Nabriva Therapeutics plc

Ladies and gentlemen, thank you for standing by, and welcome to the Nabeva Therapeutics 4th Quarter 2020 Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, Please press star zero. Thank you. I would now like to hand the conference over to the speaker today, Mr. Gary Sender, Chief Financial Officer. The floor is yours.

Thank you, and good afternoon, everyone. Welcome to NEBREVA's conference call and webcast to discuss the fourth quarter and full year 2020 earnings and business updates. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to the risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K filed with the SEC. Moving to slide three, I'd like to share the agenda for today. Ted Schroeder, NEBREVA's CEO, will start with a review of key business items in 2020. He will provide an overview of our 2021 priorities and will take you through a thorough commercial update. Jennifer Schrands, our Chief Medical Officer, will then discuss an exciting new development project as we explore the potential use of Zenletta in patients with respiratory infections due to cystic fibrosis. I will provide a financial review, and Ted will wrap up the discussion and lead a Q&A session. In addition to Ted, Jennifer, and me, joining us on the call for the Q&A session is Steve Gillone, our President and Chief Operating Officer. The slides for today's presentation can be found on our website under the Investors section. I would now like to turn the call over to our Chief Executive Officer, Ted Schroeder.

Thank you, Gary. and thanks to everyone joining our call this afternoon. Starting with a review of 2020, there is no doubt that COVID-19 made for a challenging year for the world, the pharmaceutical industry, and for Nebreva. I am so incredibly proud of the perseverance and dedication demonstrated by everyone on the Nebreva team. For 2020, For NEBREVA, 2020 represented a year of making great strides and shifting our focus to serve patients in the community and building positive momentum heading into 2021. One of our major achievements last year was obtaining the U.S. rights from Merck to promote and distribute Cevextro for patients with acute bacterial skin and skin structure infections, also known as ABSI. Gaining the rights to Cevextro provided a complementary product alongside our first marketed drugs, Enleta, which was approved by the FDA in August 2019 for the treatment of adults with community-acquired bacterial pneumonia, or CAP. It's a testament to Merck's confidence in our ability to market innovative antibiotics. We remain keenly focused on business development opportunities as we move forward. At the same time of the Civexta transaction, Nibriva announced a partnership with AmpliTea Health, a leading contract sales organization. Through AmpliTea, we are now pleased to have 60 sales representatives deployed, reaching almost 8,000 community healthcare providers. This effort, coupled with the continued excellent managed care coverage for Zenletta, has positioned us well towards our commercialization goals to expand the awareness and prescription growth for both products in the community setting. Approximately 92% of total commercial lives have access to Zenletta, with most of the coverage still being unrestricted without the requirements for prior authorization or a step edit. Internationally in 2020, Zenletta secured regulatory approvals in Europe and Canada, and a phase three trial completed enrollment in China. A regulatory filing in China is expected by the second half of 2021 by Sinovant, our local partner. And as Gary will comment on later in the presentation, in 2020, we removed risk by paying down debt and recently strengthened our balance sheet with an extended cash runway that now gets us into the fourth quarter of 2021. With that as an overview of how we executed in 2020, let me discuss our key objectives for 2021 on slide six. First and foremost is to build upon the commercial infrastructure we implemented last year to broaden the prescription uptake for both Zenletta and Cevextro. Please keep in mind that three-quarters of our current field force started after Thanksgiving. Early trends remain encouraging, especially our ability to get direct access to medical providers. We also anticipate that Cevextro will be transitioned to a Nebreva-branded product early in the second quarter, and we will begin recording 100% of the net sales on our P&L. More to come on that in Gary's financial section. An important objective for NEBREVA this year is to remain opportunistic in finding ways to expand organically and through synergistic business development initiatives. In this regard, you will hear from Dr. Schrands about our plans to initiate an important phase one study for Zenletta in patients with cystic fibrosis, or CF, who often take antibiotics chronically. Our decision was based on Zenletta's ability to achieve high concentrations in the lung, coverage of resistant organisms, favorable safety profile, and the large unmet medical need. We anticipate having meaningful data readouts to share with you beginning later this year. Additionally, we continue to focus on business development for Zenletta in Europe and other territories as we look to find partners to market the drug outside of the U.S. With regards to Contipo and our new drug application resubmission, the FDA still has not determined how it will conduct international manufacturing inspections during the COVID-19 pandemic. This has negatively impacted many FDA product reviews. It's important to know that we and our manufacturing partners have been in active dialogue with the FDA to ensure that all parties are prepared for a resubmission. As a result, next steps and specific timing of the Contipo NDA resubmission cannot be finalized until the agency issues industry guidance. We in the industry await future communication from the FDA on the matter and how the agency plans to address foreign facility inspections. Recall that no new non-clinical or clinical data were requested, and the FDA did not raise any other concerns with respect to the safety or efficacy of Contipo. Please keep in mind that our eight-year market exclusivity does not begin until Contipo is approved by the FDA. We will provide an update once we have greater clarity. We know that you, our investors, are eager to hear about the path forward, and so are we. And lastly, we will pursue our 2021 objectives while prudently managing our balance sheet and expenses as we have historically done. Now, turning to slide eight, let me walk you through our commercial progress and outlook. You've seen this slide before, but let me use it to reinforce the complementary overlap in our targeted calling markets. I think it's important to reiterate the shared physician specialty is in focus for Cevextro and Abc and for Xenleta in CAP. Strategically, there are considerable similarities in the prescriber base, particularly within primary care, urgent care, and infectious disease. The market is large, with these two products having a combined total in excess of 5 million potential patients in the outpatient setting. On slide 9, We show the updated sales territories with 60 amputee representatives now in the field, 45 of them being added after Thanksgiving of last year. We believe that the footprint of these 60 salespeople will effectively cover our target of 7,800 physicians across the country. We believe our current alignment gives us the ability to reach approximately 61% of the historical Civextro prescribers and roughly 57% of the potential Zenletta prescribers. That gives you some perspective on the healthcare provider side. So let me shift and talk now about what we are currently seeing in the market and how we are systematically approaching our brand awareness and medical education campaign given the COVID-19 dynamics. What we have seen in the market is a meaningful fall-off in non-COVID-related respiratory ailments versus the prior year's level. Looking at total prescriptions for oral levofloxacin, a commonly used quinolone antibiotic to treat bacterial infections as a benchmark, the graph shows a steep 50% drop in total prescriptions year over year. But it's still a big opportunity, and we hope to participate even more as trends return to normal. While the market is challenging, we are getting meaningful interactions with healthcare providers. Starting with slide 11, I am pleased to share that 33,000 total sales calls have occurred since October, over 6,000 in family medicine alone. Other top medical specialties include podiatry, dermatology, infectious disease, and internal medicine. Based on our efforts to date, we have reached approximately 96% of the top two deciles of potential Civextra prescribers and 98 percent of potential top deciles in Leda prescribers, truly a demonstration of our execution and ability to be able to reach our target physician audience. The next slide shows that the majority of the primary care engagements, approximately 56 percent, have been in person, which is a third higher than the industry average. Overall, we are seeing some reassuring signs with improvements in access for certain regions. Our feedback from the sales force shows an increase in physician offices allowing sales professionals to conduct educational lunches, fulfill sample requests, and deliver clinical messages. Admittedly, we are still in the early days as it takes multiple visits with physicians to educate them on a new drug, especially given the fact that there has been a dearth of new antibiotics. However, what we are seeing is directionally positive, and we remain hopeful that our access for face-to-face interactions will improve. We have proceeded cautiously given the dynamics of the COVID-19 environment. But given our current confidence, we are rolling out enhanced marketing materials and medical education programs in the weeks and months ahead as we aim to expand Zenletta's brand recognition in order to drive new prescription growth. Some examples of these new initiatives for Zenletta can be seen on the next slide. Our goal is to optimize resources by focusing on enhanced marketing resources for Zenletta, which include both rep-driven and non-personal promotion materials. A few highlights include virtual education seminars delivered by leading specialists in the pulmonary community, as well as outpatient-focused promotional pieces, highlightings and letters inclusion, and up-to-date recommendations for community-acquired pneumonia outpatient treatment. Additionally, we are focused on a new creative campaign, expanded HCP education, and additional rep-directed resources. In parallel, the managed market team continues to secure excellent managed care coverage for Zenletta. This can be seen on slide 14. Over 248 million lives have coverage with Zenletta, and we expect to further expand formulary coverage in 2021. Unrestricted access has edged over 78% versus 74% in the prior quarter. Major plans are being added. As we conveyed last quarter, Humana, which has nearly 1 million lives, came on board as of January 1, 2021, also with unrestricted coverage. In summary, before I hand the call over to Jennifer, it is important to note that physicians' historic knowledge of and experience with Civextro has initially opened the door for discussing Zenletta. With 60 field personnel now fully trained and deployed, we would expect to see the pull-through of prescriptions to increase as we move through the year. And as Gary will explain in more detail, we are excited to be able to sell Cevextro in the coming months under the NEBREVA label. Now, let me have Jennifer talk more about why we are exploring the uses in LETA in cystic fibrosis. Jennifer?

Thank you, Ted. I'm excited to provide an update on our lifecycle management activities for Zenleta. While a great deal of effort has been rightfully focused on diagnostics, vaccines, and therapeutics for the COVID-19 pandemic, innovation directed at the silent epidemic of antimicrobial resistance continues to fail to meet the growing unmet medical need. Since its founding in 2006, Nebreva has been driven to develop new agents to address antimicrobial resistance. Xenletta, discovered in the labs at Nebreva, represents the first antibiotic with a truly novel mechanism of action approved in the US and Europe in over 20 years. To fully leverage Xenletta's unique characteristics, our team is actively advancing projects focused on important unmet medical needs that Xenletta may have the potential to address. Turning to slide 16, I would like to discuss the first of these projects focused on the treatment of bacterial exacerbation in patients with cystic fibrosis. Cystic fibrosis is a rare multisystem disease. The major cause of morbidity and mortality in patients with CF is pulmonary complications due to the vicious cycle of airway obstruction, inflammation, and infection that ultimately leads to end-stage lung disease. This process results from mutations in the CFTR gene that leads to impaired ion transport across cells in various organs. As shown on slide 17, an abnormal CFTR protein leads to an imbalance of ion regulation, depleting water, decreasing pH, and increasing mucin polymer cross-links in the airways. As a result, mucus becomes dehydrated, thick, and sticky, and cannot be efficiently cleared by the mucociliary system. Mucus buildup leads to obstruction, chronic inflammation, and bronchiectasis, creating an environment right for bacteria to multiply, overtake the host's defenses, and ultimately cause acute and chronic bacterial infection. Turning to slide 18, data from the Cystic Fibrosis Foundation Research Registry demonstrate that Staphylococcus aureus is the most prevalent organism isolated from the respiratory tract of CF patients. with 70% having Staph aureus and up to 26% with persistent methicillin-resistant Staphylococcus aureus or MRSA colonization. Importantly, the presence of Staph pulmonary infections is associated with worse patient outcomes, such as airway obstruction and increased hospitalization. And notably, the presence of MRSA has been associated with a median survival time that is 6.2 years shorter compared to CF patients without MRSA. Additionally concerning are trends of increasing MRSA colonization and infection rates in older patients, as well as co-infection with Pseudomonas aeruginosa. Unfortunately, there are no approved treatments for this potentially modifiable risk factor for mortality. As shown on slide 19, Data from a national cross-sectional survey of Cystic Fibrosis Foundation-accredited programs evaluating utilization of antibiotics for chronic MRSA infections in CF patients who have acute pulmonary exacerbation demonstrated that there is a high variability in the antibiotics and dosages prescribed, with sulfamethoxazole, trimethoprim, linazolid, and doxycycline being the most commonly prescribed agents in adults in the outpatient setting. Importantly, the authors concluded there was no consensus of the best treatment approach for these patients. Turning to slide 20, it is important to note that the most commonly prescribed treatments are limited by high rates of resistance, as well as safety and tolerability issues, including leukopenia, thrombocytopenia, and peripheral or optic neuropathy, or renal toxicity, which may limit patient adherence to therapy. Slide 21 summarizes how Zinleta's unique properties align to potentially address the unmet medical need in patients with cystic fibrosis who have staphylococcal pulmonary infections. Importantly, Zinleta is approved for the treatment of community-acquired bacterial pneumonia in the U.S., Europe, U.K., and Canada for susceptible organisms, including Staphylococcus aureus, based on clinical response rates demonstrated in two Phase III clinical trials. In addition, as outlined on slide 22, Zynletta is a known potent anti-staphylococcal antibiotic, and its activity is unaffected by the presence of biofilms. Lastly, Zynletta possesses a low mutation frequency against Staph aureus, which is critical given the chronic nature of many of these infections in CF patients. Crucial for the treatment of lung infections, as shown on slide 23, Zenletta has excellent penetration into the epithelial lining fluid and macrophages in the lung and has anti-inflammatory properties that may disrupt the vicious cycle of obstruction and inflammation that create an environment conducive for chronic bacterial infection. Advancing to slide 24, I've summarized Zenletta's characteristics that I just shared with you. Our team is actively advancing several studies to evaluate the potential of Zinleta in patients with cystic fibrosis. We received extremely supportive feedback from a global scientific advisory board of CF clinician scientists for the development of Zinleta for treatment of staphylococcal pulmonary exacerbations. Based on advisor input, Debreva has mapped out a targeted development program, beginning with the Phase I safety and PK study in cystic fibrosis patients, expected to initiate enrollment in third quarter 21. Additional activities to be conducted in 2021 to support clinician decision-making include assessing the potential for drug-drug interactions with commonly prescribed medications in CF patients utilizing physiological-based pharmacokinetic modeling, as well as in vitro studies of Xenolitis activity in Sputa from CF patients. Our team is excited to initiate these studies as soon as possible and for other data readout beginning later this year. In summary, Synleta is a proven and potent anti-staphylococcal antibiotic with unique properties that make it well-suited as a potential treatment option for pulmonary exacerbation in patients with cystic fibrosis caused by Staphylococcus aureus. We are enthusiastic to work with the CF community to assess and lend us potential to address this important unmet medical need. I will now turn the presentation over to Gary for the financial review.

Thanks, Jennifer. On slide 26, I've listed some key financial highlights. NEBREVA generated total revenue of approximately $2.5 million in the fourth quarter and $5 million for the full year 2020. Fourth quarter revenues were driven by approximately $2 million in collaboration revenues, including our portion of Cevextro sales. Other revenue consists of Zenletta product sales of $47,000 and continued grant income from the Austrian government. Full year revenues include $2.8 million in collaboration revenue, including our portion of Cevextro sales commencing in the last week of September, as well as milestone payments from our partners in China and Canada. Also included in full-year revenues was 108,000 of Zenletta product sales and $2.2 million in research premiums and grant income from the Austrian government. In 2020 in particular, we actively managed our expenses to optimize resources. We always want to ensure that our investments in commercial activities achieve our expected returns. Our operating expenses increased by $6.2 million in the fourth quarter compared to the third quarter of 2020, primarily due to SG&A expenses resulting from the relaunch efforts in the community with the expansion to 60 sales reps in late November. Additionally, in the fourth quarter, we recorded a non-cash reserve for a minimum contract obligation associated with our contract manufacturing partners. We expect that our commercial investments will increase in 2021 as we fully realize the full year impact of 60 reps and the potential for a modest expansion as we monitor the macro environment and access to physicians. We ended the fourth quarter with cash of $41.6 million, an increase of $0.2 million from the third quarter, driven by proceeds from our December financing, cash flows from collaborations and grants, offset by our fourth quarter investments. In March 2021, we completed a registered direct offering to bring in an additional 23.4 million of net proceeds into the company. Together with ATM proceeds received in 2021, we expect that our current cash balances will fund operations into the fourth quarter of 2021. Let's now look at the details of our P&L and balance sheet. Please advance to slide 27. Slide 27 provides details of our P&L, and I ask that you look at the notes on the right side. Our full-year 2020 revenues of $5 million were driven primarily by collaboration revenue and government grants. Collaboration revenue included contribution from Savextra sales in the fourth quarter and the last few days of September. Zenletta product sales were impacted by us not investing in commercial efforts from April until the end of September, and by the second quarter write-down of IV inventory, resulting in full-year sales of $108,000. This was clearly below our expectations coming into the year. And as I said, we optimized and preserved resources as we and everyone tried to manage the uncertainties of the pandemic. R&D expense was significantly lower year over year due to a decrease in development activities. SG&A expense was lower compared to 2019 due to the termination of our sales force in April 2020 and a significant reduction in commercial efforts until the community relaunch of Zenletta and Savextro in late September 2020. We continue to allocate our resources in a thoughtful manner and make investments where the expected return is justified. Interest expense was significantly lower given the reduction in our debt balances. Please turn to slide 28, which has our December 31st balance sheet. We previously discussed our cash balances. Inventory has increased primarily as a result of supply purchases in accordance with our contractual obligations. Prepaid expenses increased due to the payments made to our contract manufacturing partners for news and lead inventories. Year-over-year debt balances are significantly lower due to the paydown of debt which occurred in the first quarter of 2020. Please advance to slide 29. Focusing on Savextro revenues for a moment, I'd like to provide more color around the transaction, specifically as it pertains to revenue recognition. We currently receive a percentage of Merck's gross sales and we record those sales under collaboration revenue in our financial statements. Once Nebreva begins selling Cevextro under its own NDC code and meets the requirements for distribution, we will record 100% of net sales under product revenue. One could expect our reported Cevextro sales to increase by a mid-to-high single-digit multiple as we go from what, in effect, is like an earned royalty on Merck sales to 100% consolidation of net sales. And the overall economics are better for Nebreva, and our gross profit from Cevextro will meaningfully contribute to our marketing and selling investments. For the next part of the call, Ted will make some closing remarks, and then we will head into a Q&A session. Ted? Thanks, Gary.

In conclusion, on slide 31, I want to focus on our priorities for 2021. Last year, based on market dynamics and our excellent managed care coverage, we adapted our commercialization strategy and pivoted to the community. As we look at what we have accomplished in 2020 and where we are headed this year, we absolutely believe this was the right decision. We believe that this best serves the needs of patients that require short-course novel anti-infective therapies for both CAP and ABSI. The addition of Cevextro, a well-known antibiotic, has certainly facilitated greater access to providers, leading to meaningful discussions about Zenletta's benefits. Based on its promotional responsiveness and brand recognition, we anticipate seeing the return of historical peak sales trends for Cevextro in by mid-2022. We recently announced the publication of a study documenting the high rates of macrolide-resistant streptococcus pneumoniae throughout the United States. As a reminder, streptococcus pneumoniae is the leading cause of bacterial pneumonia in the United States. An example of a macrolide is azithromycin or a Z-Pak. The data showed that while the overall rate of macrolide resistance was 39.5%. More concerning, macrolide resistance in respiratory isolates was greater than or equal to 25% in every region of the US. Macrolide resistance was also shown to be significantly more common in outpatients versus inpatients. In updated 2019 guidelines issued by the Infectious Diseases Society of America and the American Thoracic Society, it was stated that macrolides should not be used as monotherapy if resistance rates are above 25%, and instead, physicians should consider other antibiotics. We believe that these data further support our medical education around the appropriate use of Zenletta for the treatment of adult patients with CAP, and our focus goes beyond CAP. As we discussed earlier, we are seeking potential expanded indications for Zenletta in patients with cystic fibrosis. This could be a $100 to $150 million per year incremental revenue opportunity, so well worth a focus clinical trial investment. And we will continue to look for business development opportunities to license Zenletta outside of the United States and seek more complementary assets for our U.S. business. Work continues on Contipo, and we remain hopeful that the FDA will find ways to approve drugs awaiting foreign manufacturing inspections. There are headwinds that we and others continue the battle given the ongoing impact of the COVID-19 pandemic. For example, the CDC has reported data showing that fewer people are getting sick this year with the flu. In fact, there has been a 95% drop in flu cases year over year, equating to a significant dip in antibiotic prescriptions overall. But the NEBREVA team is experienced, flexible, and patient-focused. We demonstrated our nimbleness in 2020, and I am confident that our results will improve. Before we begin Q&A, I want to take a moment to personally thank Gary for his leadership. hard work and insights over the past almost five years. It was important to me and to Gary to have him consult for an extended period of time as he turns his attention to serving on boards. I want to officially welcome Dan Dolan as the company's incoming CFO. Dan will become the CFO after tomorrow's close of business, and I look forward to benefiting from his more than 20 years of experience. Additionally, I also would like to thank Jennifer for her contributions as NEBREVA's chief medical officer and wish her the very best. Gary and Jennifer helped in important chapters of NEBREVA's long history, and we are grateful for their efforts throughout this critical period. I would now like to ask the operator to open up the line for questions.

As a reminder, If you want to ask a question, you will need to press star 1 on your telephone keypad. Again, that is star 1 on your telephone keypad. You have your first question. It comes from the line of Ed Ars from HC Wainwright. Your line is now open.

Great. Thank you. And thank you for taking my questions. Appreciate all the detail here you've given for the quarter and for the year. First question is on the expected ramp in Sivextro now that you have your full sales force in place and trained and out making calls and also importantly with Sivextro. Sivextro also kind of helping complementarily with the calls. First question is around the statement that you gave on the pathway as you move into the second quarter. Ending this year's run rate for Sivextro aligning with the historic peak trends by mid-2022. I wonder if you could explain a bit more what you mean by that statement and also if you could help us with some sort of quantification of that, even if perhaps just a range would be helpful.

Yes, sure, Ed. Thanks for the question. I think I'm going to let Gary talk about the financial pieces. The one thing I would say in response is kind of what what will drive the business for the rest of the year. One thing that is true about Cevextro is there is some seasonality associated with skin and skin structure infections, just like not quite as severe as antibiotics for respiratory infections, but overall prescriptions across all kinds of infections have been depressed because of the of the pandemic. And so we do expect, as we see things open up more, people are out and about doing things, and we move into the warmer months, we do expect to see a rise in the overall market, and that will benefit Cevextro. And then a return to the kind of prescription trends we were seeing from Merck prior to them pulling personal promotion of the product. And so it will take some time for us to rebuild those relationships and get samples, remind people of the product, but there's a built-in base of prescribers that we are targeting to get them re-energized. Gary, I don't know if you wanted to talk about kind of the financial impacts of that.

Yeah, Ed, so if you use kind of IMS data in 2019 and kind of dollarize it, you'd see that roughly the sales were about $60 million on a gross basis. So what we hope is that through the very focused effort that we've talked about, maybe some lessening of the COVID headwinds, that, you know, by the middle of next year we could get back to, you know, back to levels like that. And, again, right now we are recording basically a, in effect, a royalty on Merck's gross sales. But once we flip to having Nabriva's own brand, which we expect early in the second quarter, we will start to record 100% of the net sales. on our product revenue line. And so that, you know, one should expect to see a pretty big increase there. Because again, in effect, we're getting a royalty today, and we will eventually be booking 100% of net sales.

Right, right. Okay. And then just from a big picture perspective, as we think about the cadence of sales from both products through the year, is it I'm just trying to confirm that my sense about this is correct, but through the year, I would imagine Zinleta is still going to be the overwhelming majority of revenues you would expect for this year.

Yeah, Gary, do you want to talk about that?

Yeah, I mean, Ed, we don't give specific product forecasts, but I think, you know, certainly Zenletta is in a very early stage of its product lifecycle, right? Sorry, I meant Sevextro. Yeah, right. So, yeah, one should expect that Sevextro, you know, would be larger just because it is a more established brand. Whereas with Zenletta, we're still in the early stages of educating community-based physicians. about its attributes.

Right, of course. If I may, one question perhaps for Jennifer on your opportunity with CF. Again, appreciate all of the detail around the thesis here, but wondering Specifically, you know, as you begin to, you know, prosecute this potential and look for confirmation that this could work, where do you think is perhaps the areas of risk where it could fail? And in particular, I'm wondering, you know, I realize that, of course, in CAP, Zinleta has excellent penetration in the lungs. But, you know, CF, as you mentioned, is a whole different story. It's a very heavy, thick mucus, and it's been a problem for other drugs in penetration as well. So I'm wondering if that's one of the areas that you're especially keen on understanding. Any thoughts there would be helpful.

Yeah, for sure. Thank you. That's a good question, and certainly helpful. The track record for treatment, especially for some of the aerosolized treatments, have unfortunately had some failed space-free studies. I think what we saw, the fact that we have extremely good activities for both staff and MRSA. In fact, we do have great points for MRSA awarded by the CLSI. I think your point being it's important to get the sputa from cystic fibrosis patients because there are some differences in the type of staff that grow over time in this environment, as you mentioned earlier. the thick mucus, the biofilms, the anaerobic environment. So we'll be looking at the in vitro activity of lefamilin from the sputa of contemporary cystic fibrosis patients to look at activity and compare it to non-CF patients. We also are interested in looking at, from the PK perspective, when we do our phase one study, we're going to be looking at concentrations of lefamilin in urine, obviously from metabolites, but also specifically in in the sputa, and so we're getting ready to look at that as a bit of a prep surrogate. We also have done a lot of work in the earlier program for Xenletta and did see very high penetration into tissues. It's one of the key attributes of Lathandel, and then it goes to tissues, and that would be the glandular tissues around in the area where you might be concerned of the bacteria kind of hiding in a sanctuary spot. So I think the Phase I study will inform dosing in patients and tolerability. I think the non-clinical work will help us with the in-vitro activity. We also are looking at doing an animal model NCF to also look at left ambulance, look at probability of target attainment as well. So I think the totality of data that we'll be able to get from these both non-clinical and clinical programs and from what we understand from our global advisors, that is sufficient information for them to inform future development. And at that point, then we would make some decisions whether additional studies would be needed.

Yeah, to kind of put that into perspective, the good news here, I think, is that we can get those answers with relatively low spend and understand whether the current commercial product the oral product actually is appropriate. And our scientists in Vienna think that it is. The benefit there from a patient standpoint is the obvious convenience. Certainly way better patient convenience than having to be hospitalized and put on an IV antibiotic for these exacerbations. I think from our perspective, it takes a five-day prescription for community-acquired pneumonia to and turns it into a 30-day prescription, and that patient at today's pricing would be worth about $8,000. And it wouldn't be unusual to see that same patient have two or three exacerbations per year, which would put us squarely in a kind of a rare disease model for incremental business above cap. So it's worth the effort. It's not all coming directly out of the NEBRE of the Treasury. There is some grant funding that supports some of these activities, and it's relatively straightforward to get an answer. So we'll know whether there's a future program or not for pretty insignificant spend.

Okay, that's great. Ted, Dr. Franz, thank you so much for the answers. It's very helpful. You bet. Thanks, Ed. Always appreciate the interest.

You don't have any more questions at this time? Ladies and gentlemen, that concludes today's conference call. Thank you for participating. You may now all disconnect.