Q4 2019 Earnings Call
[music].
Good morning, ladies and gentlemen, welcome could it be solid fourth quarter, two south and make the financials, let me tell at school.
This time all participants are in listen only mode. They pay you opened up that's changed I say session and instructions will follow at that time.
If anyone should require assistance during the conference.
Please press Star then jail attached on telecom.
My during this conference maybe recorded I would now like to tag on friends over to your host Mr. Guy Sanders Chief Financial Officer.
Thank you and good afternoon, everyone. Welcome to debris. This conference call on web traffic to discuss the fourth quarter and full year 2019 earnings.
Before we begin I would like to remind everyone that this conference call and webcast will contain forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward looking statements reflect our opinions only as of the dig it up this call we will undertake no obligation to review.
Hi, guys are publicly released the results, but any revisions to these forward looking statements in light of new information or future events.
Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our most recent filings on form 10-K, and other pediatric periodic reports on forms 10-K, 10-Q, and 8-K filed with the FCC.
Moving to slide three I'd like to share the agenda for today.
Ted Schroeder number even CEO will start with the 2019 overview and current business uptick Francesco Maria Latino degrees as Chief Commercial Officer will then provide an update on this and let a launch I will provide a financial review and Ted will wrap up the discussion and lead a QNX session.
In addition to Ted and Francesco joining us on the call for the Q in a session our Jennifer Srams, our Chief Medical Officer, and Steve July on our President and Chief operating Officer, I would like to turn the call over to our Chief Executive Officer, Ted Schroeder. Thank you, Gary and thanks to everyone. Joining our call. This afternoon, let me begin with a recap of.
2019, and provide a business update 29 team was a significant your front abry. The end for patients. As then letter was approved by the U.S. food and drug administration in August of 2019 for the treatment of community acquired bacterial pneumonia. Our team is especially proud to have discovered into.
Belts and led to the first antibiotic with a new mechanism of action in two decades, and we were excited to bring it to physicians and patients.
With both I'd be an oral formulations Zen led is well suited for use in hospitalized patients those transitioning from the hospital to home and in those initiating treatment in the outpatient setting.
We're pleased to say that our managed care coverage for us and let it has exceeded our expectations and is better at this point and its lifecycle then other recently launched antibiotics.
Then let it has been added to formulary is of health plans accounting for greater than 60% of all covered lives in the U.S. and we have contracts in place with large well known plans importantly, most of the coverage has unrestricted and does not require prior authorization for us.
Step edit requiring the patient to failed treatment with another antibiotic before receiving then latta.
This makes access easier for the prescriber and the patient.
We expect that our coverage will continues to grow and in fact, we've recently signed a contract with a very large pharmacy benefit manager that represents over 10 million Medicare part D covered lives our market access team has done an outstanding job and we believe our ability to obtain favorable to.
Positioning on formulary speaks to payers recognition of the high unmet medical need for a new class of antibiotics with a novel mechanism of action and the short course treatment for the more than 5 million adult patients diagnosed with pneumonia each year.
In addition to the breadth and quality of managed care coverage. We have the brief Rx connect co pay savings program were eligible patients have no more than a $50 copayment for orals and led to.
Based on the market dynamics excellent payer coverage and our commitment to optimize our resources. We are significantly shifting our salesforce focus to the community and advanced our sales team to dedicate at least 75% of their time to calling on targeted community prescribers.
To support these efforts, we're enhancing the distribution of Orals and led to ensure easier patient access and are providing one day sample packs to ensure patients can initiate then letter as soon as the Doctor prescribes it.
We believe that given our excellent commercial managed care coverage and expected expanded coverage on Medicare plans focusing on the community is our best opportunity to drive product adoption in the near term.
Having just initiated this approach in January we expect that once our reps have had the opportunity to pay multiple visits to target doctors and his coverage continues to improve we will drive new prescription growth during our third quarter earnings call. We said that the strong initial customer ordering of.
1.4 million reflected the demand we expect it for multiple months post launch as a reminder, we book sales when the wholesale orders product and they're still working down that initial stocking in line with this expectation we recorded sales of approximately $100000 in the.
Peter.
While we still believe than the transition of care strategy for the hospital, we're having similar results to others in our space and getting Ibcs and led to on hospital formulary is taking time launching a new cap product in the fall at the beginning of the flu season may have created a timing.
Issue for Us as physicians were just learning about send letters profile.
As we've consistently said we expect that.
You will need to promotes and let it through two flu seasons to see a significant upward sales trend.
We remain committed to doing.
Increasing awareness of then let it in the hospital setting recognizing that navigating the formulary review process takes time.
Importantly, many hospitals are providing access to orals Atlanta for use on discharge, which we believe is a positive sign for the eventual adoption of Ibiza, Atlanta as well as for the community opportunity.
Now, let me turn to a brief update on can tipo can tipo or fossil mice and for injection is a novel potentially first in class Ivy antibiotic in the us for the treatment of complicated urinary tract infections, we resubmitted the NDA for can Tipo in December in Jan.
Anywhere this year and a breather received FDA acknowledgement of the in the end da Resubmission and they established a PDUFA action date of June 19 2020.
Two days ago, Sta announced that they are restricting travel for inspections, and we are proactively working with them about the path forward. It's too soon to speculate about any potential impact to continue though we look forward to providing more information about continue those potential launch later this.
Year.
Importantly, please know that we're focused on prudently managing our resources, we will continue to closely monitor our performance and all Cape size to ensure that we are optimizing our resources to maximize the near term opportunity present letter and prepare for the potential launch of can tipo Les.
Later in our presentation, Gary will discuss a restructuring of our debt facility, which we believe is in our shareholders' best interest.
Moving to slide six the challenges of launching new antibody new antibiotics is not a secret large feature stories, which recently appeared in both the New York Times and the Wall Street Journal highlight some of the headwinds we face.
We remain confident that legislative changes will continue to be made to enable physicians to utilize the best available treatments for their patients and we certainly believe that we have differentiated treatment options ins and led and can tipo.
The curve is 19 outbreak is the most recent reminder of the impact infectious diseases have on public health similar to influenza virus infections patients infected with Covance 19 are at an increase risk for secondary bacterial pneumonia.
Based on the information available from China up to 15% of co bid 19, Infectives patients have also developed bacterial pneumonia given the high mortality in this setting up concomitant bacterial and viral infection, particularly in patients who are older have diabetes or.
Our immuno compromised timely and appropriate empiric therapy should be considered and administered promptly to patients with suspected or documented secondary bacterial pneumonia in this setting of cove at 19.
In the previous working closely with bio and organizing and industry response, we are monitoring efforts by BARDA and their preparation for the potential need for widespread cap treatment and have proactively submitted a brief via the BARDA medical countermeasures portal, so offers and let.
Oral treatment option in patients infected with the core Corona virus with suspected or documented secondary bacterial pneumonia.
In addition, we're supporting sign event, our development and commercialization partner in greater China for lift Samuel and they were working closely with the country's national medical products administration to be prepared to offer the Samuel and should it be needed for the treatment of suspected or documents secondary bacterial pneumonia.
Resistance rates to Macrolides in China exceed 80%, thus the need for novel antibiotics is even more acute than it is in the us or do we are closely following these developments and doing what we can to assist consistent with the breeders mission.
Ill now turn the call over to Francesco.
Thanks, guys and good afternoon to everyone on the call building on pet opening I'm going to share more details about the progress were making within salita launching these first few months on the market.
Tim going into some launch measured detailed on slide eight is an important reminder, about the wide variety of settings, where patients are treated in the United States industry overlapping opportunities. We see many patients we've got a treated outside of the hospital either to transition of care inpatient to outpatient are directly from the emergency Department.
As well as outpatient into community practice consistent with our prelaunch view. This initial months on the market confirmed its ignyta profile as a first in class antibiotic with a novel mechanism of action the appropriate spectrum of coverage for cap packaging anytime we an oral short course of monotherapy fits very well in the community.
And at transitional care treatment of Caf patient, who are distracting the hospital and these continued to be the main target towards and later, we continue to believe that the transition of cash flowing from the hospital is an important opportunity for data, but as Ted mentioned, we are heading similar result to others in our space and getting I recently had on cost to go.
Formulary, taking time, we'll continue to work with hospital to provide the appropriate medical education about the latest value proposition.
Despite some of the challenges of getting I'd on formulary, many hospitals I, providing access to all of them leader for use on these charge, which is a positive sign for the eventual of option. All IB till later in a few minutes I'll talk more about our strategy and plans to increase our fall within the community in order to maximize our near term revenue while we.
Continuing to work on gaining access to the hospitals towards inmate IB.
Turning to slide nine.
Key priority for the loans as bina, ensuring that delay days available for patient when and where they need it immediately after launch or our specialty distributors order I think we inventors and Walgreens community specialty pharmacy secured or are there later at many of their locations by the end of 2019, we had more than 200.
Orders for Delta between hospital, and specialty pharmacy supporting the transition of cash strategy most of the ordinance what for oral than leader in outpatient pharmacies.
In those areas, we've seen an uptick in prescription Walgreens as please repeat orders and has agreed to Stockton laid out at some 24 hours regas side to assist patient who are looking for script fulfillment options octet hours.
In order to strengthen our distribution channel supporting both the outpatient use in the community and the transition of care. In addition to Walgreens community specialty and option care at the end of 2019, we establish additional partnership with that carry ahead on script to provide mail order direct to patient services for Steve for field.
We have a new collaboration with Publix retail pharmacies in Florida, who are stocking the laid out in select location. We shut in close proximity to high volume community prescribed and we will continue to look for ways to expand instantly data availability for the patient and as demand grows we expect more retail location.
To make it available.
Patient with cap, we see community based physician have an excellent coverage for domain and we have in place than a rebound direct connect copays savings program, where electrical patient pay no more than a $50 copayment foot or rather than later in early January. We also provided the salesforce, we didn't laid out one day sample packs for this.
In addition to that community target. This allows patients to lead the Doctor's office with the first day of than later why the specialty pharmacy or the home delivery service would feel discrete and these are being well received by both our sales reps and the doctors they core.
Moving on to Slide 10, let me talk about the hospital uptake.
Let us in our space getting laid Ivy on hospital formulary had been challenging see if the launch in September than a believer salesforce as called the older 900 targets hospital by the end of 2019, we have access to sales and laid out in more than two hundreds hospital, either as on formulary or as non formulary for pay.
Asian transition of can we all of them later, however, a lower than anticipated a number of PNG review occurred in Q4 for done later and above 75% Abaxis is for Delta oral only we continue to believe that I recently that will be an important to for using the hospital setting, but it's going to take additional time to gain.
The broad formulary inclusion we will continue to educate key decision makers in hospital and will actively move to ads and laid out on target Hospital formulary.
They have been granted sequel for foster status effective January one and we applied for the permanent jayco towards EMEA, given the new CMS quarterly review cycle, we expected the J code would be granted by amplifiers and if granted will be effective as of July 1st the sequel, and eventually the permanent J code.
Is critical for different addition of care strategy as it allows the outpatient treatment centers, including the emergency department to before Ventilate, IB SP plus 6%.
Moving on to Slide 11, let me talk about the great progress, we've made with managed care coverage for them. They.
Our market access team has done a tremendous job before and after the launch and must clinical reviews occurred within the first 90 days from will.
We are pleased to say that our managed care coverage has exceeded our expectation and expanded at this point means the latest lifecycle than other recently launch on the biotech as of February 2020, more than 180 million or about 60% of all corporate life in the United States and access to than later in most of the axis is unrestricted.
We know utilization management, such as step edits or prior authorization.
Coverage is primarily driven by major claims like express scripts, and Tim Aetna and Tri care web evidently that to that commercial formulary again, we know use in addition management.
We have contract in place with major commercial and Medicare part D plans accounting for about 100 million covered lives, including the recently signed contract with the major PBX for both commercial and Medicare lives and more than 90% of contract have low utilization management additional significant contracts both commercial.
In Medicare part D. We'd noise. In addition management are forthcoming and therefore delayed the coverage is expected to further increase.
Moving on to slide 12 days on the market dynamics, we see in order to optimize our resources and leverage the excellent payer coverage for Atlanta, we have been significantly shifting our salesforce focus to the community and we have asked them to dedicate 75% of more or less time to calling on targeted community priest.
Fibers.
We believe this shift will help us driving revenue sport than later in the near term, while we continue to work on gaining access to formulary for items and later key for long term success and also on preparing to launch Fourq on Diebel if approved in the coming month.
Turning to slide 13, I'd like to share some of the leaders of our community Black our highly experienced salesforce had been targeting over 6000 community healthcare professional seems late November. These targeted HCP are all high prescribers of oral antibiotic for cap, the adding close proximity while our targeted.
Hospital account and Wolverine specialty location. We are also prioritizing areas with high managed care coverage and call on doctors, who are able to eat prescribed or use our specialty pharmacy channel for that vision prescription.
We do have availability of assembled back in January to breach the patient first the of Tanami, we expanded the sales force folks and we also activated that's laid ash that achievement patient service.
We are feeling to other today and we all know that he takes multiple interaction with physician before one sea change in prescribing behavior. We are pleased to see anyone of initial signals. Our success based on the latest restriction for cap the number of prescriber and importantly, the number of physician prescribing multiple times, we believe these strategic shift of four.
Because to the community given our excellent managed care coverage and increased frequency of interaction will allow us to impact the launch trajectory. While we continue to work on access to the hospital I would now like to turn the presentation over to get it for the financial review.
Thanks Francesco.
On slide 15, we've listed some key highlights that are relevant to our financial position. These highlights related costs and let us revenue profile and the active management of our balance sheet I will discuss discuss each of these in subsequent slides.
Turning to slide 16, and our 2019 TNL than letter generated net sales of 1.5 million in a few months post launch.
Our third quarter earnings call, we said that wholesalers placed orders, which represented multiple months of prescription demand and we didnt expect meaningful orders post that initial stocking.
In the fourth quarter, we had net sales which were in line with those expectations and they were approximately $100000.
We also recorded meaningful collaboration revenue from our Chinese and Canadian partnerships.
We will continue to seek other licensing opportunities presented line outside the us and we look forward to our existing partners progress as they work to bring the products to patients in their geographies.
R&D expense significantly fell in 2019.
Given lower clinical trial investments and a onetime charge in 2018 or in process R&D related to this avanti acquisition.
The increase in SGN a prime.
Early reflecting the investments we are making on our commercial infrastructure and our customer facing teams.
Higher interest expense is connected to our loan facility with Hercules and as I will discuss we expect that to be significantly lower starting in the second quarter.
Slide 17 shows the key components of our balance sheet.
Cash and cash equivalents were $86 million at the end of the year.
We brought in approximately $27 million through our ATM facility in 2019, and netted about $18 million from our December 2019 equity raise.
Post and let US approval, we drew down a $10 million traunch from our debt facility with Hercules.
I now wants to discuss our Hercules debt facility and his decision we made which we believe is in our shareholders' best interest.
I ask that you turn to slide 18.
We are proactively managing a risk on our balance sheet and have decided to pay down $30 million of the $35 million outstanding debt balance we have with Hercules is this plan to occur on April onest.
When we established Hercules facility in the fourth quarter of 2018, we provided them with the revenue forecast in the first quarter of 2020, we did not satisfy a covenant to achieve a certain level of near term revenue.
For the terms of our agreement, we would have had to pledge and allocate $40 million of cash specifically to Hercules.
That cash would therefore not be accessible to number Eva to continue to invest in the business.
We worked collaboratively with Hercules to create a revised structure that was in both parties interests.
Post the loan pay down and the resulting $5 million debt balance.
We will utilize an updated revenue forecast horse for performance Covenant testing and our minimum liquidity requirements are now only $3 million down from $10 million in the original loan agreement.
This liquidity requirement is eliminated if can tivo is approved and as long as we are in good standing with the other terms of a Hercules agreement.
With a 5 million dollar debt balance our interest expense will fall significantly and there is no change to the interest only period of that facility.
Post the pay down our cash is expected to fund our operations into the third quarter of Twentytwenty.
The adjustments are meant to lower our overall risk profile and again, we believe that they are in our shareholders' best interest.
With that I will ask Ted to make some closing remarks, and then we will head into our Q in a session Ted Thanks, Gary.
In conclusion on slide 20, I want to focus on our priorities for Twentytwenty, we are driven by the needs of patients and those that treat them. Our goal is to ensure the greatest access possible for us and led by executing on our community action plan as well as expanding appropriate utilization.
And in hospitals, how do we plan to do this by expanding on what has worked over the last several months successfully obtaining managed care coverage, particularly for Medicare part D. Patients, we expect to see growing demand as we continue to increase the frequency of interactions with targeted physicians.
Providing them with the appropriate education about the benefits of having a novel antibiotic likes Atlanta as a treatment option for cap, particularly for high risk patients with linked to growing prescription demand, we will work to expand retail availability of Orals Atlanta.
Leveraging the knowledge and relationships, we gain whats and let US we'll also strengthen our position to potentially launch can tipo.
We expect to see the approval and then let it in Europe and Canada in the second half of the year to benefit patients in those geographies, who have a high unmet medical need.
We'll continue to look for business development opportunities both out Licensings Atlanta outside of the U.S. as well as in licensing assets that might fit than the breakeven infrastructure both in the hospital and the community.
In parallel we look to reduce risk by thoughtfully, managing our balance sheet and resources, while strategically being opportunistic to create growth for our product offerings. Finally, please know that everyone. It in a breather is standing by to assist cobot 19 patients who can track secondary bacterial pneumonia.
In doing so is consistent with our company mission.
I would now like to ask the operator to open the lines for questions operator.
Okay.
Okay.
Operator are you on the call.
Well I'll little I like that.
Ladies and gentlemen.
A question at this time, please press the star aggregate number one.
Yes telecom, Okay Thats helpful. Thank you Mr. Huang from Vicki.
Paul Yes.
Thanks, Greg can come from the that level of my that's fine.
Now I'd like to open.
Given the shift in sales strategy going forward, how should we consider this in our sales projection.
David.
Im not exactly sure what you mean house you should consider in your sales projections.
I think with respect to the ramp.
For the ramp so yes, okay. So.
Thanks for the question David I think as you as you think about the ramp.
The the ramp for the community is really.
Driven by the number of interactions we have with with physicians and so unlike the the hospital, where you're going through a lengthy formulary and pharmacy and Therapeutics review process in the community. We have great managed care coverage, it's improving particularly on the Medicare part D side.
Which is important for older patients, who can track community acquired pneumonia and so kind of the standard is to start to get a physician's behavior to change it takes kind of six or seven interactions with that with that prescriber and so giving you know we started in January we're starting to see that.
At ramp.
We expect that that will that we'll continue to to grow over the year as those interactions ramp up so we're right at the front end of it now but.
Through the first quarter as we get in the second quarter I would reiterate our previous guidance that we do think that it takes two flu seasons to see meaningful.
Increases in sales as we get all the all the bits and pieces together that are necessary to fill a prescription.
Is that helpful.
Yes that is would you say that.
That shifting away I guess in the near term from the transition of.
I guess the.
The.
The two oral.
In hospital you.
Will that affect the sale projections in the in the.
Coming year.
It should actually improve the sales projections because his francesco explain the the formulary process in hospitals has been.
As slow as we seen with other other hospital antibiotics and so we made the strategic decision that because we have greater access in the community given the excellent managed care positioning that the best way to drive utilization present, Atlanta is the focus more effort in the community we're not to be.
Band in the hospital, but we are intentionally.
Slowing down our efforts in the hospital to make sure we have multiple advocates for the product and that we're working with in kind of budget constraints that hospitals have for the timing of approval as Atlanta, That's we pivoted to the hospital to that to the community because that's really why.
Or the bigger opportunity is and where we'll have.
An earlier opportunity to drive prescribing present Atlanta.
Thanks for answering my questions.
You bet. Thanks.
The next question comes from our call.
Hello.
Well I will go.
Hi, Thanks for taking my questions are.
Are there Alex.
So.
You've you've.
If you missed your I guess internal expectations based on new comment that.
You had at any projection in Europe.
Debt covenant so.
What.
I guess moving the maybe you could go through what what drove the.
And then the Miss in your internal expectations and.
And.
Let's turn it takes two flu seasons, but.
You do have financial constraints. So can you can you talk about.
What's your strategy there.
What's.
Lipstick and how can get a meaningful change in.
Trajectory this year.
For the for the sales thanks.
Yes, no thanks, Alan and that's exactly the reason for the.
Early and quick pivot to the community, it's really to take advantage of the opportunities in front of us and we could have made thus we could have stayed with.
The standard game plan and kept pushing on the hospital, but as you know Thats, a big rock up a steep hill and that's primarily responsible for where we found ourselves with our 2018 forecast with Hercules and so the we didnt expect to have such quick managed care adopt.
Option prelaunch, but thanks to the excellent efforts of our managed markets team, we have better than expected formulary, not only formulary adoption, but without restrictions and thats an important differentiator, we're not having to have patients wait to get the prescription filled as you can answer.
Management for an antibiotic that's gating to having a patient fill the prescription at the pharmacy. So it's at rents a little bit of fishing, where the fish are so we actually think that that will allow us to not only catch up but to accelerate the the performance of than letter. We've always believed that the oral opera.
Trinity was the bigger opportunity the transition of care strategy was really a drive it from the you know the community thought leaders into the community setting, but as we've seen managed care access improve we've come to understand that we can do both the push and pull from the community so pull through.
Prescribing at retail and push into the hospitals those same physicians discharge patients back into the community.
So.
I guess, some learnings bank and.
Success, and the hospitals, even slower than what you had expected but.
You do have an opportunity to it and move into the community it sooner than you.
Which may help but is that fair and then and then the other aspect to this is.
Okay.
Two to one extent do you have.
Coverage.
Medicare lives how much.
How much more do you have to go on that because I mentioned that.
A key target.
Patient days, there what percentage of the way through that in terms of coverage are you and when do you expect to get all the way there.
Yes. The thanks, So let me let me start to answer that question, Alan about Medicare coverage and I'm going to handed off the Francesco too.
Provide a bit more detail as you know one of the gating items for Medicare part D is they basically have six months to make a decision in the front end and so thats six months is just basically come up and so we're in the process now of doing the contracting with the plans.
We said earlier on the call that we just signed contract that covers 10 million lives and so we're getting up to.
Kind of a runway we have a number of other contracts with Medicare part D that we're expecting to to sign in the relative near future.
To put that in prospective.
And in my experience and filling with products and other therapeutic classes were actually moving faster with Medicare part D than most other companies do.
And if you look around at other products. There are some products have been on the market for a while that actually are still in kind of low double digits for Medicare coverage, we expect that we will be moving past that.
During the year, so I'd say our AR.
Gating I agree that we need to have greater managed care coverage, but our early conversations indicate that that Medicare coverage will continue.
Due to improved.
With increase along on the other hand, I also want to mention I mean, we all agree I mean, the majority of patients eventually would come from there, but there are also very specific patient population data actually come the commercial operation that we are seeing today and we the commercial we had close to 70%.
Of.
Okay. Okay.
Partially covered lives that they have been laid on formulary once again the majority with no prior authorization so.
The Medicare part D is coming it's already is already good it will come optical contract that means signs of now we just demand that off at the different plans to put the drag on formulary.
Again, the good thing is that even these managed care contracts. They are more prior authorization until we expect the coverage would really improved a lot over the next couple of months in parallel to what Ted was saying, especially when you come to the community. It takes at multiple interaction, we doctors to really see the changing behavior and.
So we really believe that as we get into the second quarter, we will have the frequency.
The frequency of interaction with the position on one hand, and the increase coverage, especially on the Medicare part D side, Dan and so we should really see the ramp up the prescription going up.
Yes, let me just add one other one other point that I think is important here and that is for the commercial covered lives of which were we have 70% coverage at this point the five day indication for treating community acquired pneumonia for that commercial patient is really significant.
Yes, giving them two courses of a macrolide to think keeps the patient out of work for two weeks is not ideal when you can prescribe a single five day course, a treatment with ZTE Atlanta and get the patient back to work.
One of the things that for sure you've seen a light shine on recently with.
Some academics looking at the number of patients who actually have paid time off from their jobs when they're sick, it's actually a sizable portion of the US population covered by health plans that don't have more than a couple of sick days available to them. So short course therapy that gets the patients.
And well and back to work in within five within a week is actually a real benefit to those patients and I believe one of the reasons that physicians will.
Look favorably on adopt things Atlanta in that population in addition to the Medicare population.
Thanks for taking my questions.
That Alan Thank you.
Our next question comes from Jason Gerberry at Bank of America. Your line is open.
Oh, Hey, good afternoon. Good evening, Hi, This is chief on for Jason Gerberry. Thanks for taking my questions.
I guess going back to that have been.
Okay sure how many piece Kriedberg I guess, maybe Ted.
Can you talk about maybe there and there's an analog tag went through similar out and what would that analog feed bypassing.
With that that's not how about on the hospital too.
Our which answers enough can I just wanted to see if there is an analog that we can point to fall for any shut off trajectory I can follow I guess.
Second question for me what B.
When we talk to position it seems like a lot of prescribers in the committee setting they would fall cable out they would follow thought leaders in the hospital, what kind of antibiotic use and I guess now that you have been to more of a commodity front.
How do you think that you're trying to communications with the company piece by but we can potentially change that behavior. Thank you.
Sure. Thanks, Jayson I appreciate the question so kind of the.
Kind of summarize the broader question, what what do we think will drive prescribing the community and what analogs are there I think unfortunately, it's been quite a while since there has been an analog that's both an ivy and an oral treatment for community acquired pneumonia you'd have to look back to the earlier quinolones alike.
Leave Ocwen and Moxifloxacin and Moxifloxacin to look for analogs. It said that that there's there's both the community in a hospital piece short of that there haven't been there've been some skin and soft tissue products.
That had.
Various.
Durations of that but there.
Now entering.
They were entering really credit markets at the time, So I think really it's probably all the way back to the introduction of respiratory Quinolones are probably.
Best analog to those became really large products driven mainly by the the community prescribing.
From a from a tail well influenced standpoint, that's true in more complicated conditions, but community acquired pneumonia is not really condition. It's treated by infectious disease specialists, it's more in the hospital, it's really more pulmonologists and Hospitalists, who treat the.
Patients in the community you see a lot of treatment by internal medicine, and emergency Department physicians urgent care physicians and it's not typically a.
Hey.
Okay, well driven type of decision, but it's really an understanding of the patients that are in front of the physician. The other tool that we have is where we are working closely with.
Surveillance programs and in some areas were able to actually look at resistance trends for strep pneumonia. For example, which is the leading cause of community acquired pneumonia down to the ZIP code level.
And as we've discussed before generally in the US the we see resistance race between 30 and 60% for strep pneumonia.
Thats, a national number and Thats hard for physicians to focus on but when you can bring it down to their local area, where their patients live and they see resistance. Its 30 35, 40% that has a meaningful impact on physicians and they've shown a willingness to adopt a product that can reliably treat their patients and do it in five.
Days, So we think the strengths of Orals and led to actually are very attractive to busy primary care physicians and recycling of if I and key any if I can add today I mean, as we said clearly we are heading the same experience as others to really add the recently that the hospital, but everybody.
He is quite.
Consistently appreciating the value that don't leave that can bring.
For the treatment outside of the half so thats. The reason why as we said many hospitals by not yet.
Might have not yet food delayed I'd on a formulary, but they might want to use it into these chartering in some kind of situation, where they're sending vision outside of the hospital. So in a certain way instead say I mean, they basically a patient population that is basically a problem of resistance in the community that everybody's aware of both the hospital people.
Really think that theses that drive that outside of the hospital has a very strong value proposition. So we will still expect some influence from the hospital into the community as well.
Yes.
Thanks, maybe another question I find they felt maybe for Gary.
So can we talk about potential BD development.
Just just curious.
Auto Volatilities and seen in todays Mark had can you talk about what kind of levers again pool for August beating development and.
Thinking about cash run rate Opteon. Thank you Tony Thanks.
Yes, so maybe we can talk about cash runway obviously.
Thats, a our revised guidance.
Significantly de risked our balance sheet and as in the past we will look for for all opportunities to fund the company I think we have a track record.
Of the bringing in non dilutive funding into the company.
We have as you know we have in M&A in Europe on file.
We expect to hear back.
On a decision on that in the second half of the year, there's a large unmet medical need for pneumonia patients in Europe, and we hope to.
To be able to have a business development transaction in Europe that could bring in some non dilutive financing.
And we have other opportunities in other geographies as well and beyond that consistent in the past we will look at all opportunities to define the company.
Okay. Thank you.
Hi, Dan Ladies and gentlemen, if you hold the question at this time the spot this thought and then another one.
Parlophone, Okay Thats helpful. Thank you Jay Southam Becky.
Paul.
Hi, Bob Thanks, Tim comes from Kevin.
Okay. Thank you along with open.
For taking my questions.
Early to to answer this question, but I think is pretty relevant.
You mentioned that you have to get in front of Dr., maybe six or seven times in order to influence.
Prescribing habits, but.
As we kind of approaching a world of social distancing relative to what's going on with the Corona virus.
How do you see that playing out do you anticipate still being able.
To engage with doctors in this environment.
At least in EMEA over the next several quarters.
Hey, you can add there would be helpful.
Yes, so it's an excellent question and you're right. It's early days, where we're still trying to understand.
Where that where that brings us we've we've certainly seen early examples at the hospital level.
They think they've been fairly widely reported on that some major medical centers are.
Trying to restrict access to their campuses to adjust.
Kind of employees and really patient facing employees and so they're even on even non patient interactive paid employees its own interact with patients are working remotely. So some impact on the hospital side, we've seen less of that on the on the physician side, but we're at were actually preparing for that.
And there are a number of non personal efforts that we can use to support the physicians that have already been introduced too.
Then, let an oral and continue to work through those through electronic details and other other means that we believe will help support the message to already been been established and some of those.
Hi, prescribers Francesco if you want again on I mean today I mean, as Ted said, clearly we are getting ready to phase potentially hopefully not too long time of restrictions will face if he's access so we have already planned anyway.
Multi channel digital campaign, clearly, we will be enhancing that even further considering that so we are will be leveraging any means to getting touch any from the our customers probably more remotely moving forward, but we have plenty. Please and we will definitely continue to deliver the message, especially to those that have already started.
Engaging with.
Great appreciate that.
Mentioned that.
There's a role for Syn, let him for you guys play.
In the 19 outbreak as supportive care with.
People secondary pneumonia.
I guess, what can you guys do to kind of.
Make your voice heard there in that area that is there's a lot of voices Yolanda different things.
How can you kind of ensure that you're in front of that.
The right people and playing an active.
Role in providing that level supportive care.
Yes, so it's a so it's a multi layered question right. There is so I think there's questions at a larger policies side that can be driven the through places like BARDA and others and I'll actually ask.
Steve alone the comment on that and then there is just kind of the general.
Knowledge of the disease I think one of the things it's in our in our favor is at the fact that there are secondary bacterial infections are.
Not novel to cope with 19.
The regular seasonal influenza also has a high degree of.
Secondary bacterial infections, one of the reasons why we see antibiotics for cap go up during flu season is because more patients, particularly older sicker patients are at risk of poor outcomes. When they have a secondary bacterial infection that doesn't that isn't new news.
I think to policymakers, sometimes its new news, but it's not new news to the to the treating physician and so the advantages of of being treated with.
With San let our.
First and foremost as the short course therapy and its activity broadly against multi drug resistant organisms, including strep pneumonia and re and multi drug resistant staff and so in an era, where you see more opportunistic infections in the sicker population and let it has a.
Really remarkable profile in that group says continue the education efforts and I think if you if we see more and more infections, which will come with more.
In China as is the rates about 15%.
If we see anything close to that.
You are going to see a broad group of antibiotics used to treat pneumonia and I think having.
More attention Arounds and let a will grow organically from.
Recognizing it's it's anti microbial profile to actual experience and in our own promotional efforts.
Steve you want to comment on kind of the more policy related opportunities sure yet and thanks for the question I think it's a multi pronged approach to kind of get to what you were asking around how we ensure our voices are the dialogue.
As as was mentioned during during the prepared remarks, we've obviously been proactively interacting with BARDA and provided them some information.
On our side about about the family in and where it may play a role.
We're working with bio as well on a broader industry wide effort to try and coordinate things.
Related to covert 19, and then I guess the last piece of that is that part of the lobbying effort that we've been involved in now for a long time around antibiotic resistance in the need for antibiotic development.
With the end about working group and others is also the third leg of the stool. If you will trying to influence Bart is activities in this space.
It's early days. So BARDA has just in the last three or four days.
Released their broad agency announcement around what they're doing with Covance covered 19.
And so I think we'll continue to be proactively engaged with that.
As appropriations, our outlaid from the eight point whatever billion dollars was allocated to covert 19.
Recognizing that some of that will obviously be directed towards direct acting antiviral is in vaccines in diagnostics, which are needed but that they I think there is a recognition that there is an unmet medical need in particular as it relates to the fact that most of the treatments that have been used for a long time for back to you on ammonia.
Our older generic products and their supply chains are rooted in.
Places like China, and India, where.
People are spending a lot of time and energy trying to ensure that we don't wind up in a situation, where we have no therapies available because apiay size are not able to get into the country. Because they are made in areas that are highly affected even more so than us. So I think that's the approach we've taken in will continue to be pro.
Active in it.
Great. Thanks for very good one last one in.
Gary.
Cash into Q3 2020.
Doesn't quite get you to the next.
Cold and flu season, and given kind of it.
Mark environment, we're in now cash would seem to be very valuable to have.
How.
Do you think you to still possible to get that financing.
I know you paying down the Hercules loan given some of the conditions there but.
Do you still see opportunities.
For.
Good antibiotic company to tap into the debt markets or.
Should we be thinking more about some of the.
Actions that from your peers have taken.
That at least in.
Seem to be on the surface sort of highly dilutive actions taken to kind of buying an extra.
Quarter to cash flow.
Yes, Kevin I mean, it we really can't speculate.
We believe we've mentioned before we'll look at all opportunities to add to bring cash into the company and I think we've we've shown that in the past that we've done that.
And we will we will take actions that we think on our shareholders' best interest, but beyond that I'm sure. You can appreciate we can't really speculate about what we're going to do.
Hi, Thanks.
Great or any any more questions on the line.
I'm showing no further questions at this time. Thank you may continue.
Okay, well thanks, everyone for your questions your interest and we look forward to updating you as we continue to make progress on our community focused for the treatment of than letter for community acquired pneumonia. Thank you and we'll talk soon.
Little capital levels concludes today's Wisconsin. Thank you called out participation have a wonderful day all this problem.
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