Q3 2020 Paratek Pharmaceuticals Inc Earnings Call
Well real World study, Valerie and use IRA and several infection types.
In this study the authors game desire to be both effective and well tolerated for a variety of serious infections that included multi drug resistant or MTR and extensively drug resistant or xdr, gram-negative infections, and pulmonary non tuberculosis, mycobacterium obsesses or MTM infections.
You will hear more details about our NTN program from Randy.
Upcoming remarks [laughter].
By the time, the current antibiotics, even options against Anthrax limited. We also continue to make significant progress in a broad based project Bioshield public private partnership with the biomedical advanced research and development authority or BARDA the.
The supplemental mouse pharmacokinetic data and FDA response documents requested by FDA are in the final stages of publishing at Florida and will be submitted imminently.
It's difficult to predict how long FDA will take to complete its final review based upon multiple discussions with the agency, we believe FDA understands the importance of an efficient and timely review.
Before I hand, the call over to Adam I would like to provide <unk> third quarter of 2020 financial highlights and review our updated 2020 financial guidance.
Fair Tech generated $13 $7 million in total revenue in the third quarter, primarily driven by the continued strong demand and growth in the net revenue of these are which contributed $10.9 million.
This third quarter revenue represents a 35% increase in use IRA net revenue versus the second quarter of 2020, and a greater than 200% increase versus the same quarter in 2019.
$2.9 million for the third quarter, Twentytwenty compared to $23.6 million for the second quarter of 2019 the.
The $2.7 million decrease is primarily the result of lower personnel related costs and a reduction in sales and marketing costs due to COVID-19.
Now turning to our Twentytwenty financial guidance we.
We now anticipate our full year 2020 total revenue to be at the higher end of the previously communicated range of $78 million to $83 million driven by strong U.S IRA us net revenue trends.
Total revenue includes a desire to use net sales the initial water procurement of desire for the SNS.
Government contract revenue earned under the BARDA contract and royalty and collaboration revenue.
As noted earlier this guidance assumes that the initial barter procurement undesirable valued at approximately $38 million will occur by the end of Twentytwenty.
The FDA good rig completed as early as the end of this year, but may slip into the first quarter.
The first procurement is expected soon after completion of the FDA review.
Accordingly, the first procurement will be recognized as early as late Twentytwenty four in the first quarter of 2021.
Excluding the R&D offshoring of manufacturing expenses reimbursed by BARDA, our R&D and SGN expense combined are expected to be lower when compared to 2019, highlighting our commitment to remain disciplined from an opex perspective thus.
Thus full year, Twentytwenty R&D and Sq Nay expense combined is now expected to be approximately $120 million compared to our previous guidance of approximately $135 million.
This favorability is driven by a continued focus on operational efficiencies and the timing of certain expenses driven by the COVID-19 pandemic.
Some of which will now occur in Twentytwenty one.
R&D and SGN expense includes continued investment in our commercial infrastructure, while pursuing potential strategic lifecycle investments in areas that will create long term shareholder value such as the non tuberculosis mycobacteria Obsesses program for NTM program.
Based upon our current operating plan, which includes estimating use IRA us product revenue and cost reimbursement under the BARDA contract, we anticipate that our existing cash cash equivalents and marketable securities of $149.5 million as of September Thirtyth Twentytwenty provide for a cash runway.
Through the end of 2023 with a pathway to cash flow breakeven.
This anticipated pathway assumes the company will be able to fund all company operating expenses anticipated capital expenditures and debt service, including repayment in full of the Hercules loan and security agreement.
Our planned lifecycle investments, including NTM are also factor into our current cash runway guidance.
I would now like to turn over the call to Adam Adam.
Thanks Evan.
The U.S. launch Nusantara continues to progress well with continued strong quarter over quarter growth seen since launch.
Even in the face of a challenging and ongoing COVID-19 pandemic.
As you can see from this slide you.
He is already net revenue grew 35% in the third quarter compared with net revenue in the second quarter.
Regardless of the profit 19 challenges we are facing.
We have not wavered from our strategic focus on guiding institutional access while building awareness and establishing trust and confidence with physicians, who are saving lives and treating serious community acquired infections everyday.
In the third quarter and at least for the foreseeable future profit 19 will continue to present a number of challenges.
In the last quarter alone, we saw a patient flows to physician offices and institutions approximately 25% below pre corporate levels at a market that saw an 18% decline in broad spectrum antibiotic utilization when compared to the same period in the prior year.
You see some improvement over Q2, but still down significantly nonetheless.
These headwinds coupled with significantly reduced physical access to hospitals and a reduced ability to interact with physicians face to face does not represent the historic environment for personal interactions and scientific education exchange about no novel products.
These dynamics have also made it an increasingly challenging environment to engage with hospitals to obtain formulary status, but nevertheless, our business continues to grow quarter over quarter.
And we are effectively and efficiently operating within a hybrid sales model consisting of both face to face and virtual interactions that we see existing well into 2020 one.
We have supplemented our efforts with virtual market marketing and virtual sales tools and as such were able to achieve 10.9 million in use our net product revenues, representing a 35% increase versus the prior quarter.
Establishing USADA as one of the best antibiotic launches in the past five years.
Accounting for inventory news on a gross demand increased from approximately 9.5 million in the second quarter Twentytwenty two approximately 12.9 billion in the third quarter of 2020.
The us growth in this third quarter was driven by demand as inventory in the channel remained essentially flat.
The U.S. commercial launch of news Areva is continuing to materially that differentiates itself from other antibiotic launches over the past five years driven by strong operational execution.
News I have as many product aperek attributes that include.
One a broad spectrum efficacy across two common indications to a favorable safety profile consistent with news Iris tetracycline heritage and three convenient once daily oral and RV formulations that enable utility in multiple settings of care.
Accordingly, these factors continue to build strong demand and validates our PTX commercial strategy since launch which has been to focus on hospitals and adjacent sites of care for the first two years of our launch.
We believe that the continued commercial success in these hospital them institutional settings of care will translate into future success in the community settings.
As the first broad spectrum once daily oral in IB antibiotic approved for both pneumonia in skin and maybe 20 years, we believe that use our eye is on its way to addressing significant unmet needs. In these sales community acquired infections, while combating antibiotic resistant pathogens that arise from clinical five years I'm poor outcomes.
The older generic antibiotics.
We believe these are was convenient once daily oral and Ivy dosing provides flexibility in prescribing reductions in hospital stays and in some cases avoidance of hospital admissions altogether.
The ability of <unk> to potentially minimize hospital stays has always been an important attribute for many about prescribers and a meaningful benefit for our patients.
In todays call an environment, where cap is an ever present clinical infection, especially now that we have entered the full winter influenza season available hospital beds are becoming but both a much valued and scared scarce commodity.
It's important offering with news hour to be able to safely send patients home sooner is taken on even more significance.
As you know since launch we have focused our efforts on institutional access with a team of approximately 60 representatives targeting six 600 hospitals and they are adjacent sites of care.
Currently approximately 90% of news ourselves it generated by physicians associated with the hospitals infection.
Infectious disease doctors being the largest news are a prescribing speciality.
Initiatives across key areas, such as the execution of the mouse PK studying requested by FDA for the preview Yue advancing the preclinical clinical and manufacturing work under the border Anthrax program sharing of new data of recent medical conferences and advancing our pipeline as we prepare to initiate a phase to be studied.
With plans to begin enrollment in the first half of 2021.
We believe visa liver, both have the potential that and build significant value for physicians patients and shareholders.
As noted earlier Barbara partnership continues to progress well this unique public private partnership is a recognition of our joy Lee share commitment to advancing news IRA in the fight against antimicrobial resistance and to develop new Zara as a potential treatment against bioterrorism pathogen, including anthrax and the procurement of news or for the strategic nausea.
Stockpile.
We continue to make important progress advancing our efforts in collaboration with BARDA to onshore the manufacturing of news IRA which will enable us to have a secure additional supply chain for news IRA fully within the U S to the best of our knowledge is I will be the first and only antibiotics to be made in the U S, including API production.
Importantly, this U S. Onshoring initiative for news are also aligned with the President's by America Executive Order issued in August of this year, which required FTA to establish a list of essential medicines, which are defined as medically necessary to have supply available all times and an amount adequate to serve.
Patient needs and and the appropriate dosage forms we were pleased to see that FTA has included a matter of cycling as part of its a psycho medicines list that was released on October 30th. This further supports the importance to the U S government of ensuring that news hour will be secured in the SNS and that we have ongoing plan is to bull to build a fully integrated.
<unk> desire to manufacturing chain within the U S shores.
The timing of the initial BARDA procurement of 2500 anthrax treatment courses of news IRA remains contingent on the completion of the FDA review of the previous Yue application.
As mentioned last quarter. The initial FDA review of the pre way I've taken longer than we had initially anticipated and in June FTA requested supplemental mouse pharmacokinetic data and the same Australia and that was used in the animal anthrax efficacy studies.
This study is complete and the response is now in the final stages of publishing it Florida and will be submitted to the FDA at any moment.
We are confident that these data will fulfill FDA single question on the premium emergency use authorization application for news IRA.
The one thing that is out of power text or bar does control is how long it will take FDA to complete a to review.
The FDA review could be completed as early at the end of this year, but may slip into the first quarter of next year.
The first procurement is expected soon after completion of the FDA review.
Accordingly, the revenue from this first procurement will be recognized as early as late 2024 in the first quarter of 2021 importantly, based on feedback from Florida. This modest delay in our first procurement, we will have no impact on the timing of future procurements.
Beyond the work with BARDA. We also continue to pursue a number of compelling lifecycle opportunities for news IRA. The first of these is that completed and file oral only community acquired bacterial pneumonia PK study that will support an oral only dosing regimen in pneumonia.
This study is agreed upon with FDA to decide to show that it or only dosing regimen will have a comparable pharmacokinetic profile to the approved Ivy to oral dosing regimen in patients with cap that was established in our optics study.
Based on recent interacted with FDA regarding this application this filing instead of being categorized as a pharmacokinetics supplement fda's categorize it as an efficacy supplement as the subjects. In this study were pneumonia patients rather than healthy volunteers as a result, the Sandia NDA review has been assigned a standard review timeline, which typically.
<unk> takes up to 10 months.
Now believe it approval for this oral only dosing regimen, while expected during the second quarter of 2021. Following recent discussions with FDA may be pulled forward. So to submission includes a single study with a modest number of pneumonia patients.
We're also continuing to move our program on non tuberculosis Microbacteria obsesses are NTN forward, it's a potential 740 million dollar addressable market in the us alone.
As a reminder, non tuberculosis microbacteria of obsesses is a rare an orphan disease with no FDA approved therapies startup activities for the phase to be study are underway with the initiation of patient enrollment plan for early next year.
And bound feedback from our KML community has continued to highlight the clinical unmet need for an efficacious and well tolerated oral antibiotics to treat infections caused by micro bacterium obsesses.
Broadening the clinical data set using news IRA in patients with ATM to recent case series have been published highlighting the potential efficacy of news R and pulmonary Microbacteria obsesses.
One real world's study was recently presented Ivy week with 11 patients included as noted by the authors do Zara was shown to be effective and well tolerated in this small sample set importantly, and consistent with a chronic treatment. These and these patients patients receive therapy for me in a six four months with some tree.
<unk> with desire for over 20 months.
The second published case serious from Brigham and women's again highlighted the long term use and good tolerability of amount of cycling as part of a multi antibiotic treatment regimen for for patients, who mycobacterium obsesses disease.
Two of these patients at cutaneous disease, one had pulmonary disease and one had osteomyelitis add bacteremia. These.
These patients received amount of cycling for a median duration of 166 days with the longest duration of therapy being 225 days.
Data also noted by the authors found him out of cycling to be a novel oral option for the treatment of Microbacteria I'm obsessed disease for which safe and effective options are needed. These data continue to reinforce the need for additional studies to further evaluate these encouraged clinical findings.
Biotech along the outside researchers continue to generate evidence that further characterizes the important attribute of news IRA.
Investigator initiated research or IAR program advances the medical knowledge that we believe are useful to clinicians to date. There are seven active non clinical in clinical studies in our IRR program, such as studies in the areas, including diabetic foot infections as well as C. Difficile infections with three additional studies expected to start before.
The end of this year.
In addition, there are 11 active non clinical research studies, including the activity of amount of cycling alone and in combination in Iraq Osteomyelitis model and several other studies and Mycobacterium obsesses that will build on the growing information of news IRA.
The data from these programs were ultimately be published by the researchers conducting them.
Regarding our overall publications plan. There are currently over 20 publications and process that address the use of news IRA and special pathogens populations or disease states that will further define it unique therapeutic profile and parallel real world evidence from ongoing registries and independent case series reports.
The mix by indication just qualitatively.
Good thing and the number of days patients are on order of divorces Ivy.
And then.
Once you get approval of the oral only dosed in pneumonia, how do you see that impacting the utilization of Nuvera.
I've got two other topics, but maybe I can pause here.
Yeah. Thank you I mean, maybe Adam you can take those questions because your closest to the commercial performance that we've seen.
Yeah, I'm happy to do so as regards to the the mix by indications I'm not a lot has changed since the you know should see even the launch very quickly we sort of established a a 50% of that business was on label about 50% was was off label nothing unusual there that's normal.
So for for many anti infective anti Infectives. The off label use is driven predominantly with things like last year. My lots is some.
Some advocates you'll diseases and some NTM.
Driving that business those patients are on a news article a foot for quality.
At the time, the other half of the business actually about 50% to 55% of the prescriptions.
Our for skin and pneumonia with skin being the largest proportion of that I'm surprised me because we've just come through and written.
That was left of the skin season, we're moving into the community acquired pneumonia season. So we should expect to see a tick up in pneumonia prescriptions as we go into the <unk>, but the rest of this year.
As regards I think the question around you know the change to the to the label Yeah.
We think that there's significant opportunity for nusantara with even just with the oral for skin that we have I mean remember we have an oral only dosing pathology for skin.
And we anticipate that next year, we will also get the pneumonia, but the skin indication alone is a 1.5 billion dollar market opportunity and four representing nearly 14 million patients. So you know we're cautiously optimistic we'll do well as we approach going into the community setting and stand to promote in that segment of the business.
Got it thank you [laughter] golf to the inclusion in the midst of 17 medicine.
What does that mean in towns Oh, any let's say.
Oh, hi, laying on inventory build up that would be acquired by once you're being set up on that list.
On the B executive order and just separately on the BARDA contract.
Oh, we eat it sounds like you're getting ready to submit.
Phone that to them.
Can you remind us oh.
What is the next step in the development program, the objective, which any future purchases or payment maybe do a.
Over the next year or two.
Yeah. Thanks, I mean, maybe Randy you could you could take the the progress there would that be making on BARDA and then maybe I can talk about the essential medicines listening about that potentially means to to parenting.
Yeah sure. So so thanks, so yeah, so like I said the BARDA.
Relationships continues to progress really well there.
Over the next several years.
Well, we haven't talked about comedy central that yeah. So yeah. So just to be clear I mean, the the first purchase has been delayed you know for US we're very confident it's not a matter of if it's a matter of when and the other one's for 21 22, and 23 are going to be essentially annually.
Im sure that part is not keeping us didn't manage to provide any I mean factory supply chain just that habit not supply.
And use our four for BARDA that being said, we we've indicated that we've had over this year continued discussions with other branches of the department of defense and other federal agencies that oversee.
You know in you know in order to weed go absolutely excellent reimbursement and support in that in both from the pile of perspective, and we'd go great advocacy you know the other thing about that community setting. He said he was actually a target rich environment and so you know we were well underway and tons of that.
He shifts that we have in these institutional adjacent sets of care, where these we believe very strongly that these primary care doctors actually rely on the recommendations of Ivy physicians and where we have 70 plus percent of our prescribers being Ivy physicians I think Adam has done the appropriate work and creating the right type of.
I think strategic beachhead for us to be able to take on his expansion on our own in a in a manner that is consistent with our overall.
Less than 20 patients who are PK population and as a result of that act.
Acknowledge that there was a small data set and we look to see if there's ways to accelerated understanding that the pneumonia season and the challenges with covid more important.
Drivers for us so.
So that's that's what gives us a little bit of a sense of confidence that they may work with us to try and move that up a little bit.
Today's question and answer session I'd like to turn the conference back over to Mr., Evan Loh for any additional or closing remarks.
Okay. Thank you very much it was there no more questions. We'll conclude today's call in closing I would thank all of you for your time and attention today. Your continued interest and desire paratek are important to us the.
But you're only making use Irish commercial success is well under way at the wealth of microbiological and medical use data on these area continues to expand.
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