Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by our conference will begin momentarily once again, ladies and gentlemen, thank you for standing by our conference will begin momentarily.
[music].
Greetings and welcome to the Paratek Pharmaceuticals first quarter 2020 earnings call.
At the time, all participants are in listen only mode.
Question and answer session on all the oral presentation, if anyone should require operator systems. During the conference. Please press star zero or your telephone keypad. As a reminder, this conference is being reported and it's now my pleasure to introduce your host Mr., Ben strain Vice President Investor Relations and corporate communications. Thank you you may begin.
Good morning, and welcome to Parateks first quarter 2020 earnings and corporate update conference call a press release with the company's first quarter results was issued earlier today and we have also posted slides that a website there will be referred to on this call. Both can be found at www Dot Paratek pharma dot com participants on today's call.
Our.
Good luck CEO.
Adam Woodrow President and Chief Commercial Officer, Randy Brenner, Chief development and regulatory officer.
Michael Big them.
I can give chairman.
Before I turn the call over to Evan I would like to point out that we'll be making forward looking statements, which are based on current expectations and beliefs.
I.
It's a subject to certain risks and uncertainties actual results may differ materially I encourage you to consult the risk factors discussed to know if they see filings for additional detail.
Evan.
Thank you Ben.
Good morning, and thank you all for joining our Twentytwenty first quarter earnings call and corporate update.
So those are the office at Paratek the challenges posed by over 19 highlight the critical needs of patients with bacterial infections, where antimicrobial resistance is an ever growing threat to successful clinical outcomes, we're proud to be providing much needed new therapeutic alternative for patients in need with these IRA are.
Once daily oral and intravenous broad spectrum antibiotic that offers and effective lifesaving antibiotic for serious community acquired infections.
We remain as committed as ever to our mission observing these patients as well as to the health care providers, who care for them.
We are pursuing this mission from a position of strength and we believed that our strong cash position enables us to remain committed to wash stated strategic goals for Twentytwenty and beyond.
We would also like to applaud the heroic efforts of medical professionals in the U.S. and around the world, we're working to save lives into combat.
Myriad clinical complexities of the code at 19 pandemic.
Whether directly treating patients impacted by the virus for implementing containment measures to constrain. Its transmission you are all selflessly, putting the needs and safety of your patience first.
Thank you for those efforts.
During these unprecedented times I would also like to take this opportunity to thank the entire paratek team for their dedication and unwavering commitment to ensure that patience and health care providers have access juniors IRA or once daily oral and intravenous broad spectrum antibiotic approved for both serious skin infection.
And community acquired bacterial pneumonia.
During the covert pandemic, we have paratek have embraced public health guidance with all of our employees now working from home and utilizing virtual meetings.
Our actions with each other and the diverse health care provider community, a thought leaders clinicians researchers and payers.
Well its environment can be challenging at times, where continue to have success and engaging with the medical community and building awareness for needs are.
While still early in the commercial launch phase, we believe our efforts continued to be successful and augmenting awareness of the profile and clinical value of these are within our targeted institutions, resulting in the continued strong demand and uptake for news are.
We are pleased with the results to date.
Well in today's environment has presented operational challenges for the news I relaunch and Paratek.
We believe the current covert 19 pandemic.
Also presents potentially significant future opportunities then use eirik and address.
We believe me its Iraq is an ideal therapeutic candidate that can be clinically effective ur cobot 19 patients.
Develop secondary community acquired bacterial pneumonia, and we continue to actively educate and build awareness throughout the clinical care community of the many benefits that use our offers.
In addition to covert 19 pandemic further highlights the importance of a novel once daily well tolerated oral and Ivy antibiotic in the clinical treatment paradigm for pandemic protect preparedness writ large as well as for patients with serious skin infections and community acquired bacterial pneumonia.
As you can imagine there was a major push discharge patients from hospitals to make every possible hospital beds available for cobot 19 patients.
He was iris once daily Ivy two oral discharged dosing flexibility in the ammonia patients serves as the foundation for the go home and stay home value proposition that we've shared with you.
A compelling concept that appears to be resonating with prescribers.
Paratek generated 7.9 billion.
Net revenue in the first quarter, primarily driven by the sales of use Iris.
Net revenue in the U.S IRA increased 35% over the previous quarter to $7.3 million.
We're pleased by the performance W.'s IRA as we continue to see significant increases in demand quarter over quarter, driven predominantly by the oral formulation.
Further in this quarter. We also had continued success securing access from payers and institutional access within our prioritize and targeted at hospitals.
Adam will provide more details later in this call.
Late last year, we also announced a significant milestones.
Typically we entered into a broad based project Paasio contract with the biomedical advanced research and development authority or 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.
Total value comic aperta of approximately $285 million.
We appreciate bardas confidence in Paratek and there's significant investment in this innovative long term public private partnership for the development of use Iraq in the fight against Bioterrorism and antimicrobial resistance in order to save lives and protect Americans.
One important future achievement from this partnership with BARDA is that we believe that part paratek will be the only biopharmaceutical company with a fully U.S. base antibiotic supply chain from <unk> through final drug product.
Given the potential antibiotic shortages announced recently from several large companies, we're especially proud to pursue such an important manufacturing pathway or news IRA in partnership with BARDA.
Randy will provide an update on progress to date in this collaboration later on this call.
The rapid global spread of the Kogan 19 pandemic further highlights not only the importance of pandemic preparedness, but the need for novel therapeutics, including antibiotics that address bacterial resistance.
We believe that our recently announced broad based public private partnership with BARDA, We'll open up opportunities for Paratek actively pursue other strategic procurement partnerships government contracts that will further support national pandemic preparedness and provide news iron for patients in need.
We believe these IRA is uniquely position with its once daily oral and Ivy broad spectrum profile and we are pursuing a number of other strategic opportunities to expand our government relationships beyond the current scope of the BARDA collaboration.
We continue to remain focused on providing and onto <unk> on interrupted supply of these are including building sufficient safety stock to address variability in demand.
Based upon current inventory levels, we have a sufficient supply of desirous to meet our forecasted demand into next year, including the initial BARDA procurement.
Our manufacturing partners I continue to perform to our contractual requirements, which will provide for our anticipated longer term inventory needs.
To address potential strategic government procurement opportunities beyond BARDA, we're also making incremental investments to expand our current supply and manufacturing capacity.
Additionally, our partner in the greater China region I labs.
Last week announced its application for <unk> in China was granted priority review by the Chinese regulatory authority.
It's important regulatory milestones further highlights the importance of new antibiotics globally.
You know time of rapidly developing antimicrobial resistance and reinforces news iris role in serious community acquired infections.
Before I hand, the call over to Adam I would like to provide first quarter 2020 financial highlights and review our Twentytwenty guidance.
As noted earlier in the first quarter of Twentytwenty, we generated total revenue of $7.9 million of which 7.9 million were attributable to news IRA net revenue in the United States.
We also earned other revenue of approximately <unk> point, Sixmillion, which consisted principally of government contract service revenue from BARDA, <unk> point, Threemillion and royalty and collaboration revenue up another point $3 million.
R&D expense was $6.4 million for the quarter.
2020, compared to 11.4 million for the first quarter of 29 team.
The $5 million decrease was primarily the result of lower clinical study costs associated with our completed.
Based you you do you have program and other operational efficiencies as we continue to strive to optimize the business.
That's gene expense was $23.6 million for the first quarter twentytwenty compared to $23.3 million for the first quarter of 2019th.
Now turning to our Twentytwenty financial guidance.
In evaluating Parateks Twentytwenty final financial guidance.
Rebalanced, our strong first quarter results against the forecasting challenges related to the code that 19 pandemic.
As a result, we're currently maintaining our full year twentytwenty guidance.
As you highlighted in our last earnings call in February we estimate 2020 total revenue to be between 75, an $80 million compared to the $16.5 million in 29 teeth.
This revenue guidance consists of the following elements.
He is our net revenue and Twentytwenty is expected to be approximately $66 million, what slightly more than half of this revenue coming from the initial arda procurement of 2500 anthrax treatment courses.
As a reminder, the initial news IRA BARDA procurement is anticipated to be secured in the second quarter of Twentytwenty.
Government contract service revenue earned under the BARDA contract combined with royalty and collaboration revenue is expected to be between $9 million to $14 million.
Of note conch government contract service revenue consistent cost reimbursement by BARDA for Twentytwenty spend on our FDA post marketing requirement activities. The anthrax development program and the onshoring of U.S. News IRA manufacturing.
Full year, Twentytwenty, R&D and SGN expense is expected to be approximately $140 million.
Excluding the R&D and onshoring of manufacturing expenses reimbursed by BARDA, our R&D SGN expense combined.
Our expected to remain relatively flat when compared to compared to 2019, highlighting our commitment to remain disciplined from an opex perspective.
This includes continuing investment in our commercial infrastructure, while pursuing potential strategic lifecycle investments in areas that will create long term shareholder value such as a non tuberculosis mycobacteria or NTM program.
Based upon our current operating plan, which includes estimated use Iraq U.S. product revenue and the BARDA cost reimbursement of activities related to the project boss your contract.
We anticipate their existing cash cash equivalents and marketable securities of $194.8 million as of March 30, Onest Twentytwenty provide for a cash runway through the end of Twentytwenty three.
The pathway to cash flow breakeven.
Isn't dissipated pathway assumes we'll be able to fund all company operating expenses anticipated capital expenditures and debt service that includes repayment handful of the Hercules loan and security agreement under its existing terms.
You May have also notice that we filed a registration statement on form S. Three this morning.
We have six months left on the current and only shelf that we had filed in 2017.
This approach.
We believe the standard corporate.
Corporate governance, and good housekeeping and the amount is consistent with our prior filings.
We have no plans in the foreseeable future to utilize the shelf.
With that I'll now turn the call over Adam Adam.
Thanks Evan.
The U.S. launch of Nusantara continues to progress well and we're encouraged by the continued growth in demand seen in the first quarter.
This quarter, we saw increases in pneumonia related prescriptions, driven primarily by the continued strength in prescribing about oral formulation, which makes up over 80% about business along with a modest increase in Ivy volume.
It's important to note that these results were achieved in a challenging environment that included a relatively light flu season.
And to hospital setting that limited representative access and prioritize cobot 19 patients above all else.
Despite this overall demand seen in the first quarter exceeded our expectations.
We believe that these trends augur well for continued growth in demand.
<unk> cautiously optimistic for the balance of the yet as we anticipate the hospital setting and associated adjacent use of cash will slowly evolved to a more normalized environment as the year progresses.
That's the first broad spectrum once daily oral an Ivy antibiotic approved for both pneumonia and skin and maybe 20 years, we believe that Nusantara is well on its way to addressing important unmet needs in the serious community acquired infections, well combating antibiotic resistant pathogens that arise from clinical five yeah.
Poor outcomes with older generic antibiotics.
We believe use obvious convenient once daily oral an ivy dosing provides flexibility and prescribing.
So again reductions in hospital stays and in some cases, allowing patients to avoid hospital admissions altogether.
The ability of Nusantara to potentially minimize hospital stays has always been an important feature for some of our prescribers and a meaningful benefit for our patients.
But in today's call that 19 environment. This message has taken on even more significance.
In addition, we believe that use our a safe <unk> news on a safety and Tolerability profile, along with its lack of dosing modifications fat Patrick will renal impairment provides a much needed alternative.
I'm I'm much needed alternative.
Two other drugs such as the Quinolones.
With that cardiovascular Q to see a newer logic side of serious adverse events codifying the quinolone across black box label.
It's important to note. The cobot 19, just don't Tony associated with secondary bacterial pneumonia, but also is increasingly associated with severe cardiovascular morbidity and mortality.
Accordingly.
Accordingly.
He is out belief that he's I'm wise to use any antibiotic such as equivalent or even a macrolide to carry potentially life threatening Q Tc risks or other known cardiovascular events, such as aortic dissections in these patients.
As discussed in prior calls it takes a sustained effort accompanied by seller education, and I'm wavering patients to establish momentum for new Ivy onto about taking the hospital setting after which adoption in the community.
Switching from for companion once daily oral like you saw it can accelerate.
Well I have sounds a marketing model shifted to a virtual one we've remained labor laser focused on building the awareness and profile of news all right in the mines of all health care, <unk> prescribers, including E. All I'd pulmonary and hospital physicians.
While still early in the process. We believe our efforts continue to be successful in building the profile of news our within our targeted institutions as we continue to see traction uptake for news era.
Well there are risks to our virtual model. So far we're pleased with the results and will be closely monitoring in the coming weeks and months.
I haven't mentioned USADA generated 7.3 million in net revenue in the U.S. in the first quarter compared to 5.4 million seen in the fourth quarter of 2019.
Driven by increased demand.
Accounting for inventory USADA gross demand increased from approximately 6.1 million in the fourth quarter of 2019 to approximately 8.3 million in the first quarter of Twentytwenty.
Our initial outreach continues to be directed towards early adopting hospital specialists, including I'd doctors Pulmonologists Hospitalists and they all physicians within Navy 600 key U.S. accounts, which are currently being supported by approximately 50 to 60 Representatives, which we believe is the appropriate.
Level, given our experience in the market to date.
We have taken a measured approach with a 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 have being focused on gaining institutional access for news, our well, making steady progress in raising awareness.
We have achieved institutional accessing over 60% to the 600 targeted hospitals.
Awareness of news on right now exceeds 90%, the I'd community and over 60% into broader physician target base meeting our expectations.
This is important because awareness serves as the gatekeeper for physicians to consider writing a prescription Phoenix for news IRA.
From a perspective.
Access and reimbursement we continue to have success.
Over 80% of commercial lives over one third of Medicare lives and greater than 50% of Medicare lives in the U.S. now have access to use our <unk> with limited or no restrictions.
In fact earlier this month, we secured a multiyear agreement with both the Humana Medicare part D and their humana commercial lines of business to place. These are on their formulary no restrictions.
This is a first for new branded broad spectrum oral in quite a number of years and shows the value. The humana is placed on keeping patients out of the hospital.
[noise] securing the agreement with Humana is a great first step and we believe this will help minimize the potential for prescription projections due to formerly restriction.
We believe we will be at which continue to expand access genies are in the Medicare Spice, thus, enabling the most vulnerable patient population with the greatest need to have access to news IRA.
We're extremely pleased with outperformance to date, we believe we're on the right commercial possibly with news Iraq and are well positioned for long term commercial success.
We look forward to reporting on I've continued progress in the quarters of ahead.
With that I'll now turn the call over to Randy.
Thanks, Adam.
Within the clinical development and medical areas. We continue to have several important value drivers, which we believe have the potential to adds significant value for patients to shareholders. The BARDA partnership is off to a terrific start with great momentum.
We were honored and excited to be the sole recipient of the first ever BARDA bio she'll contract for antibiotic for the treatment of a by a threat pathogen, which includes news are being added to the strategic national stockpile. This unique public private partnership with BARDA as a recognition of our share commitment to study news IRA and the fight against antimicrobial resistance.
And the treatment of bioterrorism pathogens, including anthrax.
As we had communicated in early April at the close of the first quarter BARDA initiated the two time based contract options, which now will provide cost reimbursement for all of our FDA post marketing requirements associated with the initial upper old news IRA as well as manufacturer security at onshoring activities.
With regard to the funding for the FDA post marketing <unk> events. This includes the pneumonia and pediatric clinical studies as well as the five year post marketing bacterial surveillance study required for all newly approved antibiotics.
The cost reimbursement for these postmark any commitments is projected to total approximately $77 million.
[noise] initiation of funding to support the onshoring of Parateks manufacturing activities for any desire was initiated approximately three months ahead of schedule and the setting of the Carbonite came pandemic. We believe this pull forward. It initiation of this contract option is consistent with the publicly stated importance of a fully U.S. based antibody.
Next supply chain has articulated by the card White House administration.
The cost reimbursement for the onshore and security requirements activities is projected to total approximately $20 million.
The Onshoring initiative is important to securing news hours overall supply chain by adding a comprehensive additional supply chain to our already well established all European based manufacturing infrastructure.
Over the projected collaboration timeframe. This work she will provide for a secure United States based supply chain. We believe we were the only biopharmaceutical company in the World currently committed and actively bringing its antibiotics supply chain into the United States.
We also remain on track to receive approximately $38 million earmarked for the procurement up 2500 anthrax treatment courses of news IRA designated for the strategic National Stockpile as a reminder, east treatment courses mandated to be 60 days per CDC guidelines to $38 million procurement purchase is expected to occur the second.
Quarter of this year following FTC review of the pre Eway application that was submitted at the end of February by BARDA.
To our knowledge news our will be the first broad spectrum oral an ivy antibiotic added to the strategic national stockpile since several office and doxycycline were added nearly two decades ago.
[noise] beyond the BARDA work, we also continue to pursue a number of compelling lifecycle opportunities for news Iraq.
The first of these is an oral only community acquired bacterial pneumonia PK study that will support and oral only dosing regimen and cap.
This study agreed upon with F.D.A. is designed to show that an oral only dosing regimen will have a comparable pharmacokinetic profile to the approved Ivy to oral dosing regimen and patients with cap that was established in our optics study we remain on track for a supplemental NDA submission in the middle of this year, followed by a potential approval for this.
Oral only dosing regimen during the upcoming Twentytwenty 2021 pneumonia season.
As we noted in the last call we continue to listen to the feedback received through our field based medical team as a result of significant inbound interest. We're also continuing to explore nontobacco less mycobacteria or NTM. Another promising lifecycle opportunity for news IRA with significant potential to address important unmet clinical need.
Page.
As a reminder, non tuberculosis mycobacteria obsess as an orphan disease with no FDA approved therapies.
[noise] inbound feedback from the K well community has clearly you noted that an effective oral option would be a clinically important and welcome addition to the limited list of suboptimal Ivy only therapeutic choice is being used today. These ivy only three to four drug antibiotic regimens are often complicated by a lack of long term tolerability.
Secondary line infections and multiple adverse events and these are not only has a safety and tolerability profile that clinicians have appreciated but has also demonstrated potent and feature activity against mycobacteria abscessus.
Further as we have published desire. It she is very high pulmonary penetration levels in humans for these reasons additional clinical investigation in this indication as warranted.
We continue to have discussions with FDA that had been constructed to date regarding NTM and look forward to provide clarity on our plans in the coming months.
We remain excited about this opportunity for news IRA to address a significant unmet medical need an orphan indication that requires chronic antibiotic therapy that can last month's two years.
Data generation also continues to be an important component of the medical team just last month, we launched a new online portal for interested researchers to present ideas for funding through our investigator initiated research or IR program.
As part of this program, which was initiated at the time of the FDA approval Paratek has identified areas of interest for IR Research program, which include in vitro studies. It gets important pathogens aventura, such as asset needed factor and into our caucus strange registry trials generating more real world clinical use experiences and offer.
Attunitys to address important unmet health needs, such as C. difficile or other acute and chronic infections and high risk patient groups to date. There are seven active nonclinical in clinical studies in IR program with seven additional and the contracting face the data from these programs are ultimately published by the researchers conduct.
Mm.
Regarding our publication plan. There are currently over 30 publications and process that address the use of news are in special pathogens are populations or further define its unique therapeutic profile.
In addition, the Thirtyth annual European Congress, a clinical microbiology and infectious disease or Akhmad recently accepted and published for Paratek supported Abstracts. This research described news hours. It feature activity on a number of key pathogens quality of life outcomes for patients from Oasis too.
But do you mean biology of C. difficile infection that hospitalized patients with cap and risks and observed occurrences. The c. difficile infection that patients with community acquired bacterial pneumonia treated with a matter cycling or moxifloxacin. These patients continue to highlight the efficacy and safety profile of news are adding to the growing body of evidence of news ours you till.
I guess life threatening infections.
We've also been adjusting our 2020 medical strategy plant to adapt to the current environmental challenges we're facing.
This includes an increase in virtual discussions between our field teams and kao wells and utilizing social media for appropriate dissemination of medical information.
In addition, we've been planning to support a symposium at an upcoming medical Congress, which has since been canceled due to covert 19, we're now planning to conduct a symposium virtually and develop enduring materials from the supposed Jim which concessions can utilize.
We believe that additional data generation and the oral only cap and NTM lifecycle opportunities will further broaden the potential new zira to reach into new and clinically important patient populations.
At this point, we would now like to open the call for questions.
Oh, I'm, sorry will now be.
Thank you will now be conducting a question and answer session. If you like to ask your question. Please press star one and your telephone keypad.
Confirmation tone will indicate your line is in the question Q you may start to if you'd like to move. Your question. Thank you for participants getting speaker equipment, maybe necessary to pick up your hands that before passing the Starkey one other thing we pull for your question.
My first question comes from the line of Bert Hazlett with BTG. Please proceed with your question.
Yeah. Thanks, I have a just a couple first is with regard to border collaborations in an additional collaborations that you are pursuing do you have any sense of timing with regard to those interactions I know for more perspective.
Timing can be can be difficult, but do you have a sense of timing in terms of the interactions with the particular agencies within the government.
[noise] Ah Hey, Burdett that's already.
So yeah, I think a your comments or our dar very accurate or it's difficult to fully project or some of the timing or activities are going on within that the U.S. government, but.
We remain.
Active at our pursuit for additional discussion so within the U.S. government to try and look for opportunities for additional stockpiling if the current opportunities.
Got it thanks that are there specific date at this time.
Okay. Thank you then just a two other quick ones.
Adam or are you finding on the sales side are you finding that this novel sales model that youve employed actually may have some efficiencies in terms of in terms of spend and then just very quickly on the clinical side what might a an M. P. M. A development study look like.
Just in terms of dumps are numbers of patients and length of a therapy it and again congratulations on the on the results in the first quarter. Thank you.
Thanks, Frank Thanks, but I'm look.
From a from a spending side, we're not spending quite as much as we work before everything is now remote but look you know the fact is that.
Obviously going through Mount she became impossible to detail in the hospitals, when we quickly pivoted to a virtual SaaS model.
You know right now it's still early in the process and.
The one thing I can tell you is that the <unk>. So I think are actually being reasonably successful I'm certainly within the target institutions. It was you know it was a good news that we already started to see really good awareness because without that went in Chicago that utilization.
There are obviously have some risks with this model there are obviously some efficiencies which is why we know perhaps spending as much but one thing I can tell you is that given the recent announcements in the sector.
Actual effort, so perhaps a bit more effective than they've been in the past because we have about 100% share of voice certainly in the oral skin in a broad spectrum or skin and pneumonia markets.
I can take the second one births question about the NTM.
You know so far we've got ongoing dialogue with FDA that being said it a little too early to comment on specifics other than to say that you know the micro back here I'm obsessed this.
Subset of the ER NTM population that we're looking for is a very small group.
Six to 8000 estimated in the U.S.
So again very typical rare disease type orphan type study. So we're anticipating you know a reasonably small numbers of patients, but right now those discussions are still ongoing and we'll be able to provide more in the coming months hopefully.
Thank you congrats again on the results.
Thank you. Our next question comes from the line of anybody out with SBB Leerink. Please proceed with your question.
Hi, this is shut in Oh.
Oh, Thanks for taking all the questions first congrats on the good quarter.
We have just a couple of question I'm supposed to be have no any.
Clutter on the rate of secondary cap.
Among the Colgate patients and could you Oh, they have any visibility on how much. Jeff is are you in that patient population all contributed to our Q1 results.
And second is that based on your comments about being part of being the only at about a company with full U.S. supply chain.
Does that mean that Youre manufacture Offshoring act if it pretty much done.
Thanks.
So I'll I'll I'll talk about the cap part first but we're we're really pleased with the development we've seen from USADA. So far this year, but he is actually quite difficult to gauge whether this is definitely a scene and they are an uptick of cabot in relation to covert 19.
As you can imagine there is a major push to try and discharge patients from the hospital that and I want to study RV an oral.
Dosing and pneumonia <unk> message is resonating with the prescribers you know as the environment Normalizes. We believe we'll have the ideal products come what well for covered 19 patients to develop secondary bacterial pneumonia and we're actively educating a building awareness to that effect as regards to how much second recap the reason.
As a result covert 19, I think the jury's out on that there's obviously been a few publications, but I don't think there's a definitive answer to that question.
Randy did you want to take the onshoring question.
Sure if images make sure I understood. The question fully but the just as a reminder, right now we have that a a full you based.
The factory supply chain deal from a pie through finished product the efforts around the onshoring are just beginning with BARDA, so where the early phases of that the time. It takes two to tech transfer and bring on both the IR to a drug product steps, a well will take us a full a fully a couple of.
Here is to fully implemented so still a lot of work to be dot on that but we're really excited about the initiate those activities a little bit ahead of schedule for what we initially planned.
Got it thank you so much.
Thank you. Our next question comes from the line of Kevin Kendra, What key research. Please proceed with your question.
Hi, Thanks for taking the questions first.
I wanted to ask about kind of the cadence of of revenue for the balance of year, how should we be thinking about.
Growth in news Irish should it be should we see consistent.
Revenue growth sequentially or should.
We think about some variability given this shift from pneumonia the skin and then second Oh on inventories just wondering if you could say or how much inventory you have out the channel. It seems like demand has been strip outstripping reported sales over the past couple of quarters.
Hi, Kevin its Evan.
Thanks to the Oh, thanks for the question.
I think when you look at the cadence of revenue just like with the other.
Are you know procurement arrangements you may have that you may be familiar with it can potentially be.
You know lumpy is good word that we'd like to use but we still remain on track for that initial procurement in the second quarter.
I don't being set as well as we look at the go forward for the remainder of this year and maybe also into 2021.
As you think about the secondary bacterial pneumonia that is commonly seen with these type of pneumonic viral.
Infections.
We also wonder whether the you know the dialogue really a ship thing a at least for the near term.
Away from sort of the episodic a seasonal pneumonia season to just pneumonia in general all year long and a lot that will depend upon what this cobot endemic of evolves into in terms of a vaccine as well as a natural herd immunity overall.
And then I think the next question is around what does the balance with regards inventories that right Kevin.
Yes, I'm just seems like a.
The the gross demand numbers that you put up last couple of quarters have been ahead of what we see on itself.
Yes, Adam did you want to address that.
Yeah, I I'm more than happy too I mean at the end of the die as as a product grows the inventory will build over time, but what I can tell you is there's certainly no on an excessive inventory in there I think you're alluding to the fact, but this seems to be <unk> more sellers than you're picking up.
We've seen a little bit of working down actually of inventory into law school to.
I'm sure that will come back up to this sort of a standard levels. You know I think the key thing for everybody on the coal is that <unk> actually driven by a buildup of inventory in the channel.
They say well, we would ER, we would <unk> highlight bound the cool.
Yeah, I think it's fair to say that our market demand was strong in the first quarter as you saw in that ordering and it's it's institutional demand, we're very closely align Kevin.
Right and we're just throw my follow up with Covidien and the emergence of that and the awareness that we all have that have you seen the tone of conversation change both with payers about the need for novel antibiotics as well as a in the political arena about the importance of having a an anti and.
Anti infective agent given that the lots currently are being dominated by an infectious disease.
No I think it's I think it's in a very interesting time as I think you're right now the spotlight has really shifted in the direction of.
Hi, anti infective type of therapies as well as prophylactic therapy I think when you think about the commentary that's been made from HHS. They are in search of clearly end to end solutions.
And when they think about the end to end solutions. It includes not only.
Hi, viral vaccines as long as diagnostics.
But I think that Theres also an interest in asking the question is our end up anti bacterial armamentarium as strong as it can possibly be in this pandemic and the and I think that the BARDA commitment is a testament to their commitment to before thinking in Florida to bring in the best technology for patients.
I think we've also seen in heard a that CMS has been moving very quickly in terms of Oh payment reform and reimbursement in this very difficult time, and we believe that there'll be continued more evolution and the way that they will be looking at the reimbursement work antibiotics in the hospital stays.
And finally, I think you know our success with our recent Medicare contract on the part D side with Humana is also another testament to the fact that in patients who are the most vulnerable.
Specifically over the age of 65 about the most co morbidities and potentially the most to lose.
In this post a in this cobot endemic they've made a big commitment to ensuring a that desirous available to all prescribers, if they want them for their patients with no with no restrictions.
Good thanks.
Thank you. Our next question comes from the line of Dennis RC with H.C. Wainwright. Please proceed with your question.
Hi, Good morning, everyone. This is Tom ZIP Afghan couple of question for Oh, Congratulations on Autopart Grasberg those are the borrower contracts.
Underscore.
So first question a little bit above the BARDA contract.
Assuming you a is approved or in this quarter or what are some immediate steps.
You will need to take in order to for fair with her first SMS order.
Sure Hey, Tom and his Randy Yeah, Randy brighter. So we've been working closely with BARDA. There are a number of I used the word administrative activities that have to happen in advance of the procure refer occurring.
Most of which revolve around documentation or quality agreements.
Those do you know certificates of analysis those kinds of things so.
As I said in my initial comments the other paratek in BARDA teams are working extremely well together both are busy to putting all the the documentation in place for this to happen. So I'm you know our expectation is that the a once they're pretty you. A review is completed by the FDA all those Dr and all that documentation will be complete Tom and we'll be ready to progress for.
But the procurement.
Okay sounds good and and then just wondering about the revenue recognition for this first order EUR $3 billion.
That's going to be a lump sum payment since there's a contract or as it grows it's spread out.
The next few quarters us.
Yes, a desire becomes shipped out to partner.
We have the we have set this up as a single payment.
Okay. Okay. So think of it. Thank you and then just want to switch gears.
Two other development for desirable.
And can you otherwise somewhat final preparations before the SMB a for the oral formulation and submit it.
Yeah I missed the beginning of your question as you say you're interested in understanding the preparations that are going on for the Sndk.
Yes, that's right yeah, so [noise].
So we are we're in the the the Atlanta late stages of study closeout activities you know the <unk>, it's our only ongoing clinical study at the time of this of the covert outbreak. So we're working remotely with our sites to do all this study activity closeouts or that the that the true very traditional for any study close out.
Analyses programming analyses.
Yes, I report creation, and then really you know a summary of the data for FDIC. So things are progressing as very typical for any study close out at this point in time.
Okay sounds good. Thank you for thinking Oh, Oh, Oh questions and congratulations again on a on a go first quarter.
[noise]. Thank you. Our next question is a follow up from Bert Hazlett with BC I'd. Please proceed with your question.
Yes, I'd like to just get your views on your partners activity in China could you just give.
Could you give some your thoughts on why maybe they received the a priority review and could you just frame the potential opportunity as you see it in China, we obviously have or estimates, but well, we'd like to better understand that opportunity as it gets closer to reality here. Thank you.
Maybe I can talk a little bit about you know that maybe the environment in China, and then or maybe Adam you can talk a little bit about you know the way with the way, we see and that's like when you China, but I think in terms of taking a step back I think we can't minimize the importance of.
And then Microbials and the issue with regards to resistance. It's not just the U.S. based problem, it's actually a global problem.
And China has some of the highest stuff that till resistance rates in the world.
And you know they've been through the cobot, a experience and a lot of the first the tranches of data in terms of outcomes that to resistance and the use of ER agile and.
Enter Bacterials has come out of China, and I do believe I don't know for sure because I'm not there or at the Chinese FDA, but I think that they want to make sure that a Chinese citizens have the best in technologies and they see and I believe that they see that then desire is part of that end to end solution.
For or for the country. So we're very excited about that ER and we look forward to a then moving to the process forward to getting an approval and they're getting this product a into the hands of Chinese positions in the Chinese patients in the first half a 20 or 21.
Adam what about China as it relates to a immensely.
Hi, Thanks Evan.
Look I mean, we know that there's a significant unmet medical need for for novel antibodies in China, There's clearly a great deal of potential there's still some work that the the teams are doing from a a preparation perspective to ensure that they've put everything has set up for the initial push upon approval I'm just a reminder.
But that you know under the terms of the a collaboration agreement we are entitled to receive a milestone payment to 6 million upon that regulatory approval. We obviously expect that in the first half of 2021, and then we actually receive tiered royalties a sort of low double digit to mid teen percent touches on the net sales that followed.
You know this will significantly expand our global <unk> footprint and endorsement of the products that we've developed we've got great expectations for full how things will work.
We desire they've proven to be a great partner and they've got a good commercial partner in China. So I only time will tell but I think it's fair to say that there is a significant opportunity for drug like and use our especially in the marketplace to scope at top of resistance.
You know bird just to build on that as well.
You know as you as as any company approaches commercial launch there has to be a full understanding of the opportunity space and what it will take in order to get there and is that I mentioned I had a announced earlier this year a a partnership with Hisun pharmaceuticals are there in order to launch the product.
In the U.S. I'm trying to lead that yeah in China, and I believe that thank you and I believe that they.
Have committed verbally around what they said is about 600.
Representatives to be able to actually addressed the tier one cities, where they will initially be focused upon their launch and you can see that the denominator in China in terms of potential on the need is is massive and a it is a we're very pleased with the commitment that I labs has made to ensuring that the law.
Onshore gets off well and generates early momentum similar to the momentum that we had seen.
In the U.S I relaunch here the U.S.
Thank you. Thank you for the color. Thank you for picking a follow up.
Thank you we have reached the end of our question and answer session I'd like to turn the call back over to Mr. low for any closing remarks.
As there are no more questions, we will conclude todays call.
In closing I'd like to thank you all for your time and attention today, you continued interest and use IRA and Paratek are important to us.
The journey of making use eirik commercial success is well underway.
The unique profile of these are specifically, our once daily well tolerated oral is positioned well for long term growth and broad based commercial success in patients with serious community acquired infections.
As a wealth of data and use our continues to expand we are increasingly confident in the potential of news are being affected and a much needed addition to the armamentarium of antibiotics available to positions to save lives, particularly when resistance is a concern.
We remain committed to the continued development of desire to the oral only pneumonia and NTM lifecycle opportunities.
The BARDA BARDA partnership is off to a terrific start with great momentum.
And signed the contract at the end of last year several important activities have taken place, including the initiation of the funding to support the onshoring of our manufacturing activities for news IRA and support for all of the post marketing requirements associated with the Bruegel desire in addition to progress.
Ward securing the first procurement.
The BARDA collaboration positions Paratek as a leader I.
Not only with the potential to provide desirable bioterrorism <unk> pathogens, but as a leader in innovation for the broader I'd sector in the battle against antimicrobial resistance.
In addition to these are being the first broad spectrum oral and I'd be antibiotic added to the strategic national stockpile since separate blocks in the doxycycline were added nearly two decades ago.
We fully expect to deliver an important you treatment option for pulmonary anthrax that has the potential to save lives and protect Americans.
These opportunities motivate us all at 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 desire for patients in need and for the selfless health care providers, who are at the bedside each and every day, we very much appreciate your support and interest we look forward to keeping you apprised of our continued success.
Goodbye for now.
Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation have a wonderful bank.