Paratek Pharmaceuticals (PRTK) Q2 2021 Earnings Call Transcript

Paratek Pharmaceuticals (PRTK)
Q2 2021 Earnings Call
Aug 09, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Thank you for standing by. This is the conference operator. Welcome to the Paratek Pharmaceuticals second-quarter 2021 earnings call. [Operator instructions] I would now like to turn the conference over to Paul Arndt with LifeSci Advisors.

Please go ahead.

Paul Arndt -- LifeSci Advisors

Thank you, operator, and good afternoon, everyone, and welcome to Paratek's second-quarter 2021 earnings and corporate update conference call. A press release with the company's second-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.paratekpharma.com. Participants on today's call are Evan Loh, chief executive officer; Adam Woodrow, president and chief commercial officer; and 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 will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in the company's SEC filings for additional detail.

It is now my pleasure to turn the call over to Evan Loh, chief executive officer. Evan?

Evan Loh -- Chief Executive Officer

Thank you, Paul. Good afternoon, and thank you all for joining our second-quarter earnings and corporate update call. Paratek 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 remain confident that our efforts in 2021 will firmly establish the foundation for the continued and long-term commercial growth of Nuzyra and demonstrate continued forward progress in all aspects of the BARDA BioShield public-private partnership, which is designed to develop Nuzyra as a novel medical countermeasure for the treatment of pulmonary anthrax.

As you can see from this next slide, Nuzyra's quarter-over-quarter growth continued into the second quarter of this year, generating a total of $52.8 million in net U.S. sales. This revenue includes $14.9 million from the core Nuzyra commercial business, a 13% increase over the first quarter of 2021 and an 84% increase over the second quarter of 2020. We believe this quarter-over-quarter growth was not only a significant achievement in this volatile and rapidly evolving healthcare setting but serves as a reflection of the clinical importance of positive patient outcomes with Nuzyra and the overall strength of our commercial business.

The balance of the $52.8 million in net U.S. sales was secured from the first BARDA procurement delivered and accepted by BARDA in June of this year. Accordingly, Paratek recorded revenue of $37.9 million from this procurement in the second quarter of this year. Our confidence in the long-term commercial success of Nuzyra remains unabated based upon the strong foundation of demand for Nuzyra that our sales and marketing teams have established in the first two years of the commercial launch, which focused solely on the hospital care setting.

In early 2021, based upon performance data from a focused primary care sales pilot program conducted in the second half of last year, we expanded our commercial promotion into the primary care setting. To date, early signals of the trial and adoption in the community launch appear promising and augur well for future long-term growth. As seen on this next slide, the monthly commercial revenue curve continues to validate that Nuzyra's commercial performance to date represents one of the most successful antibiotics launched in the last five years. The Nuzyra commercial launch dynamics continue to materially differentiate from any other IV, oral antibiotic launches.

We believe that the strength of the commercial business is driven by disciplined operational execution combined with Nuzyra'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 Nuzyra's tetracycline heritage; and third, convenient, once-daily oral and IV formulations that enables Nuzyra's utility in multiple settings of care. We anticipate that the positive growth trajectory of the core Nuzyra commercial business will continue through the balance of this year given the encouraging inbound feedback from the primary care-based physicians who have consistently articulated the need for a well-tolerated, once-daily, oral, broad-spectrum antibiotic that includes coverage against MRSA for skin infections. Further, we believe that this community expansion will materially benefit from the additional long-term value of the recently FDA-approved oral-only regimen in pneumonia for Nuzyra. Adam will provide more details on the community expansion during his prepared remarks.

In addition to the continued growth and success of the commercial business, we are focused on three foundational catalysts beyond the community expansion for the Nuzyra U.S. launch that we believe will create near- and long-term value for Paratek, all of these having occurred in the second quarter of this year. First, as a continued validation of the broad-based commitment of BARDA to this unique BioShield-funded public-private partnership, we were excited to announce that BARDA has accepted delivery of the first procurement of Nuzyra valued at $37.9 million. Second, in late May of this year, we received FDA approval of our Nuzyra sNDA for the oral loading dose regimen in pneumonia.

We believe that this will be an important catalyst that will broaden and further expand the commercial growth opportunity for Nuzyra in both the hospital, outpatient, and primary care settings. We plan to launch the second community-based indication as we enter this year's fall/winter pneumonia season. Third, the initiation in June of this year of a phase 2b study for Nuzyra in a rare disease pulmonary nontuberculous mycobacterium abscessus for which there are no approved therapies. To further support the need for additional clinical research, two recognized NTM experts, who are also NTM treatment guideline authors, collaborated on a recently published review article that expands on the current guidelines for the treatment of pulmonary mycobacterium abscessus infections.

These authors included omadacycline in their recommended NTM abscessus treatment options and also noted that additional clinical studies in this disease are desperately needed. Randy will provide more details on our NTM program later in his prepared remarks. I would also like to note an important recognition of the clinical utility of Nuzyra that occurred in July and another potential future milestone anticipated in the second half of this year that we believe will create longer-term value for Paratek. First, last month, in July, CDC's guideline for the treatment and prophylaxis of plague was updated to include Nuzyra.

The addition of Nuzyra to the CDC guidelines provides further validation now across multiple agencies, including beyond CDC, FDA, and BARDA, within the Department of Health and Human Services of the potential utility of Nuzyra against pathogens that cause health and bioterrorism security threats such as anthrax and plague. A second event or milestone, which we anticipate will occur later this year, is the approval of Nuzyra in China. The approval in China will trigger a $6 million milestone payment from Zai Lab and will make Nuzyra available in one of the largest antibiotic markets in the world today. It is important to note that both of these last two catalysts remind us that antibiotics are truly global products.

We cannot forget that antimicrobial resistance is an ongoing pandemic that requires innovation, such as that represented by Nuzyra, in order to stay ahead of bacteria's ability to create new mechanisms of resistance. Before I hand the call over to Adam, I would now like to provide Paratek's second-quarter 2021 financial highlights. Second-quarter 2021 total revenue was $57.5 million, which is comprised of the following. Nuzyra generated $52.8 million in net U.S.

sales during the second quarter of 2021. This revenue is comprised of, first, $14.9 million from the core commercial business, which represents a 13% increase over the first quarter of 2021 and an 84% increase over the second quarter of 2020; and importantly, $37.9 million from the first of our broader procurements. Government contract service and grant revenue earned from costs incurred under the BARDA contract was $4.2 million for the second quarter of 2021, compared to $0.9 million in the second quarter of 2020. We anticipate a modest step-up in contract service and grant revenue earned under the BARDA contract as we move through the year driven by activities associated with the U.S.

onshoring of Nuzyra manufacturing, the continued enrollment of the FDA post-marketing required study in pneumonia, and further progress of the preclinical in vitro studies and large animal pharmacokinetic, or PK, studies in the anthrax program. Research and development expenses were $6.5 million for the second quarter of 2021, compared to $4.6 million for the same period in the prior year. The increase in R&D expenses for the second quarter of 2021 was primarily due to $4.2 million in costs that were reimbursed under the BARDA contract, which included costs for the U.S. onshoring of Nuzyra manufacturing and for FDA post-marketing requirements, which includes the preparatory work for the pediatric studies with Nuzyra, in addition to the ongoing pneumonia study.

The remaining increase is mainly the result of start-up costs incurred for the phase 2b NTM abscessus study. Selling, general and administrative expenses were $27.1 million for the second quarter of 2021, compared to $21 million for the same period in the prior year. The increase in SG&A expense is primarily the result of costs incurred for the Nuzyra community expansion and an increase in stock-based compensation expense due to the probability and timing of the achievement of performance-based vesting milestones. Paratek reported net income of $9.7 million or $0.20 of earnings per share for the second quarter of 2021, compared to a net loss of $23.1 million or $0.53 loss per share for the same period in 2020.

As of June 30, 2021, Paratek had $75.3 million in cash and cash equivalents. Based upon our current operating plan, we anticipate our existing cash and cash equivalents plus the $37.9 million received from BARDA in July of this year for the first procurement of Nuzyra provides 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. Adam?

Adam Woodrow -- President and Chief Commercial Officer

Thanks, Evan. The commercialization of Nuzyra continues to progress well with consistent quarter-over-quarter growth seen since launch despite continued access challenges due to the ongoing COVID-19 pandemic. As you can see from Slide 11, Nuzyra core commercial net revenue grew 13% in the second quarter when compared to the first quarter of this year, more than double the rate of growth compared to the prior quarter. Nuzyra gross demand increased from $14.6 million in the first quarter of 2021 to $18.6 million in the second quarter of 2021, an increase in $4 million in total.

Thus, growth continues to be driven by demand. Nuzyra's once-daily, well-tolerated oral and intravenous formulations, combined with Nuzyra's broad-spectrum profile, offers a much-needed new life-saving antibiotic that is uniquely positioned to be applicable in every setting of care from the hospital and its potential to minimize hospital stays to the community where there is a tremendous unmet need for a well-tolerated, once-daily oral broad-spectrum antibiotic that includes coverage against MRSA for skin infections. These attributes, in addition to having an approval in two common indications, have enabled Nuzyra's launch to materially differentiate itself from other recent IV oral antibiotics launched in the United States. As discussed in previous calls, our initial strategy was to launch into hospitals focusing on the key influencers in the antibiotic sector, that being infectious disease physicians.

In parallel, we worked with the payers to gain favorable access in the outpatient community setting. As we enter 2021, roughly two years after launch, over 85% of our business was generated by hospital-based physicians, with IV doctors making up approximately 70% of our prescriber base. This validates the need for effective IV oral antibiotics for patients hospitalized with serious community-acquired infections, or CABP. Today, we continue our focus on growing our hospital business.

We are, however, cognizant that hospitals continue to provide physical access challenges as they did for much of 2020. And these challenges are greater than those seen in the primary care setting. We've also found formulary and stewardship committees remain distracted and focused on COVID-19. And while face-to-face sales representative access to physicians in hospitals has clearly improved during 2020, it is difficult to predict when the hospitals will fully open up.

In the meantime, our hospital team continues to execute on its hybrid model, which entails successfully working virtually and in the adjacent sites of care where the more impactful face-to-face access is more readily gained. This strategy has enabled us to maintain our growth trajectory as we see new accounts adopt Nuzyra for specific patient types, such as patients with pneumonia and a high risk of C. diff infection or for patients with a skin infection and multiple comorbidities or allergies, as highlighted on this slide. At the beginning of 2021, having established IV endorsement and good patient access to Nuzyra in the community, we started recruiting a field force to expand promotion into the $2.2 billion total addressable market for skin infections in the community.

Current generic antibiotic options in the community setting are universally challenged by either significant bacterial resistance or serious safety concerns limiting their utility. During Q2 2021, we met our goal of 40 fully trained primary care specialists detailing our oral-only skin indication to a target audience of community-based physicians made up of primary care doctors, podiatrists, and a select group of high-prescribing dermatologists. Our sales message is to provide primary care physicians with a treatment option for serious skin infections that can potentially avoid the need for hospitalization. Start-at-home, stay-at-home with Nuzyra once-a-day resonates with physicians in today's COVID-19 environment.

After an initial settling-in period, this team is performing well, and prescriptions are tracking to the plan we developed based on the pilot program we ran in 2020. We have also recently received positive feedback on the reception of a small community-based medical science liaison team that Randy will provide more details on later in the call. The second quarter has also confirmed our initial utilization expectations in the community where we see primary care physicians, and podiatrists, in particular, trial Nuzyra earlier, more frequently, and after fewer sales calls when compared to hospital-based IVs or pulmonologists. We assume the faster uptake in the primary care setting is likely the result of the absence of stewardship committees and formulary restrictions found in the hospitals, as well as the tremendous unmet need in the community for a new, effective, and well-tolerated oral antibiotic in the skin indication.

The key to success in the primary care setting are ensuring access to Nuzyra for a patient and fulfilling prescriptions in a timely manner. With that said, we are particularly pleased with our progress in the payer environment. Between the insured patients and the Medicare patient population where we see the vast majority of our prescriptions, we now have over 132 million lives covered with limited or no restrictions. But perhaps what is more important is that after completing the benefits investigations, our specialty network is able to fulfill approximately 95% of all prescriptions written usually within 24 hours and regardless of payer coverage status.

Our objective in the primary care setting moving forward is to fine-tune our community targeting strategy based on the characteristics of the initial trialists and their utilization data to accelerate initial trial and repeat usage. We continue to evaluate this significant opportunity for further expansion and are looking forward to the launch in the fall of the CABP oral indication, which we estimate to have a total addressable market worth some $1.5 billion. In summary, we anticipate the momentum in hospitals and primary care will continue through 2021 and expect to see continued growth as we launch our newly approved oral-only dosing for CABP in the fall and maintain our focus on gaining new trialists and repeat usage by building awareness and establishing trust and credibility with physicians who are saving lives and treating serious community infections every day. And with that, I'd now like to turn the call over to Randy.

Randy Brenner -- Chief Development and Regulatory Officer

Thanks, Adam. Let me start with some updates regarding our BARDA program. As you heard from Evan a few minutes ago, we were excited to announce that BARDA accepted delivery of the first procurement of 2,500 anthrax treatment courses of Nuzyra valued at $37.9 million. Upon completion of the delivery of the first procurement, BARDA asked Paratek to be a distribution partner for Nuzyra should an anthrax attack and outbreak occur.

Paratek has agreed to partner with BARDA on this work, and our current contract was modified last week to include an additional scope of work and funding for this effort should the United States government trigger a distribution request. We are excited to expand this partnership in the distribution phase and use Paratek's distribution infrastructure and network to further play a part in protecting Americans. With regards to the timing of future procurements, as we noted last month, these will be linked to specific development milestones. BARDA's confirmed to us that satisfactory top-line data from the pilot efficacy study for the treatment of anthrax in rabbits will trigger the next procurement.

We expect to have top-line data in hand by the second half of 2022. Together with BARDA, we continue to make great progress on the Animal Rule development program for anthrax. Efforts this year are focused on the evaluation of pharmacokinetics of omadacycline in both rabbit and nonhuman primate animal models for inhalation anthrax. A PK study in rabbits was completed earlier this year.

A second PK study in rabbits and an initial PK study in monkeys is planned for the fall. With regards to our BARDA-sponsored onshoring program, we are pleased to report on its continued progress. In collaboration with BARDA, all of our onshoring partners have now been selected. Paratek and our U.S.

onshoring partners have completed the knowledge transfer and initial analytical and process development work for our API process. Additionally, we have ordered the necessary equipment and began construction of the facilities to enable commercial production of omadacycline API. Work is also ongoing at the partners for our U.S. drug product facilities where we have similarly completed the knowledge transfer and initial analytical and process development for omadacycline tablets, and we'll move forward with the engineering phase of this project later this year.

For the omadacycline IV drug product, we've selected our U.S. onshoring partner and are in the beginning phase of the project. BARDA continues to partner with Paratek to fund our FDA post-marketing commitments. Recall that this contract line item is valued at approximately $77 million and includes reimbursement for our ongoing adult pneumonia IV-to-oral post-marketing study commitment, as well as reimbursement of our pediatric and microbiologic surveillance programs.

Following omadacycline's placement on FDA's essential medicines list last year, in July, Nuzyra was added to the CDC's updated guideline on antimicrobial treatment and prophylaxis of plague, recommendations for naturally acquired infections, and bioterrorism response. The addition of Nuzyra provides further validation across multiple agencies within the Department of Health and Human Services of the potential utility of Nuzyra against pathogens that can cause health and bioterrorism security threats such as anthrax and plague. Plague is a disease that affects humans and other mammals. It is caused by the bacteria Yersinia pestis.

Humans usually get plague after being bitten by a rodent flea that is carrying the plague bacterium by handling an animal infected with plague or inhalation of infected droplets. If not identified and treated with an effective antibiotic, plague can be rapidly fatal. It is present in the U.S. today, and cases are most commonly reported in the Western and Southwestern states, including Arizona, California, Colorado, New Mexico, and Texas, where wild rodents carry the bacteria and represent a surrogate for human infection risk.

Consistent with our commitment to build Nuzyra's long-term value, we continue to actively pursue life cycle initiatives for Nuzyra. In May, we received FDA approval of our sNDA for the oral loading dose regimen of community bacterial pneumonia, which was a big milestone for the program. This achievement, as noted by both Evan and Adam, will augment the community launch as we enter into the second half of the year and the pneumonia season approaches. In addition, we have continued to advance our clinical development program for nontuberculous mycobacteria pulmonary disease caused by mycobacterium abscessus, or NTM.

As a reminder, pulmonary NTM abscessus is a rare and orphan disease with no FDA-approved therapies. Inbound feedback from the KOL community has continued to highlight the clinical unmet need for an efficacious and well-tolerated once-daily oral antibiotic to treat infections caused by mycobacterium abscessus. Based upon our internal market analytics, pulmonary mycobacterium abscessus represents a $1 billion addressable market in the U.S. alone.

Start-up activities for our phase 2b clinical study for treatment of pulmonary NTM with omadacycline are underway. Clinical sites for this study are actively prescreening patients, and we anticipate initiation of patient enrollment soon. As a reminder, the study is a three-month, randomized, placebo-controlled monotherapy design that will enroll approximately 75 patients with pulmonary NTM infections caused by mycobacterium abscessus. As this is a rare disease, enrollment is estimated to take approximately two years.

This study will provide much-needed placebo-controlled trial data in mycobacterium abscessus patients. Most recently, two NTM experts, who are also NTM treatment guideline authors, collaborated on a recently published review article that expands on the current treatment guidelines for the treatment of pulmonary mycobacterium abscessus infections. The authors included additional agents, which are highlighted in green on this slide, including omadacycline, in their recommended treatment options based on omadacycline's potent in vitro activity and reports of clinical success in real-world case series. In particular, the authors highlighted the potential of the oral formulation of omadacycline given the lack of currently available oral treatment options and listed it first in order of preference for the new oral options they included.

The authors also noted that clinical trials in this disease are urgently needed, thus, the excitement we have for our randomized study in NTM abscessus that we've just initiated. In addition to NTM, data generation will continue to expand throughout 2021 through multiple avenues. First, we continue to generate data with our partners within the U.S. government.

And one of the in vitro biothreat studies has resulted in an abstract that was accepted at IDWeek. Second, additional evidence continues from our growing IIR program. This includes study of C. difficile infections, bone, and joint infections, and NTM, both MAC and mycobacterium abscessus.

Two IIRs have completed this year, and nine are currently underway. From our IIR program, we have three abstracts that have been accepted at ECCMID or IDWeek, with one lead author receiving the IDWeek training award for the abstract. And third, real-world evidence from three ongoing observational studies and independent case series continue to be presented at conferences and published in peer-reviewed journals that describe the clinical features and outcomes of patients with challenging infections, particularly in NTM and osteomyelitis that receive omadacycline as a therapeutic agent. A real-world retrospective claims analysis is underway that assesses the patterns of inpatient and outpatient antibiotic utilization in CABP and skin.

This study will generate a series of publications, with the first abstract of Nuzyra to be presented at IDWeek 2021 later this year. All of this work has resulted in the acceptance of 11 manuscripts for publication this year that address the use of Nuzyra in special pathogens, populations, or disease states and will further define its unique therapeutic profile. The medical affairs team has several activities planned to further support the community launch and the expansion of scientific education into this new healthcare base. This includes the placement of a small number of targeted community-based education medical science liaisons to further augment the primary care launch through scientific exchange.

We have strategically placed them in densely populated metropolitan areas with a large presence of primary care practitioners. Education will focus on community antimicrobial-resistant trends associated with the community-acquired pneumonia and skin and soft tissue infections, the most up-to-date clinical care algorithms for these infections coupled with the most pressing unmet needs associated with their treatment options. As you know, we also have an ongoing omadacycline NDA review in China, and I'm pleased to note that the regulatory process continues to make good progress with the approval expected later this year, which would trigger a $6 million milestone payment from Zai Lab to Paratek. We believe that the China approval and launch, as well as the additional data generation opportunities being pursued by Paratek, 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.

Questions & Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator instructions] We will pause for a moment as callers join the queue. The first question is from Ed Arce from H.C.

Wainwright. Please go ahead.

Ed Arce -- H.C. Wainwright & Co. -- Analyst

Hi. Thanks for taking my questions and congrats on the continued progress this quarter. Three questions for me. Firstly, you had mentioned for the BARDA contract, this next procurement is upon the data from rabbits expected in the second half of next year.

I'm wondering if that would trigger the second procurement. Or is there any other before then and that's the only one that we have visibility to in the timeline? And then secondly, the community launch upon the start of the pneumonia season, I'm wondering if you could give us a little more detail around exactly when activities would ramp up for that. And I know you mentioned MSLs and some of those being placed in densely populated areas. But exactly what kind of activity do you think could best explain how you expect to really reach the physicians there? And then lastly, with the NTM enrollment expected to take about two years, is there any expectation for perhaps any interim data or any related publications before then related to NTM? Thanks so much.

Evan Loh -- Chief Executive Officer

Ed, it's Evan. Thank you very much for the questions. So with regards to the next procurement, maybe I'll have Randy address that question. 

Randy Brenner -- Chief Development and Regulatory Officer

Sure. So yes. So thanks, Ed. Yes, your statement is correct that the data readout in the second half of next year regarding the pilot rabbit treatment efficacy study is in relation to the next procurement or what we refer to sometimes as the second procurement.

We're still in discussions with BARDA over the definition of progress and how the third and fourth procurements will be, what they'll be linked to, and we'll certainly share that once those discussions are complete.

Evan Loh -- Chief Executive Officer

And I think since you're already speaking, Randy, maybe you could take Ed through his third question, which is around the NTM trial and any visibility on interim data or publications.

Randy Brenner -- Chief Development and Regulatory Officer

Yeah. So as of now, Ed, it is a placebo-controlled randomized trial with no plans for interim analyses built into that. That being said, we do anticipate not from our phase 2b study. But from much of what I mentioned with regards to ongoing activities within IIRs and other case series being published that during the course of this clinical program, there'll be multiple NTM publications related to omadacycline and its use in that patient population.

That will be coming out periodically over time.

Evan Loh -- Chief Executive Officer

Yes. Fair to say that the Mike Rybak database is probably going to be the largest one, right, Randy?

Randy Brenner -- Chief Development and Regulatory Officer

Yes. I mean, that's part of our IIR program.

Evan Loh -- Chief Executive Officer

Yes. OK. Adam, other features of what activity you're planning for the community launch to ensure that we can reach the appropriate physicians.

Adam Woodrow -- President and Chief Commercial Officer

Yes. Thanks, Ed. So you asked when we're going to start. Well, we've obviously been looking at this for some time now.

And right now, we've just finalized our messaging and our materials for our representatives. We've got all of our training programs put in place. Our representatives are being briefed at the end of this month into September, and they will obviously be fully trained on the oral-only dosing regime. In addition, we've got an education that we'll be doing through the community-based MSLs, just a small team, but there's a good education that needs to be done and can be completed by them.

We are also targeting, obviously, community-based pulmonologists. They will be added to the target list of our specialty representatives. And also, we will be selecting high-prescribing respiratory primary care doctors that will be added to the core list that, at the present time, is really very much focused on skin. The story is simple and will be kicked off in September in time for the flu campaign, and we'll share more details of exactly what we've done at the next call.

Evan Loh -- Chief Executive Officer

And then, Ed, just to add because you specifically asked about the MSLs. I can tell you in the few months that they've been out there, the enthusiasm from the primary care physicians has been terrific and they are thrilled to learn about antibiotic resistance. I think we've been a little surprised how little these physicians are aware of even the resistance numbers and resistance patterns within their own regions. They're welcoming the opportunity to continue to educate themselves on treatment paradigms, resistance patterns, and other things.

So the MSL experience to date in the community has been really, really positive and we anticipate that excitement to only continue to grow.

Ed Arce -- H.C. Wainwright & Co. -- Analyst

Fantastic. Thanks so much.

Operator

[Operator instructions] The next question is from Suji Jeong from Jefferies. Please go ahead.

Suji Jeong -- Jefferies -- Analyst

Hi. Thanks for taking my question and congrats on the good quarter. Could you share with us your current strategy or thoughts for the commercial allocation for Nuzyra in Europe? And also, my second question is, currently, what percentage of those scripts come from the off-label use? Thank you.

Evan Loh -- Chief Executive Officer

So, Suji, I'll take the first part with regards to Europe. As you recall, when we actually submitted our MAA, we utilized the exact same database that we used that was FDA approved. And EMA requested a second pneumonia study. And thus, we are conducting that second pneumonia study.

Because of the fact that our analytics told us that the eminent need was primarily in terms of resistant pathogens in the pneumonia sector, we decided to withdraw our application, and we had initially planned to await the results of that second pneumonia trial. The other exciting aspect of Europe that we think is a big opportunity, as well as we've explored the rare disease NTM, we've learned that, in fact, there is as much NTM there in the European theater as there is in the U.S. It is truly a global disease, and we think that there may be an opportunity here to leverage the randomized phase 2b data as a way to open the door to have further discussions with the EMA specifically about what development and registration program would look like for NTM in addition to the other indications that we had originally sought. Adam, do you want to take -- 

Adam Woodrow -- President and Chief Commercial Officer

Yes. I'll pick that up, Evan. So, Suji, you asked the question about what percentage of our business is off-label. As we went into this year, about half of our business was off-label.

As we promote to infectious disease consultants for skin and pneumonia, they tend to use our drug in other indications, notably sort of osteo and some NTM. We're now obviously migrating and adding to that with promotion in primary care, and we're seeing a steady increase in the utilization for skin in the primary care setting with that promotion, which is starting to eat into the sort of, I suppose, proportion of our business that is off-label. The reason for that being that primary care physicians tend to stay on label in terms of their utilization. So right now, it's probably about 50-50, but I would expect that that will come down and we'll end up with a mix of about 60-40 probably as we go into 2022.

Evan Loh -- Chief Executive Officer

Yes. Suji, just as one other addition to my earlier comments, when you look at the strategy that we undertook, specifically about withdrawing the application, it was important for us to be able to preserve the maximum amount of market exclusivity. And as you know, the clock starts ticking on your initial indication, which could have been for the skin indication, which we thought was less valuable ultimately for us as well. And we do think that as we consider a rare disease opportunity like NTM, I think that there is going to be recognition for, I think, the innovation and the value of that provides in a rare disease and orphan setting.

Suji Jeong -- Jefferies -- Analyst

I see. Great. Thank you.

Operator

The next question is from Robert Hazlett from BTIG. Please go ahead.

Robert Hazlett -- BTIG -- Anlayst

Yes. Thanks. Apologies if you've commented on this, but maybe, Adam or Evan, you could comment on the physician access for your sales force. Is it normalized at this point? And are you expecting any potential wobbliness with regard to that as different COVID variants kind of course their way through the system? If you commented, my apologies.

Adam Woodrow -- President and Chief Commercial Officer

No. I sort of mentioned it in my commentary, Bert, hospital access is still not where we would love it to be, which is back to where it was pre-COVID. It's still restricted quite significantly in some parts of the country. It's geographically dispersed.

And it's really difficult to predict where that's going to go for exactly the reason you're intimating. The new guidelines and changes, I don't think actually help us at this present time. Having said that, the access in the primary care setting with our primary care field force is very, very good. And even the hospital team continue to work successfully in the adjacent sites of care and through a sort of remote setting.

Evan Loh -- Chief Executive Officer

Yes. And I think the other aspect of the primary care access that I think is important to us is the fact that, as Adam has described in the past, I think that there is just a very -- a much larger search field to actually find physicians that have patients that have the unmet need that Nuzyra can provide. In addition to that, I think our specialty pharmacy approach has really, I think, risen to the occasion in terms of optimizing its performance with regards to ensuring fulfillment, mostly within a 24-hour period of time for individuals that receive prescriptions for Nuzyra. And that's even generally in the case of accounts, even on the Medicare side where we don't have formulary listing, we do have enough of the trusting relationship there with those physicians and the providers where positive patient outcomes is really continuing to be very much aligned with what they are trying to deliver, as well as what we care about most.

Robert Hazlett -- BTIG -- Anlayst

Just one more related component. So you commented on it earlier, I think, with regard to the resistance data that you're providing. Is that resonating as it used to in days of old with different antibiotics? I'd love to just hear how that's playing out in the field.

Evan Loh -- Chief Executive Officer

Adam?

Adam Woodrow -- President and Chief Commercial Officer

Yes, I can answer that because I've been to some recent advisory boards. It's fascinating, but actually in the pneumonia space, because there's not been anybody in there, the physicians are blissfully unaware of how poor the susceptibility is for strep pneumo, for example, with the oral antibiotics that they prescribe. So there is a little bit of education to do there, which is what we were mentioning earlier on. Having said that, of course, one of the benefits is that we get a significant share of voice in that space where we'll be the sort of first once-a-day drug in that space in some time for the treatment of community-acquired pneumonia.

And the skin space, they're far more aware of it because there's been a number of products that have promoted the challenges with oral drugs with our MRSA coverage. So CABP is a greenfield site for us. And really, they are shocked and surprised when they see how poor the oral drugs are. I mean, you have to remember that they're using drugs that are between sort of 25 and 50 years old, and the resistance rates vary from sort of 50% to 20% at the best.

And so we really do provide a highly efficacious alternative in a package that appears to have really good safety data.

Evan Loh -- Chief Executive Officer

I think, Bert, another data point maybe I'll have Randy comment on is the feedback that we have from our small, focused MSL interactions with the primary care docs.

Randy Brenner -- Chief Development and Regulatory Officer

Yes. I mean, it's very similar to what Adam just mentioned. Most of them are aware of antimicrobial resistance. I mean, obviously, they hear about it, just like everybody else does and knows it exists and also very much aware of MRSA and immersed in the challenges around there.

But in the pneumonia space, in particular, there is the lack of understanding why patients they get Zipans two or three times, keep coming back, and it's not working and equating that to, as Adam said, that 25% to 45% or 50% resistance rates that exist for many of the generic antibiotics. So in the community, it's definitely a message that docs are aware of, but the education is certainly helping them understand how bad the resistance patterns are in the different regions that we're talking to them in.

Robert Hazlett -- BTIG -- Anlayst

Thanks. Appreciate the color. I look forward gaining traction as you really lean into the oral sales effort. Thanks.

Evan Loh -- Chief Executive Officer

Thank you, Bert.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Evan Loh for any closing remarks.

Evan Loh -- Chief Executive Officer

In closing, I would 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 underway. As the wealth of microbiologic 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 in multiple settings of care.

The opportunities ahead of us to be able to provide a novel life-saving antibiotic to patients motivates us all at Paratek. We look forward to keeping you apprised of our continued progress. Goodbye for now.

Operator

[Operator signoff]

Duration: 45 minutes

Call participants:

Paul Arndt -- LifeSci Advisors

Evan Loh -- Chief Executive Officer

Adam Woodrow -- President and Chief Commercial Officer

Randy Brenner -- Chief Development and Regulatory Officer

Ed Arce -- H.C. Wainwright & Co. -- Analyst

Suji Jeong -- Jefferies -- Analyst

Robert Hazlett -- BTIG -- Anlayst

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