Paratek Pharmaceuticals, Inc.
Q1 2016 Earnings Call Transcript

Published: 3 May 2016

[Operator:]

Greetings, and welcome to the Paratek Pharmaceuticals First Quarter 2016 Financial Results Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Paul Arndt, Managing Director. Thank you, Mr. Arndt, you may begin.

[Paul Arndt:]

Thank you, Michelle. Good morning. This is Paul Arndt, Managing Director of LifeSci Advisors, Paratek’s Investor Relations Firm and welcome to Paratek’s year first quarter 2016 update and earnings conference call. A press release with the Company’s full year – I am sorry, first quarter financial results was issued yesterday evening and can be found at www.paratekpharma.com. The agenda for today’s call is as follows; Michael Bigham, CEO and Chairman of the Board will provide an overview of the Company’s progress so far this year and near-term plans for the coming quarter. Dr. Evan Loh, President and Chief Medical Officer and Director will review the Company’s clinical programs. He will provide an update on the two Phase III registration studies, and a recently initiated Phase I b study in UTI for its lead compound Omadacycline. Douglas Pagan, Chief Financial Officer will review the financials for the first quarter. Michael will then make brief closing remarks and open the call to Q&A. Adam Woodrow, Chief Commercial Officer will also be available for questions. Before we begin, I would like to remind you that today’s discussion will include statements about the Company’s future expectations, plans and prospects that constitute forward-looking statements for purpose of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. The words anticipate, plan, potential, expect, will and other words to noting future events identifies statements as forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those disclosed in our press release yesterday and in the Risk Factors section of our Form 10-Q filed with the SEC on May 2, 2016. In addition, any forward-looking statements represent our views only as of today, Tuesday, May 3rd and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we may specifically disclaim any obligation to do so even if our views change. I will now turn the call over to Michael Bigham.

[Michael Bigham:]

Thank you, Paul. Good morning and thank you all for joining our 2016 first quarter earnings call that will also include a corporate update. We are pleased to report that we enjoyed a strong start to the year with the successful achievement of several key milestones in our Phase III registration program for our lead compound Omadacycline. Omadacycline is a well-tolerated, once-daily oral, and IV broad-spectrum antibiotic being developed for patients with serious community-acquired infections, where resistance is of concern. We are in currently in Phase III development with Omadacycline conducting pivotal registration studies to confirm the efficacy and safety of once-daily oral and IV Omadacycline in two potential indications. The first indication is acute bacterial skin and skin and structure infections or ABSSSI or Skin. Our second indication is community-acquired bacterial pneumonia or CABP. Recall that our two pivotal studies are being conducted under special protocols assessments with the FDA. Furthermore, we have agreement with the FDA that a single successful study in ABSSSI and a single successful study in CABP would support the approval for both indications for our once-daily oral and IV formulations of Omadacycline. Given our discussions today with the FDA, and the progress of our two pivotal studies, we remain on track to file our new drug application for Omadacycline during the first half of 2018 with potential approval as early as the end of 2018. The Phase III registration program for Omadacycline continues to progress well. We announced just a few weeks ago that enrollment of the Phase III registration study in Skin has completed, in fact, well ahead of our projected schedule. We now expect to provide top-line efficacy and safety results from this study as early the end of June this year. The study enrolled faster than originally planned due in part to significant interest from the clinical investigators in the study. The rapid enrollment rate is consistent with our ongoing market research and feedback from industry thought leaders that suggest we need – suggest the need for a new broad spectrum, well-tolerated, once-daily oral and IV antibiotic that addresses bacterial resistance in patients with serious community-acquired skin infection. In November of 2015, we began enrollment in our second Phase III registration study with Omadacycline for the treatment of CABP. As we have noted in the past, predicting enrollment rates for pneumonia studies is challenging as there are many factors over which one has no control, notably, the severity of the flu season amongst others. However, while this flu season has not per se been a severe one, we are pleased to announce that we have nonetheless experienced a faster-than expected enrollment rate. Based upon our current enrollment experience, we now expect to be able to announce top-line results as early as the third quarter of 2017. Beyond our Phase III studies, we were pleased to very recently announce the initiation of our Phase I b study in urinary tract infection. Evan will provide more detail on this important study later in this call. As you will recall, we also plan to commence a Phase I b study in acute bacterial sinusitis as early as the end of 2016. The primary focus of these studies will be to establish the pharmacokinetics and pharmacodynamics profile of Omadacycline in patients with cystitis or sinusitis respectively. These data will inform our decisions around the appropriate oral-only dosing regimen or Omadacycline in these new indications. Together, these two Phase I b studies will lay the groundwork for the potential expansion of Omadacycline into oral-only indications with the goal of pursuing future commercialization in the broad community setting. There was a growing need for new agents in this category given the increasing threat of bacterial resistance to existing antibiotics. To accommodate our projected timeline to be able to file an NDA in the first half of 2018, we have already begun and transitioned into the next important phase of manufacturing. Our goal is to manufacture the FDA required registration batches of Omadacycline by the end of this year and to conduct ongoing stability testing in order to support potential product launch by the end of 2018. At Paratek, we are committed to sharing information on our science and product candidates with the clinical and scientific communities. In April, we presented a total of 10 posters at the European Congress of Clinical Microbiology and Infectious Diseases, ECCMID in Amsterdam. These posters included data from two clinical studies that reinforce the safety and clinical activity of Omadacycline. Taken together, these posters reinforce the anticipated safety and tolerability attributes, as well as potential clinical activity of Omadacycline, all of which are being further evaluated in our Phase III registration study. Evan will provide a more complete review of the progress of our clinical development program later in this call. As a reminder, Paratek has a second compound in Phase III development, sarecycline, a narrow spectrum once-daily oral antibiotic with potent anti-inflammatory properties. Our US partner for this program Allergan continues to make progress in the execution of the Phase III registration program for sarecycline and we look forward to seeing data from those studies later this year. We were pleased to announce this quarter the addition of Kris Peterson to our Board of Directors. Chris joined in March and as many of you will know she has broad experience in the biopharmaceutical industry most recently as CEO of Valeritas, and prior to that, as Company Group Chair for Johnson & Johnson’s Biotech Sector where she was responsible for research, development, manufacturing, and commercialization of oncology, immunology and other biotechnologies therapeutics. As such, she brings with her valuable experience in leading companies from development stage through to full commercialization and we are delighted to have her as a member of our board. With respect to our balance sheet, we ended the first quarter with more than $112 million in cash, cash equivalents, and marketable securities. These resources will allow the company to fully fund the ongoing development efforts through the readout of our Phase III registration study in community-acquired pneumonia for which top-line data is now projected to be available as early as the third quarter of 2017. For those of you who have already had an opportunity to review the financials reported in our press release, and 10-Q last evening, you will have seen an increase in R&D expense during this quarter as compared to previous periods. This increase is due primarily to the faster-than projected enrollment in both of our Phase III registration studies. As such, expenses that had been projected in future quarters will now be recognized sooner as the studies have enrolled more quickly. This acceleration in the recognition of these expenses does not affect the aggregate expense levels from these studies and as such does not affect our overall cash runway. Doug will provide more detail about our financial results later in the call. The momentum from our first quarter has continued into the second quarter. First, we recently announced the initiation of our Phase I b study to evaluate the pharmacokinetics of oral-only dosing regimens of Omadacycline and subjects with cystitis or uncomplicated urinary tract infections as has known by regulators. Second, we expect to announce the top-line data from our Phase III Skin study as early as the end of June, only a few short months away. Evan will describe these studies in more detail later in this call. With that, I will now turn the call over to Evan to discuss our clinical highlights from this quarter. Evan?

[Evan Loh:]

Thank you, Michael. Good morning everyone. I would like first to describe the important progress we are making with our ongoing Omadacycline Phase III registration study. As Michael mentioned, enrollment in the Skin infection study, which began in June of last year is now complete. We were able to complete enrollment in this study in just ten months which was appreciably faster than we had originally projected and faster than the historical registration Skin antibiotic studies we had used as benchmarks. We now hear the continued enthusiasm that study investigators have had for Omadacycline and we believe that the rapid rate of enrollment reflects a high-level of interest in the potential, clinical utility of Omadacycline as a new, once-daily, well-tolerated, oral and IV broad spectrum antibiotic for use in serious community-acquired infections where resistance is of concern to treating physicians. As you have heard, we expect to be able to share top-line results with the medical and investment communities from this important study as early as the end of June 2016, a few short months away. As a reminder, the purpose of this study is to examine the efficacy and safety of Omadacycline compared to linezolid, also known as Zyvox, which is considered by regulatory authorities and KOL as the most appropriate antibiotic comparator for the treatment of serious and acute skin infections. In this study, the primary outcome measure for the FDA is early clinical response determined at 48 to 72 hours after the first dose in the modified intense to treat or MITT population. As you will recall, the primary outcome measure for the EMA is different. For the EMA, the primary outcome measure is the investigators’ assessment of clinical response at 7 to 14 days after the end of therapy known as the test of cure evaluation. Our study was specifically designed to meet the requirements for regulatory approval in both the US and Europe. As Michael had noted, we have a Special Protocol Assessment or SPA agreement with FDA for the design of the Skin study and we have received formal, central, scientific advice from the CHMP and EMA endorsing the clinical trial design, choice of comparator, and primary endpoints for the adjudication of efficacy. For those who have interest, detailed information about our clinical study design is also accessible in the Science section of our website and at clinicaltrials.gov As we have stated previously, the oral-only indications are an important driver of value for Omadacycline as supported by both market research and the in-bound interest from our clinical study investigators. As we have described in the past, our recently initiated, Phase I b study in UTI and our planned Phase I b study in sinusitis are important components of our broader oral-only strategy. With respect to the broader oral-only opportunities for Omadacycline development, we continue to be focused on a unique opportunity in the near-term to conduct an oral-only Phase III pivotal Skin study that would be designed to earn FDA approval, potentially within the current timeline we have projected for our IV and oral, once-daily, Skin and CABP indications. The potential value to Paratek and prospective partners of an early oral-only indication for Omadacycline is significant. Most importantly, such an augmented label with an oral-only dosing recommendation for patients with ABSSSI would premise promotion in the community setting which is the largest market opportunity for a well-tolerated, broad spectrum, once-daily oral antibiotic. We believe that such a study could be conducted relatively quickly as such a study would not require a hospitalization component and because we have received strong inbound interest for such a study from the clinical community. Such a study would also have the added albeit unintended advantage of solidifying the EU regulatory path to approval based upon the scientific advice feedback that Paratek received from the CHMP last year. We have in the past several months conducted preparatory work with the CRO that would conduct the oral-only registration Skin trial, prepared clinical trial materials, and developed a protocol for discussion with the FDA. We will however, defer a final decision on the initiation of an oral-only Skin study until after the top-line data from the current Phase III registration study are available. To close this discussion of our ABSSSI registration program, I would just like to say that we are very much looking forward to advancing this program in order to provide the patients and doctors what we believe has the potential to be an important new class of antibiotics. The current IV to oral Phase III registration studies are designed to support our go-home strategy for patients, whereas a future Phase III oral-only Omadacycline Skin registration study would support our stay-home strategy for patients. Both strategies leverage the prospective strength of Omadacycline and are designed to provide high quality patient care, as well as patient convenience, while providing cost savings to the healthcare system. With respect to our Phase III registration study in community-acquired bacterial pneumonia, we are pleased to announce that we have experienced faster-than planned enrollment. As Michael has noted, this is due in part to our success in initiating sites quickly in Europe to capture as much of the northern hemisphere enrollment season as possible, as well as a reflection of our commitment to work with the most experienced pneumonia clinical trial investigators many of whom have participated in other recent pivotal Phase III registration trials in CABP. Our site initiation efforts have continued to progress well with nearly 90 sites initiated globally as of today. Further, we are now expanding site initiations in South America, South Africa, and other countries in the southern hemisphere as their pneumonia season is about to begin. However, in my experience, it remains prudent for us to be cautious when projecting dates for completion of clinical trial enrollment. As a reminder, enrollment in CABP studies is primarily influenced by the severity of the flu and pneumonia season, which will migrate seasonally between the northern and southern hemispheres. Further, with relatively fewer southern hemisphere sites, and the anticipated increases in competition for patients from other pivotal CABP trials projected to be enrolling in the northern hemisphere later this year, we are only prepared today to adjust our anticipated date for sharing top-line data to as early as the third quarter of 2017. As we complete the southern hemisphere CABP enrollment season, and enter the northern hemisphere CABP season again later this fall, we will be better able to further refine our timeline for sharing top-line data from this Phase III CABP study. In the aggregate, we believe that we remain on track to file our NDA for Omadacycline with the USFDA during the first half of 2018 for both ABSSSI and CABP. In this base case, what we refer to as the one plus one filing strategy path for Omadacycline, based upon the SPA agreements, our dossier will support an NDA and approval for both oral and IV formulations of Omadacycline in the treatment of both serious skin infections and community-acquired pneumonia by as early as the end of 2018. Beyond our current Phase III studies, we are pleased to report that we have begun enrollment by dosing our first patient in our planned Phase I b study in patients with urinary tract infections or UTI and specifically in women with cystitis, the most common form of UTI. This study will explore a range of doses of both oral and IV Omadacycline to evaluate the pharmacokinetics and pharmacodynamic profiles of oral-only and IV to oral dosing regimens of Omadacycline in female patients with cystitis. This study will also provide initial insight into the potential for clearance of bacteria in urine by Omadacycline in these patients. Urinary tract infections represent a significant unmet need for an oral, well-tolerated, once-daily, broad spectrum antibiotic as these UTI infections can be caused by a range of hard to treat, gram positive and gram negative pathogens including multi-drug resistant E. coli and vancomycin-resistant enterococci or VRE. Again as a reminder, the big three indications for the most successful antibiotics launched in the history of antibiotic development such as levofloxacin, included indications such as, Skin, pneumonia and urinary tract infections. We believe that the Phase I b study of Omadacycline in patients with UTI will provide us with the initial and vital pharmacokinetic data combined with an early efficacy assessment that will provide a first step forward in understanding the potential efficacy and clinical activity of Omadacycline in UTI with an oral-only antibiotic regimen. We also plan – we also continue to plan for a second Phase I b trial in sinusitis that should be initiated by as early as the end of this year combined with the anticipated oral-only Skin, Phase III registration study, these Phase I b studies in UTI sinusitis lay the groundwork for future potential oral-only regimens for Omadacycline beyond the Skin and pneumonia infectious clinical domains. Finally, as Michael mentioned earlier, in April of this year, we presented a total of 10 posters at the European Congress of Clinical Microbiology and Infectious Diseases or ECCMID in Amsterdam. This is the major infectious disease congress held in the EU annually each spring. These posters included data from two clinical studies that reinforce the safety and clinical activity of Omadacycline observed in the clinical program to-date, specifically, data from a pool of analysis of a Phase II study and a truncated Phase II study in patients with complicated skin and skin structure infections or CSSSI demonstrated that Omadacycline appeared comparable to linezolid in evaluations of both safety and efficacy. Data from a separate single-dose study show that Omadacycline had no impact on QT interval as performed with a thorough QTC study. We also presented data from two pre-clinical studies evaluating the impact of Omadacycline on Gastrointestinal Flora including, Clostridium difficile, or C-diff. In a well-validated model, Omadacycline demonstrated that while extensively disrupting Flora in the Gastrointestinal tract, Omadacycline has a low propensity to induce C-difficile infections. A separate study found that Omadacycline exhibited potent in vitro activity against C-difficile. These positive datasets are consistent with the historical clinical experience that Tetracycline as a class have never demonstrated a previous position for inducing C-difficile enterocolitis. This demonstrated attribute confers important clinical benefits to patients and the healthcare system due to a low risk of readmission for severe diarrhea due to C-difficile enterocolitis shortly after the completion of antibiotic therapy. Now, Doug will share an update on our financial results for the quarter. Doug?

[Doug Pagan:]

Thank you, Evan. We continue to be in a strong financial position as we advance the late-stage development program for Omadacycline. The company ended the quarter with $112.3 million in cash, cash equivalents and marketable securities and $19.6 million in debt. Our first quarter operating expenses were $30.7 million. The bulk of operating expenses were R&D costs accounting for $24.3 million for the quarter ended March 31, 2016. During Q1, Paratek experienced its highest patient enrollment in each of Phase III studies. As such, expenses related to these studies that had been projected in future quarters will now be recognized earlier to match the study enrollment. This pull-forward in expense recognition does not affect the total study cost and importantly does not impact our overall cash runway projections. External costs associated with the Phase III clinical studies for Omadacycline led to $14.4 million of expense. The balance of R&D expense was driven by costs incurred related to the planned Phase I b studies, manufacturing of registration batches and personnel costs. All in conclusion of the Phase III IV to oral Skin study work in Q2, we would anticipate R&D expense to return to more typical recent quarterly level. G&A expenses were $6.2 million for the quarter ended March 31, 2016. The bulk of these expenses were related to personnel costs, professional, legal and consulting fees as well as the necessary costs of being a public company. Based on current assumptions, we continue to project that the company’s cash, cash equivalents and marketable securities are expected to fund operations through the readout of top-line results from our Phase III registration study in CABP, which is expected as early as the third quarter of 2017. I now will turn the call back over to Michael to close. Michael?

[Michael Bigham:]

Thank you, Doug. In closing, it is more than fair to say that these past twelve months have been transformative for Paratek on many fronts. We expanded and strengthened our senior leadership team. Our senior leadership team is now complete. We augmented our balance sheet and we initiated two global Phase III registration studies for Omadacycline. A few weeks ago, we announce that our Phase III registration study in Skin with Omadacycline completed enrollment well ahead of schedule and in just a few short months, we anticipate share and review of the top-line results from this study. As you have heard today, our CABP registration study is now enrolling ahead of projected timeline such that we have accelerated our projected timeline for sharing top-line results to as early as Q3, 2017 and very recently went out the initiation of our Phase I b study in UTI. And finally, later this year, we look forward to sharing with you top-line data from Allergan’s Phase III registration study on our second product Sarecycline. While we are proud of the progress we have made to-date, we do recognize that much yet remains to be done. We are privileged to be the stewards of the exciting drug candidates that we have been entrusted to develop for patients and needs. Our team knows well how much potential could these compounds can do for patients worldwide, treat terrible infections and in some cases even save lives. That motivates us daily and we know that you too appreciate the importance of the work we do and we very much appreciate your continued support. With that, we will open the floor for Q&A.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Paul Matteis with Leerink Swann. Please proceed with your question.

[Paul Matteis:]

Hey guys. Good morning. Thanks for answering the questions and congrats on all the progress.

[Michael Bigham:]

Good morning, Paul.

[Evan Loh:]

Good morning, Paul.

[Doug Pagan:]

Good morning.

[Paul Matteis:]

So, we have a couple, one on skin and one on UTI. The first one is, when we are thinking about the potential return on investment of augmenting the label of Omadacycline with an oral-only or I guess, generating oral-only label, when you guys do work with payers and physicians, who are the patients in the outpatient setting for skin infections that would receive a branded oral product? It seems like if someone would second have to get a branded oral, they might go into the hospital, but, wondering what your guys’ thoughts are there? Thanks.

[Michael Bigham:]

Adam, would you like to try?

[Adam Woodrow:]

Yes, I think, in terms of the community pool, there are patients subsets that just now progress first-line agents for their areas that they are resistant to bactrimel clindamycin and they just can’t tolerate it. But what we know from our research is that these patients for the most are risk of a cool treatment outcome where the physician in the community suspects a resistant pathogen maybe in both. Those are the patients where they have to get it right first time. If they don’t it right first time the patient will often end up in the hospital setting. That’s the patient that we are going to be targeting as a small subset of the average patient groups that in front of the doctor’s office. But it is an acknowledging that area that there is a requirement for this broad spectrum agent that covers MRSA in the community.

[Paul Matteis:]

Yes, I know, it’s hard to Adam to speak about this with any actual clinical data in this context yet, but do you have any sense of what percent of the market this is, the subset you are referring to?

[Adam Woodrow:]

Well, we know that’s in the community, the group that would be considered to be an at-risk patient population with a known or suspected drug-resistant pathogen in the United States by about 2018 would be about 3.4 million patients. We know from our research that the requirement for drug vacuum at a site in these patients that either can’t tolerate the existing first-line agents or of filing the generic options would lead us to get us a share somewhere in the mid single-digits of these patients, on those patient numbers.

[Paul Matteis:]

Okay, got it. That’s helpful, Adam. And then maybe, one for Evan. I am wondering on the UTI development path longer-term, you are alluding to on the call how, this is – is this going to be a heterogeneous patient population, various pathogens can be in play, what’s the clinical path forward for carving out the specific sub-types of UTI patients for which Omadacycline is effective? Can you do that by pathogen in a screening process in the clinical study? I know there is some other regulatory aspects of these two that have evolved, so maybe any thoughts there would be pretty helpful. Thanks.

[Evan Loh:]

Paul, thanks for the question. We thought extensively about this and we’ve talked to a lot of KOLs both in Europe as well as in the US about potential path forward and the unmet need. Clearly, when you look at the most complicated setting of complicated urinary tract infection, there is a broad range of bacteria, but in both uncomplicated and complicated, you have to actually deal with, specifically, multi-drug resistant E. coli. But for us, as we take a step back and think about what we are doing in terms of this current Phase I b trial, we are committed to getting the pharmacokinetics right and based upon the strength and attributes of our current oral formulation, the fact that it is a compound that is non-metabolized, well excreted in the urine, minimally protein-bound with consistent performance in terms of reproducibility, in terms of pharmacokinetic profiles in the serum. We are hoping that we can see permissive levels of Omadacycline in the urine as the first step and we wanted to have not a heterogeneous population, but we wanted to have a relatively homogeneous population, Paul, where in the cystitis setting, you will have relatively a straightforward environment where you have one question to ask which is that you will have the ability to determine whether you can actually have the first signal of elimination and cure of E. coli in the urine without having to worry about the complexities of anatomical defects, catheters and other components that lead to complicated UTI. So, right now, we believe that there is good tissue penetration in kidneys and then in fact we know that we got parent compound in the urine. Subsequent to that, assuming that we can actually have permissive levels in the urine that I think have to be at a multiple of at least 2x above to mid-90 for E. coli, then I think that we would – there is a possibility as the guidance has said, maybe going to certain regions of the world, such as Turkey and Greece and I think that in those particular settings you have higher penetration rates of ESCL producing E. coli and maybe we could do an enriching cohort to study that in the uncomplicated cystitis study and I think that would be the next lead-in for discussions with the FDA about a potential enriching strategy, if we wanted to do that and if not, I think the guidance currently still tells us that in fact a traditional larger, pretty traditional Phase III program would be in the opting for us to get our initial approval in either cystitis or complicated UTI. But we would not move forward until we have the pharmacokinetics established in this particular study.

[Paul Matteis:]

Okay. Thanks, Evan, and maybe just one quick follow-up. In this first study, beyond PK and predictable and favorable PK as a potential hurdle for advancement, are you looking to see any – is there any hurdle on test of care like the percent of patients that you want to see favorable TOC or any other more clinical variables that are key to pay attention to here?

[Evan Loh:]

I think we will collect that as a secondary outcome, but the primary outcome is going to be looking at our ability to clear and sterilize the urine as day five or day seven after the initial therapy. We have two other questions that we’ll be looking at, one is the duration of dosing, and number two, I think just to emphasize, because we do not have a tolerability ceiling with our oral compound, because it is so well tolerated that we will exploring higher doses than we are currently using in our Phase III program to make sure that we have investigated the full range of PK needs to assure us that we’ve fully tested this compound to give it a chance to have success there.

[Paul Matteis:]

Great. Thanks very much guys.

[Evan Loh:]

Thanks, Paul.

[Operator:]

Our next question comes from the line of Louise Chen with Guggenheim. Please proceed with your question.

[Q –Brandon Folkes:]

Hi it’s Brandon Folkes on for Louise Chen. Congratulations on all the progress so far.

[Evan Loh:]

Good morning, Brandon.

[Q –Brandon Folkes:]

Good morning, Evan. If Omadacycline is approved for community use, how do you plan to market this to physicians? Would you look to partner or board a larger sales force? And then, secondly perhaps on the Skin data coming out in June, what should we expect to see the intensive type of data and the amount of disclosure? Is it just going to be top-line results or will we see more? Thank you.

[Michael Bigham:]

So, why don’t I take the top-line data first and then I’ll hand it off to Adam to talk a little bit about what we are thinking about today from a marketing perspective. The top-line data will be pretty standard. I mean, I think the most important variables will include our early clinical response which is the primary clinical endpoint for the FDA. But we will, as a key secondary, sensitivity analysis have a test of cure assessment as well and we will have key safety tables reported overall as well. And so, I think it will be a relatively focused set of data, but in addition to that, we are robustly looking at the microbiology which will be important because I think as the path forward in Skin having MRSA in our label is going to be very important for physicians in deciding to use this particular agent.

[Adam Woodrow:]

So, on the commercialization approach, I think, we’ve been very clear about ex-US. We are going to be looking for partners. We have no intention of suddenly becoming a European or an Asian company at this present size. So our focus is going to be on the US and our initial plan in the United States will be to launch Omadacycline in the hospital setting with a targeted field force of somewhere between 80 and 120 bio-representatives. And along with the complementary MSO field force, their objective in the first year will be to gain hospital formulary acceptance and initial utilization on our go-home strategy, which is the early patient discharge. Our well-tolerated once-daily IV to once-daily oral formulation enables that early patient discharge and facilitates high rates of patient compliance. When we have established the trust in our safety and efficacy, we will look to expand beyond the hospital and into the community as you suggested and to do this, we may or may not require a partner, I guess, as we stand today, we haven’t finalized a decision on that yet. But what we do know, is from the research and our experience, that we will see community use without promotion in that community setting if we can establish the appropriate oral-only dosing regimens for both Skin and CABP.

[Q –Brandon Folkes:]

Okay, thanks so much.

[Michael Bigham:]

Thanks, Brandon.

[Operator:]

Our next question comes from the line of Bert Hazlett of Ladenburg Thalmann. Please proceed with your question.

[Bert Hazlett:]

Thank you, thank you for taking the question and congratulations on all the progress.

[Michael Bigham:]

Thank you, Bert.

[Evan Loh:]

Good morning, Bert.

[Bert Hazlett:]

Thank you. Just touching on one of the subjects you spoke on just a moment ago, can you comment on the microbiology of the Skin study at all? What you’ve seen with about to-date?

[Michael Bigham:]

Bert, thanks for the question. We’ve been able to have some early looks at blinded microbiology which is our central lab approach. We have very large number of MRSA and staph which you would expect, which I think will facilitate our ability that have that in the label. We’ve seen appropriate numbers of stress species and in addition to that, because of the type of moderate to severe type of patients we are looking at, we have actually seen some gram negatives, actually in our blinded microbiology determinations today. So, we think that we will have the ability to speak to that at-risk population that Adam talked about, the individuals who have a high risk poor outcome and those that you worry about that may have to be covered for a gram negative where therefore a broad spectrum agent is appropriate. Those just as a reminder for both include individuals that are older, diabetic, coming from a nursing home, or in fact, as Adam has mentioned before many times, those have demonstrated failure on currently available generic antibiotics.

[Bert Hazlett:]

Thank you. And I’ve got just two more points, just the – you touched on the potential for prospective partners I think in your opening comments. Could you just characterize, I mean, with Phase III data upcoming, what is the status of partnership discussion and when is – it’s obviously very difficult to predict such thing. But what is the urgency with what you are pursuing that now and when might that pool up?

[Adam Woodrow:]

Well, I think, in all on a stay, there is no urgency on our part at this present time. We would like to find a partner for Omadacycline in Asia and in fact for Sarecycline in Asia because of course they require local study populations. Given that our current strategy for registration for example in Europe, it’s probably going to be an approval about a year or so behind the United States. We’ve got a bit of time to think about the partnership option there in Europe and clearly, and this really comes from mine and the rest of the groups’ personal experience. Any potential partner is going to want to read – you see a de-risk assets and something that’s got pretty good a surety of an approval in the European Union. And so, from our perspective, we’ve obviously open discussions. We’ve got people that are interested, but like ourselves, they want to see the results for the first phase pre-clinical trials.

[Michael Bigham:]

And I would – Bert, I would add one more piece of feedback that we’ve received as well is that I do think given the past history with other biotech companies in the antibiotic sector, I think the de-risking probably in our particular case includes data from our pneumonia study as well in addition to the Skin study if you pour, I think something like that could be seriously entertained.

[Adam Woodrow:]

In oral-only as well.

[Michael Bigham:]

In oral-only as well, yes.

[Bert Hazlett:]

Okay. Thank you for that color. And then just one quick one, you have started the UTI program, but I believe you have mentioned sinusitis was potentially being considered as well as you have previously. When should we expect a movement with regard to that indication as well?

[Evan Loh:]

Yes, I think, sinusitis is one that we are very excited about planning for. I think the challenges that, require that we’ve actually modeled it against the published Gatifloxacin study that was published specifically where individuals with acute sinusitis had sampling in their sinuses both at the beginning of therapy as well as during the course of therapy and there are only a small number of specialized centers in the US and also they are, I think even fewer potential patients that would want to volunteer for that. So, we are right now doing a lot of diligence and I think the path remains challenging. That being said, I do think independent of that, I think the pathogens that we are looking at in the community-acquired pneumonia study have almost direct overlap with what you would see in the acute sinusitis setting. So we believe that these are supplementary and supportive of basically upper respiratory type of pulmonary as well as sinus type of infections.

[Bert Hazlett:]

Okay, okay, thank you. congratulations on the progress.

[Evan Loh:]

Yes, I think, just – I mean, just- I think we are still planning for the end of the year Bert, not to avoid your question, but I think right now that is still our plan by the end of this year to get that off the ground.

[Bert Hazlett:]

Okay, thanks. I didn’t know whether to oppress that or not. Thank you for the clarity.

[Michael Bigham:]

Yes, thank you.

[Operator:]

Our next question comes from the line of Hartaj Singh with BTIG. Please proceed with your question.

[Hartaj Singh:]

Yes, thanks for the question guys. I really appreciate it. I just have a fairly simple question, now with CABP coming into sites, can you just explain some of just the market dynamics, the differences between Skin and CABP both from the standard of care, how these patients are treated and then just market dynamic perspective would be really very, very helpful. And I just have a quick follow-up after that. Thanks.

[Adam Woodrow:]

Yes, I suppose it’s some interesting, I am trying to – in terms of the dynamics, I mean, both of the – both groups, both Skin and community-acquired pneumonia get treated in hospital obviously with the IV orals and if you look at Skin, your typical treatment paradigm would be a generic vancomycin plus or minus a bit to lack them and then, if the patient doesn’t respond and they got a sensitivity that will go for a targeted approach which fits with the current antibiotic stewardship that’s dose one per day, but all too frequently that will have an undiagnosed pathogen or that will have a polymicrobial infection and in those instances, that bolting on net several other antibiotics and this is obviously a space where Omadacycline could fit as a broad spectrum monotherapeutic option or for some reason you can’t tolerate vancomycin, you got a degree of renal failure and you’d ultimately be looking for something else that could cover the patient empirically, that would be a spice where would obviously be a first-line treatment option. There aren’t obviously any drugs approved at this present time that a broad spectrum, prior to the orals with MRSA coverage. In the community-acquired pneumonia space, it’s typically combination therapy. So, if you turn up in the hospital, you will get IV Ceftriaxone or Rocephin as it used to be called plus you will get Macrolide. So you get combination therapy. In some cases, you might get quinolone as a monotherapy but all too frequently we are saying that the quinolones are pooling out a favor for all sorts of reasons not least their toxicity profile, but also their ability to induce C-difficile infections within hospitals. So they are looking for alternatives, especially if that Ceftriaxone Macrolide combination are failing. One thing I would say about that combination of course is that there is no oral step-down or oral discharge, because Ceftriaxone doesn’t come with an oral formulation. So, clearly there is a spice for a broad spectrum, monotherapy in a well-tolerated once-daily formulation offers early patient discharge and that’s of course the space that will be targeted in those patients but at most at-risk of that resistant pathogen. Does that makes sense?

[Hartaj Singh:]

Yes, no, no, that’s very helpful I mean, it’s something that we’ve got to start thinking about seriously now, you know, assuming Skin as positive. And then just a follow-up, assuming Skin reads out positively, just what are some of the steps from a commercial and educational and sort of getting the message across of Omadacycline and the Skin trial that you’ll be sort of engaging in prior to CABP reading out in the third quarter of next year and thank you.

[Michael Bigham:]

Well, clearly, I think it’s one of those areas where education is important. I mean, in the past, if we were successful obviously in conducting an oral-only trial, in the past there has not been a new agent for primary care physicians that also covers MRSA as a broad spectrum oral option. That’s in itself an education that could be conducted. But, just having new options is important today. There is a lot of discussion around IV-only drugs, because there is plenty of those, but, truthfully, it’s the one area where we can continue to do our education is the area that we focused on and you’ve seen probably already from Paratek and that is, we continue to make sure that we get our day throughout there in terms of publications, posters and presentations. And also, we are in this position where are seeking advice actively from our key opinion leaders in terms of ad votes, and once we got from them the appropriate forms of education, we will progress those a bit closer to time.

[Hartaj Singh:]

Got it. Thank you. Appreciate that.

[Operator:]

Our next question comes from the line of Chiara Russo with Cantor Fitzgerald. Please proceed with your question.

[Chiara Russo:]

Yes, hey guys. Good morning. Thank you for taking the questions. I think, just a couple. My first question is around the oral-only Skin Phase II trial. I wonder, Evan if you could probably get a little bit more granular with how you think that trial is going to work? How big it’s going to be? If there is sort of different types of inclusion criteria for the patient, sort of give us little bit more color on that.

[Evan Loh:]

Good morning, Chiara. Thanks for the question. There is pretty, defined guidance actually today for in oral-only ABSSSI trial also the path that – set forth, actually that’s a good analog as well. The design of the trial will be roughly similar to what we have for the IV oral it will be about 700 patients overall. We think it will be oral-only Omadacycline , randomized one-to-one against oral Zyvox. We will have an early clinical response assessment at the primary endpoint and we will, however, be also collecting the test of cure assessment as a key secondary. That’s the basis upon which our protocol was written, that is currently down at the FDA that they are looking at and we hope any day now or in the next few weeks that we will receive endorsement from them as well. The other feature of this trial that I think is important to reemphasize is that because it doesn’t have a hospitalization component, just being oral-only it is in some ways logistically less complicated than what we had with the IV oral and we believe it will have the potential to enroll in even a shorter period of time than ten months, it’s number one. And number two, because of the glitches of MRSA in the US, as well as the combined inbound interest from our current clinical investigators who really are interested in this broad spectrum oral agent with MRSA coverage we think that the primary region for the site will be in the US, which will also I think help facilitate this program moving very quickly.

[Chiara Russo:]

Okay, so basically we are just talking about sort of the standard to Skin Phase III outlook and you said the clinical investigators are interested, does that mean that there is going to be potentially a lot of overlap in sort of the sites that help that with the CABP and the Skin IV oral?

[Evan Loh:]

I think, yes, I think, you are right. It will be about 30% to 40% of the sites will be exactly the ones that we use for our IV to oral and they are the ones that are pushing hard, but again, we think that’s important to have new investigators have the opportunity to work with Omadacycline and I think, to go back to a question that Hartaj asked earlier, another way to actually greet familiarity and uptake ultimately is to have as many clinical investigators with experience with this product to give us information on safety and ultimately efficacy before the product is actually launched into the community.

[Chiara Russo:]

Okay, that makes sense. And so, obviously, we are all looking forward to having the top-line readouts hopefully in June and then you’ve got the big CABP readout in third quarter 2017. There is a little bit of a gap there, if Sarecycline hopefully comes out mid-year, I think this year as well. Any other sort of data readouts or news besides the trial initiation. Just sort of to fill that gap in terms of like news well if you would.

[Evan Loh:]

We have just filling a couple of other data readouts that we think will be coming in the mid to second half of this year. As you know, we have some required special population studies for the FDA that all products have to have that includes looking at our clearance from a population of renal impaired. We will also be looking at our bronchoalveolar lavage study in individuals to look at lung lavage penetration levels of Omadacycline. I think that will be facilitated to continue to buttress our confidence in the success of our pneumonia study going on. And then, we do have another repeats multi-dose oral PK study. That would be reading out sometimes in the middle portion of this year as well. And finally, as we talked about, depending upon our resources, and the top-line data, we hope to be able to actually get our oral-only Skin study off the ground after that period of time. And I think

[Michael Bigham:]

UTI data.

[Evan Loh:]

And the UTI data as well, yes, in Q1 of 2017, as early as that. And then, just to update you on the timing, we believe based upon publicly available information and what Allergan has shared with us that their data is actually going to be out sometime in the second half of this year. Chiara, I think, you said in the middle of this year, but I think it will be in more in the second half of this year.

[Chiara Russo:]

Second half. Okay, all right. Perfect. And just last sort of housekeeping, you guys sort of touched upon your R&D spend being little bit above average due to increased enrollment and how that sort of pulls that your spend – pulls us in a little bit and you touched on the – do you think that the R&D spend will return to more historic levels. Are you talking about more sort of the late 2015 levels going forward? Just kind of curious if you could frame that up for us?

[Michael Bigham:]

Sure, so we would expect Q2 to be somewhat similar to Q1 based on the enrollment of the Phase III as well as some of the preparatory work that Evan had already discussed with oral-only Skin.

[Chiara Russo:]

Okay.

[Michael Bigham:]

But then, following Q2, we will have a drop more inline with 2015.

[Chiara Russo:]

Okay.

[Michael Bigham:]

Second half of 2015 I think is a good proxy.

[Chiara Russo:]

All right, great guys, great progress. Thank you for taking the call.

[Michael Bigham:]

Thanks, Chiara.

[Evan Loh:]

Thank you.

[Operator:]

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

[Kevin Kedra:]

Hi guys. Thanks for taking the questions. Just wondering first, you mentioned that talking to partners is going to want to de-risked assets that’s probably going to go up CABP or potentially the oral-only studies, but when you speak to these partners, can you gauge on the levels of interest in the Skin program versus CABP and maybe also oral-only and then secondly, I know it’s early given that we haven’t had any of the Phase III readouts, but, can you talk about how you might think about pricing given that we’ve seen where some of your competitors have priced some of the recent launches in Skin, one of your competitors talking us today about a price that they think to be reasonable in the CABP space, certainly more for a – more a outpatient than inpatient setting, but it seem to be sizable delta between where they were looking at pricing versus where most of the skin products are priced. So, proprietary again Omadacycline is going to have multiple uses. How are you initially thinking about pricing?

[Adam Woodrow:]

So, I will take that. I think, I can’t comment really on the value proposition of competitive products, but what I can say is that at Paratek we have committed to a value-based approach to pricing that fits with good antibiotic stewardship. Obviously, that means that we need to gain utilization only in patients who would most benefit from Omadacycline. Our current research, both here in the US and ex US, suggest that that would be those patients that have most at risk of poor treatment outcomes with a known or suspect resistant pathogen or potentially in patients who have failed in the current generic options and who would benefit from an empiric broad spectrum monotherapy that’s convenient and it’s obviously in a once-daily, well-tolerated IV and oral formulation. I think if we can actually validate that product profile, we will be in a position where it will be positive for the patients the environment and the healthcare system and they will fit well with the current antibiotic stewardship initiatives. Other than that it’s really a little bit too early for us to talk about specific pricing, but clearly, it will have an impact in terms of where we are and we will have the benefit of looking at the environment in a couple of years when we come to market.

[Michael Bigham:]

Hi, to your question with regard to partnering, just a few clarifying comments, with regard to de-risking the asset, there are two sides to that question. One is, what do the partners want to see and from our perspective is, what data do we want to have in hand before we consummate a partnership. And the Skin data obviously will have here in a few short weeks or a few short months. That’s excellent. But we also want to have our pneumonia data in hand before we consummate any partnership either European or as Adam intimated earlier, if we get an oral-only indication – when we get an oral-only indication of what kind of partnership might we look for in the US, because we want to get value for that pneumonia indication. We are excited about that opportunity set. As regards partners per se, there is a – as you can imagine, there is a heterogeneous partnering universe out there. There are some pharmas who have a predominant interest in the hospital setting and that’s their primary focus. Others, prefer the community setting, because that’s where they have sales forces and some frankly have the ability to bridge both opportunity sets and we are having conversations with all of the above and there is a variant level of interest in Skin versus, call it, respiratory. Obviously, we call it pneumonia, but in many respects, pneumonia is really the first and perhaps arguably the most important indication for respiratory infection, but really it is only the beginning. So there is a broad universe of potential opportunity there. So, it’s too early to tell. I think it’s also pretty clear that in the last several years, there has been momentum building within big pharma in terms of interest in the antibiotic space, sort of a rediscovery if you will that the antibiotic space and the antibiotics in general can in fact become blockbuster drugs. Others have proven that. Cubist did a very nice job approving that and as you know, and with the improved regulatory environment and what we see as a generally favorable pricing environment an improving pricing environment for antibiotics, we think that bodes well for the partnering opportunities. But, our goal of course near-term is to generate the Phase III data in Skin and CABP and as you know, we very much like the concept of doing an oral-only Skin study for all the reasons we’ve cited, because that would in fact, provide the opportunity to promote in the community setting early, which we think has significant advantages both and to our prospective partner.

[Evan Loh:]

Is that okay, Kevin.

[Kevin Kedra:]

Yes, great, thanks.

[Evan Loh:]

Okay, thank you.

[Operator:]

[Operator Instructions] Our next question comes from the line of Katherine Xu with William Blair. Please proceed with your question.

[Katherine Xu:]

Yes, thank you and good morning. Can you just remind us the activity of Omadacycline in renal impaired patients? I know, you are doing the studies, but what is the activity of that to-date? And also, do you have a sense of percentage of patients – that are renal impaired in the – at least the first Phase III study, maybe you have some second Phase III?

[Evan Loh:]

Katherine, thank you for the question. Omadacycline is actually avidly cleared in the urine and through the kidneys which is important for us to actually explore this indication, because it actually has very low protein binding. The data we have to-date is that 40% of the absorbed oral dose is actually cleared in the urine and we believe currently based upon a single-dose ABME study that we have permissive levels of parent compound in the urine to go ahead with this multi-dose oral Phase I b UTI study. What was – and the percentage, yes, I think, we actually, because of the fact that we have – had not run this particular study in patients with end-stage renal disease or in hemo dialysis. We have to actually had – we had an exclusion criteria for severely renal impaired. Those individuals with less than 30 CCs per minute of GFR. And so, to-date, I don’t know, I can’t tell you exact distribution across the GFR spectrum, but because of the fact that we actually do not have an age ceiling, or I think we are going to see a good number of individuals above the age of 65 and those individuals by definition will have some degree of renal insufficiencies. So, that is actually going to be some good data for us to look from a population PK perspective and to see how their ultimate efficacy will go. But I think, the way to think about it is that, even in individuals that have mild to moderate impairment in renal insufficiency, because of the way we are – Omadacycline is cleared what does that results in, that will ultimately result in actually higher steady state level of Omadacycline. And because of the fact that we actually have a safety ceiling with the IV that goes up as high as six times above the current dosing, that we believe that we won’t see a shift with regards to tolerability, but also as we all know, higher levels of antibiotics generally portends better outcomes overall.

[Katherine Xu:]

Great, that’s helpful. And thanks Evan and another question for Adam, so, from the IV to oral step-down, what you are observing in the marketplace. Do people – how high is the co-pay and to people – are people prohibited from selling the oral prescriptions because of the high co-pay and things like you have observed that in the marketplace?

[Adam Woodrow:]

Well, I mean, clearly, the situation is that there is co-pays associated with discharge on various drugs. In fact, that was recently at an advisory board, where they wanted to move to generics. Unfortunately, it was single source generics and the single source generics were over $150 a day and that was causing big problems because there was no sort of co-pay assistance or any patient programs. Any branded drug would obviously take this into account. Given the fact that we have an IV and we have an oral, our plan when we ultimately come to market Omadacycline in the marketplace will be to make sure that the IV is priced appropriately and doesn’t discourage pharma re-acceptance in anyway and we do from our research that there are certain prices for IV drugs that really do put barriers up to pharma re-adoption. We won’t go into that realm with our IV. And with the oral, we will make sure that there is appropriate patient access. We don’t want patients to be discharged on the oral only to reject it because of a co-pay or a co-insurance system that can’t be bridged by the company sourcing. That’s exactly what we will take into account when we are ready to launch.

[Katherine Xu:]

Thank you.

[Operator:]

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

[Michael Bigham:]

Okay, thank you. Just in closing, thank you all again for your time and interest today. Clearly, it’s an exciting time here at Paratek as we continue to advance our Phase III program and begin to make preliminary preparations for potential commercialization of Omadacycline in a few short years. With the recent initiation of our Phase I b study in UTI, and the potential for a Phase III registration oral-only study in Skin, we are proactively exploring the broader opportunities for Omadacycline. All of these activities arise from our belief and the potential for Omadacycline to make a real difference in the treatment of serious infections and consequently the larger patients. This belief motivates us daily. We very much appreciate your continued support. Thank you.

[Operator:]

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