ongoing COVID-19 pandemic. As you can see from this slide, NUZYRA net revenue grew 35% in the third quarter compared with net revenue in the second quarter. Regardless of the COVID-19 challenges we are facing, we have not wavered from our strategic focus on getting institutional access while building awareness and establishing trust and confidence with physicians who are saving lives and treating serious community-acquired infections every day. In the third quarter and at least for the foreseeable future, COVID-19 will continue to present a number of challenges. In the last quarter alone, we saw patient flows to physician offices and institutions approximately 25% below pre-COVID levels and a market that saw an 18% decline in broad-spectrum antibiotic utilization when compared to the same period in the prior year. This is an improvement over Q2, but still down significantly, nonetheless. These headwinds, coupled with significantly reduced physical access to hospitals and a reduced ability to interact with physicians face-to-face does not represent the historic environment for person interactions and scientific education exchange about novel products. These dynamics have also made it an increasingly challenging environment to engage with hospitals to obtain formulary status. But nevertheless, our business continues to grow quarter-over-quarter. And we are effectively and efficiently operating within a hybrid sales model consisting of both face-to-face and virtual interactions that we see existing well into 2021. We have supplemented our efforts with virtual marketing and virtual sales tools. And as such, we're able to achieve $10.9 million in NUZYRA net product revenues, representing a 35% increase versus the prior quarter, establishing NUZYRA as one of the best antibiotic launches in the past 5 years. Accounting for inventory, NUZYRA gross demand increased from approximately $9.5 million in the second quarter of 2020 to approximately $12.9 million in the third quarter of 2020. Thus, growth in this third quarter was driven by demand as inventory in the channel remained essentially flat. The U.S. commercial launch of NUZYRA is continuing to materially differentiate itself from other antibiotic launches over the past 5 years, driven by strong operational execution and NUZYRA's many product attributes that include: one, a broad-spectrum efficacy across 2 common indications; two, a favorable safety profile consistent with NUZYRA's tetracycline heritage; and three, convenient once-daily oral and IV formulations that enable utility in multiple settings of care. Accordingly, these factors continue to build strong demand and validates Paratek's commercial strategy since launch, which has been to focus on hospitals and adjacent sites of care for the first 2 years of our launch. We believe that the continued commercial success in these hospital and institutional settings of care will translate into future success in the community settings. As the first broad-spectrum, once-daily oral and IV antibiotic approved for both pneumonia and skin in nearly 20 years, we believe that NUZYRA is on its way to addressing significant unmet needs in these serious community-acquired infections, while combating antibiotic-resistant pathogens that arise from clinical failures and poor outcomes with older generic antibiotics. We believe NUZYRA's convenient once-daily oral and IV dosing provides flexibility in prescribing, reductions in hospital stays, and in some cases, avoidance of hospital admissions altogether. The ability of NUZYRA to potentially minimize hospital stays has always been an important attribute for many of our prescribers and a meaningful benefit for our patients. In today's COVID environment where CAP is an ever-present clinical infection, especially now that we have entered the full winter influenza season, available hospital beds are becoming both a much valued and scarce commodity. This important offering with NUZYRA to be able to safely send patients home sooner has taken on even more significance. As you know, since launch, we have focused our efforts on institutional access with a team of approximately 60 representatives, targeting 600 hospitals in their adjacent sites of care. Currently, approximately 90% of NUZYRA sales are generated by physicians associated with the hospitals, infectious disease doctors being the largest NUZYRA-prescribing specialty. From a market access perspective, we continue to have strong commercial and Medicaid access while obtaining comparable levels of Medicare coverage remains a challenge. We've had several important meetings with Medicare payers and with CMS over the past several months, highlighting the importance of coverage with novel antibiotics for our most vulnerable patients, particularly in the COVID environment. While success is hard to predict, we do believe we will have the opportunity for expanding access in the Medicare patient population in the quarters ahead. Given our excellent reimbursement and infectious disease support and efficacy, plans are now well underway to optimize our current institutional-based sales force and add a targeted community-based sales force set to be established and implemented in early 2021. This will be accomplished within our current cash runway guidance. We continue to believe that the strong success in the hospital setting will translate into success in the community over time, and we look forward to providing specifics in the near future. Overall, we're extremely pleased with our performance to date. We believe we are on the right path with NUZYRA and are well positioned for long-term commercial success. We look forward to reporting on our continued progress in the quarters ahead and our plans for addressing the community opportunity. And with that, I'd like to now turn the call over to Randy. Randy? -------------------------------------------------------------------------------- Randall B. Brenner, Paratek Pharmaceuticals, Inc. - Chief Development & Regulatory Officer [5] -------------------------------------------------------------------------------- Thank you, Adam. I'd like to begin by thanking the Paratek team for their hard work in making significant progress advancing our research, development, manufacturing and medical affairs activities. This includes initiatives across key areas such as: the execution of the mouse PK study requested by FDA for the pre-EUA; advancing the preclinical, clinical and manufacturing work under the BARDA anthrax program; sharing of new data at recent medical conferences; and advancing our pipeline as we prepare to initiate a Phase IIb study of NTM with plans to begin enrollment in the first half of 2021. We believe these deliverables have the potential to add and build significant value for physicians, patients and shareholders. As noted earlier, our BARDA partnership continues to progress well. This unique public-private partnership is a recognition of our jointly shared commitment to advancing NUZYRA in the fight against antimicrobial resistance and to develop NUZYRA as a potential treatment against bioterrorism pathogens, including anthrax and the procurement of NUZYRA for the strategic national stockpile. We continue to make important progress advancing our efforts in collaboration with BARDA to onshore the manufacturing of NUZYRA, which will enable us to have a secure additional supply chain for NUZYRA fully within the U.S. To the best of our knowledge, NUZYRA will be the first and only antibiotic to be made in the U.S., including API production. Importantly, this U.S. onshoring initiative for NUZYRA also aligns with the President's Buy America Executive order issued in August of this year, which required FDA to establish a list of essential medicines, which are defined as medically necessary to have supply available all times in an amount adequate to serve patient needs and in the appropriate dosage forms. We were pleased to see that FDA has included omadacycline as part of its essential medicines list that was released on October 30. This further supports the importance to the U.S. government of ensuring that NUZYRA will be secured in the SNS and that we have ongoing plans to build a fully integrated NUZYRA manufacturing chain within the U.S. shores. The timing of the initial BARDA procurement of 2,500 anthrax treatment courses of NUZYRA remains contingent on the completion of the FDA review of the pre-EUA application. As mentioned last quarter, the initial FDA review of the pre-EUA had taken longer than we had initially anticipated. And in June, FDA requested supplemental mouse pharmacokinetic data in the same mouse strain that was used in the animal anthrax efficacy studies. This study is complete and the response is now in the final stages of publishing at BARDA and will be submitted to the FDA at any moment. We are confident that these data will fulfill FDA's single question on the pre-emergency use authorization application for NUZYRA. The one thing that is out of Paratek's or BARDA's control is how long it will take FDA to complete its review. The FDA review could be completed as early as the end of this year but may slip into the first quarter of next year. The first procurement is expected soon after completion of the FDA review. Accordingly, the revenue from this first procurement will be recognized as early as late 2020 or in the first quarter of 2021. Importantly, based on feedback from BARDA, this modest delay in our first procurement will have no impact on the timing of future procurements. Beyond the work with BARDA, we also continue to pursue a number of compelling life cycle opportunities for NUZYRA. The first of these is the completed and filed oral-only community-acquired bacterial pneumonia PK study that will support an oral-only dosing regimen in pneumonia. This study has agreed upon with FDA that designed to show that an oral-only dosing regimen will have a comparable pharmacokinetic profile to the approved IV-to-oral dosing regimen in patients with CAP that was established in our OPTIC study. Based on recent interactions with FDA regarding this application, this filing instead of being categorized as a pharmacokinetic supplement, FDA has categorized it as an efficacy supplement as the subjects in this study were pneumonia patients rather than healthy volunteers. As a result, the sNDA review has been assigned a standard review time line, which typically takes up to 10 months. We now believe an approval for this oral-only dosing regimen, while expected during the second quarter of 2021 following recent discussions with FDA, may be pulled forward since the submission includes a single study with a modest number of pneumonia patients. We are also continuing to move our program on nontuberculous mycobacterium abscessus, or NTM forward. It's a potential $740 million addressable market in the U.S. alone. As a reminder, nontuberculous mycobacterium obsesses is a rare and orphan disease with no FDA-approved therapies. Start-up activities for the Phase IIb study are underway with the initiation of patient enrollment planned for early next year. Inbound feedback from our KOL community has continued to highlight the clinical unmet need for an efficacious and well-tolerated oral antibiotic to treat infections caused by mycobacterium abscessus. Broadening the clinical data set using NUZYRA in patients with NTM, 2 recent case series have been published, highlighting the potential efficacy of NUZYRA in pulmonary mycobacterium abscessus. One real-world study was recently presented at IDWeek with 11 patients included. As noted by the authors, NUZYRA was shown to be effective and well tolerated in this small sample set. Importantly, and consistent with the chronic treatment needs in these patients, patients received therapy for a mean of 6.4 months, with some treated with NUZYRA for over 20 months. The second published case series for Brigham and Women's, again, highlighted the long-term use and good tolerability of omadacycline as part of the multi-antibiotic treatment regimen for 4 patients with mycobacterium abscessus disease. Two of these patients have cutaneous disease, one had pulmonary disease and one had osteomyelitis and bacteremia. These patients received omadacycline for a median duration of 166 days with the longest duration of therapy being 225 days. These data also noted by the authors found omadacycline to be a novel oral option for the treatment of mycobacterium abscessus disease for which safe and effective options are needed. These data continued to reinforce the need for additional studies to further evaluate these encouraged clinical findings. Paratek, along with outside researchers, continue to generate evidence that further characterizes the important attributes of NUZYRA. Our investigator-initiated research, or IIR program, advances the medical knowledge that we believe are useful to clinicians. To date, there are 7 active nonclinical and clinical studies in our IRR program, such as studies in the areas including diabetic foot infections as well as C. difficile infections, with 3 additional studies expected to start before the end of this year. In addition, there are 11 active nonclinical research studies, including the activity of omadacycline alone and in combination in a rat osteomyelitis model and several other studies in mycobacterium abscessus that will build on the growing information of NUZYRA. The data from these programs will ultimately be published by the researchers conducting them. Regarding our overall publications plan, there are currently over 20 publications in process that address the use of NUZYRA in special pathogens, populations or disease states that will further define its unique therapeutic profile. In parallel, real-world evidence from ongoing registries and independent case series reports continue to be published in peer-reviewed journals, describing the clinical features and outcomes of patients with challenging infections receiving omadacycline, including osteomyelitis and NTM. With regards to our NDA review of NUZYRA in China, the regulatory process continues and makes good progress with the approval still expected in the first half of next year. We believe that the China approval and the additional data generation with the oral-only CAP and NTM life cycle opportunities as well as our IIR program will further broaden the potential for NUZYRA to reach into new and clinically important patient populations. At this point, we would like to open the line for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We'll take our first question from Ami Fadia with SVB Leerink. -------------------------------------------------------------------------------- Ami Fadia, SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst [2] -------------------------------------------------------------------------------- Congratulations on the [desirable] performance in the quarter. A couple of quick questions on just NUZYRA performance in the quarter alone. Can you talk about the mix by indication just qualitatively that you're seeing and the number of days patients are on oral versus IV? And then once you get approval of the oral-only dose in pneumonia, how do you see that impacting the utilization of NUZYRA? I've got 2 other topics, but maybe I can pause here. -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Yes. Thank you, Ami. Maybe, Adam, you could take those questions because you're closest to the commercial performance that we've seen. -------------------------------------------------------------------------------- Adam Woodrow, Paratek Pharmaceuticals, Inc. - President & Chief Commercial Officer [4] -------------------------------------------------------------------------------- Yes, I'm happy to do so. As regards to the mix by indications, not a lot has changed since the -- since even the launch. Very quickly, we sort of established a 50% of our business was on-label. About 50% was off-label. Nothing unusual there. That's normal for many anti-infectives. The off-label use is driven predominantly with things like osteomyelitis, some rickettsial diseases and some NTM driving that business. Those patients are on NUZYRA quite -- for quite a period of time. The other half of the business, actually, about 50% to 55% of the prescriptions are for skin and pneumonia, with skin being the largest proportion of that, unsurprisingly, because we've just come through and are in the -- what's left of the skin season. We're moving into the community-acquired pneumonia season. So we should expect to see a tick-up in pneumonia prescriptions as we go into the rest of this year. As regards, I think, the question around the change to the label. We think that there's significant opportunity for NUZYRA with -- even just with the oral for skin that we have. I mean, remember, we have oral-only dosing physiology for skin, and we anticipate that next year, we'll also get the pneumonia. But the skin indication alone is a $1.5 billion market opportunity and 1/4 representing nearly 14 million patients. So we're cautiously optimistic we'll do well as we approach going into the community setting and starting to promote in that segment of the business. -------------------------------------------------------------------------------- Ami Fadia, SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst [5] -------------------------------------------------------------------------------- Just with regards to the inclusion in the list of essential medicines, what does that mean in terms of any specific stockpiling or inventory buildup that would be sort of required by what's your sort of being -- sort of on that list under the executive order? And just separately on the BARDA contract, it sounds like you're getting ready to submit a response to them. Can you remind us what is the next step in the development program, subject to which any future purchases or payments may be due over the next year or 2? -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [6] -------------------------------------------------------------------------------- Thanks, Ami. Maybe, Randy, you could take the progress that we're making on BARDA, and then maybe I can talk about the essential medicines list and what that potentially means to Paratek. -------------------------------------------------------------------------------- Randall B. Brenner, Paratek Pharmaceuticals, Inc. - Chief Development & Regulatory Officer [7] -------------------------------------------------------------------------------- Yes. Sure. So thanks. So yes, so as I said, the BARDA relationship continues to progress really well. There are a number of activities that are ongoing as part of the overall contract and the overall program. They're made up of essentially the anthrax Animal Rule program. The clinical activities associated with the post-approval commitments that the BARDA contract is funding. The onshoring efforts that we spoke at length about in our opening remarks as well as the procurement opportunities that are laid in this part of that contract. So all 4 of those activities are progressing really, really well. I guess, as far as immediate next steps, obviously, the procurement is front of mind for us. The response, as I said, is about to go into FDA. It's in BARDA's hands for final publishing and submission. Once it gets to FDA, they will complete their review. As a reminder, there was a single question that we had to respond to, and we generated the data to respond to that question. The piece that remains out of our control was how long FDA will take to review that, but early discussions with FDA. They seem to understand the importance of reviewing that as in a -- as a time of manner as they can. So that -- and as I said, that final review will then essentially trigger BARDA to be able to do their next steps to move forward and procure the product. -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [8] -------------------------------------------------------------------------------- And the -- as far as the future -- first, sorry, the future purchases (inaudible) Sorry. Go ahead. -------------------------------------------------------------------------------- Ami Fadia, SVB Leerink LLC, Research Division - MD of Biopharma & Generics and Senior Analyst [9] -------------------------------------------------------------------------------- Do you mind -- yes, if you could just clarify -- yes, that was my question. The future purchases. -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [10] -------------------------------------------------------------------------------- Yes. As far as the future purchases go, the contract lays out the purchase of approximately one 2,500 treatment course purchased annually over the next 4 years. So those purchases are not linked to specific milestones within the contract -- more linked to showing ongoing progress of the programs that are contained within that BARDA contract. So we anticipate about 1 procurement annually over the next several years. Randall, why don't you talk about the essential medicines list? -------------------------------------------------------------------------------- Randall B. Brenner, Paratek Pharmaceuticals, Inc. - Chief Development & Regulatory Officer [11] -------------------------------------------------------------------------------- So just to be clear -- yes. So just to be clear, Ami, the first purchase has been delayed. For us, we're very confident. It's not a matter of if, it's a matter of when. And the other ones for '21, for '22 and '23 are going to be essentially annually. That's what we've guided on before. As far as what the listing on the essential medicines list means for Paratek and for NUZYRA, first of all, we were surprised by the listing. We had no A-priority knowledge that NUZYRA is going to be listed there and is listed specifically under the bioterrorism pathogen and medical countermeasures category. And we were the only branded product listed there, and we're very excited to see that. We think that based upon a further affirmation and validation by FDA, independent of BARDA's assessment for which they actually gave us our BioShield award, I think further buttresses and enhances our confidence in the opportunity, not only for the base award of the $285 million, but I think we should consider based upon analogs such as emergent biosolutions of future NUZYRA purchases after the 5-year contract is completed, and we have a -- an approval for anthrax. And we believe that the view that -- and the dollars that BARDA gave us specifically to onshore to provide a second manufacturing supply chain for NUZYRA in U.S. soil is actually also premonitory for future purchases because I'm sure that BARDA is not giving us the monies to provide a manufacturing supply chain just to have it not supply NUZYRA for BARDA. That being said, we've indicated that we've had, over this year, continued discussions with other branches of the Department of Defense and other federal agencies that oversee strategic national stockpiles as well as the need to have broad-spectrum antibiotics to protect their active war fighters. And we believe based upon those conversations that not only is the BARDA pre-EUA, a separate independent validation of the importance of omadacycline, but we believe that this validation by FDA is also another external independent scientifically based agency validation that I think will accelerate those discussions, vis-a-vis, future near-term purchases for NUZYRA. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- (Operator Instructions) We'll hear from Bert Hazlett with BTIG. -------------------------------------------------------------------------------- Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [13] -------------------------------------------------------------------------------- With regard to the marketing strategy and the pivot towards the community-based approach, others have successfully done this in the past, but what is it that gives you confidence at this particular point that this is the right move to make? And then could you just elucidate a little bit more about the strategic engagement here? Is this something you tend to do by yourself? Is this something where you might consider pulling a partner? Just a little bit more about the color. -------------------------------------------------------------------------------- Adam Woodrow, Paratek Pharmaceuticals, Inc. - President & Chief Commercial Officer [14] -------------------------------------------------------------------------------- I think I can take that one, Evan. Thanks, Bert. Look, I think, first and foremost, that if you go back a few years, we've been pretty consistent in terms of what we felt is the right time to start considering the community-based opportunity. And if you go back to some of the early calls, we've always said that you need about 24 months before you start to pivot into the community setting. And the reason for that is you need to build advocacy with the experts in the field, which is the infectious disease consultants. And you also need to get your payer reimbursement in order. We've got absolutely excellent reimbursement and support in that -- in both from the payer perspective, and we've got great advocacy. The other thing about that community setting is that it's actually a target-rich environment. And so we're well underway in terms of our plans now to build basically what would be a community-based sales force, and we'll establish that and implement that early in 2021. We'll continue to make sure that you understand how that affects us. But right now, it's within our current cash runway guidance. And we think that the efficacy and the reimbursement that we've got will help us in terms of making sure that it translates into success in the community over time. The final thing I would say is that we've ultimately got a launch, obviously, with the initial skin indication. But before the year is out, we will have 2 indications in a single once-daily formula for patients. And that historically has performed extremely well in the community setting for an antibiotic. -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [15] -------------------------------------------------------------------------------- Bert, I would just build on what Adam said also, you know that our primary goal has always been to drive the performance of NUZYRA, which we believe is a true franchise product. And as we've prosecuted these last 2 years of launch, we continue to get inbound interest from KOLs about the oral and different places it can be used. And we're also learning that these opportunities are ones in which they get highlighted by the regional efficiency and effectiveness that we've been able to garner from partnerships and relationships that we have in these institutional and adjacent sets of care where these -- we believe very strongly that these primary care doctors actually rely on the recommendations of ID physicians. And where we have 70-plus percent of our prescribers being ID physicians, I think Adam has done the appropriate work and creating the right type of, I think, strategic beachhead for us to be able to take on this expansion on our own in a manner that is consistent with our overall cost efficiencies that we've driven through this year in terms of our OpEx efficiencies. And I think some of those OpEx efficiencies affords us this opportunity for us to think about taking this initial step out on our own. -------------------------------------------------------------------------------- Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [16] -------------------------------------------------------------------------------- Okay. And then I have an additional one. Just about the oral-only cap. Could you please just run through the consideration again that your -- how the application is being viewed? And then I think the comment was there's a 2Q PDUFA date potentially, but that could be pulled up. What gives you confidence there? -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [17] -------------------------------------------------------------------------------- Randy, [did you] want to take that one? -------------------------------------------------------------------------------- Randall B. Brenner, Paratek Pharmaceuticals, Inc. - Chief Development & Regulatory Officer [18] -------------------------------------------------------------------------------- Yes. So hey, Bert. It's Randy, I'll take that one. So the events with the oral-only indication were that the submission went in, and we had anticipated it just to be classified as a typical PK prior-approval labeling supplement. And upon receipt of the application and review of the data, FDA decided that they were going to classify it as an efficacy supplement, even though there was no real efficacy -- full efficacy studies included in the application. They've decided based on their categorization that, that was the right way to classify the indication. So we've had discussions with FDA as recently as this week about the application. And while, of course, you would expect they would give no firm commitment. The application really is quite small. It's a single study, less than 20 patients in our PK population. And as a result of that, they acknowledged that it was a small data set, and we'd look to see if there's ways to accelerate it, understanding that the pneumonia season and the challenges with COVID are more important drivers for us. So that's what gives us a little bit of sense of confidence that they may work with us to try and move that up a little bit. -------------------------------------------------------------------------------- Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [19] -------------------------------------------------------------------------------- Okay. So as we're thinking about this, again, I want to make sure I'm hearing the consistent message. When is the best expectation that this can be available that you have right now? -------------------------------------------------------------------------------- Randall B. Brenner, Paratek Pharmaceuticals, Inc. - Chief Development & Regulatory Officer [20] -------------------------------------------------------------------------------- Yes. So I think we have to rely on the PDUFA date, which is that 10-month review, which puts it into the second quarter. But we'll continue to work to see if we can accelerate that. -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [21] -------------------------------------------------------------------------------- And Bert, just to be clear, something that you said here in terms of when it will be available. It really will be a labeling update in terms of the ability to use an oral-only load in place of an IV -- single IV load. That's really the PK goal here. We do have a pneumonia indication. Doctors can decide how they actually want to do their own resourcing in terms of how they want to treat their patients, and we have an oral-only indication in skin, which to date, has continued to be, I think, a very fruitful opportunity space that we've seen, lots and lots of doctors use NUZYRA as an oral-only start in settings of care that are adjacent to the hospitals. -------------------------------------------------------------------------------- Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [22] -------------------------------------------------------------------------------- Congratulations on the performance to date. We look forward to more growth of the product. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- That does conclude today's question-and-answer session. I'd like to turn the conference back over to Mr. Evan Loh for any additional or closing remarks. -------------------------------------------------------------------------------- Evan Loh, Paratek Pharmaceuticals, Inc. - CEO & Director [24] -------------------------------------------------------------------------------- Okay. Thank you very much. So as there are no more questions, we'll conclude today's call. In closing, I want to thank all of you for your time and attention today. Your continued interest in NUZYRA and Paratek are important to us. The journey of making NUZYRA a commercial success is well underway as the wealth of microbiological and medical-use data on NUZYRA continues to expand. We are increasingly confident in the potential of NUZYRA to be an effective and a much needed addition to the armamentarium of antibiotics available to physicians to save lives, particularly when resistance is of concern. The BARDA collaboration also positions Paratek as a leader, not only with the potential to provide NUZYRA for bioterrorism pathogens, but as a leader in innovation for the broader ID sector in the battle against antimicrobial resistance. These opportunities motivate us all at Paratek, and we would like to thank the patients who have participated in our clinical studies, and again, our employees who have worked tirelessly for our long-term success. We very much appreciate your continued support and interest. We look forward to keeping you apprised of our continued progress. Goodbye for now. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- And that does conclude today's conference. Thank you all for your participation.