Q4 2019 Earnings Call
[music].
Greetings and welcome to the Paratek Pharmaceuticals fourth quarter fiscal year 2019 earnings call.
At this time, all participants are in listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Ben strain Vice President of Investor Relations and corporate communications. Thank you Mr. strained you may begin.
Good afternoon, and welcome to Parateks fourth quarter and full year 2019 earnings at corporate update conference call. A press release with the company's fourth quarter results was issued earlier today and we also posted slides on our website that will be referred to on this call. Both can be found at www Dot Paratek pharma dot com.
Participants on today's call, our Evan Loh CEO.
Adam Woodrow President and Chief Commercial Officer, Randy Brown, our Chief development, and regulatory Officer, Michael Brigham Executive Chairman and Sarah Huggins, 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've met we'll be making forward looking statements, which are based on current expectations and beliefs de such statements are subject to certain risks and uncertainties and <unk> actual results may differ materially.
Encourage you to consult risk factors discussed it out that's the SEC filings for additional detail Evan.
Thank you Ben Good afternoon. Thank you all for joining our fourth quarter and full year 2019 earnings call and corporate update.
2019 was a transformative year for Paratek with a number of key achievements that we believe that set the stage for sustained long term growth and have established paratek as a leader in the anti infective space.
In early 2019, both news IRA and say Sarah launch in the United States and we're pleased with the progress of both product launches.
These innovative therapies are now providing much needed new therapeutic alternatives for patients in need and in the case and use IRA offering and effective lifesaving antibiotic for serious community acquired infections.
We are pleased by the performance revenues Iris launch with significant increases in demand seem quarter over quarter throughout 2019, driven predominantly by the oral formulation.
This quarter.
Quarter over quarter, increasing demand was accompanied by continued success in securing access from payers and access within the target at hospitals, Adam will highlight these successes in greater detail.
We generated 9 million in net revenues in the fourth quarter, primarily driven by the sales and use our.
Net sales of new Zira increased 74% over the previous quarter to $5.4 million into fourth quarter.
We are and other revenues of approximately 3.6 million, which consisted principally of about $3 million development milestone for the submission of the regulatory filing would most likely to China from side lab.
And royalties earned from say Sarah sales in the U.S.
Looking at the growth trajectory observed in 2019, we believe that news I was on track to be one of the most successful antibody launches in the last decade.
We believe that the achievements and sales trajectory seen in 2019 are setting the foundation for future sustained growth in Twentytwenty and beyond.
Late last year, we also announced a significant milestones.
Entering into a broad based project bile she'll contract with biomedical advanced research and development authority for BARDA.
Which is part of the United States Department of Health and Human services and the office of the assistant Secretary for preparedness and response.
We would like to thank BARDA for their commitment to the long term viability of the antibody sector.
In particular, we appreciate their confidence in Paratek and there's significant investment in this innovative long term public private partnership for the development use Iraq in the fight against antimicrobial resistance in order to save lives and protect Americans.
BARDA award to Paratek, a five year contract, which is valued at up to $285 million over the initial five year term.
And if successful we believe that there is potential to expand this partnership to 10 years.
This contract is unique in scope and designed to support the development news IRA for pulmonary anthrax.
Importantly, the on the support for I pulmonary Anthrax Development program. This award also provides full cost reimbursement to fund all of the F.D.A. post marketing requirements associated with use Iris initial approval, including the pneumonia and pediatric studies, which will commence in the coming months and.
Funding for the five year post marketing bacterial surveillance studies, which is required for all newly approved antibiotics.
As a reminder, this clinical expense was previously included in our cash runway. However, these activities will now be funded entirely to the BARDA collaboration to an aggregate value of $77 million.
This is the first time that antibiotic will be procured via project Bausch yield for the strategic national stockpile.
Our contract provides procurement provides for procurement of up to 10000 treating the courses knees are further strategic national stockpile for use against potential anthrax attack attacks valued at up to $153 million.
Randy will provide an overview of the details of the collaboration and an update on progress to date.
The recent news with the Corona virus Cobot 19 further highlights the need for novel Therapeutics to treat this devastating and near pandemic disease.
As with influenza many of the Corona virus fatalities are unfortunately associated with secondary bacterial pneumonia infections further highlighting the importance of a novel once daily well tolerated oral and IV antibiotic in the treatment paradigm for pandemic preparedness.
Rapid global spread of this new virus further highlights the importance of pandemic preparedness, including the need for novel Therapeutics.
Accordingly, we believed that our recently announced broad based public private partnership with BARDA, well open up opportunities for Paratek to actively pursue other strategic partnerships. The government contracts to further support national pandemic preparedness and help patients in need.
We believe these Iraq is uniquely positioned with its once daily broad spectrum profile for these opportunities.
We're also pleased with the recent progress achieved and expanding the global footprint for both say, Sarah Hughes IRA into China, which I will detail in this slide and the next.
Our mass I think partner Xylem has made significant progress following completion of the phase three development program.
Following the successful submission of the a modest likely in India in late 2019.
So I lab recently announced this month that the China National Medical products Administration has accepted its new drug application for a modest likely for the treatment of community acquired bacterial pneumonia and acute bacterial skin and skin structure infections.
Under the terms of design collaboration agreement, we are entitled to receive a milestone payment of $6 million upon regulatory approval, which is anticipated in the first half of 2021.
And tiered royalties at low double digit to mid teen percentages automaticity likely net sales in China.
Huh.
Now turning to say Sarah.
Admirals launch they say in the U.S. has successfully generated clinical demand and we're pleased to see its growth trajectory in 2019.
Which we believe augurs well for continued growth in Twentytwenty.
To further the global opportunity with the say, Sarah we announced yesterday that we have signed an agreement with Elmer all granting a license for alcohol to develop and commercialize say Sarah for the greater China region.
<unk> is anticipating a regulatory submission in the 2023 timeframe.
As part of the agreement, we aren't title to receive high single digit.
Royalties on net sales.
Before I hand, the call over to Adam I would like to provide full year 2019 financial highlights and cover our Twentytwenty guidance.
In 2019, we generated total revenues of 16.5 million.
Which 11.5 million were attributable to news I run net sales in the United States driven by a strong finish to the year as news IRA generated $5.4 million in net sales in the fourth quarter alone.
We also earned collaboration revenues of $5 million in 2019, consisting primarily of a 3 million dollar milestone payment received from xylem as just highlighted and royalties earned from say Sarah sales in the United States.
R&D expenses were 39.6 million at 2019 compared to 57.5 million for 2018.
The decrease was primarily the result of the capitalization of news Eirik commercial supply cost, which were classified as an R&D expense until after FDA approval of news Iris.
<unk> expenses were 89.1 million in 2019 compared to 63.7 million in 2018.
The increase was primarily the result of investments in support of the U.S. commercial launch of news are.
Now turning to our 2020 financial guidance.
Paratek estimates twentytwenty total revenues to be between 75, an $80 million compared to 16.5 million in 2019.
This revenue guidance consists of the following elements.
<unk> net sales in 2020 is expected to be approximately $66 million, what slightly more than half of these revenues coming from the initial BARDA procurement of 2500 anthrax treatment courses.
As a reminder of the initial BARDA procurement is anticipated to be secured in the first half of Twentytwenty.
Royalty and collaboration revenue combined with BARDA grant revenues expected to be between nine and 14 million.
Of note BARDA Grant revenue consists of cost reimbursement associated with Twentytwenty spend on the FDA post marketing requirement activities. The anthrax development program and the onshoring of U.S., New Xyrem manufacturer.
Twentytwenty R&D and SGN expense is expected to be approximately $140 million.
We continue to remain disciplined from an opex perspective balanced against potential strategic investments in areas. We believe will create long term shareholder value.
For example, R&D expense includes approximately $5 million earmarked for the startup activities in preparation for a potential NTM Registrational study.
Excluding the BARDA R&D and onshoring reimbursement R&D and SGN expenses combined are expected to remain relatively flat when compared to 2019 I.
I think highlighting our commitment to remain disciplined from an opex perspective, including continued investment in our commercial infrastructure and additional value drivers such as pursuing the potential indication and NTM.
As many of you are aware in 2019, we established a 50 million dollar ATM program.
As of the close of the market yesterday, we have raised approximately $36 million and net proceeds under this program of which approximately three fourths was raised in 2019.
Well as a matter of corporate policy, we do not comment in advance on our future financing activities given our recent ATM activity, we feel it appropriate in this circumstance to provide some general guidance specifically given the current strength of our balance sheet. We have no plans at this time to sell additional equity including.
Through the ATM.
Based on our current operating plan, which includes estimated news IRA U.S. product sales and the and the BARDA expense reimbursement activities related to the project biofuel contract.
We anticipate that our existing cash cash equivalents and marketable securities of $215.4 million.
As of December 30, Onest 2019 will extend our cash runway.
Through the end of 2023.
Providing paratek with a pathway to cash flow breakeven.
This anticipated pathway assumes we will be able to fund all company operating expenses anticipated capital expenditures and debt service that includes repayment in full of the Hercules loan and security agreement under its existing returns.
With that I'll now turn over the call to Adam.
Adam.
Thanks Evan.
The U.S. launch of Nusantara continues to progress well and we are encouraged by the significant growth seen in the fourth quarter.
In fact.
The demand is seen in the fourth quarter exceeded our expectations.
We believe many of the successes and leading indicators such as the particularly strong demand seen in December of 2019, bode well for the future.
As the fast broad spectrum once daily oral and IV antibiotic proof of both pneumonia and skin in maybe 20 years, we believe that news all right well on its way to addressing important unmet needs in this serious community acquired infections.
While combating antibiotic resistant pathogens that arise from clinical five years import outcomes with older generic antibiotics.
We believe news out as convenient once daily oral at Ivy dosing is providing flexibility in prescribing, resulting in reductions in hospital stays and in some cases, allowing patients to avoid hospital admissions altogether.
In addition, we believe that news are a safety and Tolerability profile, along with its lack of dosing modifications for hepatic or renal impairment provides a much needed alternative to many existing antibiotics. For example, the quinolones with their basket a few T.C. I newer logic serious adverse events.
But recently added to that black box warning.
As discussed in prior calls.
It does take a sustained effort education I'm patients to establish momentum for new Ivy antibiotic in the hospital setting.
After which adoption in the community setting for companion once daily oral like news RF can be accelerated.
As Kevin mentioned.
USADA generated 5.4 million in net sales in the U.S. in the fourth quarter compared to 3.1 billion seen in the third quarter.
Accounting for inventory news, our gross demand increased from approximately 3.3 million in the third quarter of 2019 to approximately 6.1 billion in the fourth quarter of 2019, an increase of 85% versus the prior quarter.
Simply stated growth in the fourth quarter was driven by demand as inventory in the channel remained essentially flat.
For the full year use our achieved net sales of 11.5 million, which landed right at the midpoint of guidance of 10 to 13 million driven by the growth in demand.
Our initial outreach continues to be directed towards early adopting hospitals specialists, including I'd doctors Pulmonologists hospitalist and he off physicians within nearly 600 key U.S. accounts, which are currently being supported by approximately 50 to 60 representative.
[laughter], which we believe is the appropriate level given our experience in the market today.
We have taken a measured approach with our hiring process as we balance our return on investment to ensure we have the right sounds representatives in place to drive objective value creation.
In our key targeted hospitals and integrated delivery networks, we've been focused on gaining institutional access the news, our while making steady progress in raising awareness.
We have achieved institutional accessing over 60% to the 600 target to hospitals.
And awareness of news are now exceeds 90% in the I'd community and over 60% in the broader physician target bikes.
This is important because awareness says that the gatekeeper for physicians to consider writing a prescription for news IRA.
We're extremely pleased with the initial launch and believe we're on the right talked with news, our and are well positioned for long term commercial success.
Look forward to reporting on our progress in the quarters ahead.
With that I'd now like took a turn the call over to Randy.
Thanks, Adam.
Several important value drivers, which we believe have the potential to add significant value for patients and shareholders.
We're excited to be the sole recipient of the first ever Bio showed award from BARDA for antibiotic for the treatment of a bio threat and for addition to the strategic National stockpile.
This unique public private partnership with BARDA as a recognition of our shared commitment to studying news IRA and the fight against that the Microcutter resistance and the treatment and bioterrorism pathogens, including anthrax.
Let me start with an overview of the BARDA program.
The based program is activated and provides funding of approximately $59 million, including approximately 21 million for the development program for news IRA for the treatment of pulmonary anthrax.
Planning and preparation for these studies are well underway with plans to initiate the studies. This year the cost of these activities will be reimbursed as work is complete.
The balance of the program is 38 million earmarked for the procurement of 2500 60 day treatment courses of news are to be purchase for the strategic national stockpile, the $38 billion procurement purchase of the initial treatment courses will occur upon FDA acceptance of the pre emergency use authorization for news.
Era, which is targeted for submission to the FDA in the first quarter of this year, we projected acceptance occurring in the second quarter of this year.
In addition to the based program the contract also provide support for the following.
There are three independent cost reimbursement provisions that total approximately $110 million, which include first full cost reimbursement for the post approval commitments agreed with the FDA for the initial approval of news Iraq for approximately $77 million.
As a reminder, this clinical expense was previously included our cash runway. However, these activities will now be funded entirely through the BARDA collaboration.
Second cost reimbursement for BARDA security requirements and use onshoring of our manufacturing supply chain for approximately $20 million.
This investment by BARDA helps to further secure our supply chain, adding secondary suppliers and over the projected collaboration timeframe will provide for a secure United States based manufacturing supply chain.
And finally, the development of news IRA for the prophylaxis pulmonary anthrax valued at approximately $13 million.
Under the contract the $77 million excuse me associated with the post marketing commitment is on track to be activated in April of this year and the $20 billion associated with the BARDA security requirements and onshoring is schedule and on track to be advocate activated in June of this year based upon all go in discussions with BARDA.
We anticipate these activities will begin that schedule.
In addition, under the contract Florida projects the procurement of three additional 2500 treatment courses, which are anticipated annually through 2023 for a total of approximately $115 million. These procurements are spread throughout the course of the anthrax program and the procurements are contingent upon paratek demonstrating cuts.
Can you progress and the Anthrax development program.
We remain highly confident on the probability of success of the Anthrax program.
This high level of conviction is based on a number of factors, including the published in future activity and in vivo efficacy of news I or I guess anthrax and in a mouse model. The published PK profile of new Zira, which demonstrates high concentrations in the long and pulmonary macrophages. The high end durable efficacy data in pneumonia as.
And that tetracycline historically have demonstrated clinical efficacy in pulmonary anthrax.
As such we're highly confident in our ability to show ongoing progress throughout this program at our ability to secure the additional 7500 treatment procurements and obtaining an approved label to treat anthrax via the FDA animal roll pathway.
The BARDA partnership is off to a terrific start since signing the contract at the end of last year. Several important activities have taken place in order to get the anthrax animal program and the first procurement moving forward. These include activities such as completion of vendor contracts and Preway discussions and document review with preparation.
For filing with FDA.
Importantly, we also had our face to face kick off meeting with our BARDA partners and together we are excited to move this important program forward.
We look forward to working with a highly skilled and experienced team at BARDA.
The activation of the based program on December 19th 2019, we have submitted our first in horse to BARDA for the cost reimbursement activities for the base award for the month of January.
We also continue to pursue a number of compelling lifecycle opportunities for new zira incomplete, including an oral only community acquired bacterial pneumonia PK study that will support and Sndk port oral only pneumonia dosing.
We continue to enroll patients in the approximately 20 patient pharmacokinetic study agreed upon with FDA, which are designed to show that an oral only dosing regimen will have a comparable pharmacokinetic profile to the approved Ivy to oral dosing regimen in patients with cap that was established in the optics study.
[noise] remain on track for a supplemental NDA submission followed by the potential approval for this dosing regimen in time for the Twentytwenty pneumonia season later this year.
As we noted in the last call we continue to listen to the feedback received through our medical team in the field as a result of significant inbound interest. We're also continuing to explore non tuberculosis mycobacteria or NTM and other promising lifecycle opportunity for new zira with significant potential to address an important.
That clinical need.
NTM lung disease is a rare type of infection caused by several naturally occurring michael bacterium species, including Mike about carrying obsesses.
Mycobacteria obsessed us infection is an orphan disease at accounts for approximately 6000 8000 of the estimated 70 to 80000 NTM case as seen in the us on an annual basis.
There are no FDA approved therapies to treat NTM, what caused by mycobacteria processes.
These patients are treated with complex two to four drug combination regimens that up tolerability challenges and offer require patience to return for daily Ivy infusions for months two years of treatment, which can significantly impact quality of life.
[noise] imbalance feedback from the KNL community has clearly noted that an effective oral option would be a clinically important and welcome addition to the limited list of sub optimal Ivy only therapeutic choice is being used today.
And that is likely as demonstrated potent in vitro activity against mycobacteria obsessed this and as we have published a cheese very high pulmonary.
Penetration levels in humans for these reasons additional clinical investigation in this indication is warranted we.
We began initial discussions with the FDA had a big constructive to date regarding NTM and looking forward to providing clarity on our plans in the coming months. We remain excited about this opportunity for new Zira to address the significant unmet medical need in a rare disease and chronic indications.
We believe that the oral only cap and NTM lifecycle opportunities will further broaden the potential for news IRA to reach into new and clinically important patient populations.
At this point, we would like to open the line for questions.
Thank you we will now begin ducking your question and answer session. If you like to ask a question you May press star one on your telephone keypad confirmation total indicate your line is in the question Q you May Press Star too if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Our first question comes from the line of Ed Hay Group with H.C. Wainwright. Please proceed with your question.
Okay.
Hi, everyone. Thanks for taking my questions and congrats on a strong finish through the year.
Thanks first question I have.
Is on new Zira on the demand that you.
Discussed in this questions either for item or Evan.
[music].
Given the strength that you saw in December or could you give us a little more detail around what you think.
Was driving that continues to drive that and where do you think perhaps there's still room.
2020.
To expand and strengthen the underlying demand.
And related to that.
In 2020.
What kind of.
Seasonality or or trajectory would you expect throughout the year. Thanks.
Thanks I decided.
So look there's about two or three things that have continued to drive. It obviously there is some seasonality with what we've seen.
From an indication perspective, as we've seen a little bit more cap as we've moved into the just the the winter season.
With a corresponding slight decline in the in the skin indication, but if you also recall we were granted a J code towards the back into the year, we've seen an uptick in our IP utilization and in addition, and announced to your question about how we're going to continue to increase the demand as we go through Twentytwenty we can.
We need to make progress guiding hospital, formularies, and and I'm getting committees to accept news entre into the institutions and that will continue.
To assist us in the growth that we expect to see joining twentytwenty.
I think just to build on that as well I think Adam has.
Scene.
The effects of the having the J code.
As it relates to the hospital I'd use and another big commitment that his team will continue to have is on the educational front.
We continue to build awareness throughout all the different physician populations that actually have told us that they see interest and Youtube utility.
And product.
Great Thanks for that.
Our next question comes from the line of Kevin Kedra with Gabelli and company. Please proceed with your question.
Hi, guys. Thanks for taking the questions.
First and maybe to get down to limit the revenue guidance target that you gave for news Iraq.
Specific.
Wondering what gives you the confidence.
In that targets and why wouldn't that we'd be looking at something that's more.
Range bound given the early nature of the launch and then secondly.
You mentioned that you're seeing an increase use in the IB.
Can you give a sense on the if you mentioned this earlier if you did I'm sorry, I missed it but.
What are we seeing in Ivy versus oral as a percentage of.
Thanks.
Adam do want to take that question first yes. So I've asked the question about the Ivy and and oral.
About 85% about utilization is in the in the Ivy I, sorry, sorry in the oral with only about 15% in the Ivy.
And you know if you go back to what I said right at the beginning before would even launched the strength of Nusantara is in the is the fact that we have an oral Walt.
Physicians tell us what the research tells US is that the strength is in the oral discharge and as a consequence, we continued to see more utilization of oral than we do Ivy.
And Kevin getting back to your no revenue guidance as we said you know total estimates for 2020 will be somewhere between 75 and $80 million in terms of total revenue consisting of I think the most.
The most prominent component of that is and use IRA net product sales expected to be about $66 million.
A more than approximately 38 million about those sales are going to come from the initial BARDA procurement.
And as Randy said, we have high confidence.
That component actually moving ahead, because it was part of the.
Base Award.
And we think that will be secured in the first half of Twentytwenty. We do have some royalty in collaboration revenues with that as well, but I think the confidence that we have is based upon the inbound stories.
And I.
I think it's really organic growth when you look at what the doctors have told us the demand that we're seeing and the positive patient stories at this point in time, we feel comfortable in in the range that we've provided and we still think that this overall imply significant growth over 2019 from a $11.5 million. So.
This is a this is a good place to be and will be a updating you on the coming quarters.
Our next question comes from the line of Robert Hazlett with BTG. Please proceed with your question.
Yes, Thanks have a couple Adam just on the Salesforce 50 60.
People that you had mentioned in the call. How do you think about that in the near term obviously, it sounds like you're comfortable with it and how do you. How do you think about the in in the medium and long term and are there any plans to.
To expand or at least or any plans contemplate it expanded.
A couple of other questions well.
So I look I mean at the end of the die and I think we've been pretty clear we want to be judicious in the use of out of.
Of our balance sheet and so we've taken a very measured approach and the expansion of our field force right now based on the sort of learnings that we got we think that 50 to 60 is the right number I'm obviously over time, we will learn more as we do so it's not inconceivable that we might add more rep.
Presents tips, but for now.
Our view is that we've got the right number to achieve what we're trying to achieve through the course of this year.
And.
In truth.
If you recall were actually hitting our numbers, we have a smaller sale force than we originally planned.
Yes.
Good positive progress with regard to progress in China as well your partner.
Hi, labs looks like they're making material material strides there can you talk about the potential timing for approval. There and then is there also possibility for licensing and other geographies such as Japan.
Yes. So this is this is Randy I mean with regard to the approval in China I think what would die is anticipating as approval anywhere from 12 to 18 month review timeframe, which gets them approval in the early part of 2021.
Participating in hand goes.
37 with regards to.
Other no other regions. We we do as we've always said that antibiotic resistance is a global need and we have explored and we'll continue to explore the right opportunities.
For what's best for news, our what's best for.
Prepare attack that being said, we've actually spent time in Japan and given the feedback that we've received both from a potential partners as well as from regulatory authorities.
We see that that pathway is one that we will not be pursuing a in the near term.
Okay. Thank you.
And then.
You talked about in the press release aggressively pursuing other opportunities within the government to support of National pandemic preparedness could you just elaborate a little bit more about what types of opportunities exist out there in terms of magnitude scale and potential timing I know that's the last of is definitely.
Really a challenge to predict but but any additional clarity would be helpful.
I think these are really initial conversations that we've we thought about and have started the started to contemplate think it's too early to really be comp <unk> commenting on them.
Specifically that being said there are opportunities in terms of other.
Facets of the.
HHS as well as department of Defense, who actually think about the national pandemic preparedness that are looking for the continuum of not only a materials for containment as well as a as as profile last us on a vaccine basis, but also to think about therapeutic armamentarium, not only therapeutic antibodies, but also antibodies.
Products, which serve and important.
Serve as as an important addition to that a as well and you know and our view a given the given the commitment by BARDA and the ASP or to be committed to saving lives and protecting Americans. We think that this is potentially a significant opportunity for us going forward.
[music].
Okay. Thank you well congratulations on the first award and hope there are other consideration down the road.
Thank you Bert.
Our next question comes from line of any idea from SVB Leerink. Please proceed with your question.
Hi, This is Sean.
Thanks for taking my question Oh, So first.
Oh do you have an updated outlook for a long term potential them desirable.
So and also secondly, about the Bart Oh reimbursement of R&D activities.
You mentioned that some of those.
Charles studies and offering activities starts to be activated this year.
Could you elaborate more on the following.
Meeting sections of those reimbursements in the following years about what's the cadence would look like thanks.
Sure.
This is Randy I can I can take the.
The BARDA question from you so.
As we've we've announced a right. After the war came out in December and had again on the call today there.
There are multiple components to the BARDA Award the based program, which we talked about including the Anthrax development program as well as the first procurement of the 2500 treatment courses. The based program was activated upon signing of the contract which was December of last year.
The the other than the other milestones consist of.
Some some time based milestones which include the $77 million associated with the FDA post approval commitments that Paratek received with the initial approval of news IRA.
We expect that that those will be act that the activation of those will occur.
Early part of this year and.
The cost Reimbursable will be getting once that that option is activated the second one is the procure is the onshoring activities and the border security requirements of approximately $20 million.
And that that is scheduled to be activated on or around June of this year.
And again as we said in our prepared remarks, we think that the those two activities are progressing and are on target to be activated in the time frames that we outlined the third one is actually additional moneys of about $30 million associated with additional animal work that is put in place to support potentially support the development of the profile axis of anthrax.
You'll you'll recall that the initial program is actually for the treatment of pulmonary anthrax. This would be some additional animal programs would need to be done to support the profile access program.
And those would be initiated later in the development program. Once we have a sense that there is actually efficacy in the treatment program and then the last component are the three additional procurements, which we had noted are really spread out throughout the course of the first several years of the contract that.
Our linked to Paratek showing ongoing progress with regards to the.
Treatment of Anthrax program.
So just to just to build on what Randy said.
Because you specifically asked about the cadence of the R&D reimbursement, it's contemplated that the vast majority of these dollars actually with the Invoiced and actually accounted for over the five year period of the grant to give you a specific pointing to a point in case and on this as is our.
Commitment through our FDA approval letter for our cap trials that in fact, we have to actually have that data into the FDA during over that period of time.
In the 2023 2024 times timeframe. So he was specifically designed to support those programs and a five year micro biologics surveillance program as well.
And your question about.
Whether we're updating our long term guidance right now we're not updating our long term guidance at this time, but we do continue to see a really tremendous long term opportunity for news are I.
I mean, given the initial momentum that we've seen and what we've also committed to foot twentytwenty.
You know we can connect with adults 22 to 2020 full guidance of $500 million.
Thanks, maybe.
If I may.
Having.
Oh question regarding your cash runway.
Thank you.
Extend its oh from your last update by another half years.
End of 20 to 23.
Oh that can potentially free.
Cash flow breakeven.
And also you will be able to fully.
Okay.
I know this study have another convertible loan.
65 million does do in Q2 2024.
Do you have fun to pay that off or will you have yet other financing options to pay that.
Yeah look you know at the end of the day for US it's always been maintaining a strong balance sheet as a principal focus for the management team and our board of directors and in the best interest of all of our shareholders and.
Are the strength of our current balance sheet remains a core strength of our company for the benefit of all shareholders, but you know as as you alluded to we do have this convertible debt.
And it's due in the first half at the end I think close at the end of the first half may of 2024.
Based upon our expected a performance for Paratek over this period of time that we see today, we believe that the convert will have been converted on or before that maturity date.
Thanks, that's very helpful.
Our next question a follow up question from the line of that RC with H.C. Wainwright. Please proceed with your question.
Hi, everyone. Thanks for taking the follow up.
So.
Along the lines of your cash runway through the end of 2023, and now Youre guidance of a password pathway clearer too.
Cash flow breakeven.
I would just wondering if other than perhaps BARDA as a risk which seems quite low are there any.
Potential risks over that period that could change this.
And on the flip side are there.
Any potential opportunities to equity even.
Provide for a longer runway. Thanks.
Well I think you know as as we said and thank you for the question that you know this this pathway that we that we looked at is based upon what we see today and based upon the initial momentum and performance that we saw with these are in 2019, which very much fit within our expectations I think what we've learned also is that there is tremendous strength in the.
I will as the majority our of our scripts are coming from the world and as you know.
After the first couple of years of this typical Ivy an oral product launch is that we'll be exploring what that community setting actually looks like and we do think that theres expansion and upside opportunity there.
As well and as a a prior question came by in terms of other opportunities with regards to government contracts for stockpiling et cetera, we see those as upside.
To the current forecast and I think the other other piece of growth is what Randy talked about as well not only adding the oral only pneumonia.
Indication to our label for the fall pneumonia season, I think will be another boost to.
To the momentum that we've already seen with a news iris launch and as well as having a pathway forward with regards to non tuberculosis a mycobacteria. We ended the day for US. It's it's a it's heads down it on execution.
And that is always a risk that we.
Keep right front in center, each and every day as we think about our operational deliverables.
We have.
Worked hard to to live by our commitments and deliver against them, which we have each and every either development or commercial milestone today and we continue to plan on doing that going forward.
Great and then perhaps just one last question around the awareness metrics that you mentioned earlier, obviously in Ivy right now quite high 90%.
60% in the and sort of the community.
Which.
Hasn't yet seen a whole lot of.
You know direct.
Marketing I would assume that that over time as that.
Gets more.
More you see more growth in.
In both markets that that.
That delta will will diminish over time.
Yeah. It will I mean, obviously, our initial focus is around the I'd community and the associated specialties that we target.
There is no direct communication with the that community side of the business, but as we've said before the first couple of years a focused on the hospital setting and then we'll look to address the community base a little later time away it would definitely starting to consider our approach in that space as we go through this year.
Great and just offer congrats on the first initial Europe launch thanks.
Thanks, Ed Thank you.
No no further questions in the queue I'd like to hand, it back over to Mr. low for closing remarks.
As a more no more questions, we'll conclude todays call and a in closing I'd like to thank you all for your time and attention today. Your continued interest in U.S arent paratek are important to us.
The journey of making use IRA commercial success is well underway.
The unique profile and use iris specifically, our once once daily well tolerated oral is positioned well for long term growth and broad based commercial success.
As the wealth of data on them out as I can continues to expand we are increasingly confident in the potential the mass like into being effective and much needed addition to the armamentarium of antibiotics available to physicians to save lives, particularly when resistance is of concern.
We remain committed to the to continue development, who desire through its lifecycle.
We also look forward to working closely and collaboratively with BARDA in this unique public private partnership.
This is a transformative collaboration that positions paratek as a leader not only with the potential to provide desire for bioterrorism pathogens, but as a leader in innovation for the broader I'd sector.
We fully expect to deliver and important treatment option for pulmonary anthrax that has the potential to save lives and protect Americans.
These opportunities motivate us all that Paratek and we would like to thank the patients who have participated in our clinical studies and our employees who have worked tirelessly to provide use I refer patients in need we very much appreciate your support and interest we look forward to keeping you apprised of our continued progress goodbye for now.
Ladies and gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
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