Please ensure Javascript is enabled for purposes of website accessibility

Paratek Pharmaceuticals (PRTK) Q4 2020 Earnings Call Transcript

By Motley Fool Transcribing - Feb 25, 2021 at 12:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

PRTK earnings call for the period ending December 31, 2020.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Paratek Pharmaceuticals (PRTK 4.47%)
Q4 2020 Earnings Call
Feb 24, 2021, 4:30 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Greetings, and welcome to the Paratek Pharmaceuticals fourth-quarter and full-year 2020 earnings conference call. [Operator instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Ben Strain, vice president of investor relations. Please go ahead, sir.

Ben Strain -- Vice President of Investor Relations

Good afternoon, and welcome to Paratek's fourth-quarter and full-year 2020 earnings and corporate update 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 Participants on today's call are Evan Loh, CEO; Adam Woodrow, president and chief commercial officer; Randy Brenner, chief development and regulatory officer; Michael Bigham, 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'll 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?

Evan Loh -- Chief Executive Officer

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 Paratek employees who have worked tirelessly and courageously throughout 2020 to ensure the continued commercial success of NUZYRA and the advancement of Paratek'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 for patients in need.The strong quarter-over-quarter revenue growth seen through the first three quarters of 2020 continued into the fourth quarter, as NUZYRA generated net revenue of $12.4 million, a 14% increase over the third quarter.

For the full-year 2020, NUZYRA generated $38.8 million, which was at the high end of our most recently communicated commercial range, well exceeding our original core business NUZYRA 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 NUZYRA continues unabated based upon the 2020 performance metrics of NUZYRA 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 NUZYRAs unique profile. NUZYRAs once-daily well-tolerated oral and intravenous formulation combined with NUZYRAs broad-spectrum profile offers a much-needed new life-saving antibiotic for patients with serious community-acquired infections.

In today's COVID environment NUZYRAs ability to minimize hospital stays with the oral formulation is especially relevant for many prescribers and potentially meaningful benefit for patients. NUZYRAs 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 NUZYRA in the hands of clinicians. The launch success to date has established NUZYRA as one of the most successful antibiotics launched in the last five years. We've always believed that NUZYRAs product profile makes it a very attractive option for community use, specifically its broad-spectrum profile and once-daily oral formulation.

With access to NUZYRA 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 NUZYRA. As noted on this next slide, in 2021, we'll be focused on a number of exciting and potentially transformative priorities in what should be a catalyst-rich year for both Paratek and NUZYRA.

In addition to the community expansion of NUZYRA launch into the primary care setting, we anticipate that these catalysts include two BARDA procurements of NUZYRA for the Strategic National Stockpile. The FDA decision on the NUZYRA sNDA for the oral loading dose in CABP, the initiation of a Phase 2b study for NUZYRA in NTM abscessus, and the approval of NUZYRA in China for both skin infections and pneumonia, which will trigger a $6 million milestone payment from Zai Lab to Paratek. Randy will provide additional details on both the NPM and BARDA programs in his prepared remarks. Before I hand the call over to Adam, I would now like to provide Paratek'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. NUZYRA 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 of 2020 government contracts 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 NUZYRA generating $38.8 million in net U.S. sales in 2020, a 237% increase over the prior year. While government contracts service and grant revenue in 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 NUZYRA. Fourth-quarter SG&A expenses increased $3 million to $24.3 million when compared to the same period in the prior year due to cost 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 million 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% over 2020, but as noted in the leftmost dark blue 2019 histogram bar, a level of poor business R&D and SG&A expense that is consistent with 2019 pre-pandemic levels. The expected a 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 MTM.Both efforts will drive in our estimation significant value for both Paratek and for all shareholders. The other component of full-year 2021 R&D and SG&A expense will be driven by BARDA R&D and manufacturing onshoring cost both of which are subject to full BARDA reimbursements which is anticipated to range between $20 million to $25 million.

Turning now to the right side of the slide Paratek estimates for year 2021 total revenue to range between $166 million 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 NUZYRA U.S. net product sales, which are expected to range between $138 million to $144 million.

This sales revenue range estimate includes between $68 million to $62 million from the core NUZYRA commercial business, represented by the green stack in each of the revenue histogram bars, and an additional $76 million from two expected BARDA procurements for the SNS, 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 part of 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 million to $25 million. Again, this BARDA contract service and grant revenue provides 100% reimbursement for 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 NUZYRA 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 larger 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 R-Bridge Healthcare Investment Advisory. This loan will be repaid using 100% of the royalty proceeds from our license and collaboration agreement with Zai Lab plus an initial 2.5% revenue interest from the company's U.S. net sales of NUZYRA.

The latter of which will carry an initial annual cap of $10 million per year. All Zai Lab-related milestone payments, including the near-term NUZYRA approval milestone, are excluded and remain 100% with Paratek. The net proceeds of the loan together with cash on hand was used to pre-pay 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 R-Bridge loan is non-recourse to Paratek 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 breakeven. I would now like to turn over the call to Adam. Adam?

Adam Woodrow -- President and Chief Commercial Officer

Thanks, Evan. Before I begin, I'd like to welcome our new sales representatives that have joined the Paratek family over the past couple of months. We have a tremendous opportunity ahead of us to provide NUZYRA to patients in need. And I look forward to the journey with each of you.

The U.S. launch of NUZYRA 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, NUZYRA 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 further affected representative access and productivity.

Regardless of these headwinds, 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 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 continues 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 sales force 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 NUZYRA net product sales representing a 14% increase versus the prior quarter, establishing NUZYRA as one of the best antibiotic launches in the past five years even against a very challenging backdrop. NUZYRA 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 that growth in the fourth quarter was driven by demand.

The U.S. commercial launch of NUZYRA is continuing to materially differentiate itself from other antibiotic launches over the past five years, driven by strong operational execution, and NUZYRAs many product attributes that include one, broad-spectrum efficacy, including resistant pathogens across two common indications; two, a favorable safety profile consistent with NUZYRAs 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 supports Paratek's commercial launch strategy, which is focused on hospitals and adjacent sites of care for the first three 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 NUZYRA 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 NUZYRA 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 NUZYRA 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 Paratek employees. This 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 sales 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 specialized payer and inside sales organizations.

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 NUZYRA 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.

Randy Brenner -- Chief Development and Regulatory Officer

Thank you, Adam. I'd like to begin by thanking the Paratek 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 CABP and start-up activities for our Phase 2b study 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 BARDA partnership continues to progress well. This unique public-private partnership is recognition of our jointly shared commitment to advancing NUZYRA in the fight against antimicrobial resistance and to develop NUZYRA as a potential treatment against bioterrorism pathogens including anthrax and the procurement of NUZYRA for the Strategic National Stockpile. Together with BARDA we continue to make important progress advancing our efforts to onshore the manufacturing of NUZYRA that will enable us to secure an additional supply chain for NUZYRA within the US. Paratek along with our U.S.

onshoring partners has 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 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, NUZYRA 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 Paratek partnership, but also fulfills the White House's executive order to onshore production of medicines codified in the FDAs recently published Essential Medicines List, Omadacycline was so designated.We also continue to make significant progress in the anthrax animal roll program. A PK study on rabbits was recently completed, which will lead into the pilot efficacy studies in this species. In addition, Paratek evaluated Omadacycline 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're pleased to report that Omadacycline 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 and 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 NUZYRA. 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're also pursuing a program for a rare disease non-tuberculous Mycobacteria pulmonary disease caused by Mycobacterium abscessus or NTM.

As a reminder, non-tuberculous 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 abscessus has a potential $1 billion addressable market in the U.S. alone. We are advanced in the start-up activities for our Phase 2b study for this disease with the initiation of the study plan for as early as the first half of 2021. This study is a placebo-controlled randomized monotherapy study of NTM abscessus 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'll provide more details about the safety and efficacy endpoints, which include both symptoms and microbiology assessments at a future meeting.

This is an exciting lifecycle opportunity for NUZYRA with significant potential to address important unmet medical needs. 2020 was a great year for data generation and medical affairs activities for Paratek. In addition to progress with the initiation of our 10 non-clinical and clinical studies in our investigator-initiated research program, there were 19 Omadacycline manuscripts that were accepted for publication that addressed the use of NUZYRA 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 theories continue to be published in peer-reviewed journals, describing the clinical features and outcomes of patients with challenging infections receiving Omadacycline, including non-tuberculous Mycobacterium abscessus 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 Omadacycline 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 from NUZYRA. 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 NUZYRA.

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 NUZYRA, 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 NUZYRA. Last, with regard 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 Zai Lab to Paratek. We believe that the China approval and the additional data generation opportunities will further broaden the potential for NUZYRA to reach into new and clinically important patient populations.

At this point, we would now like to open the line for questions. Operator?

Questions & Answers:


At this time, we'll be conducting the question-and-answer session. [Operator instructions] And our first question is from Ami Fadia with SVB Leerink.

Eason Lee -- SVB Leerink -- Analyst

Hi. This is Eason Lee on for Ami. Thanks for taking our question. Maybe two if I may, just first, in terms of the first $30 million BARDA procurement, I'm just curious what dialogue have you had recently maybe on the status of the pre-EUA, which, I assume, is sort of the remaining step to getting this award?

Randy Brenner -- Chief Development and Regulatory Officer

Sure. So this is Randy, I'll take that. Based on our 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 discussion with BARDA, we're aligned and expecting that the first procurement will be triggered in the near term.

Eason Lee -- SVB Leerink -- Analyst

Great. Thank you. OK. Maybe my second question then is, I guess, just on the $62 million to $68 million guidance for the core commercial business.

I guess it seemed like consensus was estimating maybe a number slightly above this. I guess maybe just relative to the strong performance you did in 2020, how do you sort of -- how are you sort of thinking about the growth trajectory in 2021 maybe in terms of like the relative impact from COVID, the community launch, and then for the, I guess, the sales force realignment? Thank you.

Evan Loh -- Chief Executive Officer

Adam, do you want to take that?

Adam Woodrow -- President and Chief Commercial Officer

Yeah. I'll check that. 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, we definitely had a feeling that we're going to see a modest impact in the early part of this year mainly because COVID pandemic is still ongoing.

We've got limited face-to-face interactions with our hospital-based physician. We've got a very, very large flu season and obviously reorganized and contracted our sales forces we went into the new year, which is why we provided guidance on the quarters, which essentially is saying that 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.

Evan Loh -- Chief Executive Officer

Yeah. And what I would build on that is 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'll 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 will -- 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 forward.

Eason Lee -- SVB Leerink -- Analyst

Great. Thank you very much.


And our next question is from Ed Arce with H.C. Wainwright. Please state your question.

Thomas Yip -- H.C. Wainwright -- Analyst

Hello, everyone. This is Thomas Yip asking a couple of questions for Ed. Congratulations on a very strong quarter for NUZYRA. So perhaps first question related to that for the sNDA, for all oral only formulation is there any remaining work that needs to be completed? Or are there any updates from the FDA so far?

Randy Brenner -- Chief Development and Regulatory Officer

So as far as remaining work the answer is no. I mean, the study was submitted within the sNDA filing in July of last year. So our PDUFA data is upcoming in May of this year and as of right now no further updates to report on with regard to how the review progressing.

Thomas Yip -- H.C. Wainwright -- Analyst

OK. Thanks for the update. And then you guys clarified -- I believe Randy was the one who said the two BARDA procurements in 2021, one is near 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?

Randy Brenner -- Chief Development and Regulatory Officer

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 and the reviews of the pre-EUA 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 contract.

Evan Loh -- Chief Executive Officer

Yeah. But that being said, there will be a compression in having two this year, which we're delighted to be able to anticipate at this point.

Thomas Yip -- H.C. Wainwright -- Analyst

OK. That sounds good. Thanks for clarification. And then switching gears to the new NTM study.

You gave some details on the Phase 2b. What are some preliminary thoughts regarding study sites? Any specific geographical areas that you guys tend to focus on? And are there any chances to expand to outside of the United States?

Randy Brenner -- Chief Development and Regulatory Officer

Yeah. So at the current time, the current plan is to conduct a study entirely in the US. 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 major academic centers, as well as some of the other NTM specialty centers that exist across the U.S.

Thomas Yip -- H.C. Wainwright -- Analyst

OK. Thank you very much for the elegant show. That's it for us for now. We'll be back in the queue.

Thanks for the questions and look forward to a very busy 2021.


And our next question is from Kevin Kedra with g.Research.

Kevin Kedra -- g.Research -- Analyst

Hi. Thanks for taking the questions. I want 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 antibiotic cocktail or off-label antibiotic use. It's going to be basically washed out and purely placebo patients or kind of what sort of background therapy are these patients going to be able to be on?

Randy Brenner -- Chief Development and Regulatory Officer

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 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 NUZYRA monotherapy versus placebo for a three-month period of time.

Evan Loh -- Chief Executive Officer

Kevin, 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 we're very excited about the ability to look at a monotherapy intervention to improve the symptoms of these chronically ill patients.

Kevin Kedra -- g.Research -- Analyst

Great. And as part of the endpoints, have you guys termed out what primary endpoint would be -- is it going to be some patient symptom score? Is there going to be diagnostic tool and for the -- sorry, I'll stop with that and follow up from there.

Randy Brenner -- Chief Development and Regulatory Officer

So I think we've shared before. We've had a couple of meetings with FDA over the last 12 months or so that 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 abscessus that we look at first. And not to say we won't look at microbiological, pure 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.

Evan Loh -- Chief Executive Officer

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 the vagaries of how these individuals respond to combination cocktails of antibiotics. And so symptoms are really the, I think the driver here. And we think that there's an opportunity here for us to create a symptom scale. It'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.

Kevin Kedra -- g.Research -- Analyst

Great. And I'll get to 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 filed with old data, or would you have to run -- would you anticipate them to run a Phase 3?

Randy Brenner -- Chief Development and Regulatory Officer

Yeah. So I think we'll hold off giving too much around the statistics and the power assumptions at this time 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. So if you don't mind, I'll deflect that question until a future discussion. As far as the study itself goes, I mean, this is a Phase 2b study.

We're not calling it a Phase 3 study for a reason. We do believe based on what we've seen from the case series that have been published and what we hear from the KLO community that there's a very clear place for Omadacycline 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 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 got a little ways to go on that and we'll see how the data comes out.

But this study is designed as a Phase 2b study with the ultimate goal should the data support to have future discussions with FDA on how it supports label changes.

Kevin Kedra -- g.Research -- Analyst

Great. Thanks.

Evan Loh -- Chief Executive Officer

There is another aspect to this that Randy you are actively discussing with FDA, which is focused around the long-term safety extension and that component might look like. And I think that they're still yet to be determined how that component will evolve, right?

Randy Brenner -- Chief Development and Regulatory Officer

Yeah, that's correct. So if you were listening to my words carefully, you heard that is a 12-week study. 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 Omadacycline in a controlled setting. And also allow us to study Omadacycline with some of the other combinations that are considered standard of care, so more to come on that in the future.


[Operator instructions] And our next and final question is from Bert Hazlett with BTIG.

Bert Hazlett -- BTIG -- Analyst

Thanks. Thanks for taking the question. Congratulations on the progress folks. Just first and -- for specific comeback to the BARDA reimbursement or the BARDA 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?

Evan Loh -- Chief Executive Officer

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.

Bert Hazlett -- BTIG -- Analyst

OK. Thank you. And then just coming to the reimbursement question and kind of coverage, Adam mentioned during his comments that there were 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 in Medicare?

Adam Woodrow -- President and Chief Commercial Officer

Yeah, 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 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 the fact that sort of community $2.2 billion addressable market. The Medicare, which is what you allude to, is a couple of the players 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 setting into primary care is actually more of a Medicare patient population that gets skin. It's the pneumonia or oral 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 with off label. So we don't really have a big trouble, big issue with making sure we get through the benefits investigations and the approval for prescribing in either the hospital or the community setting.

Evan Loh -- Chief Executive Officer

Yeah. And 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 could have 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 half a day or a day longer in those particular settings, not ideal, but at least it continues to move forward.

Adam Woodrow -- President and Chief Commercial Officer

It's Adam. We should add that we provide every type of support you can imagine for ensuring that the patients have that including bridging. They have a sampling program 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.

But so nothing's changed. The only thing that's likely to change actually over the next year is we may well expect 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 primary care side.

Bert Hazlett -- BTIG -- Analyst

That's great. And then just -- I actually did have one question with regard to sales force 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 rightsized? Again, there's a lot of variables here with regard to COVID and the access that the primary care reps might get, but is that -- do you take a look at six months post-approval of the oral loading dose, is at 12 months, at what point do you reassess that 40-person primary care sales force?

Adam Woodrow -- President and Chief Commercial Officer

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'll be an ongoing assessment, somewhat similar to what we did with the hospitals. We know that the primary care side is actually a target-rich environment. We could quite considerably 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 based -- we use the pilot as -- and everything we learned in that pilot to help assist with how projections would be for this field force. And if we find where 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 will 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, and there are institutional targets.

Evan Loh -- Chief Executive Officer

Yeah, Bert, I think that one of the things that Adam has done in a really, really, I think, thoughtful and disciplined way is to 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, etc., which he did at the end of last year. I think because of the data that, I think, we're able to -- 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 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.

Bert Hazlett -- BTIG -- Analyst

Great. Look forward to more progress. Thank you.

Evan Loh -- Chief Executive Officer

Thank you.

Adam Woodrow -- President and Chief Commercial Officer

Thank you, Bert.


And ladies and gentlemen, we have reached the end of the question-and-answer session. And now, I would like to turn the call back over to Evan Loh for closing remarks.

Evan Loh -- Chief Executive Officer

Yeah. Thank you, operator. In closing, I'd like to thank you all for your time and attention today. Your continued interest in NUZYRA and Paratek are important to us.

The journey of making NUZYRA a commercial success is well under way. As the wealth of microbiological data and clinical outcome studies on NUZYRA continues to expand, we are increasingly confident in the potential of NUZYRA 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 BARDA collaboration also positions Paratek as a leader, not only with the potential to provide NUZYRA for bioterrorism pathogens but as a leader in innovation for the broader IV 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 lifesaving antibiotic to patients motivates us all at Paratek. We'd like to thank the patients who have participated in our clinical studies and our employees who have worked hard, tirelessly, and passionately to provide NUZYRA 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.

Good-bye for now.


[Operator signoff]

Duration: 65 minutes

Call participants:

Ben Strain -- Vice President of Investor Relations

Evan Loh -- Chief Executive Officer

Adam Woodrow -- President and Chief Commercial Officer

Randy Brenner -- Chief Development and Regulatory Officer

Eason Lee -- SVB Leerink -- Analyst

Thomas Yip -- H.C. Wainwright -- Analyst

Kevin Kedra -- g.Research -- Analyst

Bert Hazlett -- BTIG -- Analyst

More PRTK analysis

All earnings call transcripts

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Paratek Pharmaceuticals, Inc. Stock Quote
Paratek Pharmaceuticals, Inc.
$1.87 (4.47%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.