Paratek Pharmaceuticals, Inc.
Q1 2021 Earnings Call Transcript

Published: 17 May 2021

[Operator:]

Greetings. Welcome to Paratek Pharmaceuticals' First Quarter 2021 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. At this time, I'll turn the conference over to Ben Strain, Vice President Investor Relations. Ben, you may now begin.

[Ben Strain:]

Good morning and welcome to Paratek's First Quarter 2021 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 in our website that will be referred to on this call. Both can be found at www.paratekpharma.com. Participants on today's call are Evan Loh, CEO; Adam Woodrow, President and Chief Commercial Officer; Randy Brenner, Chief Development and Regulatory Officer; Michael Bigham, Executive Chairman; and Sarah Higgins, Vice President of Finance Controller and Principal Accounting Officer will also be available for questions.

[Evan Loh:]

Thank you, Ben. Good morning and thank you all for joining our first quarter earnings and corporate update call. We believe 2021 will be a transformative year of continued growth for Paratek. NUZYRA's quarter-over-quarter growth in 2020 continued into the first quarter of this year. We believe this is not only a significant achievement in this volatile and rapidly evolving healthcare setting, but also a reflection of the clinical importance of positive patient outcomes with NUZYRA in the hands of clinicians. Our first quarter 2021 results were consistent with our expectations as NUZYRA generated U.S. net sales of $13.2 million in the first quarter, reflecting the health of our commercial business. Our confidence in the long term commercial success of NUZYRA remains unabated based upon growing demand of NUZYRA in the hospital care setting, coupled with the recent initial positive signs of new prescriptions and adaption in the primary care commercial expansion. We anticipate that this growth trajectory will continue through the balance of 2021, given the encouraging initial inbound feedback from the primary care based physicians for a well-tolerated, once-daily, oral, broad spectrum antibiotic that includes coverage against MRSA for skin infections. As seen in this next slide, the commercial success to-date has established NUZYRA as one of the most successful antibiotics launched in the last five years. NUZYRA continues to materially differentiate itself from other IV oral antibiotic launches driven by strong operational execution and NUZYRA's many product attributes that include

[Adam Woodrow:]

Thanks, Evan. The commercialization of NUZYRA continue to progress well with consistent quarter-over-quarter growth since its launch, even in the face of the ongoing COVID-19 pandemic. As you can see from Slide 11, NUZYRA net revenue grew 6% in the first quarter when compared to the fourth quarter of last year. NUZYRA gross demand increased from approximately $13.5 million in the fourth quarter of 2020 to approximately $14.6 million in the first quarter of 2021 and thus the growth in the first quarter was driven by demand. In the first quarter, our sales were impacted by the typical New Year insurance resets, in addition to recruiting and training and new salesforce and the ongoing challenges presented by COVID-19 that we have discussed in the past. Nevertheless, our business grew quarter-over-quarter as we effectively and efficiently operated within our hybrid sales model that consisted of both face-to-face and virtual interactions. We see COVID and the related access challenges occurring well into the second half of 2021, but with a steady shift to the more impactful face-to-face interactions as the year progresses. NUZYRA's once-daily, well-tolerated oral and intravenous formulations combined with NUZYRA's broad spectrum profile offers a much needed new life-saving antibiotic that is uniquely positioned to be applicable in every setting of care. From the hospital and it's potential to minimize hospital stays, to the community where there is a tremendous unmet need for a well-tolerated once-daily oral broad spectrum antibiotic that includes coverage against MRSA for skin infections. Current generic antibiotic options in the community are challenged by either significant bacterial resistance or serious safety concerns, limiting their utility. This is verified by our utilization data from our primary care pilot and the initial results from our primary care expansion seen so far this year. The data suggests primary care physicians' first trial of news NUZYRA occurs quicker and with fewer calls than the hospital based physicians. This dynamic is playing out as we have seen encouraging signs in prescription numbers driven from our primary care expansion efforts. We anticipate this momentum will continue through 2021 as we maintain our focus on gaining institutional access, continuing to support the primary care expansion, building awareness and trust and credibility with physicians who are saving lives and treating serious community-acquired infections every day. Our sales team is now near our targeted headcount, following significant recruitment efforts that occurred in the first quarter.

[Randy Brenner:]

Thanks. Thanks, Adam. As you heard from Evan a few minutes ago, we are excited to announce that BARDA has initiated the first procurement of NUZYRA valued at approximately $38 million that we expect will be delivered this quarter. We also continue to advance the preclinical, clinical and manufacturing work under the BARDA contract. In addition to BARDA activities, we are progressing our pipeline with the startup activities for our Phase 2b study in the rare disease pulmonary NTM abscesses with study initiation expected next month and the recent initiation of the pneumonia post-marketing study required by FDA. We continue to actively pursue lifecycle initiatives for NUZYRA. Later this month, we are anticipating a decision from the FDA on our sNDA for our oral loading dose regimen for community acquired bacterial pneumonia. We also continue to advance our clinical development program for our rare disease, non tuberculous mycobacteria pulmonary disease caused by mycobacteria abscesses, or NTM. As a reminder, pulmonary NTM abscesses is an orphan disease with no FDA-approved therapies.

[Operator:]

Thank you. Our first question is from the line of Ed Arce with H.C. Wainwright. Please, proceed with your questions. Mr. Arce, your line is live for questions. Mr. Arce, your line is live. Our next question is coming from the line of Bert Hazlett with BTIG. Please, proceed with your question.

[Bert Hazlett:]

Congratulations on a number of levels. It's been it's been quite an effort and terrific, terrific results. Just three brief ones. Could you give us some timetable for the enrollment of the 2b study in NTM? Then secondly, your confidence with regard to further government, military or other procurement, just love some additional thoughts there. And then last but not least, as you contemplate further portfolio product expansion as you've mentioned, is that primarily with Omadacycline, or are we thinking more broadly? Thanks and congratulations on all the progress once again.

[Evan Loh:]

Hi, Bert. Thank you very much for the questions. I'll have Randy address the first question around timeline.

[Randy Brenner:]

Yes. Thanks, Evan. Hey, Bert. So, we will be providing a much more detailed update on our NTM study in an upcoming meeting that we'll be announcing soon. We've said that based on the size of the study and the numbers of patients in this population, we expect about a two-year enrollment process for that study.

[Evan Loh:]

Okay, and then the...

[Bert Hazlett:]

Terrific. And then the potential for additional government procurement and your enthusiasm there and then potential expansion of either with or without Omadacycline?

[Evan Loh:]

Yes. We are extremely excited about the procurement being initiated here. We do think that that is tremendously validating to the commitment within our public private partnership. In addition to that, as a reminder, NUZYRA last year was added to the joint deployment formulary, which I think opens up the possibility for future procurements broader throughout the Department of Defense. Maybe I could have Adam comment on some of the efforts that his team has been exploring.

[Adam Woodrow:]

Thank you, Evan. Yes, hi, Bert. Look, we continue to engage with a number of departments within the government about future stockpiling opportunities, especially with the recent stimulus package. NUZYRA could be an ideal choice for a new therapeutic option to add to the Strategic National Stockpile and we'll continue to explore other buyer threats and departments such as the Department of Defense and Military. It's too early to predict how successful we'll be with these efforts. But rest assured we'll try hard.

[Evan Loh:]

And Burt, I'll take your third question with regards to potential product expansion, with regards to Omadacycline or something else. Look, I think as you can imagine, we monitor our sector very closely. And having now a commercial presence in both the hospital and the community setting, I think gives us, Bert, greater flexibility to consider opportunities to expand our pipeline. Our first commitment has always been to build around opportunities around our lead asset, NUZYRA. You heard from Randy today about the expanding lifecycle opportunities which we're excited about, given our core competencies and our established infrastructure and expertise to ensure that our franchise product NUZYRA to be successful. Given our position of strength, though, we believe we can potentially bring in additional assets, we continue to look for these assets. But as always, we'll remain disciplined in our approach and carefully monitor our cash runway.

[Bert Hazlett:]

Thank you. Congratulations again.

[Evan Loh:]

Thank you, Bert.

[Operator:]

Our next question is from the line of Kevin Kedra with G. Research. Please, proceed with your question.

[Kevin Kedra:]

Hi. Thanks for taking the questions. Maybe first, congratulations on getting the initial procurement, moving from BARDA. Can you remind us of any deliverables needed for that second procurement that you expect later this year?

[Evan Loh:]

Randy, you want to take that one?

[Randy Brenner:]

Yes, sure. So, thanks, Kevin. We're excited that we achieved the first procurement; certainly continue to exactly exemplify BARDA's commitment to advancing the program. We continue to plan for this second procurement in the second half of this year. As we've continued to state, the future procurements are tied to ongoing progress of the program. There's no specific milestone assigned specifically to each of them. So, we'll continue to have discussions with BARDA to provide more specifics in the future about the exact timing and that procurement the second half of the year.

[Kevin Kedra:]

Great. And then switching over to Omadacycline in cap, we kind of had a bit of an abnormal cap season this year with everything with COVID. How are you guys thinking about the next cap season? Do you expect something closer to normal? Or do you anticipate that's still going to feel a lot of this COVID disruption as we start heading into next winter?

[Evan Loh:]

As we look at the success of the vaccination program throughout the U.S., we're very excited about that with regards to our commitment as a company to provide resources for improving health across all populations. And what was interesting was that the public health measures that were instilled during the COVID pandemic, that included social distancing, rigorous hand washing, as well as masking, really drove the community-acquired pneumonia rates to I think a lower rate than has been seen in many decades. That being said, I think that we're seeing that the vaccination programs have been successful. With the recent CDC guidances, we see an expansion of folks being able to interact on a more pre-pandemic mass-less interaction basis and I think we'll start to see trends in the fall for a more normal pneumonia season. That being said, I think that another aspect of our expansion for the NUZYRA franchise that I think will play into this quite a bit, given the fact that because of COVID, I think hospitals have been places where most patients and most doctors are trying to be very cautious about referring patients who are ill there. And as such, I think there will be a more concentrated effort to keep people out of the hospital and keep them home in our stay home strategy with regards to the oral-only potential loading dose for pneumonia, I think will play very well into that dynamic come the fall. And if there is continued growth in the community expansion, as we started to see with the community launch with skin infections, especially those with MRSA considerations, I do think there will be I think a growth and opportunity come the fall.

[Kevin Kedra:]

Great. Appreciate that. Maybe last one. Can you talk about -- you mentioned stockpiling opportunities in the U.S. or at least government opportunities in the U.S. beyond the initial contract with BARDA. Do you see opportunities with international governments as well? Would you need to have approval of NUZYRA in those countries before you would have these discussions? Or would you be able to have discussions with other governments before you have NUZYRA approved in those markets?

[Evan Loh:]

Yes, thanks for that. I'll have Randy address that one.

[Randy Brenner:]

Sure. So yes, we are continuing to pay attention to what's going on around the world with regards to antibiotic incentives which includes some potential for stockpiling. You've probably read some of the European countries are thinking about doing some of those activities now as well. A precursor to many of those dose require regulatory approval in those countries. That being said, as we continue to expand our database, particularly on pandemic preparedness and bio threats, we will continue to share that data and look for ongoing opportunities to look to ways to provide opportunity for X U.S. countries to look for stockpiling opportunities for buyer threats and antibiotic resistance as well.

[Evan Loh:]

In point of fact, Kevin, just to build on what Randy said, if you look at the essential medicines listing of NUZYRA in the bioterrorism category, as well as this recent poster that Randy mentioned in his presentation, specifically around the CDC moving to add NUZYRA as a second line option for plague, you can see that not only are we having a franchised product profile for, I think more bread and butter skin and pneumonia infections, I do think that the pandemic preparedness portfolio of commitments by the U.S. government is something that I think will be very hard for others to ignore in terms of what we are doing internally from a DOD perspective on preparedness and the commitments of BARDA, et cetera. And I think that it will lead to other opportunities that we can explore outside of the U.S. as appropriate.

[Kevin Kedra:]

Thank you.

[Evan Loh:]

Thank you, Kevin.

[Operator:]

Thank you. The next question is from the line of Suji Jeong with Jefferies. Please, proceed with your question.

[Suji Jeong:]

Hi. Thanks for taking my question. So, the first one is about NTM Phase 2b trial. I'm sorry, I missed it earlier, but when do you expect to share the trial design? And I have follow up questions.

[Evan Loh:]

So yes, we're planning a meeting in the near future to really review in more detail, the NTM study design. So, that's coming shortly and I think Ben will provide more information once we were able to share the date of that meeting.

[Suji Jeong:]

Thank you.

[Evan Loh:]

That all being said, Suji, I think that there's opportunity here for us to really be relatively innovative in terms of that approach given the fact that there are no approved oral therapies for this disease, and we are looking forward to being able to share that more broadly in an upcoming meeting that we'll announce shortly.

[Suji Jeong:]

Okay, thank you. My next questions are on the expansion of NUZYRA into the community setting for CABP . How many additional salesforce do you expect to add to support the indication in their primary care setting? And second question is when do you expect to see the full impact of the expansion of salesforce to the community on the sales? Thank you.

[Evan Loh:]

Adam, do you want to take that one?

[Adam Woodrow:]

Yes, I'll take that. Thanks, Evan. Well, first of all, I'll take those in reverse order, actually. We expect to see the real impact of the expansion in the latter half of this year. This field force was obviously recruited in the first quarter, is just getting up to speed as we move into the second quarter and the full impact will be realized in the second half. But early signs are extremely encouraging and we're really pleased with what we've seen. As regards to whether we need new on additional representatives to support the cap launch , the answer is simply no. We don't need to expand beyond where we plan to be, which would be a sort of steady state having about 40-45 hospital based representatives and about 40 in the community. And the reason for that simply is that many of the individuals that prescribe the skin also overlap significantly with those that prescribed the community-acquired pneumonia. And so you get a double-hit on those individuals that you're targeting. You might shift your focus a little bit. Both of these diseases are a bit seasonal, as you can imagine. There's more skin infections in the summer and more pneumonia in the winter. So, you might reverse your order of detailing. And you may over-index on certain positions for one indication rather than the other at some point in time. As we've stated in the past, we're very careful with putting lots and lots of representatives on the ground until we're sure that we'll realize the benefit. And if we feel that we can benefit from putting more in, we'll look at that as sometime in the future.

[Evan Loh:]

I think that the other component of the timing of how we've expanded the community, Suji, I think is an important one to consider, which is that we believe that it was important always to have a solid foundation in the hospital setting to establish, I think, the credibility of the product in the sickest patients with infectious disease individual and physicians being the primary prescriber. The other I think feature of the predicate for setting the right conditions for a successful community expansion includes the robustness, we believe of our market access efforts to date. And I do think that those efforts and our operational support here, I think were part of the underlying reasons for despite the insurance resets and some of the COVID pandemic headwinds, we were still able to see a robust quarter-over-quarter growth in the first quarter of this year.

[Suji Jeong:]

Okay, great. Thank you.

[Evan Loh:]

Thank you, Suji.

[Operator:]

Our next question is from the line of Ed Arce with H.C. Wainwright. Please, proceed with your questions.

[Ed Arce:]

Hi, guys. Thanks for taking my questions and congrats on the first part of procurement this quarter. Apologies for the issue with the phone earlier. First couple of questions is regarding NUZYRA. Firstly, I think you had started engagement with the primary care physicians back in February. It's been roughly three months now and I know that you're expecting hopefully an expansion of the label later this month. Maybe discuss for us a bit what you're hearing as you look to expand for the oral cap in the community, what you're hearing from physicians, the feedback that you're getting, and how you think that will tie into your expectations for the latter half of this year? And then more broadly, I was just wondering, certainly there's -- there's -- is early in the year given COVID, as well as the cycle of reimbursement. But just wondering if you can give us a bit more detail of how you think the growth will sort of unfold for NUZYRA through the remainder of this year? Thanks.

[Evan Loh:]

Thanks, Ed, for those questions. Maybe Adam, you can talk a little bit about the inbound that we're hearing about the potential for the oral-only loading dose and how that will help with regards to your projected expansion success in the fall.

[Adam Woodrow:]

Yes. So, Ed, you asked also about how it's going in since February. Look, we're really encouraged with what we're seeing. All signs are good and we're pleased with the uptake. The feedback that we're getting on the skin side is very simple. Physicians are desperate for a really good once-a-day oral drug that has MRSA coverage. And we're absolutely sure, based on what we're seeing that we'll continue to see uptake as we go through the bulk of the skin season, which is in the middle of this year. With regards to pneumonia, slightly different, we've conducted a number of advisory boards and we've done some market research. Here, it's slightly different. What they're looking forward to with regard to NUZYRA is a drug that can be used in the elderly safely and with good monotherapeutic coverage of the relevant pathogens and a drug that doesn't cause . Unfortunately, that's something that affects the older patient population quite a bit along with the QTc issue that you see with some of the drugs that are on the market. So, it's a safety story, as much as an efficacy story in community acquired pneumonia and in community acquired -- in skin, it's all about the efficacy because of the MRSA once-a-day drug. So, we'll target those appropriate physicians along with their needs and based on the once-daily dosing, we're sure we're going to get good uptake. The only really efficacious therapies that are out there in oral form for pneumonia today are the quinolones and we know that they've got some significant limitations from a safety perspective and we'll take advantage of that.

[Evan Loh:]

Ed, in terms of your question with regards to how the growth might be expanding throughout the balance of the year, as you know, I think forecasting in the midst of the COVID pandemic really has provided real challenges for us for every company that's commercial at this point in time. But we continue to believe in the blockbuster potential of NUZYRA and I think the continued strong demand that we're seeing, as coupled to the start of prescriptions and adaption in the primary care setting, I think continues to fuel our continued belief in confidence in the future growth of NUZYRA. We think that continued growth in the second half of this year, I think will be an exciting journey for all of us to be on and for us to be part of. I think there are many other components of contribution to that second half growth that includes a potential second BARDA procurement, I think, potential for DOD purchases as we've mentioned and continued organic growth in our overall institutional commitments, as well as what Adam has said, a further expansion in our primary care, estimated market addressable opportunities in the event that we get that FDA approval for our sNDA for the oral loading dose. So we remain and excited about all of that.

[Adam Woodrow:]

And Evan, I would add that we also anticipate a lifting of some of the restrictions that we see continuing the hospital and the move to the more impactful face-to-face interactions as we go through the year. And at behest , we're already seeing.

[Evan Loh:]

Thank you for that, Adam. Thank you, Ed, for the questions.

[Operator:]

Thank you. At this time, we've reached the end of the question-and-answer session. I'll turn the call over to Evan Loh for closing remarks.

[Evan Loh:]

As there are no more questions, we will conclude today's call. In closing, I'd like to thank you all for your time and attention today. Your continued interest in NUZYRA and Paratek are important to us. The journey of making NUZYRA a commercial success is well underway. As the wealth of microbiological data and clinical outcomes studies on NUZYRA continues to expand. We are increasingly confident in the potential of NUZYRA to be an effective and a much-needed addition to the armamentarium of antibiotics available to physicians to save lives, particularly where resistance is of concern. The opportunities ahead of us to be able to provide a novel life-saving antibiotic to patients motivates us all here at Paratek. We would like to thank the patients who have participated in our clinical studies and our employees who have worked tirelessly and passionately to provide NUZYRA for patients in need and those selfless and dedicated healthcare professionals who are at the bedside each and every day. We very much appreciate your continued support and interest. We look forward to keeping you apprised of our continued progress. Goodbye for now.

[Operator:]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.