Nabriva Therapeutics plc
Q2 2020 Earnings Call Transcript

Published: 9 Aug 2020

[Operator:]

Ladies and gentlemen, thank you for standing by. And welcome to the Nabriva Therapeutics Second Quarter 2020 Financial Results Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Mr. Gary Sender, Nabriva's Chief Financial Officer. Please go ahead, sir.

[Gary Sender:]

Thank you, and good afternoon, everyone. Welcome to Nabriva's conference call and webcast where we will discuss the second quarter 2020 earnings and also provide a business update. Similar to last quarter's earnings call, the slides for today's presentation are posted on the company's website, www.nabriva.com, and can be found under the Investors tab in the Events and Presentations section. We recommend that you refer to the presentation, as we will be using those slides for today's discussion. Before we begin, on Slide 2, 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 date of this call. We will undertake no obligation to revise or publicly release the results of 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 our other periodic reports on Forms 10-Q and 8-K filed with the SEC. Moving to Slide 3. I'd like to share the agenda for today. Ted Schroeder, Nabriva's CEO, will start with a business update. Francesco Maria Lavino, Nabriva's Chief Commercial Officer, will present an overview on the commercial highlights and the strategy for the relaunch of XENLETA and SIVEXTRO following the recent transaction with Merck. Then, Dr. Jennifer Schranz, our Chief Medical Officer, will discuss the exploration of expanded studies with XENLETA. I will provide a financial review, and Ted will come back with some summary comments and lead a Q&A session. In addition to Ted, Jennifer and Francesco, joining us on the call for the Q&A session is Steve Gelone, our President and Chief Operating Officer. I would now like to turn the call over to our Chief Executive Officer, Ted Schroeder.

[Ted Schroeder:]

Thank you, Gary, and thanks to everyone for joining our call this afternoon. Let's start on Slide 5. Earlier this year, the management team laid out the company's 2020 strategic priorities. These priorities included the shift to commercialization for XENLETA to the community; the active pursuit of business development and licensing opportunities, with a focus on community-based products; obtaining the approval of XENLETA in Europe and Canada; preparing for the launch of CONTEPO; and the thoughtful management of Nabriva's balance sheet and expenses. Nabriva has spent the last several months planning, preparing and executing on our strategic plan to shift our commercial focus to the community and leverage our capabilities through business development. Even amidst the ongoing COVID-19 pandemic, which, as you know, has created limitations on how we can conduct our business and has impacted revenue, we have been working diligently towards attaining these goals in the first half of the year. The recent developments we have announced have set a solid foundation to optimally position our assets as we continue to maneuver and manage our way through the challenging environment. Let me summarize where we stand as of today. As you recall, market dynamics, coupled with our excellent payer coverage, is what dictated Nabriva's shift to the community. Our focus on the community is well underway. And subsequent to the end of the second quarter, we announced that Nabriva entered into an exclusive agreement with Merck, to promote and distribute SIVEXTRO. This accretive transaction strengthens Nabriva's commercialization organization and is expected to drive product uptake in the community. At the same time, we announced the Merck deal; we also announced our agreement with Amplity Health, Amplity, formerly known as Publicis, is the leading pharmaceutical contract commercial organization, who will provide community-based customer engagement and sales services for both SIVEXTRO and XENLETA. We view the deal with Merck and the Amplity arrangement as true differentiators, and ones we think distinguish Nabriva from our peers. Community-acquired bacterial pneumonia and ABSSSI represent 2 of the 3 most common reasons why patients visit a doctor for an infection. As for XENLETA, our managed care coverage continued to expand in the second quarter. As of June, greater than 226 million or approximately 76% of all U.S. covered lives have access to XENLETA for cap. Francesco will go into more detail, but the majority of the access remains unrestricted, with no utilization management. We think this adoption speaks to the value of XENLETA, because it offers a short course of monotherapy with a favorable safety profile, especially versus fluoroquinolones. We have the opportunity to take a fresh look at our prioritization of physicians and subspecialties. Internationally, we have also made meaningful progress by obtaining XENLETA approvals from Health Canada and the European Medicines Agency. We are actively considering partners to bring XENLETA to European patients. Now, let me turn to CONTEPO. As we disclosed in June, we received a complete response letter from the FDA for CONTEPO. Even though our manufacturing partners were prepared to host an inspection, FDA's travel restrictions, due to COVID-19, prevented their team from visiting the sites. The FDA did not request any new clinical data, and they did not raise any concerns regarding the safety or efficacy of CONTEPO. What's unknown, at this time, is when and how the FDA will execute international inspections, which has important implications for the timing of the resubmission of the CONTEPO NDA and its subsequent approval. Once our manufacturing partners receive feedback on their proposals to the FDA, for how the agency can complete the required inspections, we will request a formal Type A meeting to collaboratively find a potential path forward. While I can't predict the exact timing for the interactions with the FDA, I can assure you that the CONTEPO program remains a high priority for our team as well as for our contract manufacturing partners. We are remaining prudent in how we manage our resources, and we'll continue to do so. The agreement with Amplity is an example of that. It gives us a structure that is flexible and efficient, and can be scaled as appropriate to reach community-based healthcare providers for both XENLETA and SIVEXTRO. With the funds we raised in May, we have a cash runway into the first quarter of 2021. Turning to Slide 6. Let me spend a few minutes highlighting SIVEXTRO, and how this transaction aligns with one part of our business development strategy. SIVEXTRO is an oxazolidinone class antibacterial. It's a short course, once-a-day oral treatment therapy, that addresses the most common pathogens that cause ABSSSI, including methicillin-resistant staph aureus, better known as MRSA. As you will see later in today's presentation, there is a highly complementary customer base for SIVEXTRO and XENLETA, including infectious disease and urgent care physicians as well as primary care prescribers. SIVEXTRO will be procured for Merck, and Nabriva brave will be responsible for marketing, sales and distribution in the U.S. through the end of December 2023, with renewable 3-year extensions. As exciting as the SIVEXTRO promotion and distribution is, coupling that with our Amplity engagement, allows for synergies and scale with Nabriva's commercial team. Amplity has prior experience with SIVEXTRO, and we believe there is already good brand recognition of the product by healthcare providers, which should enhance our access. On Slide 7, I will touch on some additional details about our international efforts for XENLETA. The approval from Health Canada for the IV and oral formulations of XENLETA for community-acquired pneumonia came on July 10. On July 28, the European Medicines Agency also approves XENLETA for CABP, representing the first new antibiotic class approved for patients with CABP in Europe, including the United Kingdom, in nearly 20 years. Our Chinese partner, Sinovant, continues to engage with the National Medical Products Administration to expedite development activities and regulatory filings for XENLETA. Sinovant has resumed recruitment activities for their efficacy and safety study in China. Lastly, Nabriva entered into an exclusive agreement with WEP Clinical to supply XENLETA on a named patient basis. The named patient program is designed to ensure that physicians, contingent on meeting the necessary eligibility criteria and receiving approval, can request IV or oral XENLETA on behalf of patients who live in certain countries where it is not yet available. We have made substantial advancements over the last several months to properly position our commercial efforts for the current, ever-evolving environment. We are confident that with the addition of SIVEXTRO, the Amplity sales effort, the outstanding XENLETA and SIVEXTRO managed care access and thoughtful resource management that Nabriva is well prepared for the community relaunch and reengagement with physicians. Let me now turn the call over to Francesco.

[Francesco Maria Lavino:]

Thanks, Ted, and good afternoon to everyone on the call. Building on Ted's opening, I'm going to share more details about the expanded opportunity with the addition SIVEXTRO to our portfolio, and our plan to relaunch XENLETA and SIVEXTRO with lighting Amplity Health our contract sales partner. I would like to start on Slide 9, with a brief overview of the acute bacterial skin and skin structure infection, commonly referred to as ABSSSI. ABSSSI infections include cellulitis, wound infection and cutaneous abscess and are treated in a variety of settings, and is one of the most frequently diagnosed infection. One of the most common pathogens causing ABSSSI is staph aureus including the methicillin-resistant strain, also known as MRSA. Turning to Slide 10; SIVEXTRO is an antibiotic indicated for the treatment of ABSSSI, in both adults and since last June, adolescent patient. SIVEXTRO is prudent activity against a broad range of pathogens, including MRSA, with a once-daily dosage. Its oral formulation has shown 91% bioavailability. There is no need for a loading dose, no food interaction and no major drug to drive interaction, especially with the SSRI antidepressant agent. It has a favorable safety and tolerability profile and in clinical trial had a very low discontinuation rate. SIVEXTRO is available in an oral IV formulation, and is given once-daily for a short 6-day course of monotherapy for ABSSSI. Please advance to Slide 11, and I would like to review the overlap and expected synergies as we plan to relaunch XENLETA and SIVEXTRO. Approximately 3.3 million patients are treated in the outpatient setting for ABSSSI. And the key healthcare professionals, involved with the management of these patients, are primary care doctors, infectious disease physician, podiatrist and dermatologist. Similar to our analysis of CABP, about 5% of total prescriber account for more than 50% of total antibiotic prescription for ABSSSI; we will target the right shared prescriber to optimize the outpatient business opportunity for both SIVEXTRO and XENLETA. Given the very high volume of patients treated by these providers for both CABP and ABSSSI, primary care physicians, urgent care and infectious disease physicians are going to be a key share target customers' group. They account for more than 2/3 of the potential patients for both SIVEXTRO and XENLETA, and they are our highest priority as we execute the relaunch of the portfolio. Our final targeting list will also include key prescriber for XENLETA, like pulmonologists, as well as key prescribers for SIVEXTRO, such as podiatrists and dermatologists. Moving on to Slide 12; consistent to our strategic shift, we plan to follow on the appropriate CABP patient in the outpatient setting with XENLETA. Annually, more than 2 million adult patients with CABP are treated in the outpatient setting, generating more than 15 million days of antibiotic therapy. These patients are generally older, but are still in working age, with common comorbidities such as hypertension or diabetes, with or without previous antibiotic exposure and with the risk score suggesting that the patient can be treated at home. About 80% of these patients are covered by either commercial or Medicare Part D plans. The latest growth and growing managed care coverage is one of its key strengths, and a reason for confidence in our ability to gain adoption as we prudently restart that excelling effort. Slide 13 should look familiar. And during the second quarter, we continue to expand our managed care coverage for XENLETA. Our market access team continues to do a tremendous job. We are pleased to say that our managed care coverage is exceeding our expectation. And as of June 2020, about 226 million or about 76% of all U.S. covered lives have access to XENLETA. And most of the access is unrestricted, with no utilization management such as step edits or prior authorization. We have made good progress with both Commercial as well as Medicare Part D plan. The COVID pandemic has had an impact on formulary reviews for XENLETA, with some of the Medicare Part D plan. But with contract in place with large payers, we expect XENLETA coverage to further increase in Q3. As previously disclosed, effective July 1, the XENLETA IV was granted a J Code, that allows outpatient views to be reimbursed at ASP plus 6%. Turning to Slide 14; I'd like to share more detail about XENLETA's managed care coverage and the significant formulary wins to date. In addition to major plants like Express Scripts, United Health Group, OptimumRx, Aetna and TRICARE, in the second quarter, XENLETA was added without restriction to the formularies of prime therapeutics downstream plants, including Cross Blue Shields of Texas, Illinois and Oklahoma as well as Healthcare Services Corp., pushing commercial coverage close to 90%. Based on our initial assessment, SIVEXTRO also has excellent managed care coverage. And given the demonstrative success of our market access team, we expect to continue to expand coverage for both XENLETA and SIVEXTRO. Turning to Slide 15; let me share what we believe are going to be the critical success factors for XENLETA's relaunch in the community. We have been refining our messaging platform to clearly communicate the XENLETA value proposition for community patients. We will leverage local resistance data to the old antibiotics, and we will focus on XENLETA's efficacy, a key driver for adoption and its ability to offer a cure for patients in just 5 days. Given the COVID pandemic, employees in any business will not be welcomed back to work if they have respiratory symptoms. This is particularly important for the millions of people who don't have the flexibility to work from home. We will emphasize that XENLETA has a short 5 days monotherapy, and we will continue to differentiate on the safety profile versus fluoroquinolone. We will leverage our expanding Commercial and Medicare Part D coverage, we will identify the right target customers, and we will ensure the right frequency of interaction to generate prescription growth. And we will do that, as shown on Slide 16, by prioritizing the target customers for XENLETA and SIVEXTRO using multiple criteria. We will focus on geographic areas with the highest concentration of patients and prescribers, and we will consider the high level of overlap between CAP and ABSSSI prescriber, including the prioritization of SIVEXTRO and XENLETA historic prescribers. We will assess the managed care coverage for XENLETA and SIVEXTRO, the COVID restriction for HCP access, and we'll also identify those physicians who are responsive to remote detailing. We will also hone in our distribution of both products to ease patient access. We will partner with Amplity health, and we will deploy that in a staggered fashion. We are planning to have a small number of sales reps, perhaps 15 to 20, in the field as soon as early September. And we plan to expand to a 50- to 60-person sales force by the end of the year, considering all the COVID restrictions. And eventually, we plan to further expand the number of sales rep in 2021. Partnering with a contract sales organization not only provides the flexibility to scale up or scale down as access to physicians improve, but allow us to do it in a very efficient, effective and expedited manner. Moving on to Slide 17; we are very excited to partner with Amplity Health, as we get ready to relaunch both XENLETA and SIVEXTRO in the community. Amplity Health brings extensive healthcare sales experience and capabilities to support Nabriva as we approach the execution of the launches. 100% healthcare focused, Amplity Health has been delivering solutions to the pharmaceutical industry for over 35 years. And in the past two years, they have launched more than 30 products and conducted approximately 7 million healthcare provider personal interaction. They also had experience in virtual engagement channels, the new norm. As we anticipate that, moving forward, the total customer engagement model will be a blend of face-to-face and remote communication. They have been working with most of the top 20 pharmaceutical companies, and have experienced in multiple therapeutic areas, including infectious disease. And as part of Publicis, they provided sales services for SIVEXTRO. Amplity provides Nabriva the flexibility to generate organizational agility and help manage resource deployment. Turning to Slide 18, and in conclusion, the addition of SIVEXTRO to our portfolio created a substantial combined opportunity in the community, since more than 5 million patients are treated for ABSSSI and CABP. We partnered with Amplity Health to ensure flexibility with a community-based skill set. We will revise our customer segment issue and targeting, and we will deploy sales rep in a phase approach as HCP access is reestablished with a focus on high potential targets for the portfolio. Critical to success, we'll ensure the appropriate frequency on the right target, and we will also continue to leverage effective digital and non-personal promotional element of the marketing mix. We'll continue to work on expanding the already broad managed care coverage for both XENLETA and SIVEXTRO, and we will enhance the Nabriva specialty pharmacy network and home delivery, while expanding availability in the retail channel. Community-acquired bacterial pneumonia in ABSSSI represent two of the three most common infections in the outpatient setting, and we firmly believe that the addition of SIVEXTRO to XENLETA creates significant synergies and scale and will allow Nabriva to expand our footprint in the community in the near term. I would now like to turn the call over to Jennifer.

[Jennifer Schranz:]

Thank you, Francesco. I will expand upon some of the topics discussed at the last earnings call and introduce some new projects. Given the unique properties of XENLETA, we continue to advance life cycle management projects that address the global healthcare crisis of antimicrobial resistance and the unmet need within the medical community. Turning to Slide 20; as we have learned all too well from the recent COVID-19 pandemic, the host immunologic response to an insult can result in a significant inflammatory reaction, causing lung damage seen in patients with acute respiratory tract infections. As a result, modulating the immune response, using agents such as corticosteroids or macrolide antibiotics, has become commonplace in patients with inflammatory conditions. The anti-inflammatory effects of XENLETA have been evaluated in a murine model of lipopolysaccharide-induced lung neutrophilia, which demonstrated XENLETA's ability to significantly reduce local inflammation, as measured by total cell and neutrophil counts and the bronchoalveolar lavage fluid that is comparable to dexamethasone, a known potent anti-inflammatory drug. This result is particularly promising, following positive results from the COVID-19 recovery trial that demonstrated dexamethasone led to a significant reduction in mortality in patients requiring supplemental oxygen. Nabriva is excited to partner with the Austrian Research Promotion Agency, who has awarded us a grant as part of their emergency COVID-19 call for proposals that will fund experiments to further characterize the anti-inflammatory and immunomodulatory properties of XENLETA and other compounds in our proprietary pleuromutilin library. If validated, the possibility to assess the utility in XENLETA and the management of inflammatory conditions, including cystic fibrosis, bronchiectasis or chronic obstructive pulmonary disease will be possible. Turning to Slide 21; I would like to review how XENLETA's properties aligned to potentially address the unmet medical need in patients with cystic fibrosis. As background, CF is a progressive genetic disease that causes persistent chronic lung infections that severely limits a patient's ability to breathe over time, due to mutations and dysfunction in a cystic fibrosis transmembrane conductance regulator, or CFTR gene. So you might be wondering, how can XENLETA potentially improve the lives of patients with cystic fibrosis? Based on data from the Cystic Fibrosis Foundation Research Registry, staphylococcus aureus is the most prevalent organism isolated from the respiratory tract of [indiscernible] with Cystic fibrosis. And up to 26% of all patients with CF have persisted methicillin-resistance staphylococcus aureus or MRSA colonization or pulmonary infections. The presence of staphylococcus aureus infections in patients with CF is associated with worse outcomes and MRSA, in particular, has been associated with the median survival time that is 6.2 years shorter than those at MRSA. Additionally concerning are trends of increasing MRSA colonization and infection rates in older cohorts and co-infection with pseudomonas aeruginosa. It is important to emphasize that there are no approved treatments, which often are chronic and of long duration for this potentially modifiable risk factor for mortality and CF patients. Moving to Slide 22; XENLETA is a potential option for patients with MSSA, or MRSA pulmonary infections, as it is a known potent anti-staphylococco antibacterial agent that retains activity in the presence of bios and possesses a low mutation recency against staph aureus. XENLETA has excellent penetration of the epithelial lining fluid and macrophages in the lung, and both oral and intravenous XENLETA are approved for the treatment of communicare pneumonia in the U.S., EU, U.K. and Canada, for susceptible organisms. As discussed earlier, XENLETA's anti-inflammatory properties may be a particularly important attribute in these difficult-to-treat chronic infections. Based on XENLETA's characteristics that are aligned with managing infections in patients with cystic fibrosis, we are exploring funding opportunities to further assess the potential of XENLETA for the management of pulmonary exacerbations caused by MRSA. Lastly, let's turn our attention to XENLETA's potential, and the treatment of another significant unmet medical need, multidrug resistant, sexually transmitted infections or STIs. Turning to Slide 23; STI rates have continued to surge for the fifth straight year, concerning public health officials because, left untreated, STIs can increase one's risk for HIV, long term pelvic at abdominal pain, infertility and pregnancy complications. Neisseria gonorrhoeae, and Mycoplasma and genitalium have become increasingly difficult to treat due to increasing rates of resistance and as a result, have been recognized by the Centers for Disease Control and Prevention as urgent and emerging trip pathogens, respectively, in their 2019 antimicrobial resistant threats report. As you can see on Slide 24, XENLETA has potent in vitro and bacterial activity against Neisseria gonorrhoeae and mycoplasma genitalium as well as chlamydia trachomatis. And because of its unique mechanism of action, the XENLETA's activity is maintained against multidrug-resistant clinical isolates for patients failing treatment with high doses of erythromycin, moxifloxacin and doxycycline. What is most noteworthy is, XENLETA possesses a kit against all of the most common causes of urarthritis and cervicitis, making it an ideal syndromic treatment option, which would be a significant advantage in the management of these important public health threats. We continue to progress this program with grant support and have been actively collaborating with the global team of STI experts to design and execute on a development program to evaluate XENLETA's potential as a syndromic treatment for urarthritis and cervicitis. We are executing additional in vitro work. And through an investigator-initiated study, we plan to support an open-label K series, evaluating XENLETA in patients with refractory resistant mycoplasma genitalium infection. We are excited about the potential to discuss this innovative program with regulatory agencies, in particular, with the FDA, as the upcoming workshop on the development of treatments for STIs, which is expected to be held in the fourth quarter of this year. In summary, as we continue to live in the COVID-19 pandemic, it is a stark reminder of the importance of preparedness for infectious disease threats and the anti-infective research and development and the steady flow of new antibiotic agents is important for our global health and economy. In closing, as an infection disease physician and mother of 4 children, I sincerely express my gratitude for our frontline responders, school administrators, coaches and our teachers as we approach the school year. We are committed at Nabriva to make our scientific resources available to improve health outcomes in the patients we discussed today and in fighting this global public health pandemic. I will now turn over this presentation to Gary for the financial review.

[Gary Sender:]

Thanks, Jennifer. On Slide 26, I've listed some key financial highlights. Nabriva generated total revenue of approximately $485,000 in the second quarter. As expected, and disclosed in our prior financial updates, wholesalers continue to fill XENLETA orders, primarily from their initial strong stocking at launch. And given the lack of promotional efforts in the second quarter, there was minimal prescription or sales activity to pull-through existing inventory. I will discuss some one-time adjustments made to conservatively reserve against our XENLETA IV inventory and products in the channel. Other sales is comprised of collaboration on revenue and grant income from the Austrian government. Like with all companies, the COVID-19 pandemic has made it difficult to predict future sales. There are a variety of scenarios which could evolve for the rest of the year, depending on demand and our ability to get sales representatives actively promoting both XENLETA and SIVEXTRO. We are excited about getting community-based reps back working to educate physicians about our approved products, utilizing both direct and remote tactics, but sales in subsequent quarters in 2020 are difficult to forecast. We actively managed our expenses to preserve resources. We want to ensure that when we deploy our commercial and medical education efforts, we achieve our expected returns. Our SG&A spending was cut in half in the second quarter compared to the first quarter, and was lower than prior year. We expect that our commercial investments will increase going forward as we carefully deploy sales reps to discuss both SIVEXTRO and XENLETA with the medical community. We will also purchase our initial SIVEXTRO supply for Merck in the fourth quarter. We ended the second quarter with cash of approximately $50 million. We added approximately $39 million to our cash balances in the quarter through our equity raise and ATM activity. We expect that our current cash balance will fund operations into the first quarter of 2021. Let's now look at the details of our P&L and balance sheet. Please advance to Slide 27. Slide 27 provides details of our P&L, and I ask that you look at the notes on the right side. The actual product sales generated in the first quarter - in the second quarter were predominantly for the oral version of XENLETA, which carries a higher gross to net than the IV formulation. We booked a 38% gross to net reserve against our second quarter product sales. We recorded a $300,000 return to reserve adjustment for slow-moving XENLETA IV inventory based on an assessment of what was in the channel. This represents 50% of XENLETA IV inventory held at our specialty distributors. This adjustment was partially offset by a favorable $200,000 gross to net adjustment based on past claims activity and expected discounts and rebates. Overall, the combination of our actual product sales, the returns reserve and the gross to net adjustment resulted in $48,000 of negative product revenue for the second quarter. Under cost of goods sold, we recorded a $400,000 noncash adjustment for XENLETA IV inventory due to the uncertainty of commercial activity underlying IV sales. This is consistent with our stated focus on the community, for which prescriptions tend to be for the - for oral XENLETA. R&D expense is lower year-over-year due to a decrease in activities. And as I mentioned, SG&A was significantly reduced based on our active management of resources. Interest expense was significantly lower given the reduction in debt balances. Please turn to Slide 28, which has our June 30 balance sheet. We previously discussed our cash balances. Prepaid expenses increased primarily due to accrued insurance expenses and due to payments made to our contract manufacturing partners for new XENLETA inventory. Year-over-year debt balances are significantly lower due to the pay down of debt, which occurred in the first quarter of 2020. For the next part of the call, Ted will make some closing remarks. And then, we will head into a Q&A session.

[Ted Schroeder:]

Thanks, Gary. In conclusion, as we have laid out we have adapted how we think about promoting our products to help new providers and how we think about minimizing access for patients. We have built upon our favorable, early managed care coverage and are implementing new programs to leverage access. It's taking time to put the pieces in place, but we are confident that it is the right strategy in the current environment. Our goal is to be positioned for success under a variety of ever-evolving COVID scenarios as well as in a post-COVID world. On relaunch of our community-based sales effort, Amplity will utilize both face-to-face interactions and virtual engagement channels with targeted physicians. We will continue to be opportunistic as we evaluate business development and in-licensing opportunities to find assets that fit Nabriva's realigned infrastructure and core capabilities. Adding SIVEXTRO is a demonstration of our ability to bring in complementary assets. With XENLETA and SIVEXTRO together, we are in a stronger position to leverage our selling effort in the community. We believe the SIVEXTRO transaction with Merck sets us apart from our peers, and we look forward to sharing our progress with you in the coming quarters. Jennifer reviewed some exciting and important new programs that we are pursuing, primarily with grant funding. We are focusing our proven development expertise on rare infectious diseases, where there is a high unmet medical need. The duration of therapy for many of these are longer than how doctors treat acute infections. We believe that this is a good investment of our resources, will drive shareholder value and is absolutely consistent with Nabriva's mission. We look forward to updating you on our progress in these important pursuits. I would now like to ask the operator to open the line for questions. Operator?

[Operator:]

[Operator Instructions] Your first question comes from the line of Alan Carr.

[Alan Carr:]

Wondering if you can comment on SIVEXTRO; what sort of momentum it has? I noticed over time that sales have been a bit volatile. Can you comment on that? And what sort of momentum you might be able to leverage once you start taking over? And then also, I guess, can you comment on what Amplity brings? Is there - do they have some added expertise or knowledge around the space in the community setting?

[Ted Schroeder:]

Yes, sure. So thanks, Alan, for that question about the momentum with SIVEXTRO, and then what does Amplity bring to the party, as you will. So Francesco, why don't you go ahead and talk about what we know about the SIVEXTRO sales trajectory and it's promotional responsiveness?

[Francesco Maria Lavino:]

Sure, Alan. Thank you so much for the question, first of all. So I mean, SIVEXTRO, when was promoted in the past, actually, initially by Amplity itself, and then by Merck, was experiencing a very steep growth in prescription. And I guess, SIVEXTRO really represents very good examples of how antibiotic can be very, very promotional-centric. So we know that, in 2020, SIVEXTRO prescription has been declining, and this is primarily given the lack of promotional activities. So we strongly believe that as we reactivate promotion with Amplity, we will be able to bring back prescription, especially because there is a historical base of prescriber that have been using SIVEXTRO on many patients. So we believe that we might be able to - as soon as we bring some activity back to resurrect the sales. And the second question you asked was about Amplity and what it brings to the table. So as I mentioned, Amplity is a very experienced organization in the space of the contract sales organization. They have experience in the infectious disease space. They have been launching multiple brands, and they have a specific experience with SIVEXTRO. So we really believe that they might really give Nabriva what we need to quickly reactivate SIVEXTRO sales on one hand and establish a basis for growing in XENLETA, sales that is the second goal. They also bring, I think, experience in managing this virtual or remote engagement. We all hope that we will be out of this COVID situation as quickly as possible. But I guess we all agree that the world is going to be different anyway. And so our expectation is that the engagement with customers will be a blend of face-to-face as well as remote. And I think that Amplity offers also their experience in remote engagement channels that will be extremely helpful, especially as we consider the relaunch, still in a phase where there are some COVID restriction in place.

[Alan Carr:]

Okay. And around CONTEPO, when you have a sense that you'll have a discussion with the FDA, is that weeks away or further away?

[Ted Schroeder:]

Yes. So thanks, Alan, with the question about CONTEPO and the FDA interactions. Steve, you're the closest to that process, why don't you go ahead and respond to that question?

[Steve Gelone:]

Sure. Thanks, Alan, for the question. So as we communicated previously, our contract manufacturers have been in dialogue with FDA, and have informed the agency that they remain prepared to host inspections, and they're awaiting FDA's response to how they may be able to achieve completing those inspections in the face of the travel restrictions. So it's - at this point, a little bit difficult for us to comment on specific timing around that, and when a meeting may happen with the agency. But this remains very compromised for us, for our partners, and we continue to be very diligent in trying to work with the agency to come to a solution as fast as possible.

[Alan Carr:]

So actually, can you clarify that the next interaction going to be a discussion between you and the FDA? Or is it going to be once they can get a visit schedule to the manufacturer?

[Steve Gelone:]

So - and just to clarify a little bit more. So there's, I guess, two parallel communications going on. One is between the manufacturers and the agency in trying to ensure that they're aligned and working towards a plan to have those inspections happened. And the second is between us and the agency and the sponsor of the NDA to map out the appropriate time line. So those two things are basically synched together.

[Operator:]

[Operator Instructions] Your next question comes from the line of Ed Arce from H.C. Wainwright.

[Eduardo Arce:]

Congrats on all the recent progress on regulatory and BD fronts. So three questions for me. I think I'll start by following up on the previous question. Either with yourselves or with your contract organizations, what is - I guess, what I'm asking is there any possibility for you to come to an agreement with the agency for some sort of a virtual inspection? In other words, documents that need to be checked and everything else. Is there any way to get around perhaps - or is there any discussion around the possibility of getting around a physical inspection and waiting until whenever that happens? And then I've got a couple of follow-ups.

[Ted Schroeder:]

Yes, Ed. So on that question about, is there an alternative to a physical on-site inspection? And I think the answer to that is that we believe that the flexibility to do that is within the regulatory authority of the FDA. That they have the regulatory authority to conduct these inspections as a desk review, as utilizing remote methods like video or even having a qualified representative that's in-country resolve some of the parts of the inspection for the FDA. So, we do believe there are a number of tools that the FDA has available. Our contract manufacturers will be making a proposal about how they believe that they could host and fulfill and that meet the requirements of the inspection. So that's their role, and the FDA will only communicate with them about that. And then, as Steve indicated earlier, our role, once that conversation occurs between the manufacturers and the office of manufacturing quality within the division, we'll work through the time line and the resubmission. So that's kind of the state of where it is. But just to reiterate, we do believe the FDA has the regulatory authority to do this - the other means available, other tools in their toolkit.

[Eduardo Arce:]

Okay. And then, regarding your recent agreement with Amplity; I know that when you announced it, there was some discussion around how - despite the fact that this is a contracted service and would otherwise be, all else equal, a bit more expensive than sort of in-house, but you had taken some pains to describe a value-based approach to this. And I was wondering if you could describe that a bit qualitatively?

[Ted Schroeder:]

Yes. So qualitatively, I think when you start thinking about what's the expense of having a contract sales organization. And what are you getting for that? If the additional management fee that's on top of it? Well, right off the bat, one of the things that - it's kind of a push from the - I would say, from the Nabriva standpoint. Because recall, we had a hospital specialty sales force with Nabriva employees. We're now morphing into a community-based sales force. And so just general salaries are lower for that type of sales force than a specialty sales force would be. So there's not a real big change in what our historical investment in sales force have been. The benefits, of course, are much greater. One, we're tapping into an organization that has dozens of contract sales forces, with dozens of manufacturers in the field. And so we can learn from them what's working and what's not, particularly when it comes to remote engagement. And so we can leverage that expertise. It would be hard for a small company, like Nabriva, to have a wide enough view. And with that, we wind up trying to buy it through secondary sources anyway. That comes with the Amplity team. I think their ability to quickly and nimbly put sales reps in geographies that are experienced in and responsive to what the access levels are, with not only just traditional access, but also the access in a pandemic environment as well as where we have managed care access and distribution that support physician prescribing. So I think that nimbleness and flexibility, coupled with their broad view of what's going on in the marketplace, really offer significant advantages to Nabriva as we feel a sales team and are looking at how we can appropriately educate physicians in the current environment.

[Eduardo Arce:]

And then, last question, if I may. Regarding SIVEXTRO and XENLETA, as you work with Amplity to bring that forward together in the marketplace, how would you address concerns by some investors and others as they look at this, that there is a potential here for each to cannibalize the other in ABSSSI?

[Ted Schroeder:]

Well, so - yes, so the question about cannibalization in ABSSSI between the two products. And I think that's - the answer to that, I think, is relatively straightforward. XENLETA is only approved for community-acquired bacterial pneumonia in adults. And SIVEXTRO is approved for the treatment of bacterial - acute bacterial skin and skin structure infections in adults and adolescents. And that's it. So we will only promote those two products. I think that the positioning of XENLETA in pneumonia is strong. It's got a particular role to play, a new class of antibiotic in that area, and it has not traditionally been a strong area for the use of other products in the class. Pneumonia has not been their strongest area. So, I think we're playing to the two strengths of the two antibiotics, appropriately positioned and appropriately differentiated for their approved indications.

[Operator:]

[Operator Instructions] Your next question comes from the line of Kevin Kedra from G. Research.

[Kevin Kedra:]

I jumped on a little late, so I missed some of your earlier comments, so I apologize if you discussed this. But with the transition towards the community setting and picking up SIVEXTRO, you guys do have several IV products, including potentially CONTEPO. Are you thinking about - I know in the past, you've been thinking about bringing in products like you did with SIVEXTRO, have you guys considered the idea of maybe out-licensing or divesting some of the IV products to a company that might be more focused on the hospital? Might be able to maybe have more success there without having to take on the cost to do that?

[Ted Schroeder:]

Yes. No, it's a great question. If we're shifting toward the community, what about the hospital focus? I think one of the realities right now is that access to the hospital is effectively not possible because of the pandemic restrictions. But looking toward the future, we are considering a variety of scenarios to manage our portfolio of IV products; we're open minded. And while we believe it's important that hospitals have access to new antibiotics to treat seriously ill patients, we're flexible in our thinking about how we can best optimize the resources and the best home for those products. So, I can't say much more than that, but we remain open-minded about how we would structure the business.

[Kevin Kedra:]

Great. And then, on some of the data you showed on what XENLETA can do, opportunities in CF and STIs, I know some of that's funded with grants, but how far can that grant funding gets you? Can that get you to proof-of-concept data? And how much are you guys willing to kind of spend to get some of these programs to proof-of-concept data, given where you are financially and putting a lot of your resources into commercialization of - to products?

[Ted Schroeder:]

Yes. So I think we have the - the susceptibility data from an in vitro standpoint. It, certainly, gives us encouragement that those programs could be important. And in the case of CF, I think the understanding that PK and CF is particularly important. And we do believe that we can get there with grant funding, and then we'll be at a decision point. And if - because if the PK doesn't hold up, there's no program to move forward. If the PK looks promising and CF patients and antibiotics, the PK is particularly difficult, if we get past that hurdle, we understand it, then I think it's a program that we can look forward to that changes the focus of the company from acute antibiotics to rare disease - rare infectious diseases as they have a different trajectory and a different economic value.

[Kevin Kedra:]

Thanks.

[Ted Schroeder:]

Thanks.

[Operator:]

And there are no further questions at this time. Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.