Q3 2019 Earnings Call

Well follow at that time, if anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being recorded.

I will turn the call over to live Reinstall Chief business Officer.

Thank you good afternoon, and thank you for joining us today with me on the call, our Larry Edwards, President and CEO and Chris Walk Senior Vice President Finance.

On today's call Larry will discuss recent developments and will provide an update on the derive a launch Chris will provide an overview of our third quarter 2019 financial results and Larry will conclude and open the call to question before we begin our formal comments, let me remind you that during today's conference call, we will be making forward looking statements.

I represent the company's intentions expectations or beliefs concerning future events.

These forward looking statements are qualified by important factors set forth in today's press release and in the company's filings with the FCC, which could cause actual results could differ materially from those in such forward looking statements.

Information discussed on today's call is accurate as of today, and we do not necessarily intend to update the specific information in the future I would now like to turn the call over to Larry Edwards.

Thank you Maria good afternoon, everyone and thank you for joining us on todays call.

In the third quarter, we continued working hard to ensure that the Robert becomes a commercial success and is reaching more patients in need of antibody treatment options for serious often life threatening infection.

During the quarter, we made significant progress with a 23% increase in net sales compared to second quarter and continued formulary uptake of success rate of 99% for all in all reviews today.

Furthermore, carton grocers are probably has over 30% versus the second quarter, demonstrating continued acceptance and support for increased utilization of the drugs.

So rob as a well differentiated antibiotic that has a broad spectrum of coverage in a very reasonable in an appropriate price point.

As antibiotic resistant rates continue to increase and inappropriate initial empiric therapy continues to be a problem for patients we expect to Rob to become an increasingly important component of the antibody treatment Arsenal for complicate intra abdominal infections.

Our team is squarely focused on continued preliminary uptake in ensuring pull through with all health care professionals and we're confident that sales will continue to increase.

Our launch execution strategy as we've outlined in previous quarters have been comprised of two phases. The first was targeting tier one accounts, which are the highest institutional users antibodies as defined by days of therapy represent approximately 6% of the Gram negative market and the second is focusing on tier two accounts, which constitutes approximately 30% of.

Gram negative market.

We have now expanded this to target key tier three facilities as well.

As we continue to see impress reorder rate of 57% first rather and all accounts and reorder rates as high a 70% within our tier one account segment.

As seen by these reorder rates, our Salesforce continues to make significant progress the prescribing physicians across the U.S.

Rob is available at more than 1000 accounts, representing 99% acceptance rate of formulary reviews, and approximately 154 formulary reviews, our pending or plan to take place by the end of the fourth quarter.

Securing inclusion on hospital formulary as has been a significant component of our launch strategy. The proportion of sales is steadily trending more towards accounts. It helps Rob secured on formulary. Our goal is to continue to generate demand for his rabah pull through formulary wins and bringing on additional new account.

We believe that the scope of coverage and continued frequent engagement with our top tier accounts would deliver impressive new customer growth, which combined with high reorder rates will ship days will ship from a steady progress to increased traction. Our goal is now to continue to expand our customer by customer base and maintain progress with returning customers.

Anecdotal feedback from physicians pharmacists and decision makers continues to be very positive in fact, many HCP. The applaud the Rob was broad label in high clinical cure rates in patients with multi drug resistant pathogens, including SBLF asking you to factor methicillin resistant Staphylococcus vancomycin resistant enterococcus and resistant.

Only microbial infections.

Anecdotally physicians also feel the ability to use robin patients with penicillin and or beta lactam allergies as a critical advantage, while others believe the minimal risk of C. diff developing and patients treated with a broad spectrum agent likes Rabah is a major asset.

Most additions believed as Rob as a logical alternative to Carbapenems and other bid a lot cans for patients with complicated.

Yeah.

Physicians also appreciate that is Robert does not require dose adjustment for patients with renal impairment.

Which they recognize as a key factor per usage in patients in the IC, you and an elderly patients with renal insufficiency.

We feel like we've made significant progress this quarter, we're proud of their confidence to date, all without having a J code or and APC code both of which were approved on October Onest of this year. These codes assists with reimbursement as Rob for use by hospital in non hospital prescribers.

We're encouraged by the steady growth and positive feedback we continue to receive from healthcare providers and thought leaders, who are not only value the clinical benefits as Rob but also appreciate are appropriate and piri pricing strategy.

Behind increased adoption of the Rob the is the dedication of persistence of our tenured field sales of medical teams.

They continue stay focused on key account educating healthcare professionals and providing tools that show benefits of the rafa for patients.

As announced back in August the U.S. government agencies CMS implemented several significant changes to hospital antibody reimbursement, which became effective October onest 2019.

The changes are part of a rule known as the Ibps full year 2020 final rule, which will hopefully help level the playing field. So clinicians can choose the most appropriate antibody for their hospitalized patients without the fear of hurting the hospitals finances.

And we hope it will be additional incentive for collision clinicians to considers a rather when treating patients.

There's a clear unmet need were non beta lactam agents that can cover resistant pathogens that potentially improve patient outcomes.

Greater than 80% of antibiotics used to treat complicated interim domino infections are beta lactam and resistance continues to increase due to selective pressure put on this class with the Rabah healthcare professionals now have an additional option.

Underscoring, our progress, which will drop as Robert as recently strengthened balance sheet with Chris will go in more detail Chris.

Thanks, Larry.

As of September Thirtyth, 2019, Tetraphase had cash cash equivalents of $24.5 million and 2.7 million shares outstanding.

Earlier. This month, we completed an 8 million dollar equity financing with the healthcare focused institutional investor bolstered bolstering our resources and increasing our cash runway into the third quarter of 2020.

Now turning to the quarterly results.

For the third quarter of 2019, Tetraphase reported a net loss of $16.3 million or $6 per share compared to a net loss of $19.6 million or $7.39 per share the same period in 2018.

Total revenues were $3.3 million for the third quarter of 2019 compared to $1.2 million for the same period in 2018.

Total revenues for the third quarter 2019 consisted of the Robert product revenue of $1 million as well as government contract revenue a point $4 million and a territory expansion in upfront payment from adverse medicines of $2 million.

Research and development or R&D expenses for the third quarter of 2019 were $5.3 million compared to $11.7 million for the same period in 2018.

The decrease in R&D expenses for the third quarter compared to the same prior year period was primarily due to a decrease in activity across all of our pipeline programs versus the prior year.

Selling general and administrative or SGN expenses for the third quarter of 2019 were $11.4 million compared to $9.5 million for the same period in 2018.

The increase in SGN, a expenses for the third quarter compared to the same prior year period was primarily due to an increase in commercial related expenses for Rob.

Additional details on our financial performance for the third quarter, maybe found in our press release issued earlier today.

I'll now turn the call back over to Larry for closing remarks.

Thanks, Chris and closing, we're pleased to see the keys or rather launch metrics continuing to trend in the right direction and we believe we have the financial resources and dedicated team in place to bring this important new antibody to patients in need.

We are grateful for your support and we look forward to providing future updates with that we can now I'll turn the call over for questions operator.

Ladies and gentlemen, if you have questions at this time. Please press star and then the number one key on your Touchtone telephone. If your question has been answered are you wish to remove yourself from the Q. Please press the pound keys.

Your first question comes from the line of Alan Carr from Needham and company. Your line is open.

Hi, Thanks for taking your questions. This is Joe we on for Alan.

A couple of them.

First can you give us a breakdown in terms of the prescriptions.

Yes.

Take down of inpatient versus home Allison.

Long term care and.

I've a follow up to that thanks.

Sure. So this is Larry so looking at Q3, our breakdown was roughly about 75% for the hospital about 5% for the long term care and about 20% for the home health infusion centers.

Okay. Thanks.

Welcome.

In terms of ex us.

Partnerships and strategy there maybe you can give us.

An update on what's your current thinking is.

Yes, so I mean, all along I think we we originally thought we were going to go into you on our own. So we've shifted and made some changes with reorganization and said that were divesting our pipeline assets now also looking to out license. This in the EU and other areas. So.

We're.

Midway along some discussions outside of the use of looking at.

Our Odell view minus the Asian Pacific area, which we currently have the collaboration with Everest on them. We're early discussions for the EU. We were trying to find the you in its totality, but we're finding that we're probably going to break that up and be more specific into maybe the big five and then look to partners.

For other regions as well.

Okay, great. Thanks for the additional info.

Welcome.

Again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone.

If your question has been answered and if you wish to remove yourself in the queue. Please press the pound.

Okay.

Thanks.

Okay.

There are no further questions at this time please continue.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.