Paratek Pharmaceuticals, Inc.
Q2 2017 Earnings Call Transcript

Published: 2 Aug 2017

[Operator:]

Greetings and welcome to the Paratek Pharmaceuticals' Second Quarter 2017 Earnings Conference. At this time, all participants are in a listen-only mode. A 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, Paul Arndt, Managing Director, LifeSci Advisors. Please go ahead.

[Paul Arndt:]

Thank you and good morning everyone. My name is Paul Arndt, Managing Director of LifeSci Advisors, Paratek's Investor Relations firm. And welcome to Paratek's second quarter 2017 update and earnings conference call. A press release with the company's second quarter financial results was issued earlier this morning and can be found at www.paratekpharma.com. The agenda for today's call is as follows

[Michael Bigham:]

Thank you Paul, good morning and thank all of you for joining our earnings call and corporate update for the second quarter. As you know from our recent announcement of the successful results from OASIS-2, our once-daily, oral-only Phase 3 skin study. Paratek has now completed the planned clinical program for omadacycline in support of our regulatory submission to seek approval of omadacycline by the FDA. Given the robust efficacy and the consistent safety and tolerability profile across all three of our phase 3 studies, we remain confident in the approvability of omadacycline for both the skin and pneumonia indications. To that end, we recently held two pre-NDA meetings with the FDA. The first focused on clinical and non-clinical topics and the second focused on the CMC data components of our proposed submission package. We were very pleased with the tender and content of the meetings, the result of which was confirmation that we have a clear path towards our NDA submission. Following these regulatory meetings, today, we can announce that we plant to begin a rolling submission of our NDAs to the FDA in December of this year, less than five months away. The final NDA submissions for both formulations are expected to be submitted during the first quarter of 2018. These critically important milestones over the next few months represent the culmination of almost two decades of innovation, extensive clinical development and planned all hard work. With these goals now close at hand, a strong financial position enables us to deliver on several significant value creating milestones through mid 2019. In short, we have the financial resources already on hand to fund such critical activities as these submission of our NDAs, our regulatory submissions with the EMA, anticipated product approval in the U.S. and commercial launch of omadacycline in the U.S. As you can appreciate, much has transpired -- since the beginning of this year. Given the recent flurry of significant events, I believe it helpful to summarize the most important milestones that we have delivered upon in the last few months alone. First, we announced the successful completion of our third phase 3 study, known as OASIS-2 from omadacycline. As you know from the top line results we shared with you recently the outstanding efficacy seen was the once-daily oral-only dosing regimen in this study is consistent with the efficacy profile seen across our entire phase 3 program. Additionally, we continue to be pleased with the safety and tolerability profile of omadacycline. The robust efficacy, safety and tolerability profile seen in OASIS-2 along with the high completion rates confirm the clinical importance of the once-daily oral-only omadacycline regimen These data in combination with the generally safe and well tolerated profile seen with the IV to oral treatment regimen in our previous OASIS-1 an OPTIC phase 3 studies, we enforce our confidence in the approvability of both to once-daily oral and the IV to oral dosing regimens. Both formulations are important, why? The IV to oral dosing regimens in skin and pneumonia will serve as the focus of our initial launch strategy in the U.S. given the importance of first establishing formulary acceptance of any new antibiotic in the hospital setting. Initially, the bio-equivalent, once-daily oral formulation serves to underpin our “go-home” strategy. Oral omadacycline will facilitate early and the effective discharge from the hospital which offers greater convenience and comfort for patients as well as reduces overall treatment cost to payers. The consistent positive data from all three of our phase 3 study gives treating physicians the confidence that the once-daily oral omadacycline will allow for the same, safe and effective treatment as the IV omadacycline used in the hospital. With time, as the IV to oral step down approach with omadacycline establishes itself as an efficacious, safe and well tolerated treatment option and becomes more common place we expect that our once daily oral dosage form will be used more widely in the outpatient study to potentially avoid the need for hospitalization altogether. The benefits of avoiding hospitalization are manifest and benefit both patients and the payor. We call this outpatient use “stay on strategy”. Our once-daily oral dosage regimen of omadacycline makes this possible and represents a key strategic component of the successful adoption of omadacycline in the broader community setting. Many, if not most current investors have not had direct experience investing in companies developing a once-daily oral antibiotic. These have historically been the purview of large pharma companies only. And large pharma has not developed such a drug in almost a generation. However, I personally find it helpful to consider the perspective importance of our once-daily oral regimen against the history of commercially successful antibiotics. To be specific, it is important to remember that a once-daily oral only dosage regimen is a hallmark of the most successful blockbuster antibiotics. Our OASIS-2 study demonstrated the clinical utility of omadacycline to treat skin infections entirely in an outpatient setting with their once-daily oral-only dosing regimen. Later in this call, Evan will elaborate more broadly on the profile of omadacycline across our entire clinical development program. A second set of major milestones completed just last week included the two successful pre-NDA meetings we held with the Food and Drug Administration. These meetings allowed us the opportunity to review and discuss our plans for submission with the agency. As mentioned earlier, the net result of these meetings was the confirmation of our planned NDA filing strategy and the timelines. Having been previously granted Qualified Infectious Disease or QIDP status and fast track designations for omadacycline, we remain confident in the commitment by FDA to meet the expedited 8 months review timeline from submission to approval. As a reminder, our filing targets [ph] for the FDA will technically be composed of two individual NDAs. One for the oral formulation and one for the IV formulation. However, for practical purpose these can be viewed as essentially one NDA as ultimately we will have a single label for the product. Our primary focus is on the preparation of our regulatory submission packages for the FDA follow later in 2018 by our regulatory submission for the European medicines agency or EMA. With these important regulatory activities now successfully behind us, we can proceed full steam ahead with our regulatory submission efforts. The third significant activity for us this quarter has been the selective expansion of our commercial, medical and drug supply teams. With the successful completion of the OPTIC and OASIS-2 phase 3 studies, our plan recruiting activities had led to senior hires in important functional areas. For example, we recently added a Vice President of Marketing and a Vice President of market access. We remain highly selective in whom we add to our team and we are excited by the high calibre and deep experience of the candidates who have expressed strong interest in joining Paratek. As we are approaching potential commercialization of omadacycline, we continue to focus on establishing a reliable, commercial supply chain. We are pleased to report that we now have commercial agreements in place with all four of our main suppliers. In short, we are very pleased with the progress to date and energized by the acceleration of activities around our planned regulatory submissions and preparations for potential product launch. And based upon the successful completion of our plans Phase 3 clinical program for omadacycline, combined with our recent interactions with the FDA, we remain confident in the approvability of omadacycline to treat both community acquired skin and pneumonia infection. With that, I will now turn the call over to Evan Loh, our President, Chief Operating Officer, and Chief Medical Officer to provide an update on the development program. Evan?

[Evan Loh:]

Thank you Michael, good morning everyone. We have continued to see significant progress on our sarecycline and omadacycline programs in the second quarter. I would like to first start with a short update on sarecycline. Our partner Allergan continues to make progress towards submission of the sarecycline NDA in the fourth quarter of this year. As you may recall, in the first quarter this year, Allergan and Paratek announced that sarecycline was superior to placebo at the 12-week co-primary efficacy endpoints in both pivotal phase 3 studies and demonstrated meaningful clinical benefits for patients with inflammatory acne. The efficacy data was complemented by a generally safe and well tolerated profile. Allergan will be including in their submission, long-term safety and tolerability data from the nine-month safety extension study, which was generally consistent with the safety and tolerability results observed in the two pivotal registration studies. The positive data from the sarecycline phase 3 program represents promising news for patients and further validates the importance of the tetracycline based chemistry platform that Paratek used to create it. As you well know, omadacycline remains the primary focus of our internal development and pre-commercialization effort. From a clinical development standpoint, the last few months have been busy and extraordinarily gratifying as our significant investments and hard work were rewarded with positive topline readouts of the OPTIC study and pneumonia in April, and the oral only OASIS-2 study in skin infections in July. We have now completed the clinical program in support of our planned submissions of both NDA’s and have collected pharmacokinetic efficacy, safety and tolerability data from more than 1900 patients and healthy volunteers who have received omadacycline. As Michael noted earlier, we recently completed our pre-NDA discussions with the FDA with two meetings occurring last week. As a result of these meetings, we plan to begin the rolling submission of the NDA’s to the FDA in December of this year with the final submissions occurring in the first quarter of 2018. We are also progressing our strategy for our used submission which we have noted would occur later in 2018. Our next near-term activities to submit our intention to file notification letter, which will initiate the EMA process. One important initial outcome will be the assignment of a rapid tour [ph] and a co-rapid tour who will serve as lead reviewers at the EMA. Once they are signed, we will hold our pre-submission meetings in the EU, which are likely to occur in early 2018. In parallel to this process, our team will continue to prepare the required submission components to support our EU submission. Once these meetings are complete, we’ll be in a better position to provide more specific guidance around the timing of our EU submission. It is important to remember that our anticipated 10-year market exclusivity protection in the EU starts with EU approval. As you know, we were excited to share the positive topline results from the OASIS-2 study with many of you just a few short weeks ago. To remind everyone, I will briefly review the highlights now as well as provide an overview of the overall omadacycline profile. In OASIS-2, we randomized 735 patients to receive either omadacycline or t linezolid. The primary analysis for efficacy was the modified intent to treat or MITT population. Due to the specimen [ph] activity of Linezolid the primary efficacy population excluded patients with known sole Gram-negative infections where Linezolid would be ineffective. This represented 3% of the patients in the study. Omadacycline achieved clear, statistical non-inferiority compared to Linezolid for both the primary FDA efficacy endpoint and the EMA co-primary efficacy endpoints. For the FDA the primary efficacy measure was the early clinical response. The overall response rate with omadacycline was 87.5%, which was five percentage points higher than Linezolid. The primary efficacy outcome measures for the EMA, which is also the secondary endpoint for FDA was investigated assessment of the clinical success at the post treatment evaluation seven to fourteen days after the last dose, the last day of treatment for the MITT and the clinically valuable or CE population. Similar to the FDA endpoint, higher response rates were observed for omadacycline and Linezolid for both, the MITT and CE populations, with a nearly 98% clinical success rate for omadacycline in the CE population. In the study, omadacycline again demonstrated a generally safe and well tolerated profile. Consistent with the OASIS-1 study, the most common treatment emergent adverse events in both omadacycline and linezolid treated patients were GI events, followed by low rates of headache, ALT and AST increases. Similar to the oral dosing portions of OASIS-1 and OPTIC which were well tolerated and associated with very high treatment completion rates. We also observed in OASIS-2 an equally high completion rate with oral only omadacycline, however, we did observe a higher GI adverse event rate than were seen in OASIS-1 and OPTIC. The vast majority of these events were mild and transient, with only one omadacycline patient discontinuing treatment due to GI adverse events. These high completion rates are consistent with medicines that are deemed to be well-tolerated by the medical community. No cases of clostridium difficile infection were observed in the OASIS-2 study for either on. Given the clinically important morbidity, mortality and in-hospital cost associated with C. difficile enterocolitis we are pleased that we have not observed a single case of C. diff in any of the more than 1900 patients and healthy volunteer subjects exposed to omadacycline. As you may recall, there were several cases of C. diff reported in the moxifloxacin arm of our OPTIC study. With our Phase 3 clinical studies now complete, it is reassuring to see how consistent and robust these efficacy data are across all studies. Importantly, we were delighted by the clear therapeutic benefit demonstrated in patients receiving omadacycline in the OASIS-1, OASIS-2 and OPTIC studies. We believe that these data characterize an important new antibody treatment option for prescribing physicians and hospital formulas. Our research has shown that the primary consideration for treating physicians when choosing an antibiotic include, first, will this drug effectively cure the infection. Second, can I use this antibiotic in this patient without a major safety risk? Third, will this antibiotic be tolerated by my patient allowing the patient to complete the course of therapy, and fourth, with the use of his agent minimize the risk of C. difficile infections? For each of these questions, we believe the answer for omadacycline is a resounding yes, and that omadacycline will offer physicians the confidence that the performance of omadacycline in both, the once-daily oral and IV formulations is well supported by the substantial omadacycline clinical database. I would like to take a few minutes to review a few of the other clinically important attributes of omadacycline that represent, welcome and clear points of differentiation from some of the antibiotics in use for skin infections and pneumonia today. Notably, first, omadacycline’s consistent pharmacokinetic profile and IV and oral bio-equivalency. The bio equivalent once-daily oral formulation serves to underpin our go-home and stay home strategy as Michael has noted earlier. Oral omadacycline can facilitate early and effective discharge from the hospital or in some cases avoid hospitalization completely, which can significantly reduce the overall treatment costs to hospitals and payers. Further, being discharged from the hospital earlier can minimize the risk of hospital acquired infections and is more convenient for patients, allowing them to complete their course of therapy at home. Second, the absence of drug [Indiscernible] interactions with omadacycline represent another important safety profile advantage. In contrast, there are warning and precautions without Oxiconazole [ph] such as Zyvox [ph] that may prevent its use in the many patients who are taking SSRIs or MAOIs because of the potential to induce life-threatening serotonin syndrome. Omadacycline represent a safe, convenient and effective treatment option for these patients. Third, the absence of any dose adjustments needed for liver impair or renal impaired subjects means that omadacycline can be used safely in these patients. For example, vancomycin in quinolones both require dose modifications in renal impaired patients and are often not suitable antibiotic options. Fourth, omadacycline and tetracyclines in general have demonstrated a low clinical propensity to induce clostridium difficile colitis or C diff which is a dreaded and potentially life-threatening complication of antibiotic use. C diff is however associated with the use of other antibiotic classes including quinolones and beta-lactam such as ceftriaxone. We believe that in ammonia setting today and potentially in the UTI setting in the future that omadacycline provides an important mono-therapeutic clinical alternative to quinolones. In addition to these attributes there are significant safety considerations that are not associated with omadacycline and that currently limit the use of other class of antibiotics and the indications for which we are seeking approval, for example; for quinolones irreversible neurologic toxicities, tendon rupture and QTc prolongation, fluoroquinolones, thrombocytopenia, and for vancomycin, ototoxicity and renal toxicity. In summary, we believe that the high clinical cure rate seen with omadacycline will remain the primary driver of use across a wide spectrum of patients as it relates to both the once-daily oral and IV dosing regimens. Due to the progressive decline in efficacy secondary to rising bacterial resistance rate combined with the notable safety considerations associated with current antibiotic options, we believe omadacycline will emerge as a significant treatment option for those patients who have known or suspected resistant pathogens or where patients are at risk for or experience an adverse event or when existing antibiotic options are not appropriate. I will now move on to other aspects of our development program. In June we have the pleasure presenting 10 abstract of the ASM Microbe Conference in New Orleans. For us the highlight of the conference was sharing you microbiology data that reinforce the significant clinical efficacy of omadacycline against some of the most common resistant pathogens including MRSA, Streptococcus pneumonia as well as E. coli. With respect to E. coli in particular we continue to believe that there is significant clinical unmet need for new oral agents for the treatment of urine tract infections. We are currently designing a Phase 2 clinical study to evaluate omadacycline in the sizable and important patient population. Looking forward we have had nine abstracts accepted for publication including the OPTIC study at the upcoming ID Week meeting in San Diego in early October. As is our practice we will provide more information on these plan presentation in a press release prior to the start of that conference. Finally, we will once again be hosting an Investor Day in New York City. The date is October 17. We plan to provide a more confidence about the honor clinical data, registration activities and our commercialization efforts from omadacycline including an update on our plans for the Phase 2 study of omadacycline and urine tract infections plan to start as early as December of this year. More details on this event will be shared in September. In addition to our clinical program we continue to be excited about collaboration with the U.S. Army Medical Research Institute of infectious disease or U.S. AMRIID to examine the potential efficacy of omadacycline against the bioterrorism organisms responsible for plague and anthrax. This collaboration is strongly sponsored by the Medical Countermeasure System and the Defense Threat Reduction Agency of the Department of Defense to conduct pharmacokinetic and efficacy studies. This program is progressing in his successful. Omadacycline could well become an important option in the prophylaxis and treatment of these potentially weaponized lethal bioterrorism pathogens. The success of our pneumonia and skin Phase 3 studies give us confidence and the potential to expand the use of omadacycline to further protect and treat patients from these bio threat pathogens. As you've heard we have accomplished much in the two plus years since reinitiating the omadacycline safety program in June 2015. Delivering on, we’re ahead of schedule the top line results from three Phase 3 pivotal studies, while maintaining the highest standards for data quality. As we now move forward to filing our NDA and preparing for potential commercial launch, the Paratek team is head down on execution. We remain confident in the professionalism and dedication of the Paratek team to deliver upon on our plan milestones. So, in conclusion we are pleased with our progress to-date yet we’ll remain keenly aware that our journey is far from over. Our goal is to provide omadacycline to patients in need of a new once daily well-tolerated oral and IV antibiotic that will offer lifesaving efficacy for series community-acquired infections. Our focus for the remainder of the year will be on several core activities to prepare our regular package for submissions to FDA and expanding our operational and pre-commercialization activities in anticipation of potential product launch. The next day -- the next 18 months promises to be busy and exciting. Now, Doug will share an update on our financial results for the quarter. Doug?

[Douglas Pagán:]

Thank you, Evan. We continue to be in a strong financial position as we transition our focus from late stage development of omadacycline to registration and prelaunch activities. The second quarter 2017 financial results begin to reflect that change and focus. Revenue recognized for the second quarter primarily reflects the $7.5 million upfront fee earned under our license and collaboration agreements signed during the quarter with Zai Lab for omadacycline development and commercialization in China and related territories. With the same period in 2016, we recorded no revenue. Our second quarter operating expenses were $24.2 million compared with $29.8 million for the same period in 2016. Research and development expenses recognized in the second quarter 2017 were $15.1 million compared to $22.1 million for the same period in 2016. This year-over-year decrease was driven primarily by lower clinical study cost as we neared completion of our Phase 3 program. General and administrative expenses recognized the quarter were $8.7 million compared to $7.6 million for the same period in 2016. This increase was driven by higher employee-related cost as we continue to expand our team. As of June 30, 2017, we had $175.3 million in cash, cash equivalent and investment. During the quarter we raised proceeds of $58.5 million, these included $41.8 million raised through the sale of common stock under our ATM facility through May 1, 2017 as previously discussed on our first quarter earnings call, no equity has been sold since. Additionally during the quarter, we amended our loan agreement with Hercules Capital to extend the interest only period by one year through December 2019, contingent on the NDA approval of omadacycline, the amendment also increase the available principal amount by $10 million to a new total of $60 million. Concurrent with the signing of this amendment we drew $10 million of this available principal to bring our outstanding debt balance to $49.0 million which is presented net of debt issuance cost. The final receipt during the quarter was $6.7 million from Zai for the upfront payment reflected net of applicable taxes paid. These additional financial resources provide us the flexibility needed to continue to invest in the preparation of our upcoming regulatory submissions and commercial buildout. It is important to note our projected operating plan include the full cost to support our anticipated commercial launch as such our runway projections incorporates the anticipated cost to buildout, sales, marketing and medical affairs organization, as well as to provide for commercial supply. Based on these operating assumptions our cash, cash equivalents and investments together with anticipated regulatory and commercial milestone payments from our existing collaboration partners are sufficient to fund operations through the second quarter of 2019. And now I’ll turn the call back over to Michael to close. Michael?

[Michael Bigham:]

Thank you, Doug. In summary to-date 2017 is proven to be a very productive and gratifying year. The past few months alone have included several significant milestones for our omadacycline development program notably the success of our OPTIC study and pneumonia, as well as the successful OASIS-2 study of once-daily oral-only dosing in skin. With the completion of these two additional Phase 3 studies we now have in hand the clinical data needed to support the submission of our NDAs to treat community-acquired infections in both skin and pneumonia. One final comment about the overall data that we have shared with you today from our three Phase 3 studies, it is important to recognize the data across these studies demonstrate a clear and consistent clinical profile for omadacycline has an effective and empiric well-tolerated once-daily oral and IV monotherapy for community-acquired bacterial infections. The medical community has not seen a new drug with such a profile at almost a generation. Yet the need for one grows daily with the study emergence of bacterial resistance. We believe that omadacycline is that needed new drug. And we look forward to sharing full results from all of our studies in the coming months as part of our peer-reviewed publications and upcoming Congresses [ph]. We have three main priorities for the remainder of the year. First, intensely focusing on preparing our regulatory submissions, second, judiciously expanding our operational capabilities to support a potential commercial launch as early as in the end of 2018, and third, actively pursuing appropriate opportunities to share the broader set of clinical data on omadacycline with the medical and investment communities. Evan and I are pleased with the company's progress to-date and we remain excited about what lies ahead. We recognize that our work is far from over, but we’ll remain confident in the professionalism and dedication of the Paratek team to deliver upon our goal to make omadacycline available to patients in need. With each data readout, each regulatory interaction, each at board meeting that we have we are increasingly confident that we are advancing an important primary treatment option for serious bacterial infection and with that the opportunity to improve and even save lives. We look forward to keep you apprised of our activities and progress and as always. And with that we will open the floor to questions.

[Operator:]

Thank you. The floor is now open for questions. [Operator Instructions]. Our first question is coming from Kevin DeGeeter of Ladenburg Thalmann. Please go ahead.

[Kevin DeGeeter:]

Hey, guys. Congratulations on the progress, and thanks for taking the questions. Michael and Evan, can use common in general strokes with regard to any incremental takeaways from interaction with FDA in the pre-NDA meeting in terms of your incremental learning and your perspective or thought-process with regard to potential either your scope of submission or other issues?

[Michael Bigham:]

Yes. Thanks, Kevin. Pleased do take the date the question. We were very excited about the dialogue that we had with FDA. They are clearly very supportive and interested in a new broad-spectrum antibiotic specifically because of the oral that we had here today. Both meetings were extremely successful from our point of view. Both were attended by Senior FDA officials within the offices and divisions. And we had both the clinical and as well as the CMC meeting. From the clinical perspective, all questions posed, radically addressed ahead of meeting, but we took the opportunity to have a face-to-face meeting to review the safety and efficacy data across all three to those studies. The FDA raised no concerns and agreed that no other clinical studies were necessary. The overview was well received and the team satisfied with our plan to provide data on the current NDA filing timeline that we just discussed. From the manufacturing perspective, again, FDA provided a very thorough set of responses to our questions ahead of time as part of the standard protocol the meeting focused on a couple of submission topics of which we reached full agreement with the FDA and the team there at FDA reminded us once again the importance of ensuring that our CMOs are inspection ready at the time of submission. So, overall I think continues to see the momentum that we feel going towards the end of the year to initiate our ruling submission.

[Kevin DeGeeter:]

And then just one follow-up question and it tags on to that final point with regard to your CMOs, I believe in 10-Q today they disclose Pantheon [ph] as your commercial supply for IV. Are there any other CMOs or material contributors to supply chain that you -- at this point you have not signed commercial agreements with and disclose?

[Michael Bigham:]

No, none. You are fully aware of our supply chain.

[Kevin DeGeeter:]

Terrific. Thanks so much.

[Michael Bigham:]

Thanks, Kevin.

[Operator:]

Thank you. Our next question is coming from Louise Chen of Cantor Fitzgerald. Please go ahead.

[Louise Chen:]

Hi. Thanks for taking my questions. So, the stock reaction pose what we thought was very positive OASIS 2 data has not quite what we had expected. So I was wondering if you could address like some of the concerns that we’ve gotten from investors as we – as imposed [ph] to data. So first question I had for you was in terms of the product messaging, I think there has been some confusion there regarding the hospital opportunity, first for the outpatient setting and how the dosing is done and the G.I. side effect for the hospitals versus the outpatient setting, I just wondering if you adjust that? Second thing here is just outside the hospital is it possible for doctors to adjust the loading dose and what you think of that? And then last question that we’ve gotten a lot is just -- if the G.I. side effect was anticipated by you and if it curtails either hospital or outpatient setting opportunity in any way? Thanks.

[Evan Loh:]

Thank you, Louise, its Evan for the question. We are – one of the aspects of omadacycline that we’re very pleased about is the consistent pharmacokinetics and the fact that we have an bioequivalent IV and oral, in fact based upon all of the data that we’ve published today with our three trials that once-daily dosing of the IV-to Oral as well as the dosing of the oral-only are very straightforward way for us to actually think about the dosing. With regards to the overall trials as well if you look at the dialogue that’s occurred somewhat about the rates of GI events that were seen, again the rates were transient and mild to happen primarily earlier in the oral phase of the OASIS 2 trial, but what’s most important is the high completion rates. And for us those high completion rates are important for therapy and in fact if you look at the overall tolerability and discontinuation rates they continue to be low and consistent across all three trials. This level of high completion rates are deemed actually by the medical community as a hallmark of a well-tolerated oral antibiotic. And so, we think overall that this is an important feature of a product that will be -- I think an important option in the both the hospital and community setting. But maybe I can hand it over to Adam to talk a little bit about that.

[Adam Woodrow:]

Thanks. You are asking about commercial implications. Look, through primary interviews we've been told by physicians for the nausea and omitting rate seen in OASIS 2 will have little or no impact on the overall commercial forecast and mainly because of three reasons; High efficacy is really at the top of mind with physicians and we also have an association with a very high completion rates with only one discontinuation rate in for GI event in the OASIS 2 trial, in fact we only have two in the intra clinical database. The overall safety profile of omadacycline is also something that they take into account when they’re considering a drug like omadacycline and they compared that to other drugs that are on the market and look at those safety profiles and as I think has been alluded to, there are some serious safety concerns with some of these other antibiotics in certain patient types. And that brings you to the third reason why they will consider omadacycline as an option and that’s basically because of the type of patient we’re talking about. When you’re looking at community-acquired pneumonia there’s a mortality associated with this and these skin infections are filling up hospitals because more and more patients are coming in because of the inadequacy of the current oral treatments. What those treating physician told us is that they’re primarily looking to minimize treatment failure and as such they’re looking for high efficacy first. They will accept that with omadacycline that maybe associated with some mild GI discomfort, but this is a trade-off and its an acceptable one given some of the more common treatment alternative are associate with much more serious adverse event such as neutropenia, renal failure, serotonin syndrome irreversible, neurological toxicities and C. diff just to name quite a few. So its absolutely clear from the treating physician perspective that omadacycline is an appropriate choice in certain patients.

[Evan Loh:]

Now, Louise one other part of your question that we should also address is the question you asked specifically around whether physician can actually adjust the loading dose? We chose our dose based upon PK modeling to achieve plasma concentration that were consistent with the IV loading dose that we had seen in our IV-to oral studies. I mean, at this point in time we’re still analyzing data. We don't know enough today to make a recommendation on next steps. However given the extremely high efficacy results it does beg the question whether we actually need a loading dose. And I do think that at this level of efficacy provides headroom to actually consider alternatives there.

[Louise Chen:]

And maybe the quick follow-up, so on and thank you for that. On the hospital portion of the market is there any to the G.I. issue there given the fact that you start with an IV?

[Michael Bigham:]

In fact actually as you probably know, our IV is proven to exquisitely well-tolerated all the way through the trials. We are very, very pleased with the tolerability profile there. We – as is been alluded to we seem to see in the overloading dose phase of one of the trials.

[Louise Chen:]

Okay. Thank you.

[Operator:]

Thank you. Our next question is coming from Mr. Hazlett of BTIG. Please go ahead.

[Michael Bigham:]

Bert.

[Bert Hazlett:]

Can you hear me?

[Michael Bigham:]

Yes.

[Bert Hazlett:]

Thanks. I too would like to address one or two of the issues with regard to our investor discussions that we've had. One is the size and the potential for the CABP [ph] opportunity itself. Could you describe – is that the material opportunity for omadacycline? And then secondly, the notion that the opportunity of skin is maybe a bit crowded. Could you talk about the competitive positioning of omadacycline and particularly the oral as you see the skin market evolving based on what’s there and what's coming? Thank you.

[Michael Bigham:]

Well, Bert, from a CABP perspective I mean clearly it’s a compelling value position. I mean, you got – would likely to be the first new drug to market in that space for some time. And we know that we have an opportunity in this space to potentially replace the quinolones. The fact remains that quinolones are main stay, they are one of the first-line treatment choices, but unfortunately for them they are associated with also some of our first events and they’re looking for alternatives, but until we get to market they really have no choice, because there is no really affective ID oral monotherapy that can be used in place of quinolones. They are using combination therapies and if we get approved, it would be an ideal opportunity as an alternative to quinolones. So you can imagine if you can't use a beta-lactam and you got a patients that’s at risk for a C diff infection because they are either elderly, they come from the nursing home and in fact they’ve got a history of C diff, we would be an absolute appropriate choice for that patient straight out of the when we are on to market and these markets are not insignificant. The market opportunity for CABP is significant and based on our analysis there’s about 490,000 patients in the hospital that would require an alternative because of either resistance concerns or intolerance as we mentioned. And there’s about 510,000 patients in the community fail to responder and tolerance to the existing treatment options. So, these patients would benefit from empiric IV-to oral monotherapy that can basically minimize hospital stay. And based on the data that we’ve in hand is a safe and effective alternative to the current treatment options. Now, I want to go in to your question about the skin market. That’s a very good question. People ask me this many, many times about how crowded the skin market is, but the fact remains that most of the effective skin treatment options have been narrow spectrum agents and in fact IV-only with one or two exceptions. I don’t know whether you followed it, but the most recent FDA review document for delafloxacin approval noted twice that there are very few IV and oral treatment options for MRSA and then effective MRSA treatment in an oral form is an advantage. If we get approved we believe that omadacycline has the potential to provide patients in treating physicians with that empiric well-tolerated once-daily oral and IV monotherapy for these community-acquired infections where resistance is proven and suspected and that’s actually unique profile and well-suited to the challenges in today's market. We actually see omadacycline being used in patients where the current treatment options and all acceptable either because of these resistance concerns, all the co-morbidities, hypersensitivities, the drug interactions or even intolerance that we've already mentioned. I mean, in addition to that and this is the thing that I think really sort of cements our position is that we have a really compelling value proposition, where in the hospitals the ability to transition patients from the IV to the oral once-daily well-tolerated omadacycline will enable early patient discharge and that facilitates really high rates of patient compliance and saves money both to the payer and it reduces the cost allocated to that hospital formerly budget. If we actually get used to the oral-only indication for the community setting, we’ll actually help physicians avoid that hospitalization in some of these patients all together which is an incredibly compelling financial incentive for the payers who no longer have to pay for that expensive hospital stay. And it’s also really beneficial to the patients as oral therapies are basically more convenient and eliminate the potential complications that are sometimes associated with IV drug. I think if you would have sum it all up we will be the first IV oral once-daily multi indication antibiotic that’s been launched in maybe a decade.

[Bert Hazlett:]

Thank you. That’s incredibly helpful and very clear. Just one quick one, based one additional one, based on your discussions with FDA would you expect the panel for this molecule?

[Evan Loh:]

Hi, Bert, it’s Evan. As I’ve stated before we do not expect an Advisory Committee at this time, but we will be prepared if the FDA so chooses, they always reserve the right to do that. As is customary for all NDAs, the FDA would not make a final determination for the need for ad comp [ph] until the day 60 filing determination. But if pass is prologue here we are pleased that FDA did not hold an ad comp from Lintas [ph] product during their regulatory review nor with our CABP events and so it's clear that the FDA is not prescribing for ad comps just because application being a new chemical entity.

[Bert Hazlett:]

Terrific. Thanks. If you said it before, my apologies, but congratulations on the progress. Thanks.

[Evan Loh:]

Thanks, Bert.

[Michael Bigham:]

Thank you.

[Operator:]

Thank you. Our next question is coming from Paul Matteis of Leerink Partners. Please go ahead.

[Paul Matteis:]

Great. Thanks for taking a few questions. Appreciate it. I wanted to go back to Mike’s comment about Blockbuster antibiotics at the start of the call. One point of I think investor concerns around the nausea vomiting rate. Can you talk a little bit about nausea vomiting rates for other large Blockbuster IV-to oral antibiotics in their oral-only studies and how -- what was observed in OASIS 2 compares?

[Michael Bigham:]

Hi, Paul. Evan, do you want to…

[Evan Loh:]

Yes. Hi, Paul. Thanks for that question. As you know we are overall in terms of our safety and tolerability that we’ve seen with omadacycline, we’re very pleased with that overall and even though the GI rates were higher in OASIS 2 they were predominant mild and transient. And I think the more important factor that there were very low discontinuation rates and very high percentage of compeers and for that I think we feel that this is based upon reflections back from physician interviews that this is deemed well-tolerated by the medical community. And if you compare that with other available oral broad-spectrum antibiotics that are currently in the marketplace today, we believe that these rates are very consistent and comparable to those rates, in fact we think that the overall completion rates are actually as good if not better than what’s in the marketplace today. So from a physician perspective it's about completing therapy as I mentioned earlier in my prepared remarks and we believe that based upon the data we seen in our trials that this degree of GI events is not going to be a deterrent before completion of therapy.

[Paul Matteis:]

Okay. Thanks. And the other thing I think the investment community is sensitive is obviously liver enzyme elevations given what happened with [Indiscernible]. I just had two quick questions on that. One, when you pull your data across studies and actually compare it to active control arms like linezolid or moxifloxacin, and is there a numerical imbalance in liver and the rates of liver enzyme elevations? And then two, I know you need some other Phase 1 work with omadacycline and one study in the 10-K notes that there’s a few cases of clinically significant liver enzyme elevations. Can you just expand upon the other Phase 1 work you did? I know you look at different doses, some of which are actually above what you studied in Phase 3. So anymore detail there would be helpful? Thanks.

[Michael Bigham:]

Thanks, Paul for your question. Just as a reminder for everyone I think tetracyclines as a class are known to have low incidence and low magnitude changes in liver functions test reported both in the short course therapy as well as in the long-term therapy. They viewed overall not to have a risk with regards to specific liver tox [ph]. In our Phase 1 program we did examine doses as high as 600 milligrams IV in healthy volunteers. We did see, I think a feeling of somewhere in the range of [Indiscernible] above upper limit of normal for increases in ALT. In our Phase 3 trials as you've noted, we looked very carefully at the ordinal categories of 3x, 5x and 10x across the studies and we see very comparable observations in each of those categories. Further, as you know FDA has a relative sensitivity which I think is appropriate in terms of liver tox in all new chemical entity evaluations. As such we apply the highest law laboratory criteria always to look and to try to see whether we can find any of those cases as a first screen. And then we look specifically to see whether the other criteria are actually build in terms of other changes in laboratory values or whether individuals have underlying other reason such as hepatitis or HIV for changes in the liver function tests. And in our full analysis, Paul we see no highs law cases not in any of our studies and we look at individuals who have normal liver function test at baseline, but we’ve also gone to the more extreme and look at individuals who presented in the study with abnormal liver function tests. So we feel very confident that there is no highs law cases within our entire database and that again it’s consistent with tetracycline heritage.

[Paul Matteis:]

Okay. And just expounding upon that one instance where you liver enzyme elevations and concomitant bilirubin elevation and the most recent Phase 3 study, can you just expound upon that. I think you said the patient had concomitant viral infection and that's the reason why it’s not codified as a highs law case. What are the rules there and how does the FDA think about it?

[Michael Bigham:]

So, we did have a specific discussion as we mentioned last week with FDA around all of our safety observations as well they feel very comfortable with our analyses. They’ve met all of the analytical parameters that they would expect in terms of our data presentations and they have no concerns about anything that we've seen. The one case that you note is an individual who had elevations in ALT bilirubin, but in fact had an acute infection of Hepatitis B during the course of therapy when those changes were actually noted. We actually have serologies that actually definitively to note that that was in fact the case. And when you have concomitant other medical comorbidity that can account for the changes in liver function tests you cannot ascribe causality with regards to a highs law analysis.

[Paul Matteis:]

Thanks. One last strategic question, when do you expect to find a partner for the community setting and have those discussions progressed further since generating additional oral-only data?

[Evan Loh:]

Yes. Thank you, Paul. I think actually, I think it would be helpful I give little bit background about our corporate partnering strategy and how we think about it as a way of answering the question to put it in the context. Just as sort of a general business approach we maintain an active and ongoing dialogue with prospective partners and keep them updated regularly on our progress and the OASIS 2 trial was another opportunity for us to update prospective partners. And so we remain open obviously to appropriate partnering arrangements and each of the markets where omadacycline has commercial potential. As you know our initial commercial focus will be in the U.S. and focused on the hospital setting and the primary objective there is establishing omadacycline on formularies and building ID endorsement, because history in medical practice tell us that this is a necessary prerequisite before one can expect any extensive penetration of the community market. So from a staging standpoint as the IV-to oral step down approach for omadacycline establishes itself over time as an efficacious safe well-tolerated treatment option and becomes more commonplace as it were. We expect our once-daily oral dosage form will then begin to be used more widely in the outpatient setting. So the point simply being ideally we would have a partner relationship in place by this time basically more aggressively pursue the broader community commercial opportunity. So I think we have time on that front and we do spend time educating and updating, but we really need them is on the community side and it probably happen sometime after the first year or so as we establish omadacycline on formularies and basically make that IV-to oral step down “more common place” That said however as you know transaction can heat up any time for unseen reasons and can happen quickly. Comment about the EU as well while we’re on the partnering subject. You know recall that approval of omadacycline in the EU was expected to fall at roughly one year behind U.S. approval and we are keeping open an ongoing dialogue with potential EU partners as well. In general the preferred timeframe with such partnership would be somewhere between acceptance of our regulatory submissions in the EU and actual approval in the EU, but again transactions though can eat up at anytime for unseen reasons and happen quickly. Now outside the U.S. and EU we continue to explore partnerships and as you know we have already entered into a partnership with Zai labs for the Greater China region. But again sort of the overarching challenge of course is the balanced, the ideal [Indiscernible] when a partners assistance makes the most commercial sense first is when the best deal terms can be negotiated. And it is difficult and best to know that with any certainty our approach has been to maintain regular and open dialogue with potential partners. We do know however that historically with antibiotics the larger partnerships in the main markets tend to happen around approval, but again, it can happen and heat up very quickly for unseen reasons. One final comment to dispel any notion that partnering is a black and white issue. As you might imagine, some investors believe that a longer Paratek retains U.S. and EU [ph] rights the greater the franchise value that builds up within the company, which they believe is the best way to maximise long term shareholder value for the benefit of all Paratek shareholders and history also supports that view.

[Paul Matteis:]

Thanks, Michael appreciate it.

[Operator:]

Thank you. Our next question is coming from Ed Arce of H.C. Wainwright. Please go ahead.

[Ed Arce:]

Hi, Michael and Evan thanks for taking my questions and thanks for all the additional details on omadacycline with your prepared remarks around the clinical profile relative to the approved competitive landscape. And with regard to that, I wanted to take a slightly different tack at the risk of going over this issue a bit too much. Just wanted to get your thoughts on the GI events in OASIS-2 but relative to the approved options today as opposed to prior blockbusters to say. And then I have a couple of follow ups. Thanks.

[Michael Bigham:]

Yes you know Ed, we were – we continue to be pleased with the overall safety and tolerability profile I think it’s important again to anchor ourselves on the fact that these events were mild and in fact really had only a single individual on our oral only study that infact led to discontinuation. This kind of a profile of being well tolerated and very high completion rates in our minds actually is the first decision that doctors will use to choose this. And if you – as you said Ed, if you weigh that against let’s say, universal neurologic toxicities, tendon rupture, QTc prolongation, renal failure, [Indiscernible] toxicity, thrombocytopenia, you know those are true safety issues that could lead to continued morbidity and potentially mortality. This is a tolerability issue that in my mind as a treating physician and for what we find from our physicians is that this is a deemed to be a well tolerated oral option. We will look at – you know we will look at options just thinking of how to further and optimize that loading dose period and we think it’s a high efficacy rate, this is another thing that we thought about as well, the high efficacy rates, you know I think overall gives us overall some headwind as well. But I think, overall the general, the GI events are very common with this oral antibiotics and we are very much I think within the range of what’s out there today.

[Ed Arce:]

Okay, great. As a follow up and I know this is a bit early as you are just now beginning to put together your regulatory submission, but thinking through if you could just highlight what some of the key elements that you are looking for ultimately on the label, especially relative to commercial positioning.

[Michael Bigham:]

You know one of the features and I’ll switch this over to Adam as well. One of the features of the label that we are very motivated to pursue is the President set up by [Indiscernible] and it goes back to a question that Bert asked about the opportunity in pneumonia. You recall – for [Indiscernible] they actually ran two IV to oral pivotal phase 3 studies in skin, but the FDA given the importance of what they said in their summary basis of approval of the importance of an oral MRSA agent, they in fact provided in that label and oral-only pathology [ph] when they in fact did not actually conduct an oral-only study. The fact that we have an oral-only study in skin gives us confidence then we will get that in our label for skin, but I think the door is actually open for us actually pursue with FDA and oral-only pneumonia label as a pathology that in fact is would be very exciting for us, but in terms of other aspects of the label item that would be important?

[Evan Loh:]

Yes. The any other thing I could say that we’re going explore outside of that just make sure we have all the appropriate pathogens, we have nice pathogen mix based on the database that we’ve got now, and so we really please with that will have a quite extensive list of pathogens both in the gram-positive and certainly a number of gram-negatives and lot of a typical actually have that community-acquired pneumonia trial. And then one other we’re exploring, but again its exploration as we can’t confirm either yes or no, but we’re looking at the language around C difficile. Clearly we’ve got a belief and data backs up the low propensity to reduce C difficile and just with the omadacycline but with tetracycline in general, but the question is can we – what can we do something for a label perspective.

[Michael Bigham:]

I think the other features of the label that are going to be important is noting the absence of metabolism, very consistent pharmacokinetics, the true bioequivalence with regards to the IV and oral, low protein binding which is part of the performance characteristics of the PK, but also no dose adjustments for age or gender populations, no dose adjustments for hepatic impairment, renal impaired and minimal drug, drug interactions and no effect on QTc. When you look at that profile overall compared to some of the other notable safety considerations with the antibiotics that are currently available in the marketplace today as a treating physician I would rapidly go ahead and choose this antibiotic as something that would be important for all of my patients to be considered.

[Ed Arce:]

Okay, great. And then just last couple of follow-ups here. You made a brief mention earlier on the call about interest and proceeding with UTI, any update you could share with us at this point. I realized its still in the planning phases. And then lastly for Doug, is there any sort of guidance you could share in term of OpEx spend for the remainder of the year? Thanks.

[Michael Bigham:]

Look, I think we’re – Doug, you’re going to that right.

[Doug Pagán:]

No, no, go ahead.

[Michael Bigham:]

We currently developing a protocol and we’ll give you more information at our Investor Day in October, Ed, but plans are as stated and hopefully we’ll get off the ground before the end of the year. Doug?

[Doug Pagán:]

Yes. Ed, on the OpEx side we continue to project sort of on an annual basis continuity between this year and next, and that will be somewhat variable quarter to quarter, there will be some fluctuations based on one-time charges that come through at any given quarter, but we continue to see at being relatively flat. However we expect to shift as we mentioned from G&A – sorry, from R&D to G&A as the expenses from the clinical studies continue to ramp down and our sales and marketing another efforts will increase. So again on an annual basis relatively flat for the next six quarters on an annual basis.

[Ed Arce:]

Thanks again and congrats [Indiscernible] progress.

[Doug Pagán:]

Thanks. Ed.

[Operator:]

[Operator Instructions]. Our next question is coming from Laura Chico of Raymond James. Please go ahead.

[Laura Chico:]

Hey, Good morning, guys. Thanks for fitting me in. Just one quick one, I think a lot of mine have already been asked and answered. FDA recently finalized guidance related to streamline development programs for serious infections. Wondering if you could share a little bit how this impacts your efforts and I realize perhaps not the current ones with omadacycline, but perhaps more importantly that future programs that you do have plan?

[Michael Bigham:]

Yes. I think that guidance is important for the antibiotic development community overall. Its specifically aimed at those really life-threatening very rare gram-negative pathogens in the hospital setting, that's not really where omadacycline is actually going to pursue future indications, but we are very excited about is the established animal rule guidance for the approval of antibiotic such as omadacycline potentially for bioterrorism pathogens against plague and anthrax. And we think that that will be an important public health advantage, but also important to keep our troops [ph] safe in terms of how folks have tried to figure out how to weaponise plague and anthrax. We’ll give you more updates with that hopefully by the end of the year or early next year in terms of how to progress if that goes. Laura [ph] you’re still there or you are on silent, mute.

[Laura Chico:]

Sorry guys, thank you.

[Michael Bigham:]

Thanks Laura. We’ll close up.

[Operator:]

Thank you. At this time, I’d like to turn the floor back over to management for any additional or closing comments.

[Michael Bigham:]

Thank you. As there are no more questions, we will wrap up today’s call with a brief closing comment. With the recent completion of our planned phase 3 clinical program for omadacycline needed to support approval by the FDA we are working diligently on a regulatory submissions. As mentioned at the outset of today’s call, we plan to begin our rolling submission of our NDAs in December of this year less than five months away. We expect to complete the filing of our NDAs for the once daily oral and intravenous formulations during the first quarter of 2018. With our achievements to date, and with our strong financial position, we remain well positioned to deliver upon our plans through mid 2019 including NDA submission, EMA submission, potential approval and commercial launch in the United States. We believe deeply that the work we are doing is important for us all and there is a clinical and growing need for new antibiotics. We believe that omadacycline represents an important, new primary treatment option to treat serious community acquired bacterial infections in both the hospital and community settings. We feel honoured and fortunate to be the stewards of such an exciting new antibiotic. Thank you all for your time and attention today. Your continued interest in omadacycline and Paratek are important to us. We very much appreciate your support and this journey would not be possible without you. We look forward to keeping you apprised of our continued progress and good bye for now

[Operator:]

Ladies and gentlemen, thank you for your participation. This concludes today’s conference. You may disconnect your lines at this time and have a wonderful day.