Paratek Pharmaceuticals, Inc.
Q3 2017 Earnings Call Transcript

Published: 8 Nov 2017

[Operator:]

Greetings and welcome to the Paratek Pharmaceuticals' Third 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. Please be advised that this call is being recorded as per Paratek's request. I would now like to turn the call over to the Paratek team. Please proceed.

[Paul Arndt:]

Good morning. This is Paul Arndt, Managing Director of LifeSci Advisors, Paratek's Investor Relations firm. And welcome to Paratek's third quarter 2017 update and earnings conference call. A press release with the company's third 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 you all for joining our earnings call and corporate update for the third quarter. We were delighted to host many of you a few weeks ago in New York City for our second annual investor day. And for those of you who were unable to attend, we provided updates on our omadacycline development program and our growing pre-commercialization efforts. In addition, we hosted presentation by three thought leaders regarding a need for a new once-daily oral and IV broad-spectrum antibiotic for treating skin infections and pneumonia. The take home messages from these presentations are consistent with what we continue to hear from physicians. One message in particular stands out, that having once-daily oral treatment option in addition to our IV formulation provides significant potential to both patients and the healthcare system, as it reduces and at times even eliminates the need for a hospital stay or as we say, our go-home stay-home strategy. If you were unable to join us in New York or would like to hear the presentations again, as a remainder you can find a replay on the webcast on our website for the next 10 days. Given that it's only been a few weeks since our investor day event, our prepared remarks for the call this morning will be relatively brief. Specifically, we'll focus on remarks today on our accomplishments for this past quarter and provide a current perspective on our upcoming milestone. And finally, we'll provide a review of our financials, which was not part of the investor day presentation. We will then leave time at the end to answer any questions that you may have. During the third quarter we were focused on two primary activities. First, preparing our regulatory submissions for omadacycline for two primary indications, acute bacterial skin infections and community acquired bacterial pneumonia and second, expanding our pre-commercialization effort in anticipation of a potential launch for omadacycline in the first quarter of 2019. As you may recall, our regulatory submission for omadacycline will consists of two individual NDAs, one for the intravenous formulation and one for the oral. With our Phase III program complete, the rolling submission of our NDA will begin next month and is expected to be completed during the first quarter of 2018. As a remainder, we're permitted to submit our filings to the FDA on a rolling basis by virtue of the fast track designation for omadacycline, a designation which expedites drug development and encourages early and frequent communication with the FDA. This designation also provides for a priority review for our NDA. Given the robust efficacy of omadacycline, combined with the generally safe and well tolerated profile we have observed, we remain confident in the approvability of our submission package. Although our primary focus from a regulatory perspective is on the US FDA, we're also progressing our discussions with the European authorities. We plan to submit our MAA in the EU in the second half of 2018. Consistent with our practice of data transparency, we continue to share additional clinical results and analysis with the medical and scientific communities. For example, a few weeks ago we presented new data from our clinical and microbiology programs at the ID Week Conference held in San Diego. In-all, we had nine posters and one oral presentation on omadacycline at a well-attended symposium, highlighting clinical stage antibiotics from across the biopharmaceutical industry. Another significant area of focus for us in the third quarter was our UTI development program. Pursuing this third potential indication remains a strategic priority for omadacycline. An effective and generally well tolerated one once-daily oral antibiotic to treat community acquired urinary tract infections would represent a welcome new treatment option for patients and physicians. Omadacycline is one of very few antibiotics currently in late stage development with that potential. To that end, we were pleased to be granted QIDP designation from the FDA in September, for uncomplicated urinary tract infections for both the oral and intravenous formulations of omadacycline. This QIDP designation is an acknowledgment from the FDA as the pathogens causing UTI infections pose a serious threat to public health and we believe specifically underscores the importance of developing new oral antibiotic to treat them. Omadacycline has that potential. We remain on track to initiate the Phase II UTI program as early as the end of next month. Our Phase II program for UTI will include studies, one, an uncomplicated UTI, where we'll be exploring oral only treatment regimen and a second Phase II study in patients with pyelonephritis, the most common subset of complicated UTI, where we will evaluate IV and oral treatment regiments. Finally, as you hear at our investor day from Adam Woodrow, our Chief Commercial Officer, we've devoted increasing time and resources in recent months to expanding our commercial organization and prelaunch activity. We've made several key hires to round out our experienced team and they're actively developing the strategies and tactics that we believe will position omadacycline for a successful market launch. We now have in place a rigorous and well-considered pre-commercialization plan that anticipates the potential launch in the first quarter of 2019. At present we're focused on two key levers that we believe will ultimately drive appropriate utilization. First, create the awareness of omadacycline around our decision makers and target prescribers though a scientific exchange. To this end, we will continue to present and publish our data on omadacycline and specifically our goal is to have all of our Phase 3 studies in print by the conclusion of the FDA's review of our NDA. This is an ambitious goal, one that we feel is key to building pre-launch awareness and enabling effective promotion of omadacycline from day one of our anticipated launch. Second, to target our pre-launch efforts at formulary access. We recognized that formulary access will be a critical component of our hospital-based marketing strategy at launch. For payers, we will provide our value-based arguments in the form of health outcomes data. In fact, these payer reimbursements and trade discussions have already begun and will continue through next year as we prepare for the anticipated launch of omadacycline. In short, 2018 represents a critically important year for Paratek. We are confident that we have the right plan in place to bring omadacycline to market to satisfy the significant need for a new broad spectrum once-daily, oral, and IV antibiotic. Based on the broad relevant experience of our leadership team, we believe that our plan represents the most practical and effective approach for a successful launch of a new antibiotic in the hospital market today. With that I will now turn the call over to Doug Pagan, our Chief Financial Officer to provide an update on our financial results for the quarter.

[Douglas Pagan:]

Thank you, Michael. We had a relatively light third quarter from a financial perspective with operating expenses recorded at $20.3 million. Research and development expenses were $12.1 million for the quarter ended September 30, 2017, compared with $17.3 million for the same period in 2016. The decrease was primarily driven by lower clinical study costs as expenses from our Phase 3 program wind up. We can expect an uptick in these expenses in the coming quarters as we manufacture validation batches, submit the NDAs for omadacycline, initiate the Phase 2 UTI program and build out our medical affairs team ahead of anticipated launch. General and administrative expenses were $8.1 million for the quarter ended September 30, 2017, compared to $5.9 million for the same period in 2016. The increase was driven by higher employee compensation costs as we continue to build out the commercial organization. We expect this trend to continue as we expand our pre-commercialization efforts in preparation for launch. Our balance sheet remains strong as we move toward NDA submission. The company ended the quarter with $163.4 million in cash, cash equivalents, and investment and $49.1 million in debt. This cash position together with our remaining debt capacity and expected milestone receipts from our existing collaboration partners, provides us the resources needed to continue to invest in the preparation of our upcoming regulatory submission and commercial buildup. Our financial forecasts include the full cost of our operating plan as described in our recent Investor Day, including the Phase 2 UTI program, the hiring of the sales and marketing and medical affairs organizations, as well as the commercial inventory build. Based on these operating assumptions, we continue to expect our financial resources to fund operations through the second quarter of 2019. And now I will turn the call back over to Michael to close. Michael?

[Michael Bigham:]

Thank you, Doug. In all, we had a productive and gratifying third quarter. We remain on track to begin the rolling submission of our NDA for omadacycline next month and we remain confident in the strength and robustness of the data to support the approvability of omadacycline. We have made significant progress in the preparations for our Phase 2 UTI program and we remain in position to build the first station as early as the end of next month. As we mentioned earlier in this call, the QIDP designation is an acknowledgement from the FDA that the pathogens causing UTI inspections pose a serious threat to public health and we believe it specifically underscores the importance of developing new oral antibiotics to treat them. Omadacycline has that potential. And finally, we continue to generate momentum through our pre-commercialization efforts with an anticipated launch of omadacycline in the first quarter of 2019. As Evan Loh mentioned at the Investor Day last month, we are approaching an important watershed transition for Paratek. Roughly 12 months ago, we were a company with significant promise, but still already in the read outs of two of our three pivotal on omadacycline. Roughly 12 months from today, we expect to have an approved product with the launch soon thereafter. This represents a dramatic shift signifying the new and exciting chapter for Paratek. I would like to thank the entire Paratek team, those who have been with us since the very beginning, as well as those who have joined us during our journey for their steadfast commitment and tireless efforts to develop omadacycline. We recognized that we are stewards of a very special drug, a modernized tetracycline. Each of us is motivated by the shared goal to make omadacycline available to patients and doctors for a need of a new broad spectrum well-tolerated once-daily, oral, and IV monotherapy for community-acquired infections. Evan and I are pleased with the progress in the company to date. And as we look forward to 2018, we remain optimistic and energized by the journey before us. With that, we will open the floor to questions.

[Operator:]

Thank you. [Operator Instructions] Our first question is from Louise Chen with Cantor Fitzgerald. Please state your question.

[Louise Chen:]

Thanks for taking my questions. I had a few here. So, first question was on the manufacturing supply that was launched. Just curious if you could provide a little bit more color there on where you are with that and I had a couple of more after that one.

[Evan Loh:]

Yeah. Hi, Louise. It's Evan. Thanks for the question. As you know, we had put our registration loss on stability at the end of last year and we continue to collect data and we believe that data will be ready for our rolling submissions that Michael has already mentioned. Our big commitment currently is to go ahead and get our validation batches off the runway and into production, which we are planning to do and have them, have those validation batches ready for commercial launch on the timing that Michael talked about, which is towards the end of 2018.

[Louise Chen:]

Okay. And then another question I had was just on partnerships outside the US, I know you have the Zai Lab opportunity in China, but what about the other areas of the world and will you wait for the US approval before that or are you in active negotiation now?

[Michael Bigham:]

Yes. Hi, Louise. Mike Bigham. I think as we had mentioned in the past, our strategy remains the same. In the US, we are not looking for a US partner at this time. As you know in the US, our primary focus in the first year or two post-approval is to launch in the hospital setting in the US and we intend to do that on our own. And in the fullness of time, of course, we would expect omadacycline to be pushed out into the community setting at which point in time we would be considering how we do that in the conjunction perhaps for the partner. So, that's our US strategy. Ex-US, we settled along with respect to Europe, the appropriate time for us to have a partner in Europe for omadacycline is before obviously, at or before the time of European approval. We expect to file our applications in the EU as we mentioned by the end of this year that's roughly a one-year cycle - at the end of 2018, apologies, end of 2018 that's roughly a one-year cycle, so sometime between the time that we file and the time that we get approval we would like to have a partner onboard, so they can be a part of that process and prepare for European launch. Outside of that, near-term we look at other regions. Obviously, the Zai Lab partnership is an example where we are prepared to do deals earlier in the appropriate jurisdictions, so we are looking at other parts of the Asia arena, Japan for example also, potentially Latin America, South America, those are areas that we are currently focused on.

[Louise Chen:]

And then on sarecycline, are you considering strategic alternatives for that asset or is that a core item for you?

[Michael Bigham:]

It's an exciting asset for us. We like it very much. In the US, of course, as you know, Allergan has the US rights to sarecycline. We have both milestones and royalties due to us in the United States. From Allergan and we are looking at how we over time monetize those - that asset with those assets coming to us. Outside of the US, we continue to evaluate and think about how we may partner that asset.

[Louise Chen:]

Okay. And then just last question quickly here on Zai Lab in China, how should we model or think about the financial impact to Paratek and when should we start thinking about putting that into our models?

[Evan Loh:]

Yeah, Louise. There are some milestones that will be coming in the next several years based on regulatory. We would not give a specific guidance on that, but we will likely look into that during 2018. Royalties will be several years out, so I think they are out of current frame. So, as we get further along with Zai and their development plan and their filing with the FDA, I think we'll be prepared to tweak more about the impact to Paratek from the financial perspective.

[Louise Chen:]

Okay. Thank you.

[Operator:]

Our next question is from Bert Hazlett with BTIG Research. Please state your questions.

[Bert Hazlett:]

Thanks. Thanks for taking the questions. Just I guess a brief follow-on on the UTI program, I push you to the granularity there. As you have interacted with potential strategics, how important or how meaningful is the discussion of an overall regimens in UTI? Is that a potential gating item to any particular deal in any geography? Just a little bit more color on how material that indication is, not only for you, but for potential strategics. Thanks.

[Michael Bigham:]

Yeah. A good question, Bert. Mike Bigham, thank you. The UTI is seen as, basically across the board, as significant upside depending upon which pharma you speak with, they may or may not have an existing sales force that focuses on that indication per se, but everyone we have spoken to, recognizes the medical need in that arena, particularly for the oral aspect of any regimen, whether it's all oral or IV stepping down to oral that - that's accepted as a clearly identified medical need. So, I think frankly all the feedback has been positive and people are enthusiastic about it. It's not a gating item. Frankly, to have a scanned pneumonia indication at launch, to have two such indication at launch is, as you know for a small company, extraordinarily unusual and for an antibiotic it's particularly helpful. Especially when you think about getting on the formulary, having multiple indications at launch, facilitates that process quite appreciably because it just expands the utility of the drug and gives them a greater rational for putting it on the formulary sooner. And the fact that UTI may be coming is just based on we added benefits.

[Evan Loh:]

I think I would just - Bert, it's Evan. I just build on what Michael said. I think that having those two indications, but more specifically around the pneumonia indication where there actually is not a novel broad spectrum IV and oral once-daily therapy that will provide an option for physicians, especially given the current climate where physicians and health systems are pivoting away from quinolones trying to find reasons to have a different choice and there are individuals also that are potentially allergic to ceftriaxone as the primary go-to first line intravenous therapy. So, clearly there is unmet need in that particular space. And to build on what Michael said about urinary tract infection, I think the QIDP designation that we're granted recognizes us from the FDA the need to develop more antibiotics in the UTI space, but we believe specifically the oral is the underpinning for our go home and stay home strategy and having that oral option is something that we don't believe any other company offers in terms of being in late-stage development. Adam, did you want to comment on?

[Adam Woodrow:]

I mean you know at the end of the day the indication is the third leg of the stool we've always talked about and it would be the icing on the cake if we show that we are successful in the Phase 2 trial and we are moving to a Phase 3. Let's not forget the commercial potential for the indication. I mean there is nearly 900,000 patients that we believe would benefit that have multi-drug resistant E. coli. And that's what everyone is trying to identify an option for, because they could be treated orally, but unfortunately, they are being treated in the hospital and these are the - these multi-drug [indiscernible] that send these patients into hospital. And there is no reason why our drug shouldn't work, because we are not affected by ASP. Some of these certainly have activity against the E. coli. Yeah.

[Bert Hazlett:]

Excellent. Thank you for the additional color.

[Operator:]

Our next question is from Kevin DeGeeter with Ladenburg Thalmann. Please state your questions.

[Kevin DeGeeter:]

Hey, good morning guys. Thanks for taking my questions. I just want to follow up on your strategy with regard to health outcome studies and developing health outcomes data prior to launch. Specifically, should we think about the strategy as being built primarily around the value proposition for an IV to oral setting or additional studies for oral and - when might we begin to get a little bit more granularity on health outcomes data?

[Adam Woodrow:]

So, Kevin, its Adam. We've actually taken a couple of approaches to the health outcomes and you will see more of this as we continue to publish our data during the course of what's left of this year and through 2018. But we've taken two approaches. As you know, we have the go home and stay home and those represent two distinct strategies, one which is about utilizing the oral to avoid a hospitalization completely, but that actually can't be done in two ways, believe it or not. One of them is actually load up with an IV. Keep them under observation. Then put them on the oral and discharge them. That's a very, very cost-effective way of actually avoiding a hospitalization completely and this is something that's seen as very positive by the payer and the hospital system. Another way is the more traditional approach, which is you would admit the patient for three days on the IV therapy and then you would transition them to the oral and then discharge them. We are actually going to publish data on all of those different scenarios, which includes everything from admission followed by the three days followed by discharge, also the observation type of approach and in fact, also an oral-only approach you will see data on. So, all three of those exist and a lot would depend on the hospital system and how they see the utility of the product when they come to look at the placement on formulary and where it fits for that patient base.

[Evan Loh:]

Kevin, I would build on a couple of other aspects of this. And as you know, most of the prospective health outcomes data is generated after launch and it's not really that you can actually do that kind of work here, but as we continue to reach out to payers. Adam and his team are doing a lot of work with the payers understanding what they payer needs are, as well as we are seeing a burgeoning expansion in these full-risk integrated IDNs, these integrated delivery networks, where they will be able to collect prospective data in both of our strategic go home and stay home arenas, right, Adam? I mean we can look at both the question of earlier discharge but we can also look at potentially what is the impact of what we are seeing today is more and more failures I would say in the cap setting for macrolides and the need for prevention of hospitalization overall and I think that those issues with regards to the financial well-being of the healthcare systems, but also to keep people from getting hospitalized alone will be a big emphasis of the fact that we actually have a well-tolerated once-daily oral.

[Adam Woodrow:]

Yeah, I will jump back to that, because Evan does make a good point about the fact that it's often post-launch that you get this data. We actually have seen some data in the existing clinical trials that it is something that shows a reduced hospital stay compared to standard of care. So, we've actually got that ready. It is before launch. We also have, and you will see virtually within the next six months publication of our budget impact models both from a community-acquired pneumonia and a skin setting. This is something that the hospital is used to model out the impact of bringing in a product. All of these are going to be in place and out in the public domain well in advance of the actual launch of omadacycline and something that the payer team and the medical science team will be utilizing with the payer community in advance of the approval of omadacycline.

[Kevin DeGeeter:]

Great. And then maybe one more question for me and then I will get back in the queue. As we think about inventory build for omadacycline prior to launch and specifically the 2018 impact on working capital, how should we begin to think about the range of potential cash use on working capital side for inventory build?

[Michael Bigham:]

Yeah. So, during 2018 we'll continue to record all commercial supply and all clinical supply into R&D since we won't have yet an approval. So, it will be reflected in R&D expense up to the time of approval, but you won't see it reflected in built up working capital inventory until thereafter.

[Adam Woodrow:]

So, in other words, it was also - it's incorporated in the one-way forecast that we've already provided.

[Michael Bigham:]

Sure.

[Kevin DeGeeter:]

I think about it sort of more generally, cash impact of - for the build inventory, I appreciate that prior to launch we are going to have to expense that, but just if you want to lump that all into one bucket, what - just how do we think about the impact here of just manufacturing a product in pre-launch?

[Michael Bigham:]

I think pre-launch, we're good. We don't expect to have other manufacturing runs needed by the time of launch and by the time if you're mid '19. After that, of course, yes, as we do, it would affect the cash burn after that time period, after mid '19 or second quarter of '19. I'm not sure we've given a specific guidance on the rate at which we would add to inventory at this time.

[Evan Loh:]

Yeah, it's right. Kevin, well, I think as we get closer to launch, we talk about our projections and thoughts going forward. We'll talk more about the manufacturing costs, because there are implications to cost and so forth. Right now, all the manufacturing build is related to the validation batches. Those batches will support commercial launch [indiscernible] R&D. We're not, I think, prepared at this point to talk about detailed numbers as to what aspect will go through the supply chain.

[Kevin DeGeeter:]

Great. Thanks for taking my questions.

[Operator:]

Our next question is from Paul Matteis with Leerink Partners. Please state your questions.

[Jeffrey Lin:]

Great. This is Jeffrey Lin Paul Matteis. Thanks for taking my question. Can you just tell us, I guess, what still remains or what is the rate limiting step for the NDA and manufacturing [indiscernible] for the NDA submission?

[Evan Loh:]

Thank you for the question, Jeff. I mean, as you know, there's a lot to be writing.

[Adam Woodrow:]

In other words, the main limiting factor is hours in the day.

[Evan Loh:]

And the other that we've talked about before and other - these - in prior quarter of the calls is really the stability data. We put our registration batches on stability. In the fourth quarter of last year we were just collecting time in that data. So, we believe that that data would be ready for our rolling submission as we talked about to initiate before the end of this year and we'll complete that overall submission in the first quarter of 2018.

[Paul Matteis:]

All right. Thanks for taking our question.

[Evan Loh:]

Thank you.

[Operator:]

Our next question is from Ed Arce with HC Wainwright & Co. Please state your questions.

[Ed Arce:]

Hi, guys. Thanks for taking my questions. I have a couple. First off, for Adam, I just wanted to get a little more details if you could around the commercial prep activities that you're focused on now and through most of 2018, especially with regards to preliminary access and how you think that will ultimately impact uptake through 2019, especially with regards to differences between large urban academic centers and some of their community facility? Thanks.

[Adam Woodrow:]

Thanks, Ed. Good questions. So, what we've done so far is we've got to flush out and build out our full branding and the team now finalizing sort of aggressively the final positioning and the promotional platform that we're going to utilize. Along with segmentation and targeting of hospitals, we haven't finalized that you saw that in the timeline that I've provided at the Investor Day, we'll share more details around the sort of key performance indicators that we're going to track and also our progress to that timeline as we go through next year. That includes the fact that we've committed obviously to having a fully filled out medical science liaison organization and also a complete payer organization by the end of the first quarter of next year and that's the plan, because those teams will be those groups that will be utilizing the payer data with the payers in advance to try and ensure that those are responsible for contracting and also to a certain extent responsible for former is where the omadacycline is coming and have done the prerequisite preparations to ensure that we get early adoption in those institutions and on those health plans. So, that's the first thing. In addition, our medical team are working very diligently to ensure that all of the publications are out in advance as Evan mentioned and make sure that awareness through sort of peer-to-peer discussions and through our publications plan is appropriately in place at the time of launch. And then finally one other thing I mentioned earlier on that you'll see the expansion of, because it's been targeted so far just to be influences. We have an unbranded campaign raising the sort of awareness of both Paratek and the need for new oral antibiotics as we go through 2018. And then the other thing I should also mention is we have significantly holistically ramped up our discussions with physicians through advisory boards both on the medical side and the commercial side to ensure that we're getting the appropriate scientific input and also the appropriate presentation of commercial materials. I should mention that actually even this week we've got both a payer advisory board and a commercial advisor report. This will be the third payer of what we've had in the last six months and it will be the first of our commercial boards, but there will be more of those next year as we fine-tune our campaign before launch.

[Ed Arce:]

Okay. That's great. Thank you. And then perhaps one follow-up for Evan. Just wanted to get a little more color on the trial designs and how you're focusing on UTI both the uncomplicated and the perinephritis and how you think building that data set eventually coming to a future scenario where you would be launching the drug both in the hospital and community settings and how that supports that. Thanks.

[Evan Loh:]

So, thanks, Ed, for the question. Just as a reminder, UTI represents the larger segment of the big three community-acquired infection spaces and our docs have consistently, almost universally, have told us how important this oral option is. And as you rightly say, it is the key underpinning for our stay home strategy, which we have as part of skin, as well as pneumonia, but in this particular case to avoid patients from having to be hospitalized for intravenous antibiotics. What's nice is that FDA, as we said earlier, they've recognized, I think, the importance of having antibiotics developed there and we believe specifically the lack of orals in this space is a real head turner with regards to, I think, changing the natural history of this type of disease as well. And finally, I think when you look at, as I said earlier, the current environment vis-à-vis fluoroquinolones, which have been a mainstay, but people are really pivoting away both because of define an increasing resistance relative to ESBL E. coli, as Adam mentioned, but also specifically to avoid C. difficile enterocolitis, we think that those are two spaces where we offer solutions there. And so, as we think about the UTI program, it will be, I think, exciting to be able to actually explore both uncomplicated, as well as complicated urinary tract infection as Michael mentioned in his prepared comments. In the uncomplicated setting, we will - that is the setting in which we will explore orally once-daily regimens for therapy. And in the complicated setting that's where we'll be looking at both the combination of IV, as well as IV plus oral combinations to look at overall treatment efficacy. As we get these trials underway at the end of - by the end of next month, but also earlier - early next year we'll be able to come back to you with some more specifics about the trial designs. We are still guiding that we'll be able to see top line data from those trials sometime in the early first quarter 2019 timeframe.

[Ed Arce:]

Great and thank you so much. That's helpful.

[Operator:]

Our next question is from Adnan Butt with Guggenheim Securities. Please state your questions.

[Blair Cohen:]

Hi, this is Blair Cohen on for Adnan. What doses will you be taking forward in the UK study and do you think there is a need to mitigate GI side effects with the oral dose of UTI? Could you start with the lower dose to use prophylaxis?

[Evan Loh:]

As you rightly note, we have seen in the oral-only study that we saw in the skin trial or clustering of higher rate of GI adverse events in the first couple of days and the way we look at that is we think that that is related to, I think, most likely some type of oral loading phenomenon. So, clearly our mission, as we've stated before previously, is to evaluate different dosing regimens in the oral setting to try to minimize the GI effects. And when we come back, you will be able to give you some guidance as to what we're looking at in the oral-only setting and that will be primarily in the uncomplicated urinary tract setting.

[Blair Cohen:]

All right. Thank you.

[Operator:]

Our next question is from Laura Chico with Raymond James. Please state your questions.

[Laura Chico:]

Good morning and thanks for taking the question. Just trickling back to the manufacturing front, can you remind us what you expect your capacity to supply the market will be at the time of launch?

[Adam Woodrow:]

If you are talking about - you're trying to get an idea of whether we have sufficient supply, because I can assure we will have plenty of supply to launch. I know that I feel very, very confident that we go, not just for the launch, but also should we get a partner in Europe. We've got the capacity to do that. We've mapped this out quite thoroughly. We know exactly what we're going to need over the next five years. We also know when and if we need to actually expand based on our forecasts.

[Laura Chico:]

Okay. And just one follow-up I think definitely the theme of pivoting away from fluoroquinolones as you kind of quite frequently hear, I guess you're just thinking back to the guidelines for both cap and skin infection, can you also remind us how you envision omadacyclines fitting into these guidelines and perhaps what the timeline and mechanisms would be for updating these guidelines should you be approved?

[Evan Loh:]

Yeah. So, Laura, it's Evan. Thank you for the question. I think that there is that question –embedded in that question is actually two sets of guidelines that I think we should emphasize. The first one is the one that I think you're referring to which is IDSA guidelines or ATS guidelines and those get updated on a periodic basis and we have already started discussions with those particular committees to understand what their timing is. And when our data gets published and when we have more peer use in the physician community, I think we will be able to actually get those on the guidelines, but we're not quite sure of the timeline for that. But the other guidelines that's really important that I think Adam maybe can talk to in terms of the launch dynamics is actually the hospital-based or the system-based treatment guidelines, because there is a codependency with formulary acceptance. It's not just formulary acceptance, Laura, it's also having sponsors in those systems, specifically the IV care roles and the Farm D's believe that this is important for their system and then to get them on their treatment guidelines, because those treatment guidelines drive not only care in the hospital, but because of the burgeoning number of IVNs nationwide, these guidelines will get pushed from the hub hospital out into the community setting. So, I'll leave that introduction up to Adam to talk about the importance of those treatment guidelines.

[Adam Woodrow:]

Yeah, I think you are differentiating the difference between what our national guidelines from societies like the IDSA guidelines, which are actually underactive review and we understand it will be more frequently updated, because that hasn't been updated for a number of years, because there actually hasn't been new antibiotics. So, there has been no reason to do so. I'm absolutely sure with a new antibiotic in the space, there'll be a requested update via national guidelines. But when you get a formulary acceptance, formulary acceptance isn't the sort of end to the discussion with an anti-infective, because as you're probably aware, everyone now has to have in place an antibiotic stewardship committee. An antibiotic stewardship's job, a committee's job is to take a look at any new products that get approved for formulary status and then place them into an appropriate treatment algorithm within the hospital setting. And for us one of the things that obviously is in our favor is that this lack of clostridium difficile seen in general with tetracyclines but also seen in our clinical trial programs to date with omadacycline. Actually, it makes us a very good alternative to most notably the beta-lactams and the quinolones, which have got a higher propensity to reduce C. diff. And so, as a consequence it would be an obvious choice in places where you've got patients that have a high risk to see either because they have certain risk factors or in fact have C. diff in the most recent past. As a consequence, that's a place that we know some of the stewardship committees and looking at already a place for omadacyclines as an alternative, most notably obviously to the quinolones and the beta-lactams in the skin and the community-acquired pneumonia setting. It's too early to specify exactly where we think we're going to be in those guidelines. That's actually part of what we're doing over the course of 2018. It's part of the discussions that we're having with the payer groups as we speak at this very time now, but you can be assured that there is a plenty of spaces for a broad spectrum of IV oral once-drug that can be used in an immunotherapeutic fashion based on the feedback we've had so far to date.

[Laura Chico:]

Thanks very much. That's very helpful.

[Operator:]

Our next question is from Robert Driscoll with Wedbush Securities. Please state your questions.

[Robert Driscoll:]

Hi, good morning. Thanks for taking my quick questions. So, as you build up significant commercial infrastructure ahead of the expected launch in two large indications next year, just wanted to get any thoughts on bringing in additional assets to take advantage of that. Thanks.

[Evan Loh:]

It's a great question, Robert. Thank you. As you know, our stated strategy all along is to build ourselves into a true antibiotic franchise. And the first step of that, of course, was getting omadacycline to the point where it is now with three successful Phase 3 pivotal trials as our “franchise product,” but as we have said, and we still believe strongly, there is an opportunity for someone to become a net consolidator in this antibiotic space. There is a vacuum there in our view. And we believe with the strength of our team, our track record of delivering on our promises and with omadacycline as the “franchise product” as I mentioned, we believe we're well positioned to take such a role, should the opportunities present themselves and we are always on the lookout for appropriate opportunities.

[Robert Driscoll:]

Thanks very much.

[Operator:]

[Operator Instructions] Our next question is from David Sherman with LifeSci Capital. Please state your questions.

[David Sherman:]

Hi, guys. Thanks for taking my question. I was just wondering if we could get any more detail on the planned trial designs for the UTI program, anything in terms of treatment duration, comparators, et cetera.

[Evan Loh:]

Yeah, I think if you look back - hi, David, this is Evan. If you look back at precedence, the standard comparator has been in prior trials [indiscernible] there, we will obviously be evaluating the appropriateness of using that comparator in the different regions that we'll be looking at. In the uncomplicated setting, we think that trial design typically has been a five to seven-day course and look at comparator labels. And on the complicated UTI space, I think you have a duration of anywhere from seven to 10 days of therapy. And so, as we define out the patient populations, I think we'll give you more fidelity on the dosing regimens and the timing and we will, as we always have, post the trials on clinicaltrials.gov and you'll get better visibility as we come back to you most likely in the first half of 2018 with more details on the trial design.

[David Sherman:]

Got you. Okay. Thanks.

[Evan Loh:]

Thank you.

[Operator:]

Ladies and gentlemen, we have reached the end of our question-and-answer session. I would like to turn the call back to management for closing remarks.

[Evan Loh:]

Thank you. Thank you all for those questions. And as there are no more questions, I would like to thank all of you for your time and attention today. Your continued interest in omadacycline and Paratek is clearly important to us. And we very much appreciate your support. This journey would not be possible without you. We look forward to keeping you apprised of our continued progress. Good bye for now.

[Operator:]

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