Paratek Pharmaceuticals, Inc.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Greetings and welcome to the Paratek Pharmaceuticals First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ben Strain, Executive Director, Investor Relations and Corporate Communications. Thank you, you may begin.

[Ben Strain:]

Good morning and welcome to Paratek's first quarter 2018 earnings conference call. A press release with the Company's first quarter results was issued earlier this morning and could be found at www.paratekpharma.com. Participants on today's call are Michael Bigham, CEO and Chairman of the Board; Adam Woodrow, Chief Commercial Officer; Douglas Pagán, Chief Financial Officer; and Evan Loh, President, Chief Operating Officer and Chief Medical Officer, will be available for Q&A. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage everyone to note the risk factors discussed in our SEC filings for additional details. Now I will turn the call over to Michael.

[Michael Bigham:]

Thank you, Ben. Good morning and thank you all for joining our earnings call and corporate update for the first quarter. Paratek had a strong and exciting start to 2018, building on the momentum generated in 2017, as we continued to make important progress across several key strategic deliverables. With respect to omadacycline, our investigational broad spectrum antibiotic, we were pleased to announce in April that the FDA accepted for a priority review, the new drug applications for both the once-daily oral, and intravenous formulations of omadacycline. This significant milestone brings us one step closer to potentially providing physicians and patients a new and differentiated therapeutic option in the fight against serious community acquired infections. We are seeking approval of omadacycline for the treatment of both community-acquired bacterial pneumonia or CABP, and acute bacterial skin and skin structure infections or ABSSSI. CABP is the most common cause of infectious hospitalizations worldwide and one of the leading causes of death globally. Based on the significant unmet medical need, both syndications have recently been accepted for priority review from the FDA, and have also benefitted from the qualified infectious disease product or QIDP, and fast track designations previously received. This is progress. We remain on track for an anticipated approval in October of this year. The NDAs are supported by three pivotal registration studies; two Phase 3 studies in skin, and one Phase 3 study in pneumonia. Importantly, omadacycline met all FDA required primary endpoints in each study, and were shown to be generally safe and well tolerated across the integrated safety database. As noted in our press release, announcing acceptance, FDA has indicated in their letter, that there were no filing issues identified nor any potential review issues. Further, FDA stated that it is currently planning to hold an advisory committee meeting and discuss the applications. Our expectation is that the meeting will be held sometime in late summer, but a specific date has not yet been finalized. Our team has broad experience preparing for and presenting an advisory committee meeting. We continue to work closely with the FDA, as we move through the regulatory process. In parallel, we continue to make progress with our manufacturing validation campaign to ensure that commercial supplies will be available for launch. With respect to Europe, we plan to submit the EU marketing authorization for omadacycline in the second half of this year. Based upon the central scientific advice and our recent pre-submission meetings, we continue to believe in the potential of our data to support approval in Europe. Last month, at the European Congress of Microbiology and Infectious Disease or ECMID, we presented data in nine posters and one oral presentation, which represents the first time, the OASIS II study data with oral-only omadacycline and skin infections had been presented in a scientific form. We believe these data highlight the efficacy of omadacycline against relevant pathogens in pneumonia and skin, as well as its favorable tolerability and safety profile. As you know, we believe that omadacycline has the potential to treat a broader set of community acquired infections. Most immediately, we are exploring its potential to treat urinary tract infections. Our market research suggests that there is substantial unmet medical need for new effective oral antibiotic to treat UTI and if successful, represents a significant additional opportunity for omadacycline. Our first Phase 2 study in urinary tract infections is currently enrolling patients and we anticipate the second Phase 2 to start enrolling patients in the second half of this year. As a reminder, there was a compelling rationale for the use of omadacycline in UTI, based upon the high levels in human urine, combined with its known in-vitro activity against key UTI pathogens. We look forward to sharing data from these studies in the second half of 2019. Investigation of omadacycline for the treatment of plague and anthrax or biodefense with the U.S. Department of Defense, also continues to advance. Preliminary pharmacokinetic results from this research, as well as results from dose ranging animal studies are also expected in the second half of 2019. These results, if positive, are intended to inform the design of further animal studies, where a streamline development program for approval is allowable under the FDA animal rule, when human efficacy studies are neither ethical nor practical. Now turning to sarecycline, our narrow spectrum once-daily oral tetracycline antibiotic for the treatment of moderate to severe acne. Sarecycline or SEYSARA as branded in the U.S. by our U.S. partner Allergan, is currently under review by the FDA, and we anticipate approval in the second half of this year. As a reminder, we are entitled to receive royalties on U.S. revenues, as well as milestone payments in the United States. We retain all ex-U.S. rights. Finally, as we noted in the press release on April 13, we recently welcomed Rolf Hoffmann to our Board of Directors. Rolf brings more than 30 years of experience in the pharmaceutical industry, including roles as Senior Vice President, International Commercial Operations and U.S. Commercial Operations at Amgen. We are delighted to be able to benefit from his broad U.S. and international commercial experience, as we approach the potential launch of omadacycline in the first quarter of 2019, less than one year away. With that, I will turn the call over to Adam, our Chief Commercial Officer, who will provide a brief overview of our ongoing progress in preparation for the potential commercialization of omadacycline. Adam?

[Adam Woodrow:]

Thank you, Michael. We continue to make significant progress across the commercial organization, as we work toward a potential 2019 launch. During our ongoing preparations for the anticipated launch of omadacycline, we consistently received positive feedback from key stakeholders, reflecting back to us, the importance of the many attributes of omadacycline that will benefit both patients and payors. Our recent discussions with managed care and health system stakeholders continue to highlight the need for safe and effective new treatment options. Particularly those, with a convenient IV and oral option. However, resistance represents a critical concern in the infectious disease space for all stakeholders, and we are excited about the demonstrated potential for omadacycline to address this ever growing unmet medical need. Further, we believe the once-daily bioequivalent oral and IV formulations addresses both the importance of early discharge from hospitals, our go-home strategy, and the importance of keeping patients from needing to be hospitalized at all, or our stay-home strategy. We believe these treatment options are readily understood, which should facilitate both formulary acceptance and adoption by treating physicians. We are focused on the many tactical items leading up to a successful product launch, and to that end, we have made important key hires within our payor and hospital system accountings. Getting omadacycline on formularies quickly, is a critical first step in facilitating usage of omadacycline by physicians. Accordingly, we are focusing considerable efforts to support an efficient and effective formulary adoption process. As you know, we plan to market omadacycline ourselves in the hospital setting, and to that end, we anticipate the formal onboarding of our salesforce leadership team toward the end of the year, and a broader field force beginning in January of 2019. We expect to grow our sales force judiciously during 2019, toward our target of 80 to 85 hospital representatives, which we believe is sufficient to address the key U.S. hospital accounts. Our market access teams continue to keep key prospective customers well informed, with several key meetings being held this quarter alone. Our market access team works in partnership with our medical science liaison team, which facilitates scientific exchange, using the considerable depth of our published omadacycline literature. The coordinated efforts of these two teams are vital to our success, particularly, in the first years, following initial product launch. We believe, that by the time we launch omadacycline, the blend of established and newly formed physician relationships will facilitate successful formulary discussions post approval. In addition, we have made tremendous progress, finalizing our distribution strategy, and are now working with distributor partners on the implementation plan for the IV and oral formulations. Our distribution strategy includes having ready-for-launch, full suite of patient assistance and reimbursement resources, to ensure patients have access to omadacycline, and that there is continuity of care from IV to oral, when patients are discharged back into the community. We look forward to updating you further on this progress in the coming months. By addressing bacterial resistance, simplifying treatment decisions with both once-daily oral and IV formulations and the historical comfort of the longstanding safety and tolerability physicians and patients experience with the tetracycline class, we believe that omadacycline has significant long term commercial potential. I look forward to providing periodic updates on our progress in the months ahead. With that, I will now turn the call over to Doug. Doug?

[Doug Pagán:]

Thank you, Adam. Over the past few months, we have taken important steps to strengthen our balance sheet, which we believe will provide the company with the capital required to fund a successful launch of omadacycline and removes any remaining financing overhang around the anticipated approval and launch date. In short, we believe that the strength of our balance sheet now positions us well for longer term success. With the potential non-dilutive capital from partnering and monetization of our sarecycline rights, we expect that our balance sheet will remain strong for the foreseeable future. We ended the first quarter of 2018 with $184 million in cash, cash equivalents and investment and $60 million in debt. Based on our existing capital resources and the $159 million in net proceeds raised from our April issuance of convertible senior subordinated notes, we expect to have a cash runway through Q1 2021. This runway projection includes full support of the launch plan that Adam described, as well as future contingent regulatory and commercial milestone payments from collaborations with Allergan and Zai Lab, as well as estimated omadacycline product sales. For the first quarter of 2018, Paratek reported a net loss of $27.8 million or $0.91 per share compared to a net loss of $27.7 million or $1.14 per share for the same period of 2017. Research and development expenses were $14.9 million for the first quarter of 2018, compared to $18.7 million for the same period in 2017. The decrease was primarily driven by lower clinical study costs, slightly offset by an increase in manufacturing production costs for omadacycline. We continue to make progress with our manufacturing validation campaign, to ensure that commercial supply will be available at launch. As a reminder, material produced through the validation phase will serve as initial launch stock, and will continue to be expensed in the R&D lines, until the PDUFA action days has passed. General and administrative expenses were $11.9 million for the first quarter of 2018 compared to $8.4 million for the same period in 2017. The increase was primarily due to additional headcount and higher marketing, market access and trade, and other commercial costs related to launch [indiscernible]. And now, I will turn the call back over to Michael to close. Michael?

[Michael Bigham:]

Thank you, Doug. As you have heard, we have enjoyed a very productive start to 2018. Our NDAs for omadacycline were accepted for priority review by the FDA, bringing us one step closer to anticipated approval later this year. We continue to strengthen our commercial team and expand our commercialization activities toward an anticipated product launch in the first quarter of 2019. Lastly, we significantly strengthened our balance sheet, which we believe now gives us the ability to respectively launch omadacycline with our own sales force, focused on the hospital setting. As we move through the year, we foresee several important catalysts, including an advisory committee and anticipated U.S. approval of omadacycline, and anticipated U.S. approval of sarecycline. The initiation of a second Phase 2 study in UTI; peer reviewed publications of our Phase 3 omadacycline data, and the submission of the marketing authorization for omadacycline in Europe. We look forward to keeping you apprised of our activities and progress. And with that, we will now open the floor to questions.

[Operator:]

[Operator Instructions]. Our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

[Louise Chen:]

Hi. Thanks for taking my question here. I had two questions; so first question I had, was basically, on the potential launch of your product. Is there a possibility for a launch earlier, to kind of capture more of the flu season, depending on how things go in terms of your preparation? And then secondly, just on the AdCom for omadacycline, I know that you view this as a positive, but what kind of color can you give us behind why you think it's positive and what you think you might expect from the AdCom? Thanks.

[Adam Woodrow:]

So Louise, I will take the first one, and then I will hand it over to Evan for the second. We are planning obviously on a Q1 2019 launch. We continue to evaluate the opportunity to launch a bit earlier, and if we are in a position to do so, we will let you know.

[Evan Loh:]

Hi Louise, its Evan. The FDA is still early in its review, and as you know, there are two NDAs under review. Two indications, two formulations, nearly 2,000 patients in our entire dossier and these are sizable applications. And just to emphasize what Michael had said earlier in the prepared remarks, in the NDA acceptance letter, the FDA stated that there were no filing issues nor any potential review issues. And also positively, they confirmed our review status. I mean, overall, I think with that guidance, I mean, we continue to believe in the strength of our safety data, and we will be prepared to address any topics that [indiscernible].

[Louise Chen:]

Okay. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Ami Fadia with Leerink Partners. Please proceed with your question.

[Ami Fadia:]

Hi, good morning. Thanks for the question. With respect to some of the activities ahead of an approval and launch, could you elaborate for us, when you might expect ACMC related inspection from the FDA? When you might start to build or ramp-up or launch inventory manufacturing? And separately, just on SG&A, how do we think about sort of the cadence of spending as the year progresses? You indicated that you would hire the sales force starting January 2019, but what are some of the other activities and how should we think about that, as the year progresses? Thank you.

[Evan Loh:]

Ami, hi it's Evan. I think you know it's important to note that our validation campaigns continue to advance towards having commercial supply available for launch in the first quarter of 2019. We are anticipating, as part of the normal process, for pre-approval inspections, some time before the approval, and I think it's important to note that all of our CMOs are currently in good standing with the FDA. So I think, we continue on the path and continue to progress as planned, towards having [indiscernible] ready in the first quarter 2019.

[Adam Woodrow:]

Yeah, from an activities perspective, right now, our managed markets and our care count executive team is in place, the medical science liaison organization is in place there now starting to talk to the payor organizations about the impact of omadacycline's lot from budgetary perspective, along with the technicalities obviously of the drug, within the constraints of what they are allowed to say at this present time. We will obviously bring in the sales management team a bit earlier than the field force, so the timing for that is more likely in the second half of this year, with the field force in the largest sort of slug of expense of the field force coming in, obviously in that first quarter of 2019. It might even be in December. So if you are trying to map out in terms of the SG&A, that's where you will start to see the significant kick.

[Doug Pagán:]

Ami, this is Doug. We see continued increase in the G&A line supporting those activities that Adam mentioned, with the jump likely late in the year Q4 and then into Q1, as we continue. We will likely expect the end of the year for G&A and R&D to be roughly balanced and overall OpEx will be modestly increased from what you have seen over this last year, and especially in these last two quarters.

[Ami Fadia:]

Can I ask a follow-up question on a different topic if I may? Can you elaborate on any work or activities undergoing, with respect to some of the pricing research that you have talked about? And if you can provide us any color from your ongoing discussions with payors, that would be helpful?

[Adam Woodrow:]

So the payor discussions have been remarkably consistent. We had about four or five discussions with payor groups now. One of the things that's a universal theme, is that in the anti-infected space, in particular with the community acquired pneumonia indication, payors don't really want to manage that too closely, which is unusual, I mean, as you are probably aware in many areas today, the payors have taken a very-very close look at launches and they are doing everything in their power to slow the decision to reimburse. That's not the case here. They have been remarkably consistent in saying that they see an unmet medical need, and they understand it and from a pricing perspective, at least in the ballparks that we are using to get them sort of directionality, they have no issues with the overall price per therapy, because there is no annuity of care here, which is one of the things in our favor. They also fully understand the IV to oral transition, and the fact that they are actually paying less if a patient is on an oral at home, than they are for the hotel fees of staying in a hospital. And so they understand the value proposition very-very well. So we are very encouraged with those discussions so far, and don't foresee major issues, at least from a sort of commercial perspective, when it comes to pricing. Now, actually the pricing itself, as you are probably aware, we have always given zyvox as a potential analog pre-genericization as a sort of cost therapy, and that still remains our guidance. We are actually in the middle of our pricing research at this moment, and I'd prefer to actually give you more clarity on that, as we get closer to launch, and probably straight after we have been given our label.

[Ami Fadia:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Bert Hazlett with BTIG. Please proceed with your question.

[Bert Hazlett:]

Thank you for taking the question. Congrats on the progress. I have three lines of questions; one is, have you had the mid-cycle review and any feedback from that, that you might be able to glean with regard to topics, that might arise with the panel, that's one. Two is, could you give us a little bit more color on the prep work that you are -- the specifics of the prep work you are doing for the channel? And then three, maybe to Evan, could you just remind us of the timing of the UTI Phase 2 study, and when might it read out in 2019? Thanks so much.

[Evan Loh:]

Hi Bert. I think these questions are all mine, so thank you very much. Our conversations with the FDA continue to be open and very constructive. We have not gone through the mid-cycle review, and as you know, that will potentially give us a little bit more color on where they may or may not be thinking about topics for the AdCom. That all being said, we don't believe that in general, it's appropriate to discuss the details of ongoing discussions, and we will be looking forward to sharing with you -- well the FDA will, their advisory committee briefing booklet, which will be made public, as you know, near to the typical release day, just prior to the advisory committee. In terms of topics on the panel, we as you know, believe and have great confidence in our efficacy as well as safety overall. Our efficacy is robust and consistent across all three pivotal trials. So as you look at the safety domains, what could they be asking about, I think most typically, liver injury, although we have not seen any high [indiscernible] cases. Cardiovascular is another organ system that's important. As you know, we have published our negative thera-QTc [ph] study and effects on renal function, but we have not seen any effects in that particular organ system. And then, within the CABP setting, we have a robust single CABP study of over 750 patients. But as we have shared with you, there is -- it wasn't observed in the medical difference in mortality, in omadacycline versus the competitor ARM, albeit small numbers. Our belief is that there is no evidence of causality. That being said, it would be reasonable to assume, that this subject may arise, and so we will be prepared to address it. So overall, in terms of the prep we are doing, we have hired consultants to be with us, and it's difficult for all of these preparations, we will be preparing and understanding all of the potential questions, and we will be fully prepared across all efficacy and safety domains to have a chance to review the totality of our safety data, as well as our efficacy data, if asked. From a UTI perspective, we started the first of our two UTI Phase 2 trials, the uncomplicated UTI trial, which is an oral-only causality, initiated enrollments beginning of this year. In the second half of this year, we will begin the second of these Phase 2 UTI studies, just one being in pyelonephritis and we are still comfortable with anticipating top line data from the UTI program overall in the second half of 2019.

[Bert Hazlett:]

Thank you very much.

[Operator:]

Thank you. Our next question comes from the line of Adnan Butt with Guggenheim Securities. Please proceed with your question.

[Adnan Butt:]

Thanks. Maybe Evan, you just touched on it briefly, if you were asked, how would you discuss the observed differences that you saw in the CABP study? How would you contextualize them?

[Evan Loh:]

Thanks Adnan. As we said before, I think simply stated, I think these are small incident events and these are small numbers. And overall, as you know, we have discussed in detail with you all, what we have seen overall these -- overall event rates are small and very much within the range, that has been within published randomized CABP trials. In fact, on the lower end of those ranges, and in fact, if you were to look at the historical two, three, four natural history studies, you'd anticipate mortality ranges that were much higher overall. If you look at the -- to give you some more color, if you look at the range of reasons, I think that's part of your question as well, in terms of why patients died in the CABP trial, I think it was consistent with the advanced age disease severity, underlying comorbidities of the patients, and I think that we are very comfortable in understanding these are not unexpected in terms of the natural history of the type of advanced age patients that are typically seen, who present in these community-acquired bacterial pneumonia trials. I think you remember, that nearly 50% of the patients enrolled in our CABP trial, were over the age of 65. So we are very comfortable with our belief today, that there is no causality. But given the fact that this is a single pneumonia trial, and we are, we believe, the first time, we are asking FDA to actually -- to provide an approval with a single trial, despite the robustness in terms of size of the patients, I think that there is a good chance that this will be a subject of interest, as part of the discussion.

[Adnan Butt:]

Evan, just want to confirm, asking them to approve based on a single studies, is in line with guidelines, right?

[Evan Loh:]

Yeah, as a reminder, thank you for the question. We actually have a SPA that has confirmed -- that prior to our starting Phase 3 in our designs, and in fact the single skin trial and a single pneumonia trial, individually, were actually adequate for approval of both indications, assuming benefit risk. And [indiscernible] to that, there was FDA guidance that came along to confirm as an acceptable path moving forward.

[Adnan Butt:]

Okay, thanks.

[Operator:]

Thank you. [Operator Instructions]. Our next question comes from the line of Ed Arce with Maxim Group. Please proceed with your question.

[Jason Kolbert:]

Hi, good morning. Congratulations on all the progress. It's actually Jason Kolbert for Ed. Ed wanted to focus in a little bit on post marketing surveillance, what kind of programs you are going to have in place in order to deal with that? Thank you.

[Evan Loh:]

It's Evan here. Thank you for the question. As is the case for oral, NCEs, they get approved, we will have a robust pharmacovigilance program in place. It is our obligation, as you know, that we need to have surveillance on two domains, because we have an antibiotic. The first one is obviously for safety-surveillance, and we will have a system in place for spontaneous reporting of adverse events, and we will codify those and report those as part of our statutory and regulatory guidance as well. In addition to the -- in terms of post marketing surveillance, one of the aspects of antibiotics that is unique as well, is that we have to -- we believe, have visibility in terms of microbiologic surveillance, that looks at continued understanding of what the sensitivity of the bacteria that we are treating, are over time. And as you know, that's the best way for us to continue to feel comfortable that there is not a drift, in terms of reduced susceptibility to our particular compound. But it also, I think another important aspect of microbiologic surveillance, is that it actually provides data, that is actually lacking in the treaty community settings, now recently in the U.S., because of the fact that there are very few new branded antibiotics. And I do believe, that that data allows to continue to publish and to promulgate important information that can provide guidance for physicians, as they choose antibiotics, with the continued evolving resistance environment that we see, that plagues serious community acquired infections. Just wondering Adam, if you wanted to talk about the importance of having that surveillance data published and promulgated widely, to give guidance for physicians, in terms of how they make choices for antibiotics?

[Adam Woodrow:]

Yeah. One of the things in the community acquired pneumonia space right now, is that people really don't understand or appreciate the level of resistance to some of the more commonly used anti-infectives. We know, as part of this work, that we will be asked to and as part of the post approval side that will -- you don't just do it in isolation for your own drug, you will also be including other products in that data, and it will just emphasize the challenges that exist, for example, with the macrolytes with strep pneumo and also, some of the more common antibiotics with MRSA in the community. So we will obviously use that, as part of our promotional efforts, and it's just very-very good housekeeping, to make sure that you understand, what the local resistance patterns are and the sensitivities of it by geography.

[Evan Loh:]

So overall, I think, we are not expecting any special, post marketing program. I think these are pretty standard, and it's important for us to not only continue to surveil for spontaneous reports of adverse events, but also, this microbiology program is incredibly important for treating physicians. And we will continue to generate that important value data.

[Jason Kolbert:]

Thank you for the comprehensive answer, and it's really a good indication of just how well prepared you are, as you have an eye towards commercialization. Thanks.

[Operator:]

Thank you. Our next question comes from the line of Kevin Kedra with Gabelli and Company. Please proceed with your question.

[Kevin Kedra:]

Thanks for taking the questions. First, just wanted to know, if you guys felt that there were any takeaways from the recent Plicamycin Advisory Committee that you can use, as you prepare for your own appearance before the advisory committee? And then secondly, spontaneous about balance sheet, how you are thinking about that? I know you gave kind of a runway to 2021 and the recent convertible issuance gives you a nice bolus of cash. But how do you think about acquisitions or licensing activity to potentially accelerate the timeline of profitability given here, for your balance sheet?

[Evan Loh:]

Hey Kevin, it's Evan. How are you?

[Kevin Kedra:]

Good.

[Evan Loh:]

Thanks for the question. I think overall, I think, it's always instructive for us to, as for all of you as well to listen in on the advisory committee. But overall, I think every NDA review and associated advisory committee is unique. I don't think, it's appropriate for us to make any direct comparisons, especially since I think Occasion [ph] is going after the accelerated development pathway under LPAD. While we are, as you know, using a more traditional approach with sizable Phase 3 studies. I think you know, we are in a place where it's clear, based upon prior recent AdComs that the advisory committee continues to see the addressing of resistance, and we think, particularly in the community acquired bacterial pneumonia setting, there was a very strong view in the Cempra advisor committee, that there was a very large unmet need from a resistant standpoint, and we feel exactly the same about that. We think that our current sizable, three sizable Phase 3 trials that were powered with efficacy and meeting endpoints, support this product being having very robust efficacy overall. And I think, that it's still a setting in which we will have a single CABP trial that will be reviewed in that setting. But I do think that, based upon our SPA agreements, current guidance, we feel very confident in the path forward towards a positive advisory committee assessment of benefit risk for omadacycline.

[Doug Pagán:]

Hey Kevin, this is Doug speaking. About plans for business development and licensing and so forth. First, I will say on the balance sheet, in addition to the cash that we brought in from the convert, that was intended and is planned to be used to support omadacycline launch, and make sure that we have cash through Q1 2021, which is about two years post launch, and that was its intention. As regards to the non-dilutive sources of capital, we feel now we have significant runway in which to execute those deals. We continue to focus our ex-U.S. omadacycline partnering strategy, Europe, and I think Japan and then other geographies and territories will come down the line. And then sarecycline, both ex-U.S. rights and the ability to monetize U.S. rights appropriately, likely after the approval date there. Those non-dilutive sources of capital should be able to extend our runway even further, and hopefully and likely, through cash flow breakeven. We will have to see how those timings and deals work out. But the capital we have now is really focused on supporting omadacycline as our primary priority.

[Michael Bigham:]

Yes Kevin. Hi, this is Mike Bigham. I'd like to just address briefly, the third element of your question, with regard to the pipeline. I think first and foremost, as you can appreciate, our focus near term is the approval of omadacycline and all the activities associated with what we plan to have, as a successful commercial launch of the product. Obviously, however building a broader pipeline over time remains a strategic priority for the company and for the team. But it is just not an immediate near term focus, as you can imagine. And also, simply [ph] to say, as a follow-up on Doug's comment about balance sheet strength; any pipeline expansion that we do pursue, will be done very much with an eye on long term financial balance sheet strength, as well as what impact, if any, it would have on cash runway.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the call back over to Michael Bigham for any closing remarks.

[Michael Bigham:]

Thank you. As there are no more questions, we will conclude today's call with a brief closing comment. Specifically, to thank all of you for your time and attention today. Your continued interest in omadacycline and Paratek are important to us. We very much appreciate your support, and in fact, this journey would not be possible without you. We look forward to keeping you apprised of our continued progress. But for now, goodbye.

[Operator:]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.