Paratek Pharmaceuticals, Inc.
Q4 2016 Earnings Call Transcript

Published: 2 Mar 2017

[Operator:]

Greetings and welcome to the Paratek Pharmaceuticals' Fourth Quarter and Full Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Paul Arndt, Managing Director, LifeSci Advisors. Thank you, Mr. Arndt. You may begin.

[Paul Arndt:]

Thank you, Michelle. Good morning, everyone. This is Paul Arndt, Managing Director of LifeSci Advisors, Paratek's Investor Relations firm. And welcome to Paratek's Full Year and Fourth Quarter 2016 Update and Earnings Conference Call. A press release with the company's full year and fourth quarter financial results were 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, all, and thank you for joining our full year and fourth quarter earnings call and corporate update. We continue to execute on our deliverables for the clinical development program for omadacycline through the end of last year and we remain well-positioned to deliver upon our projected key milestones into 2017. Most notably, enrollment in our Phase 3 pivotal registration study of omadacycline in community-acquired bacterial pneumonia accelerated in the fourth quarter. And as you know, this increase based the recruitment enabled us to complete enrollment in early January, which in turn enable us to move up our projected timing for top line data from the third quarter to the second quarter of this year. As you can imagine, our team is diligently working to complete the tasks necessary to close out this study in a timely manner and we are looking forward to sharing the results with you when they're available, which we expect will be early in the second quarter of this year. Community-acquired bacterial pneumonia represents an important potential indication for omadacycline. And with the data from the studies soon to be available, we remain on-track assuming successful outcome to file a new drug application for omadacycline for both the skin and pneumonia indications in the first half of 2018. We hosted our inaugural R&D day in New York in November of 2016. We were pleased to have a panel of distinguished experts who shared some new and important clinical and health outcomes data that we have generated over the last 18 months. These data highlighted our ongoing efforts to advance the clinical development program for omadacycline in the treatment of ABSSSI or skin infection, community-acquired pneumonia and UTI, as well as certain studies in special population. These data provided a fresh perspective on the magnitude of the unmet medical need in skin infections, pneumonia and UTI. These data also highlighted the value of a well-tolerated once-daily oral and IV treatment option from both the payer and the patient perspective. Also in the fourth quarter, our Phase 3 study of an oral-only dosing regimen in skin infection continued to enroll according to plan as we now have a well-established network of clinical study centers that are well-familiar with the omadacycline program. We are pleased with the progress of this study and we remain on-track to report top line data as early as the second quarter of this year. Oral-only skin study is an important study for us strategically as oral-only dosing is a key element of our stay-home strategy for omadacycline. We believe that the growing patterns of resistance and skin infections have created a significant unmet need for a new broad spectrum, well-tolerated and once-daily oral antibiotic. An increasing number of patients are being admitted to the hospital for skin infections to receive IV antibiotic treatment resulting from resistance to or failures of generic broad spectrum oral agent. Some or all of you may have had personal experiences along these lines either directly or through family or friends. We believe that there is a significant potential for omadacycline to help patients successfully treat their infections while staying at home, thus avoiding the significant cost, inconvenient and potential complication from hospitalization. In addition to our two initial indications - pneumonia and skin infections - we're also exploring Urinary Tract Infection as a potential third indication. As you will recall from our R&D day last fall, we announced the positive results of the Phase 1B pharmacokinetic study of omadacycline in patients with Urinary Tract Infection, which is the most common community-acquired bacterial infection. And based upon those results, we have begun preparatory work on the design of a Phase 2 proof of concept study in complicated UTI - and Evan will provide more details on that shortly. Finally with respect to omadacycline in October 2016, Paratek announced a new cooperative research effort with the U.S. Army Medical Research Institute of Infectious Diseases, which you may know as USAMRIID. As the study for omadacycline and pathogenic agents causing infectious diseases of public health and biodefense is important. These studies are designed to confirm dosing regimens and assess efficacy of omadacycline against biodefense pathogens including plague and anthrax. In summary, we have worked hard to continue to advance the clinical development program for omadacycline and we believe we are well-positioned to deliver upon important milestones in 2017. Specifically, data from two Phase 3 studies are expected in the next several months, followed by an NDA submission projected in the first half of 2018. In parallel with our clinical development activities, we have also taken steps in the fourth quarter to strengthen our balance sheet, and Doug will provide more specifics later in the call. With that, I will now turn the call over to Evan Loh to provide an update on our development program. Evan?

[Evan Loh:]

Thank you, Michael. Good morning, everyone. I'm pleased to report that our two Phase 3 registration programs for sarecycline and omadacycline are progressing well. Sarecycline is a well-tolerated once-daily oral narrow spectrum tetracycline-derived antibiotic with potent anti-inflammatory properties for the potential treatment of acne and rosacea in the community setting. Allergan which owns U.S. right is conducting two randomized Phase 3 studies, as well as a third long term safety study. The top line data from this safety program is expected to be announced in the first half of 2017. Omadacycline is the primary focus of our development efforts. As Michael mentioned, we have delivered significant progress in our pneumonia program with enrollment last quarter that exceeded our projection. Subsequently, the study was fully enrolled in January of this year. Enrollment of this study began in November 2015 and included approximately 750 patients at 125 study sites around the world. This study completed enrollment faster than anticipated in just under 14 months. This rapid enrollment speaks to the quality of our investigators and to the commitment of the Paratek team. This Phase 3 randomized, double-blind, multi-center study is designed to compare the safety and efficacy of IV to once-daily oral omadacycline therapy to IV and oral moxifloxacin for treating adults with community-acquired bacterial pneumonia. The study was designed to satisfy both FDA and EMA requirements. Now that the pneumonia study has completed enrollment, we look forward to sharing the top line results with you early in the second quarter of this year. Switching now to our oral-only skin study. We continue to make good progress. Executing the program according to plan's timeline. We dosed the first patient in our Phase 3 oral-only, skin infection study in August of 2016 and we are still expecting to report top line data as early as the second quarter of this year. The study was designed to satisfy both FDA and EMA regulatory registration requirement. As a reminder, this is a randomized double-blind, multi-center study in adult with moderate-to-severe skin infection. Once-daily omadacycline is being compared for efficacy and safety to the active competitors which is twice-daily linezolid. As many of you know, we have designed our omadacycline clinical development program to seek regulatory approval in both the pneumonia and skin infection indications, predicated on successful outcomes in both the IV, the oral pivotal Phase B trials in ABSSI and community-acquired bacterial pneumonia. The additional oral-only study in skin infections will enable dosing recommendations for oral-only use which will support use of omadacycline in the community setting. Last year, we begin exploring the potential for omadacycline for development in a third indication which is Urinary Tract Infection, as there is a substantial unmet need for AU broad spectrum, oral antibiotic in this space. Our Phase 1B study in UTI last year demonstrated high concentrations of omadacycline in urine and based on the totality of the omadacycline Phase 1 PK data sets, we are now in the process of designing a Phase 2 proof-of-concept study in patients with acute pyelonephritis, which is the most common subset of patients with complicated Urinary Tract Infection. As of now, we plan to initiate the study as early as the fourth quarter of this year. Finally as discussed during our third quarter 2016 earnings call, an important deliverable for Paratek in 2016 was the completion of the drug product registration batches and the initiation of a registration stability program. Additionally, we recently signed commercial supply agreements with three European-based contract manufacturers for omadacycline. 2017 will certainly be an exciting year for us as we expect to have the readout for two Phase 3 studies and the initiation of important Phase 2 studies in complicated UTI. In addition, we will also devote considerable time and attention to sharing the clinical profile of omadacycline with the scientific and medical communities through a robust publication and presentation strategies. Last year, we published nine preclinical peer-reviewed manuscripts and held our first R&D day. We continue to analyze data from our Phase 3 IV-to-oral skin study and the filing of the 10-K has given us the opportunity to share additional safety data. Liver function changes including ALT, AFT and bilirubin continue to be similar to the comparator linezolid. No [indiscernible] occurred in the study. Vital sign analysis which included systolic blood pressure, diastolic blood pressure and heart rate demonstrated minor differences between treatment group. Heart rate analysis demonstrated that the mean changes from Phase 1 for heart rate in omadacycline treated patients was slightly higher than the linezolid with a difference of fewer than five beeps per minute at oral time points. Of note, during the study, sign of tachycardia was reported in a single omadacycline subject, mild in severity and not related to treatment. There were no reports of tachycardia in linezolid-treated patients. There were no subjects in either group that reported palpitations. In conclusion, this study demonstrated that both omadacycline and linezolid were safe and well-tolerated. We also included in our 10-K updated microbiological surveillance data which continues to support the potency of omadacycline against key pathogens in our targeted indications including ABSSI, community-acquired bacterial pneumonia and UTI. We intend to continue our commitment to data transparency through peer-reviewed publications and presentations at scientific conferences. We are excited that we will have a significant presence at the upcoming European Congress of Clinical Microbiology and Infectious Disease in Vienna at the end of April at which we have 13 accepted abstracts. Two of those abstracts have been accepted as oral presentations. The oral presentations will include the Phase 3 IV-to-oral skin trial or [indiscernible] study and the human lung penetration or BAL study. Some other highlights among this set of abstracts are the analysis we've conducted of the infection-type and pathogens in the Phase 3 skin study and several abstract examining the health, economic benefit of IV to oral and oral-only omadacycline in treating skin infection, which will eventually form the backbone of our messaging to support our 'go home' 'stay home' strategy with doctors and payers. We hope that you can join us in Vienna, and if not, be sure to check out the abstract once they're available online. 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 year with $128 million in cash, cash equivalents and marketable securities and approximately $40 million in debt. The Q4 total cash balance was increased by our drawing down the second $20 million tranche from Hercules under our pre-existing debt agreement which was modified during the fourth quarter. The modifications extended the interest-only period by three quarters with sensible repayment now beginning in January 2019. Hercules also made a third tranche of $10 million available for Paratek. It draw contingent on success in either of the two ongoing Phase 3 studies. Our year-end cash position included $9.6 million raised through sale of equity during Q4 under our ATM agreement with Cantor Fitzgerald. This program continued into the first quarter of 2017 raising an additional $13.1 million this quarter. Taken together, this proceeds plus the $128 million year-end balance of cash and investment are expected to extend cash runway through the first half of 2018. Turning to the P&L, our fourth quarter and full year operating expenses were $25.9 million of $109.5 million respectively. R&D expenses were $19.7 million for the fourth quarter and $83.5 million for the full year ended December 31, 2016. The primary drivers for these expenses were our Phase 3 clinical studies of skin and pneumonia, Phase 1 study personnel related cost and expenses associated with manufacturing activity. G&A expenses were $6.5 million for the fourth quarter and $26.4 million for the full year ended December 31, 2016. The bulk of these expenses were related to personnel cost, legal fees and other professional services supporting our overall growth and our being a public company. And now I'll turn the call back over to Michael to close. Michael?

[Michael Bigham:]

Thank you, Doug. As you have heard, we had a very productive and gratifying 2016. We announced positive Phase 3 IV-to-oral top line data from our skin study in June, advanced our Phase 3 study in pneumonia to near completion by year-end, initiated enrollment in our oral-only Phase 3 skin study in August and announced the positive result from our pharmacokinetic study in UTI. In addition, we signed a new cooperative research agreement with USAMRIID, study omadacycline against biodefense pathogens. We are pleased with the progress to date, but we also recognize that there is much work yet to be done. That said, this is an exciting period for us all. Spirits remain high, energy level is almost palpable. We have worked hard to get to this point. We remain focused on the clinical development of omadacycline while devoting increasing efforts to registration activities and commercial readiness. 2017 promises to be an exciting and eventful year. The goal line is very much within view. The growing body of data on omadacycline from our clinical studies as well as investigators and other experts in the field, reinforces our belief that omadacycline has the potential to make a significant difference in the treatment of serious community-acquired infection. We cannot help but get motivated by the opportunities to make a positive impact on the lives of so many each year and at some cases, even save lives. That knowledge instills in us an appropriate sense of urgency and excitement. We know how fortunate we are to be the stewards of this promising new class of much-needed antibiotics and we are grateful for the opportunity. Importantly, we recognize that this journey would not be possible without you. We know that you understand the importance and potential of the work that we do. We very much appreciate your continued support. And with that, we will open the floor to questions.

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our question comes from the line of Paul Matteis with Leerink Partners. Please proceed with your question.

[Unidentified Analyst:]

Great. Thanks for taking my question. This is Jeff on for Paul. Thanks for the additional color on safety. Could you please tell us what has the FDA communicated to you regarding the size of the safety database and what sort of data do you have in regards to the length of omadacycline treatment exposure and associated toxicity?

[Evan Loh:]

Good morning, Jeff. How are you? It's Evan.

[Unidentified Analyst:]

Hey, Evan.

[Evan Loh:]

Thank you for your question. So far to date that you saw on our inaugural R&D day, we actually have 1,185 either normal subjects or patients treated with omadacycline and you can see from Table 1 in the 10-K, you can see the distribution of those that have been treated with the IV, with the IV and the oral and the oral-only set of formulations. We believe based upon the completion of our two ongoing Phase 3 studies, that we will have an aggregate total exposure of nearly 2,000 patients treated with omadacycline. The total duration of therapy in terms of length of therapy in the Phase 3 trials is 14 days, but as you know and as we talked about, based upon the robustness of our preclinical safety tox studies that we actually have toxicology coverage for 90 days in two separate thesis. So when you look at the overall, both exposure multiples for the actual dose as well as length of time, we are well within a safety multiple that provides us with comfort around our current safety profile going forward.

[Unidentified Analyst:]

Oh, great. Great. So my second question is what are the rate-limiting steps between the two data readouts in the second quarter? Should either or both be positive and a potential NDA filing?

[Evan Loh:]

Can you restate the question, Jeff? I missed that.

[Unidentified Analyst:]

Yes. What are the rate-limiting steps between the two data readouts and the potential NDA filing?

[Evan Loh:]

Okay, great. Yes. Thanks for that question, Jeff. Our plan currently is that we are planning to file the NDA in the first half of 2018. The main activities other than completing our CSRs is actually having ongoing discussions with the FDA. We continue to work with them to ensure that our preclinical, clinical and CMC packages are meeting their requirement based upon whatever new guidances that they may feel are important to provide labeling language for patients and for physicians. We are in the middle of these typical pre-NDA activities and we will come back to you later in the year as we get more clarity from the FDA around each of these e-dossier [ph] components.

[Unidentified Analyst:]

Okay, great. Thanks for the color and congratulations on the progress.

[Evan Loh:]

Thanks, Jeff.

[Operator:]

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

[Louise Chen:]

Hi. Thanks for taking my questions here. So first question I had is we received some calls from people asking about the safety issues with tigecycline and why we wouldn't see this in your drug in the pneumonia studies? And then the second question I have was how big of an opportunity can omadacycline be for you in the hospital and why do you think you make attraction there when similar products have not had very strong launches or other products have not had very strong launches? And then how do you plan to price your drug if it's approved? Will there be a difference between the IV and the oral and how do you think this pricing strategy will drive uptake? Thanks.

[Evan Loh:]

Louise, thank you for the questions. It's Evan. I'll take the first one and then I'll pivot to second and third question over to Adam Woodrow. For the first question, could you just help me understand what specific questions of toxicity people were referring to when they called you about tigecycline?

[Louise Chen:]

I think they were referring to the GI effects and anything else that you see as a potential adverse event in tigecycline or that you recognize as an adverse event in tigecycline.

[Evan Loh:]

Thank you, Louise. As you know, omadacycline is a tetracycline derivative. To date, all of the safety and tolerability observations we have to date are consistent with the pedigree of tetracycline. With tetracycline, typically we'll have our bearing degrees and severity of nausea vomiting for GI adverse event. And that will be our most common adverse event that we expect and we've seen to date, but tetracyclines will also have mild changes in liver function test. They can have mild complaints of headache, imbalances and laboratory values including CPK and BUN which we've seen in our database as well. When you look at Tygacil or tigecycline, that is an earlier generation of tetracycline in a class called the glycycycline of which we are not based upon our structure. That particular class of tetracycline derivative have for us, too, when we were developing Tygacil at Wyeth, two challenges - one was moderate-to-severe nausea and vomiting, which we do not see with omadacycline; and second, we work very diligently for many, many years to try to make it orally vial available. What we are so excited about with omadacycline is the availability of a well-tolerated through once-daily oral formulation for omadacycline and we believe that given the indications that we have here, we could actually have the ability to not only explore skin in cap which were relevant for treatment efficacy in Tygacil, but because of our robust urinary experience and the data that you actually saw - I'll reference back to the R&D date - of levels of omadacycline in the urine as parent compound, we are very excited about the opportunities to actually pursue Urinary Tract Infection as the third of the big three indications. And with that, I will switch over to Adam to talk about your second and third question.

[Adam Woodrow:]

Yes. Thank you. In terms of the opportunity, I think I do refer to my section in the corporate deck. We have a significant opportunity in the hospital. It's about a $4 billion opportunity which is about 3.4 million patients by our estimate and most frequent 4 million patients are in essence patients that file first line in for treatment that still require a broad spectrum agent because you haven't identified the pathogen. We've obviously positioned ourselves in that regard because we believe that that fits with stewardship [ph] and it's something we know that we can take on as an organization as a standalone with a targeted hospital field force. Some of the more recent launches that have struggled to gain traction have had challenges mainly because they are a narrow-spectrum agents and in many, many cases don't have oral formulations. That is a significant challenge when it comes to it gaining formulary acceptance. From a pricing perspective, right now it's probably a bit too premature to talk about where we're going with pricing as that will be finalized in 2018 just prior to launch. However, we do believe that omadacycline will also value beyond current product and potential competitors and fits well with the current and product stewardship initiatives. If we are approved, we believe we'll be able to offer a well-tolerated once-daily [indiscernible] equivalent oral and IV dosing formulation in multiple indications that potentially enables faster discharge of patients from the hospital, creating savings for both the hospital and the payer. We also know that if our oral issue is to avoid hospitalization altogether, those savings are magnified. In addition, the oral administration is more convenient for the patient and perhaps more importantly reduced as the IV related event such as the potential for hospital-acquired infection. I think you asked a very good question about differential pricing. You can only do that if you have both formulations and of course we'll explore those options.

[Michael Bigham:]

Louise, just one more plug for our posters that are coming in April since you asked about Tygacil. One other piece of data that we've been able to analyze further since the R&D days, specifically just to let folks know and remind people that we actually had Tygacil as our active comparator in our BAL study or our lung penetration study. And when you look at the nausea and vomiting rate to support my earlier statement, we had somewhere in the range of 5x to 10x higher rate of nausea and vomiting in the Tygacil-treated group and the minimum complaints of nausea vomiting in individuals treated with omadacycline. Again, I think it speaks to the difference in class in structure, but also the overall tolerability which I think is going to be important for the success of our oral-only product in all of these indications.

[Louise Chen:]

Can I ask you another question? Just on the OpEx for '17 versus '16? How should we think about R&D and SG&A in any poorly progression that we should think about when we model?

[Doug Pagan:]

Sure. This is Doug. Hi. Thanks, Louise. We think the OpEx for the year will be in total about similar to what we experienced in 2016 for the next several quarters or the first half of '17. The mix should be relatively the same as we continue through conclusion of the Phase 3 study. While we get into the back half of '17, the mix will change slightly. We'll increase G&A spending, a decreased R&D or the OpEx we expect to be about the same.

[Louise Chen:]

Okay, thank you.

[Operator:]

Thank you. Our next question comes from the line of Kevin DeGeeter with Ladenburg Thalmann. Please proceed with your question.

[Kevin DeGeeter:]

Hey, good morning, guys. Thanks for taking my questions. Maybe two or three quick ones for me. Thank you for the update with regard to the complicated Urinary Tract Infection Phase 2 program. Can you just - probably a little bit more detail in terms of what you're thinking of as a likely comparator and study size, secondarily and mostly housekeeping? Can you remind us which day that committed the presenting the oral-to-IV Phase 3 data for skin? And then just lastly, appreciate all the update in the K with regard to contract manufacturers. If you kind of lose the work we have done, suggest that each one of them seems to have a pretty clean bill of health with regard to no outstanding 483s. But could you just comment for each one of them, which actual facility or geography you'll be working with so we can kind of monitor that issue, which could get closer to regulatory filing?

[Evan Loh:]

Hi, Kevin, it's Evan. Thank you for your questions. You had a pool of questions there. Let me take each one. For the pyelonephritis Phase 2 proof-of-concept study, we think this will be modest sized, I think somewhere in the range of 200 to 300 subjects. We like to get that study off the ground sometime before the end of this year and we believe that most likely to be two active omadacycline arms, some nicks of IV in oral therapy compared to most likely as comparators if you look at the other complicated EPI trials, that tends to be the most common comparator there. The second question is the date of our oral presentation. I don't know the date specifically, but I can get back to you on that, Kevin. It's over the weekend. It's the Saturday or the Sunday of [indiscernible] oral presentation. The third question specifically was about the suppliers. Is that right?

[Kevin DeGeeter:]

And the supply chain and specifically - well, two questions, really related. Are there any outstanding 483s for any of the three supplier to describe [ph], but can you confirm that? And then just two out of three or the least have multiple sides for which they have capabilities that seem to be relevant for services provided. Can you just comment on which sides for each one it will be irrelevant particularly in the context if there's any need for future FDA inspection?

[Evan Loh:]

Thank you, Kevin. From our review and our own personal audits, we don't believe that there's actually any material or open 483s at those providers. In terms of the suppliers, they're all European-based - UK, Portugal and Switzerland are the sites that we have been engaged with for many years.

[Kevin DeGeeter:]

Great. Thank you. I'll get back in the queue.

[Evan Loh:]

Thank you, Kevin.

[Operator:]

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

[Robert Hazlett:]

Thank you very much. Can you hear me?

[Evan Loh:]

Hi, Bert. Yes, we can hear you.

[Robert Hazlett:]

Thank you. The first one is with regard to the expectation for the average spend profile with regard to omadacycline in the CAP study. Would you expect it to be similar to what you've seen in study with the very reasonable rates of mild-to-moderate nausea as the top end of the AE? Just any additional comment you might make there would be great.

[Evan Loh:]

From an AE table perspective, it's hard for me to predict. I would hope that it looked similar, but the population is actually different, Bert. From the skin perspective, 60% of our subjects actually came from the U.S. and in the particular community-acquired pneumonia study as we shared with all of our investors, the majority of our patients actually coming from being outside of the U.S. I also think that if you look at the guidances for half-enrollment, you look at the broad score, a lot of the determinants of the major determinants of board score is actually age and we have an increase in need age over the CAP study compared to the skin study. With that, you will see a different mix of adverse events. These are sicker patients and because they are sicker, they will have more adverse events. As we talked about as well, community-acquired pneumonia will vary around the 2% mortality rate. Our overall blinded data suggest that we are absolutely consistent with that and also the other adverse event that is unusual that we don't typically see in studies is actually patients who present with pneumonia at advanced age who often times have malignancies associated with that. Otherwise, I do agree with you that most likely, we will have a profile that still has GI being the most common of our adverse events and I think again, mycotoxin [ph] is a well-tolerated quinolone and I think we'll just wait to see what the overall blinded data looks.

[Robert Hazlett:]

Terrific. Just with regard to the unblinded data as well, do you have any sense to the microbiology and the CAP study as well? Can you give us a sense of the bugs that are present if you have it so far?

[Evan Loh:]

So just as a reminder, all of the data that we look at the cleanest slide that we don't actually have the sense of unblinded data; so far looking at the report that we see in a blinded fashion than we see some microbiologist consistent with the typical community-acquired bacterial pneumonia trial that's been published historically in the literature.

[Robert Hazlett:]

Okay. Thank you. And then just one question for Doug. You mentioned the continued use of the ATM. Could you remind us how much is outstanding in terms of the availability there? Is that something you intend to continue to tap? Thank you.

[Doug Pagan:]

Sure. Thanks, Bert. So we've used about a little less than $25 million worth on the original program. So there's $25 million less on that, there was also an additional $50 million program available, so total about $75 million. We can't beat the future use, but we have been favorable on the use of it as an opportunity to raise proceeds, but also to liquidity to our shareholders up to this point. I think on a forward-basis, you may use the program from time to time, but couldn't comment on specific plans.

[Robert Hazlett:]

Okay. Thank you very much. Congratulations on the progress, guys.

[Doug Pagan:]

Thank you Bert.

[Evan Loh:]

Operator, before we take the next call, just to answer Kevin DeGeeter, the oral presentation for the skin pivotal Phase 3 study is on April 24 and the oral presentation for the broncho-alveolar or lung penetration study is on April 25.

[Operator:]

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

[Chiara Russo:]

Hey, guys. Good morning.

[Michael Bigham:]

Good morning.

[Chiara Russo:]

Just a couple of upfront tips here. I think most of my questions have been answered. But are you planning to do a full end of Phase 3 meeting with the FDA? And if so, will we get some detail from that meeting?

[Evan Loh:]

As part of our typical pre-NDA activities that is part in partial to that, we think that that will occur later in the year and we will give you a report on that because I think that is directly tied to actually our filing timing.

[Chiara Russo:]

Okay. So I'm assuming after the notes have been released, that we'll get a peek at what that looks like?

[Evan Loh:]

Absolutely.

[Chiara Russo:]

Okay. My second question is just could you remind us about the partnership with sarecycline and what that looks like considering that we're going to be looking at some data in the first half?

[Doug Pagan:]

Sure. Chiara, this is Doug. Thanks. Recall that we have sarecycline U.S. right are partnered with Allergen. They are developing, as Evan mentioned, a study. They have protected the data for the first half of 2017. The economics of the program to us are there are three remaining milestones - one for NDA acceptance of $5 million, one for NDA approval of $12 million and then there are tiered-royalties in the U.S. on a high-single to low-double digit range. We have price outside of the U.S. We're not presently developing, but we would consider and have spoken with some potential partners on taking those rights outside the United States.

[Chiara Russo:]

All right, awesome. Have they given any guidance on how soon they would file the NDA after the Phase 3 data?

[Doug Pagan:]

Not anything more specific than during 2017.

[Chiara Russo:]

Okay. And I guess just sort of my last question has to do with the tetracycline class and how historically we've seen it used? Obviously it had a lot broader use a while ago, but in more recent years, it's sort of tapered off due to higher resistance rates. Do you think any of that is going to be a bit of a commercial hurdle when you bring in a new tetracycline and the concerns are either, 'Oh, well, those generally have a high resistance rate' or in terms of Tygacil, the side effects profile is not favorable?

[Adam Woodrow:]

Chiara, it's Adam. I think that the most recent history is actually in our favor. Tigecycline reestablished that tetracycline can be highly effective. Tigecycline is actually used in many instances and in terms of care setting and is used often as last-resort therapy because it does work. But unfortunately as you well know, it's IV only and it's not tolerated very well. We've reestablished the efficacy like Tygacil, but we've done so in a formulation that is extremely well-tolerated based on the data that we have in hand to date. As a consequence, we actually think that it provides a really good option for the treating physician. The fact remains that today, they have very, very few effective oral options available to them and we will be providing a new choice.

[Evan Loh:]

I that think the only thing that I would add here, Chiara, is that we specifically selected omadacycline to be not affected at all by any of the historical tetracycline-resistant element. We believe that we have restored the broad spectrum efficacy that we've seen with the very first tetracycline, which was put down to the marketplace in 1945 and that therefore we believe it's relevant for skin pneumonia, as well as Urinary Tract Infection. I think the right data continues to support that.

[Chiara Russo:]

All right. Great, guys. Thank you and I appreciate the question.

[Evan Loh:]

Thanks.

[Operator:]

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

[Ed Arce:]

Hi, guys. Thanks for taking the questions. Several have already been asked and answered, but I do have a few, if I may. First is on your CAP study. Remind us, if you could, what your expectations are for the effect signs of that moxifloxacin control arm across the different registrational end points? And also staying with CAP, for those of us that hadn't the chance yet to go through all the detail in the K, which by the way, appreciate that, if you could perhaps highlight particular elements that you think are particularly useful in understanding your profile there? And then finally, in terms of the CMOs that you mentioned, if you could just give us a little more detail around how you view those? I know you've been long-standing your relationships, but in terms of breaking out the different functions - or are these also utilized as primary and backups? Thanks.

[Evan Loh:]

Got it. Okay. Thank you for the questions, Ed. The CAP study was powered on a historical moxifloxacin efficacy rate for the early clinical response of about 78% to 80%. That is in the range that would seem in the solithromycin trials and so we believe that that was the right approach and it was powered at 90% with the -10% non-inferiority margin. When you look at the specific safety tables that we have included, most of them you've seen before on the R&D day, but we've given you a little bit more color on specific topics that we thought were of particular interest and importance to investors. That included the vital sign analysis, looking at blood pressure, heart rate, as well as the overall sampling of heart rate throughout the duration of the treatment phase and we continue to be comfortable with that as we've been before in other patient trials with omadacycline that this is an extremely well-tolerated and appearing-state compound. The other pieces of data that I think are important in the K include the VAL data, the renal impair data as well as the dose proportional and linear component of us being able to evaluate a higher oral dose of omadacycline at 450 milligrams a day which is one of the doses that we explored specifically in the Phase 1B urinary PK study. Finally, I would like to point you to first microbiology table which is on a larger overall microbiologic surveillance basis. When you look at the MIT-90 data there, you'll get to see that there is not only the continued robustness of the overall potency of omadacycline, but with more numbers, we're getting more clarity about the fact that this remained a very potent compound against the reckless pathogens that we are aimed at for skin including MRSA, for pneumonia, including penicillin-resistant pneumoniae as well as DRE, as well as ESBL-producing E.coli. So therein lies our ability to confidently say to you this is a true blood spectrum, well-tolerated, once-daily oral antibiotic [indiscernible] IV for these indications. From a manufacturing standpoint, it's a long-standing relationship as we have said to you and currently we have commercial agreements that we put into the 10-K with three of our four primary suppliers and these are primary suppliers and we have one more contract to sign and you will learn about that relationship once we have that signed. We are currently exploring secondary suppliers and we will put those in place most likely following launch which is typical of an approach for a small company. And we continue to commit to performing our internal Paratek audit to ensure that we've got good line of sight visibility to their performance which is ultimately important because not only do we have to supply it, but we have to ensure patient safety, which is our number one perspective always.

[Ed Arce:]

Okay, great. Thanks for that. I appreciate it.

[Evan Loh:]

Thanks, Ed.

[Operator:]

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

[Michael Bigham:]

Thank you. Thank you, all, for your attention. Your investment dollars are backed in experienced and motivated team that is developing a very promising and must needed new class of antibiotics. omadacycline is now in the cost of generating the additional data needed to begin preparing regulatory submissions for both FDA and EMA approval. The progress to date represents almost two decades of hard work by many talents and individuals to arrive at this long-awaited juncture. To have discovery and development is hard work, but we now have omadacycline to show for these considerable efforts. It has been well worth the journey and we believe the very best is yet to come. We have many important milestones ahead in 2017 and beyond, so please stay tuned. Thank you again for your time and attention this morning. We look forward to keeping you apprised of our progress. Good bye for now.

[Operator:]

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