Paratek Pharmaceuticals, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Paratech Pharmaceuticals third quarter 2021 earnings call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, You may signal an operator by pressing star and zero. I would now like to turn the conference over to Sarah Higgins, Vice President, Finance, Controller, and Principal Accounting Officer. Please go ahead.

Good afternoon and welcome to Paratech's third quarter 2021 earnings and corporate update conference call. The press release with the company's third quarter results was issued earlier today and we have 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, Chief Executive Officer, Adam Woodrow, President and Chief Commercial Officer, and Randy Brenner, Chief Development and Regulatory Officer. Michael Bigum, Executive Chairman, and I will also be available for questions. Before I turn the call over to Evan, I would also 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 filings for additional detail. Evan?

Thank you, Sarah. Good afternoon, and thank you all for joining our third quarter earnings and corporate update call. Paratech remains focused on excellence in operational execution and delivery against our stated corporate priorities in order to generate value for patients and our shareholders. Accordingly, we believe that our performance and deliverables in 2021 have continued to validate the long-term commercial growth potential of New Zyra. As you can see from this next slide, New Zyra's quarter-over-quarter growth continued through the third quarter of this year, generating $19.4 million in net sales from the core New Zyra commercial business alone, which is a 30% increase over the second quarter of 2021 and a 78% increase over the same period in 2020. We're extremely proud of the 30% quarter-for-quarter growth in the core New Zyra commercial business, despite ongoing challenges from the COVID-19 pandemic. History tells us that the third quarter tends to be our strongest quarter of growth each year since launch. Going forward, based upon the strength of the launch dynamics generated to date, we expect to see continued quarter-over-quarter growth. As seen on this next slide, the comparative monthly commercial revenue curve summarized here continues to validate that New Zyra's commercial performance to date represents one of the most successful antibiotics launched in the last five years. Also, the New Zyra commercial launch dynamics continues to materially differentiate from any other IV oral recent antibiotic launches. We believe that the strength of the commercial business is driven by disciplined operational execution combined with New Zyra's many clinically important product attributes that include, first, broad-spectrum efficacy including resistant pathogens across two common indications. Second, a favorable safety profile consistent with New Zyra's tetracycline heritage. And third, convenient, once-daily oral and IV formulations that enable New Zyra's utility in multiple settings of care. Adam will provide more details on the ongoing launch of New Zyra in his prepared remarks. We remain focused on three foundational paths to revenue opportunities driven by the unique attributes of New Zyra. First, our core commercial business in both the hospital and community settings is the main driver of our current revenue performance. Armed with the oral dosing regimen in pneumonia, at the end of the third quarter, we expanded the community launch in anticipation of this year's fall winter pneumonia season. This is an important catalyst that we believe will expand the commercial growth opportunity for New Zyra in both the hospital outpatient and primary care settings. Second, we believe there is broad potential for New Zyra use across the U.S. government. Our BARDA BioShield public-private partnership represents the cornerstone of our initial efforts to address this broader government opportunity. BARDA's commitment to this unique partnership was further validated by the newly awarded option providing additional funding to expand the development of New Zyra under an FDA animal rule development program for anthrax. This option provides $19 million of incremental funding to the original development program bringing the total value of the contract up to approximately $304 million. Third, non-tuberculous mycobacterial disease, or NTM, represents a promising future growth opportunity in the orphan disease space. In August, we announced that FDA granted orphan drug designation for Nezira for the treatment of NTM broadly. In October, we announced the enrollment of the first patient in our Phase 2b NTM study, which is focused on the subset of patients with newly diagnosed pulmonary NTM abscesses which represents, by our internal estimates, an addressable market in the U.S. alone of approximately $1 billion. We're excited about the long-term potential role of Neuzira in the treatment of patients with NTM abscesses for which there are no FDA-approved therapies. Randy will provide more details on our NTM program later in his prepared remarks. Our lifecycle expansion into exploring the potential of Neuzira as a therapeutic agent against bioterrorism pathogens and other rare infectious types speaks to the plethora of clinical opportunities for New Zyra to save lives and protect all Americans from life-threatening bacterial infections where resistance is of concern, as well as from a national pandemic preparedness perspective. Before I hand the call over to Adam, I would now like to provide Paratech's third quarter 2021 financial highlights. Third quarter 2021 total revenue was $24.4 million, which is comprised of the following. USARA generated $19.4 million in net U.S. sales from our core commercial business alone during the third quarter of 2021, representing a 78% growth compared to $10.9 million in the third quarter of 2020. Government contract service and grant revenue earned from cost reimbursement under the BARDA contract was $4.5 million for the third quarter of 2021 compared to $2.7 million in the third quarter of 2020. We continue to anticipate a modest step-up in contract service and grant revenue earned under the BARDA contract as we move through the balance of this year, driven by activities associated with the U.S. unshoring of new Zyra manufacturing, the continued enrollment of the FDA post-marketing required study of new Zyra in pneumonia, and further progress of the preclinical in vitro and large animal pharmacokinetic studies in the anthrax program. Research and development expenses were $7.9 million for the third quarter of 2021, of which $4.9 million was related to costs reimbursed under the BARDA contract, compared to R&D expenses of $6.7 million for the same period in the prior year. The increase in R&D expenses for the third quarter of 2021 was primarily due to FDA post-marketing requirements associated with the approval of USIRA, which are fully reimbursed under the BARDA contract. The remaining increase was mainly the result of startup costs incurred for the Phase 2b NTM study. Selling general administrative expenses were $26 million for the third quarter of 2021, compared to $20.9 million for the same period in the prior year. The increase in SG&A expenses was primarily the result of costs incurred for the New Zyra community expansion. We reported a net loss of $18.2 million, or $0.37 per share, for the third quarter of 2021, compared to a net loss of $20.9 million, or $0.46 per share, for the same period in the prior year. We anticipate net revenue of New Zyra will be at the higher end of the previously indicated range of $100 to $106 million, which includes the $38 million New Zyra procurement by BARDA in June of 2021. Total revenue is expected to be within the previously indicated range of $128 to $139 million. Total R&D and SG&A expenses are projected also to be within the original guidance range of $150 to $155 million. As of September 30, 2021, Paratech had $111 million in cash and cash equivalents. Based upon our current operating plan, we anticipate our existing cash and cash equivalents provide for a cash runway through the end of 2023 with a pathway to cash flow breakeven. I would now like to turn the call over to Adam.