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spk08: Greetings and welcome to Paratech Pharmaceuticals' fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ben Strain, Vice President of Investor Relations.
spk01: Good afternoon and welcome to Paratech's fourth quarter and full year 2020 earnings and corporate updates conference call. A press release for the company's fourth quarter and full year results was issued earlier today and we've also posted slides on our website that will be referred to on this call. Both can be found at www.paratechpharma.com. Participants on today's call are Evan Lowe, CEO, Adam Woodrow, President and Chief Commercial Officer, Randy Brenner, Chief Development and Regulatory Officer, Michael Bigum, Executive Chairman, and Sarah Higgins, Vice President of Finance, Controller, and Principal Accounting Officer, will also be available for questions. Before I turn the call over to Evan, I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filing for additional details. Evan?
spk02: Thank you, Ben. Good afternoon, and thank you all for joining our fourth quarter and full year 2020 earnings and corporate update call. Before I provide an overview of our corporate highlights, I would like to thank all of our Paratech employees who have worked tirelessly and courageously throughout 2020 to ensure the continued commercial success of Musaira and the advancement of Paratech's mission to provide lifesaving medicines for patients in need in this challenging pandemic environment. I would also like to acknowledge and thank those selfless and dedicated healthcare professionals who each and every day are putting themselves at risk being at the bedside to save lives of patients in need. The strong quarter-over-quarter revenue growth seen through the first three quarters of 2020 continued into the fourth quarter as New Zyra generated net revenue of $12.4 million, a 14% increase over the third quarter. For the full year 2020, New Zyra generated $38.8 million, which was at the high end of our most recently communicated commercial range, well exceeding our original core business New Zyra commercial sales guidance of $28 million that we had provided in February of last year. Our belief and confidence in the long-term commercial success of New Zyra continues unabated based upon the 2020 performance metrics of New Zyra through continued strong demand in the hospital care settings. Throughout 2020, we continue to execute and deliver against our objectives, targeting our priority hospitals while providing educational scientific exchange to ensure that physicians understand and appreciate New Zyra's unique profile. New Zyra's one stately well-tolerated oral and intravenous formulation combined with New Zyra's broad-spectrum profile, offers a much-needed new, life-saving antibiotic for patients with serious community-acquired infections. In today's COVID environment, New Zyra's ability to minimize hospital stays with the oral formulation is especially relevant for many prescribers and a potentially meaningful benefit for patients. New Zyra's continued quarter-over-quarter growth in 2020 is not only a significant achievement in a volatile and rapidly evolving healthcare setting, but a reflection of the clinical importance and the positive patient outcomes with Neuzira in the hands of clinicians. The launch success to date has established Neuzira as one of the most successful antibiotics launched in the last five years. We've always believed that Neuzira's product profile makes it a very attractive option for community use, specifically its broad-spectrum profile and once-daily oral formulation. With access to Neuzira now firmly in place, combined with significant support from infectious disease specialists who have been successfully treating patients in the hospital setting, we believe that the time is right now, two years post-launch, to further strengthen our launch trajectory by expanding commercial promotion into the primary care setting. The community expansion will initially focus on the larger of the two approved indications, serious skin infections, which in our estimation is an approximately $2.2 billion addressable market opportunity. Adam will provide more details on this exciting commercial development for New Zyra. As noted on this next slide, in 2021, we will be focused on a number of exciting and potentially transformative priorities in what should be a catalyst-rich year for both Paratech and New Zyra. In addition to the community expansion of the New Zyra launch into the primary care setting, We anticipate that these catalysts include two barter procurements of Nuzaira for the Strategic National Stockpile, the FDA decision on the Nuzaira SNDA for the oral loading dose in CAP, the initiation of a Phase IIb study for Nuzaira in NTM abscesses, and the approval of Nuzaira in China for both skin infections and pneumonia, which will trigger a $6 million milestone payment from ZyLab to Paratech. Randy will provide additional details on both. the NTM and BARDA programs in his prepared remarks. Before I hand the call over to Adam, I would now like to provide Paratech's fourth quarter and full year 2020 financial highlights and review our 2021 financial guidance. Fourth quarter 2020 total revenue was $16 million, an increase of 17% over the prior quarter and 78% over the fourth quarter of 2019. Newsira contributed $12.4 million in net U.S. sales in the fourth quarter, an increase of 14% over the prior quarter, and an increase of 130% over the fourth quarter of 2019. Fourth quarter 2020 government contract service and grant revenue were $2.8 million versus $2.7 million in the third quarter of 2020. Of note, no revenue was generated from the BARDA contract in 2019 as it was executed near the end of December of that year. Full year 2020 total revenue was $46.9 million with New Zyra generating $38.8 million in net U.S. sales in 2020, a 237% increase over the prior year, while government contract service and grant revenue and collaboration and royalty revenue contributed an additional $8.2 million in 2020. Fourth quarter R&D expenses were $6.3 million compared to $9.1 million for the same period in the prior year. Full-year 2020 R&D expenses were $23.9 million compared to $39.6 million in 2019. The decrease in both periods is primarily the result of lower clinical study costs, partially offset by an increase in expenses incurred under the BARDA contract and third-party manufacturing process scale-up to meet expected future demand for New Zyra. Fourth quarter SG&A expenses increased $3 million to $24.3 million when compared to the same period in the prior year due to costs incurred to realign our hospital territories and our community expansion. Full year 2020 SG&A expenses were $89.9 million compared to $89.1 million in the prior year. Now, turning to our 2021 financial guidance. I will begin on the left side of this slide, which is focused on R&D and SG&A expense. Full year 2021 R&D and SG&A expense is expected to be between $150 and $155 million, comprised of two components. The first component is the core business R&D and SG&A expense of $130 million, which is represented by the dark blue stack of the 2021 histogram bar. This represents an increase of 20 percent over 2020, but as noted in the leftmost dark blue 2019 histogram bar, a level of core business R&D and SG&A expense that is consistent with 2019 pre-pandemic levels. The expected and modest increase in the core business R&D and SG&A expense in 2021 compared to 2020 will be driven by allocation of capital to the primary care expansion and the initiation of the Phase 2B study in NTM. Both efforts will drive, in our estimation, significant value for both Paratech and for all shareholders. The other component of full year 2021 R&D and SGA expense will be driven by BARDA R&D and manufacturing onshoring costs, both of which are subject to full BARDA reimbursements, which is anticipated to range between $20 to $25 million. Turning now to the right side of the slide, Paratech estimates full year 2021 total revenue to range between $166 and $177 million. I'd like to provide a breakdown of this estimated revenue range. The majority of this full year 2021 revenue range estimate consists of 2021 New Zyra U.S. net product sales, which are expected to range between $138 to $144 million. This sales revenue range estimate includes between $68 to $62 million from the core Musaira commercial business represented by the green stack in each of the revenue histogram bars and an additional $76 million from two expected barter procurements for the S&S represented by the orange stack in the 2021 revenue histogram The first of these two BARDA procurements is expected to occur in the first half of the year, with the second BARDA procurement occurring in the second half of the year. The balance of the 2021 revenue full year consists of royalty and collaboration revenue of approximately $8 million and BARDA government contract service and grant revenue between $20 to $25 million. Again, this BARDA contract service and grant revenue provides 100% reimbursement with the estimated full year 2021 BARDA R&D and SG&A expenses, as noted previously. While we do not typically provide quarterly guidance, we anticipate the core New Zyra commercial business to be modestly impacted in early 2021 due to the ongoing COVID pandemic, limiting face-to-face interactions with hospital-based physicians, a lighter-than-normal flu season, and the reorganization of our contracted hospital sales force, which Adam will provide more details on shortly. Our revenue guidance assumes an acceleration in the second half of 2021, driven not only by our expectation that hospital access will improve as vaccination coverage brings us closer to herd immunity, but also by the maturation of both the hospital-based sales team and the community sales expansion, which just kicked off this month. Late in the fourth quarter, we also entered into a $60 million non-recourse loan agreement with an affiliate of OurBridge Healthcare Investment Advisory. This loan will be repaid using 100% of the royalty proceeds from our license and collaboration agreement with XyLab, plus an initial 2.5% revenue interest from the company's U.S. net sales of New Zyra, the latter of which will carry an initial annual cap of $10 million per year. All Xilab-related milestone payments, including the near-term USIRA approval milestone, are excluded and remain 100% with Paratech. The net proceeds of the loan, together with cash on hand, was used to prepay in full all obligations outstanding under the company's amended and restated loan and security agreement with Hercules Capital. Importantly, I would like to emphasize that the Arbridge loan is non-recourse to Paratech and extends the maturity and amortization period to as late as 2032, which is up to nine years beyond that of the Hercules facility. We believe that this financing, as structured, provides further strategic flexibility to our balance sheet and materially strengthens our overall cash position. Based upon our current operating plan as just described, we anticipate our existing cash, cash equivalents, and marketable securities of $125.2 million as of December 31, 2020, provide for a cash runway through the end of 2023 with a pathway to cash flow break-even. I would now like to turn over the call to Adam.
spk07: Adam? Thanks, Evan.
spk09: Before I begin, I'd like to welcome our new sales representatives that have joined the Paratech family over the past couple of months. We have a tremendous opportunity ahead of us to provide New Zyra to patients in need, and I look forward to the journey with each of you. The US launch of New Zyra continues to progress well with strong quarter over quarter growth seen since launch, even in the face of the challenging and ongoing COVID-19 pandemic. As you can see from this slide, New Zyra net revenue grew 14% in the fourth quarter when compared to the third quarter, We are particularly encouraged by these results in the fourth quarter despite increased COVID-related restrictions due to spiking levels of the virus that further affected representative access and productivity. Regardless of these headwinds, we have not wavered from our strategic focus on gaining institutional access, building awareness and establishing trust and credibility with physicians who are saving lives and treating serious community-acquired infections every day. In the fourth quarter, and at least for the foreseeable future, COVID-19 has and will continue to present a number of challenges. We saw a considerable impact to patient flows to physicians, institutions, and offices from early March through the balance of 2020 and into 2021. These reduced patient flows were accompanied by a decline in generic broad-spectrum antibiotic utilization when compared to 2019. Reduced physical access to hospitals and a reduction in our ability to interact with physicians face-to-face does not represent the historical environment for personal interactions and scientific education normally associated with the introduction of a new antibiotic. These dynamics have also made it an increasingly challenging environment to engage with hospitals to obtain formulary status. Nevertheless, our business continued to grow quarter over quarter throughout 2020. and we continue to effectively and efficiently operate within our hybrid sales model that consists of both face-to-face and virtual interactions. We see this model existing well into the second half of 2021, with a steady shift to the more impactful face-to-face interactions as the year progresses. We have supplemented our Salesforce efforts with virtual marketing and sales tools, and as such, in the fourth quarter of 2020, we're able to achieve $12.4 million in Nusaira net product sales representing a 14% increase versus the prior quarter, establishing Nusaira as one of the best antibiotic launches in the past five years, even against a very challenging backdrop. Nusaira gross demand increased from approximately 12.9 million in the third quarter of 2020 to approximately 13.5 million in the fourth quarter of 2020, and thus growth in the fourth quarter was driven by demand. The U.S. commercial launch of Neuzira is continuing to materially differentiate itself from other antibiotic launches over the past five years, driven by strong operational execution and Neuzira's many product attributes that include, one, broad-spectrum efficacy including resistant pathogens across two common indications, two, a favorable safety profile consistent with Neuzira's tetracycline heritage, and three, convenient, once-daily oral and IV formulations that enable utility in multiple settings of care. Accordingly, these factors continue to build strong demand and support Paratech's commercial launch strategy, which is focused on hospitals and adjacent sites of care for the first two years of our launch. We believe that the continued commercial success in these hospitals and adjacent sites of care will translate into future success in the primary care setting. From a market access perspective, we made great progress with approximately 300 million lives covered as of the end of January. We acknowledge that we still have some work to do with Medicare. However, our overall denial rates, including for Medicare beneficiaries and off-label utilization, are extremely low. Therefore, we believe that our current coverage is more than adequate to support our planned expansion into primary care. With commercial reimbursement now solidly established, combined with significant support from infectious disease specialists who have been using Nuzara successfully since launch in early 2019, we decided to expand our efforts into the primary care setting per our original plan. In addition to our current access and physician support, the plan to expand in primary care builds upon a small pilot program targeted at primary care physicians. This pilot program kicked off in the middle of 2020 and ran through the end of the year. The data provided by the pilot suggests Newzara has an opportunity in skin infections to address significant unmet needs in the primary care setting by building awareness among primary care physicians that can lead to clinically meaningful trial and adoption. Like the pilot, our initial launch into primary care will focus on the $2.2 billion market opportunity for skin infections. In our conversations with these clinicians over the past several months, it is clear there is a tremendous unmet need for a well-tolerated, once daily, oral broad-spectrum antibiotic that includes coverage against MRSA for skin infections. Current generic antibiotic options are universally challenged by either significant bacterial resistance or serious safety concerns limiting their clinical utility. This is verified by our utilization data from the pilot that suggests primary care physicians' first trial of Neuzira occurs quicker and with fewer calls than with the hospital-based physicians. We have a plan also to broaden our sales efforts to include community-acquired bacterial pneumonia after the anticipated approval of the oral-only loading dose regimen later this year. Turning now to our hospital sales force. Having a contract sales force at launch allowed us the opportunity to refine and then select the most productive and talented hospital sales representatives. In the fourth quarter of 2020, we realigned our hospital territories across the United States to focus our efforts to the most productive targets and converted the most highly productive sales representatives into full-time Paratech employees. reduced the overall size of our hospital footprint. Subsequently, we have filled the vacancies created in this hospital realignment and recruited most of the new primary care field force. These new sales representatives completed their training in January and have now started detailing doctors this month. Our expectation is that by the second quarter, we will have approximately 45 hospital-based representatives and approximately 40 primary care representatives in the field. These sales teams will be supported by specialised payer and inside sales organisations. Given the realignment and recruitment of the new sales personnel during this and the last quarter, we expect it will take a few months before we see the full impact of these changes. So far, one month into the community expansion and early signs are encouraging. We believe we're on the right path with Uzaira and are well positioned for long-term commercial success. And we look forward to reporting on our continued progress in the quarters ahead. And with that, I'll now turn the call over to Randy.
spk03: Thank you, Adam. I'd like to begin by thanking the Paratech team for their hard work in making significant progress advancing our research, development, manufacturing, and medical affairs activities. 2020 was a standout year that included many successes, such as advancing the preclinical, clinical, and manufacturing work under the BARDA anthrax program, the sharing of new data through publications and at a number of medical conferences, and progressing our pipeline with the submission of the oral loading dose regimen for CAP and startup activities for our Phase IIb study in NTM, with enrollment to begin as early as the first half of 2021. We believe all these efforts will have the potential to build significant value for physicians, patients, and shareholders. As noted earlier, our barter partnership continues to progress well. This unique public-private partnership is a recognition of our jointly shared commitment to advancing New Zyra in the fight against antimicrobial resistance and to develop New Zyra as a potential treatment against bioterrorism pathogens, including anthrax, and the procurement of New Zyra for the Strategic National Stockpile. Together with BARDA, we continue to make important progress advancing our efforts to onshore the manufacturing of NUSIRA that will enable us to secure an additional supply chain for NUSIRA within the U.S. Paratech, along with our U.S. onshoring partners, have completed the knowledge transfer of our manufacturing process for the API, and we are currently in the development stage of this initiative. The process flow, equipment selection, and facility modifications have been planned, and the process development and engineering are expected to be completed in 2021. The process validation will begin in early 22 with the goal of having commercial supply produced in the United States starting in 2023. To the best of our knowledge, Neuzira will be the first and only antibiotic to be made in the U.S., including API production. This is an important deliverable for the BARDA-PARATEC partnership, but also fulfills the White House's executive order to onshore production of medicines codified in the FDA's recently published Essential Medicines List, on which Amatacycline was so designated. We also continue to make significant progress in the anthrax animal world program. A PK study in rabbits was recently completed, which will lead into the pilot efficacy studies in this species. In addition, Parateq evaluated imidacycline MICs against 100 additional anthrax strains, which continued to demonstrate potent MICs and was considered effective against all bacteria tested. Of note, the collection of isolates had a strain resistant to doxycycline and a strain resistant to ciprofloxacin, the two antibiotics currently in the SNS due to their approval against anthrax many years ago. We are pleased to report that hematocycline activity was not impacted in either of those resistant strains. These data will be shared at an upcoming scientific congress. Based upon very recent dialogue with BARDA, we are aligned in expecting the first procurement in the near term and the second procurement in the second half of 2021. Importantly, based upon feedback from BARDA, the delay in the first procurement is not expected to have any impact on the timing of our future procurements. Beyond the work with BARDA, we also continue to progress some of our other lifecycle opportunities for New Zyra. The first of these is the SNDA for our oral loading dose regimen for community-acquired bacterial pneumonia. This application was submitted in July of last year with our action date set in May of 2021. We are also pursuing a program for a rare disease nontuberculous mycobacterial pulmonary disease caused by mycobacterium abscessus, or NTM. As a reminder, nontuberculous mycobacterium abscessus is an orphan disease with no FDA-approved therapies. Inbound feedback from the KOL community continues to highlight the clinical unmet need for an efficacious and well-tolerated oral antibiotic to treat infections caused by mycobacterium abscessus. Patients with pulmonary mycobacterium abscessus have many symptoms that include severe fatigue, fever, cough, and shortness of breath. Antibiotic therapy durations can often be lifelong in duration. Based upon our internal market analytics, pulmonary mycobacterium abscesses has a potential $1 billion addressable market in the U.S. alone. We are advanced in the startup activities for our Phase IIb study for this disease, with the initiation of the study planned for as early as the first half of 2021. This study is a placebo-controlled randomized monotherapy study of NTM-obsessed pulmonary disease in patients who are not receiving other treatments. The study size will be approximately 75 subjects randomized in a 1.5 to 1 ratio. Therapy will be for 12 weeks with an efficacy endpoint assessment at that time point. Due to the small numbers of patients with this rare disease, we expect overall that this study will take about two years to complete enrollment. We will provide more details about the safety and efficacy endpoints which include both symptom and microbiology assessments at a future meeting. This is an exciting life cycle opportunity for Newzire with significant potential to address important unmet medical needs. 2020 was a great year for data generation and medical affairs activities for Paratech. In addition to progress with the initiation of our 10 non-clinical and clinical studies in our investigator-initiated research program, there were 19 Amatis-Likely manuscripts that were accepted for publication that address the use of Nuzira in special pathogens, populations, or disease states that will further define its unique therapeutic profile. In parallel, real-world evidence from two ongoing observational studies and independent case series continue to be published in peer-reviewed journals describing the clinical features and outcomes of patients with challenging infections receiving imatocycline, including non-tuberculous mycobacterium and osteomyelitis. The scientific story will continue to expand throughout 2021, with additional evidence from our investigator-initiated research program in areas like diabetic foot and C. difficile infections. In addition, non-clinical research studying the activity of imidacyclin alone and in combination in a rat osteomyelitis model and studies in mycobacterium abscessus and mycobacterium avium complex, or MAC, will build on the growing scientific data for Nuzira. The medical field team will also take the learnings over the first two years of the launch to work with institutions to continue to implement skin and pneumonia clinical protocols to optimize treatment algorithms when considering treatment with Neuzira. Importantly, in time for the launch expansion into the primary care setting, we've also launched a new medical affairs website as a resource for healthcare professionals. Healthcare providers can use this website to request medical information, access our completed bibliography, access product resources on New Zyra, and request funding for investigator-initiated research. It also provides educational tools and resources related to the antimicrobial resistance. Additional disease state resources on skin infections, as well as community-acquired bacterial pneumonia, will be available soon. Additionally, in order to fully support the community expansion, medical affairs will extend resources to provide scientific and medical engagement in the community with thought leaders, primary care physicians, and clinical research institutions. More specifically, a community-focused field medical team is being deployed to allow face-to-face engagements with primary care providers and deepen mechanisms to educate and ensure access to new Zyra. Last, with regards to the NDA review in China, the regulatory process continues to make good progress with the approval expected in the first half of this year, triggering a $6 million milestone payment from Zylab to Paratech. We believe that the China approval and the additional data generation opportunities will further broaden the potential for New Zyra to reach into new and clinically important patient populations. At this point, we would now like to open the line for questions. Operator?
spk08: At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
spk07: And our first question is from Ami Fadia with SVP Lyric.
spk00: Hi, this is Ethan Lee on for Ami. Thanks for taking our questions. Maybe two, if I may. Just first, You know, in terms of the first $38 million barter procurement, I'm just curious what dialogue have you had recently maybe on the status of the pre-ELA, which I assume is sort of the remaining step to getting this awarded.
spk03: Sure. So this is Randy. I'll take that. Based on recent communications, we believe that the scientific review of the mouse PK data, which was the most recent data submitted to the pre-EUA, has been completed by FDA. And then based on very recent discussions with BARDA, we're aligned in expecting that the first procurement will be triggered in the near term.
spk07: Great. Thank you. Okay.
spk00: Maybe my second question then is, I guess just on the $62 to $68 million guidance for the core commercial business, I guess it seemed like ConsenSys was estimating maybe a number slightly above this. I guess maybe just relative to the strong performance you did in 2020, how are you sort of thinking about the growth trajectory in 2021, maybe in terms of the relative impact from COVID, the community launch and then, I guess, the Salesforce realignment.
spk07: Thank you. Adam, do you want to take that? Yeah, I'll take that.
spk09: Look, one of the things, first and foremost, that we have to be cognizant of is it's very difficult to predict how COVID-19 is going to continue to impact our business. But as we mentioned earlier on, You know, we've definitely had a feeling that we're going to see a modest impact in the early part of this year, mainly because the COVID pandemic is still ongoing. We've got limited face-to-face interactions with our hospital-based physicians. We've got a very, very light flu season and obviously reorganised and contracted our sales force as we went into the new year, which is why we provided guidance on the quarters, which essentially is saying that, you know, from our perspective, We expect to see the impact of the expansion into the community really kick into gear as we get into the second half of the year.
spk02: Yeah. And, you know, what I would build on that is, you know, that guidance range that we provided, as you referenced, I think is what we are comfortable with today based upon some of the uncertainties vis-a-vis COVID. That being said, I think foundationally we're very strong, as you saw, in terms of quarter-over-quarter growth, in terms of what our hospital sales team was able to do. We think that will continue to grow and expand incrementally. And then when you add the expansion with regards to the primary care sales force, I do see that the second half of this year that we've got confidence in terms of the acceleration of that growth curve. And we'll come back to you each quarter to give you more fidelity once we see those numbers coming forth.
spk00: Great. Thank you very much.
spk08: And our next question is from Ed Aker with HC Wainwright.
spk05: Please state your question. Hello, everyone. This is Thomas Yip asking a couple of questions for Ed. Congratulations on a very strong corner for New Zyra. So perhaps first question related to that. for the SMDA for oral-only formulation. Is there any remaining work that needs to be completed, or are there any updates from the FDA so far?
spk03: So, as far as remaining work, the answer is no. I mean, this study was submitted within the SMDA filing in July of last year. Our PDUFA date is upcoming in May of this year, and as of right now, no further updates to report on with regard to the review progressing.
spk05: Okay, thanks for the update. And then you guys clarified, I believe, Randy was the one who said it, for the 2022 voucher for the procurement in 2021, one is new term and one should be expected in the second half. Just curious, is there any, going forward, should we expect any spacing and timing for different tranches in procurements?
spk03: Yeah, sure. So thank you for the question. This is Randy again. I mean, in general, the way the BARDA contract was structured is the four 2,500 treatment courses were originally spaced about one annually over the first four years of the contract. Because of the initial delays in the review of the pre-UA from FDA due to COVID-19 and other priorities that were focused from FDA, That first procurement is the one that has shifted out a little bit now into 2021, but our anticipation is the timing of the future procurements will remain generally annually over the next three years of the contract.
spk02: Yeah, but that being said, there will be compression in having two this year, which we're delighted to be able to anticipate at this point.
spk05: Okay, that sounds good. Thanks for the clarification. And then switching gears to the new NTM study, you gave some details on the Phase 2D. What are some preliminary thoughts regarding study sites? Any specific geographical areas that you guys have to focus on? And are there any chances to expand to outside of the United States?
spk03: Yeah, so at the current time, the current plan is to conduct a study entirely in the U.S. As far as specific study sites go, in general, I think people generally know where the NTM centers of excellence are and where people ultimately get referred to to have the final diagnosis of NTM, all species of NTM, but specifically mycobacterium abscessus. So the sites will generally align around the the major academic centers, as well as some of the other NTM specialty centers that exist across the U.S.
spk05: Okay, thank you very much for the added info. That's it for us for now. We'll be back in the queue. Thanks for taking our questions and look forward to a very busy 2021.
spk07: And our next question is from Kevin Cadra with G Research.
spk04: Hi. Thanks for taking the questions. Wanted to follow up on NTM. Randy, you went through some of the details of that study, so I may have missed one or two of them trying to keep track. But I thought you had said that patients in the study will basically be not on any therapy, so they won't be on any sort of background therapy. antibiotic cocktail or off-label antibiotic use? It's going to be basically washed out in purely placebo patients, or kind of what sort of background therapy are these patients going to be able to be on?
spk03: Yeah, so thanks for the question. These patients will generally be, I'll call them newer diagnosed NTM patients, so they will come into the study most likely not on other therapies or had been on previous therapies and had stopped for some period of time. And You're right that this is a monotherapy placebo-controlled study looking at the symptom, primarily the symptom relief of Nuzara monotherapy versus placebo for a three-month period of time.
spk02: Kevin, just so you know, just to add a little bit more color, in these newly diagnosed patients when they get referred to these specialty centers, Generally, the physicians like to recommend a lot of pulmonary toilet therapy to try to move secretions, and they generally do that for almost a three- to four-month period of time. So over this period of time, it is completely consistent with their care algorithms that the addition of another antibiotic into another placebo-controlled arm is actually in addition to the standard of care. So it's a we're very excited about the ability to look at a monotherapy intervention to improve the symptoms of these chronically ill patients.
spk04: Great. And as far as the endpoints, have you guys determined what the primary endpoint would be? Is it going to be some patient symptom score? Is it going to be a diagnostic tool? And for the – sorry, I'll start with that and follow up from there.
spk03: So, as I think we've shared before, we've had a couple of meetings with FDA over the last 12 months or so to talk about, generally about, clinical trial endpoints for NTM and NTM mycobacterium abscessus. And as you may know, the FDA is really pushing for more of a symptom relief endpoint rather than the microbiological endpoint. So, the symptom endpoint will be the efficacy assessments that we look at first. Not to say we won't look at microbiological cure as well, but in a 12-week study, it may be harder to show significant changes in microbiological endpoints. So, the symptom endpoint will be the ones we look at primarily.
spk02: You know, Kevin, the FDA a couple of years ago had an advisory panel specifically about NTM where they walked away from a microbiologic endpoint as the primary endpoint because of the vagaries of how these individuals respond to combination cocktails of antibiotics. And so symptoms are really, I think, the driver here, and we think that there's an opportunity here for us to create a symptom scale that's not too different than the symptom improvement scale that was used for our pivotal pneumonia trial. Randy and his team have had lots of dialogue with the FDA, and I think generally we're aligned here, and we're looking forward to being able to share what that looks like in an upcoming meeting that we are planning to conduct in the near future.
spk04: Great. And I'm going to throw two last ones to this. Just one, any powering assumptions on the sort of efficacy you would expect to see in symptom reduction? And then do you feel that this would be data – if you generate and you're able to hit those primary endpoints and possibly show something on the secondaries, would this be fileable data or would you anticipate having to run a phase three?
spk03: Yeah, so I think we'll hold off giving too much around the statistics and the power assumptions at this time. I think as Evan mentioned, we're planning to have a more detailed review of the NTM study design in an upcoming meeting that we'll schedule soon and we're still working through some of the specifics around that. If you don't mind, I'll deflect that question until a future discussion. As far as the study itself goes, I mean, we've, you know, this is a Phase IIb study. We're not calling it a Phase III study for a reason. You know, we do believe, based on what we've seen from the case series that have been published and what we're hearing from the KOL community, that there's a very clear place for imatocycline in the treatment of mycobacterium abscessus where there are no FDA-approved therapies and the need for an oral therapy is super high. And so, you know, we continue to stand by the fact that if the data from this study is robust enough, that there will be an opportunity for us to go back to FDA and have discussions about how best to include this information in the label and a potential indication. But I think we've got a little ways to go on that, and we'll see how the data comes out. But the study is designed as a phase 2B study with the the ultimate goal should the data support it to have future discussions with FDA on how it supports label changes.
spk04: Great, thanks.
spk02: There is another aspect to this that, you know, Randy, you are actively discussing with FDA, which is focused around the long-term safety extension and what that component might look like. And I think that there's still yet to be determined how that component will evolve, right?
spk03: Yeah, that's correct. So if you were listening to my words carefully, you heard that this is a 12-week study and Our clinical team is working through the logistics on the opportunity to enable patients as they complete this study to roll into an open-label extension, which would allow us to collect longer-term safety data on the use of hematocycline in a controlled setting and also allow us to study hematocycline with some of the other combinations that are considered standard of care. So more to come on that in the future.
spk08: And as a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk07: One moment, please, while we vote for further questions.
spk08: And our next and final question is from Bert Haslett with VTIG.
spk06: Thanks. Thanks for taking the question. Congratulations on the progress, folks. Just first and foremost, just to come back to the board of reimbursement or the board of purchases, excuse me. So just to probe a little bit more, given some of the issues with the first payment What gives you the confidence that the second payment will actually occur within 2021?
spk02: You know, Bert, we've had ongoing discussions with BARDA, not only through the joint development team that we have with them, but we are in contact on a regular basis with senior leadership at BARDA. Very recent phone calls have allowed us to continue to align and feel very comfortable and very confident in our current guidance. Okay.
spk06: Thank you. And then just coming to the reimbursement question and kind of coverage, Adam mentioned during his comments that there was some wood left to chop in terms of Medicare. Adam, could you put a little bit more on that subject in terms of things you'd like to accomplish in the not too distant future with regard to coverage and Medicare?
spk09: Yeah, I'm more than happy to. Look, remember first, we've got about 300 million lives covered, which is a huge number, and we have a very small amount left in Medicare that's still got a little bit of work to do. Right now, our focus actually has always been on the Medicaid and the commercial because from a skin perspective, that's the most important population, and it enables us to back that sort of community $2.2 billion addressable market. You know, the Medicare would, which is what you allude to, is a couple of the payers are still holding out in negotiations and we're cautiously optimistic that they will come through within the quarters ahead. But as I said before, for the purposes of our commercial approach into the community, that thing into primary care, it's actually more of a Medicare patient population that gets skinned. It's the pneumonia or only dosing regimen approval later on in the year that would benefit from the rest of the Medicare coverage. But the other thing I should point out is that we get an extremely low rejection or refusal rate. We're in high single digits, which is a remarkable achievement for a new branded agent that's only been on the market for a couple of years. And that's not just on-label, that's also the off-label. So We don't really have a big trouble, a big issue with making sure we get through the benefits investigations and the approval for prescribing of new diarrhea in either the hospital or the community setting.
spk02: Yeah, I think that that, and Bert, just to add to that, I think Adam and his team have continued to commit to a specialty pharmacy support model. And we've had a great relationship with the vendor that we've created, as well as having a very strong internal team that is fully committed to ensuring that everyone who has potential eligibility has the support they need to go through the process to get coverage. And we've had success within the Medicare population as well. Even in CVS, where we do not have a defined contract in the Medicare population, we continue to see that CVS comes forward, but it does take, you know, a half a day or a day longer in those particular settings. Not ideal, but at least it continues to move forward.
spk09: Yeah, and we should add that, you know, we provide every type of support you can imagine for ensuring that the patients have that, including bridging. We have a sampling program. You know, we obviously ensure that it's affordable for patients. So everything's in there, and that will continue as we move into the primary care side as well. So nothing's changed. The only thing that's likely to change actually over the next year is we may well expand the number of sites from a specialty perspective where we actually hold product over time just because we're expanding our geography as we move into the primary care side.
spk06: That's great. I actually did have one question with regard to Salesforce structure. You mentioned, I think, 45 in the hospital, 40 in primary care. As you look to the traction that you hopefully get in primary care, at what point do you start to assess whether that 40-patient sales force is right-sized? Again, there's a lot of variables here with regard to COVID and the access that primary care reps might get. But do you take a look at six months post-approval of the oral loading dose? Is it 12 months? At what point do you reassess that 40-person primary care sales force?
spk09: Well, first, nothing will be determined based upon the additional add-on indication because far and away the largest indication is actually the skin one actually in the community, 2.2 billion versus 1.5 billion. But it will be an ongoing assessment, somewhat similar to what we did with the hospital's we know that the primary care side is actually a target-rich environment. We could quite conceivably have put a lot more representatives in there because there's that number of physicians that potentially could be targets. But if we find that we're tracking to plan, we use the pilot and everything we learned in that pilot to help assist what our projections would be for this field force, And if we find we're tracking to plan after the first quarter or two, we'll definitely look to see whether we need to add. It's highly unlikely that we'll need to shrink in this side just by virtue of the sheer size of the targets that we're going for because there's a lot more primary care targets than there are institutional targets.
spk02: Yeah, you know, Bert, I think that one of the things that Adam has done in a really, really, I think, thoughtful and disciplined way is to you know, walk before we run. And we did that with our institutional sales force in terms of getting metrics and understanding their performance before expanding and changing territories, et cetera, which he did at the end of last year. I think because of the data that I think we're able, the preliminary data that we're able to generate and see from more than six months of a very focused and modest-sized community pilot, I think that data plus the data in terms of the expansion in the 40 will give us, I think, a good set of metrics to be gauging on what we want to see from a productivity standard before we actually start adding reps. With that, we're very excited about this expansion because we think that the foundation of the institutional sales force being as effective as it has been has been characterized by the most talented and most productive individuals that we had from the contract sales relationship. And we think that we know the phenotype of what we're looking for and the talent base that we've now recruited to, I think, portends a very auspicious upcoming 2021. Terrific.
spk06: Look forward to more progress. Thank you. Thanks.
spk08: Thank you. And ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back over to Evan Lowe for closing remarks.
spk02: Thank you, operator. In closing, I'd like to thank you all for your time and attention today. Your continued interest in USIRA and Paratech are important to us. The journey of making USIRA a commercial success is well underway. As the wealth of microbiological data and clinical outcome studies on USIRA continues to expand, we are increasingly confident in the potential of USIRA to be an effective and a much needed addition to the armamentarium of antibiotics available to physicians to save lives, particularly when resistance is of concern. The barter collaboration also positions Pear Tech as a leader, not only with the potential to provide new Zyra for bioterrorism pathogens, but as a leader in innovation for the broader ID sector in the battle against antimicrobial resistance. We will continue to be focused on being disciplined in our capital allocation, executing and delivering on our commitments, as well as building long-term value for patients, physicians, and our shareholders. The opportunities ahead of us to be able to provide a novel, life-saving antibiotic to patients motivates us all at Paratech. We would like to thank the patients who have participated in our clinical studies and our employees who have worked tirelessly and passionately to provide desire for patients in need and those selfless and dedicated healthcare professionals who are at the bedside each and every day. We very much appreciate your continued support and interest. We look forward to keeping you apprised of our continued progress in the quarters ahead. Goodbye for now. Thank you.
spk08: This concludes tonight's web conference. You may disconnect your lines at this time. Thank you for your participation and have a great evening.
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