Paratek Pharmaceuticals' (PRTK) CEO Michael Bigham on Q4 2015 Results - Earnings Call Transcript

Paratek Pharmaceuticals, Inc. (NASDAQ:PRTK)

Q4 2015 Earnings Conference Call

February 23, 2016 08:30 AM ET

Executives

Paul Arndt - Managing Director of LifeSci Advisors

Michael Bigham - CEO and Chairman

Evan Loh - President and CMO

Doug Pagan - CFO

Adam Woodrow - VP and CCO

Analysts

Paul Matteis - Leerink

Louise Chen - Guggenheim Securities

Bert Hazlett - Ladenburg

Hartaj Singh - BTIG

Operator

Good day, and welcome to the Paratek Pharmaceuticals Fourth Quarter and Fiscal 2015 Financial Results Call. Today’s conference is being recorded.

At this time, I’d like to turn the conference over to Paul Arndt. Please go ahead.

Paul Arndt

Thank you and good morning. This is Paul Arndt, Managing Director of LifeSci Advisors, Paratek’s Investor Relations Firm and welcome to Paratek’s year end 2015 update and earnings conference call. A press release with the company’s full year and fourth quarter financial results was issued earlier this morning and can be found at www.paratekpharm.com.

The agenda for today’s call is as follows. Michael Bigham, CEO and Chairman of the Board will provide an overview of the company’s progress in 2015 and plans for the year ahead. Dr. Evan Loh, President and Chief Medical Officer and Director will review the company’s clinical programs. He will provide an update on the two Phase 3 registration studies for its lead compound Omadacycline as well as an update on its second Phase 3 compound Sarecycline. Douglas Pagan, Chief Financial Officer will review the financials for the full year and fourth quarter. Michael will then make brief closing remarks and open the call for Q&A. Adam Woodrow, Chief Commercial Officer will also be available for questions.

Before we begin, I would like to remind you that today’s discussion will include statements about the company’s future expectations, plans and prospects that constitute forward-looking statements for the purpose of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. The words anticipate, plan, potential, expect, will and other words to noting future events identifies statements as forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those disclosed in our press release today and in the Risks Factor section of our Form 10-Q filed with the SEC on February 23, 2016.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change.

I will now turn the call over to Michael Bigham.

Michael Bigham

Thank you, Paul. Good morning all and thank you for joining our year end 2015 earnings call and corporate update. 2015 was an exciting year for us as we initiated on schedule the Phase 3 registration studies for our lead compound Omadacycline a once-daily oral and IV broad-spectrum antibiotic being developed for patients with serious community-acquired infection.

As you will recall, we are currently investigating the utility of IV to oral Omadacycline in two potential indications. The first study is an acute bacterial skin and skin structure infection and the second study is in patients with Community Acquired Bacterial Pneumonia. Both of these studies are on track and progressing well we are particularly pleased with the enrollment of the skin infection study, which has been enrolling patients more quickly than we had originally anticipated.

Accordingly we announced in January that we expect to be able to report top-line data from our skin study by the middle of this year. Kevin will provide more details on our clinical development program later on this call. Recall that Paratek owns global right development and commercialization of Omadacycline, which we believe has the potential to be an important new class of antibiotic.

Based on the clinical study data to-date Omadacycline has the potential to provide patients and physicians with a well-tolerated, once-daily oral and IV broad spectrum mono-therapy treatment options for treating serious community-acquired bacterial infection, particularly when resistance is of concern to physician. Paratek has a second compound of Phase 3 developments, Sarecycline, a narrow-spectrum once-daily oral antibiotic with potent anti-inflammatory properties. Our U.S. partner for this program Allergan continues to make progress in the execution of the Phase 3 registration program for Sarecycline enacting and we look forward to seeing data from that study later this year.

As a reminder, Paratek’s primary focus however is on the successful development and commercialization of Omadacycline for the U.S. market, while over time seeking partners for the commercialization of Omadacycline and Sarecycline outside of the U.S. As our clinical development program has scaled up in the past year we have expanded our corporate structure along with it. We made notable additions to our clinical development team further augmenting our expertise in anti-infective.

Recently Dr. Judith Steenbergen, Executive Director of Microbiology. Judith is one of the most respected microbiologists in our industry and her experience will be invaluable to us as we work to advance our development programs for Omadacycline. In addition we have begun building out our regulatory affairs group as our Phase 3 program makes progress forward in NDA filing for Omadacycline in the U.S.

We are also beginning to expand our commercial organization. With these additions our senior team is now complete. We ended 2015 with a strong balance sheet having more than $130 million in cash. That allows the company to fully fund the ongoing development efforts through to the readout of our second Phase 3 study, which is expected in the second half of 2017. Doug will provide more detail about our financial results later in the call.

2016 will be an eventful year for the company. We expect top-line data from both our Omadacycline Phase 3 skin study as well as the Phase 3 Sarecycline study being conducted by our partner Allergan. Additionally the company will initiate our first oral only studies for Omadacycline notably with Phase 1 studies in both UTI and sinusitis. Evan will describe these studies later in the call.

With that, I will now turn the call over to Evan to discuss our clinical highlights from this year. Evan?

Evan Loh

Thank you, Michael. Good morning everyone, 2015 was a pivotal year for our clinical development program. As you heard from Michael we initiated two Phase 3 registration studies for Omadacycline our lead compound, which also in November of last year received fast track designation from the U.S. Food & Drug Administration. This designation opens the door to more frequent discussions with the FDA. Provides opportunity for our rolling submission and assures an expedited regulatory review timeline. Once the NDA is filed and accepted for review.

As Michael mentioned, we are pleased with the progress we are making with the Phase 3 registration study for Acute Bacterial Skin and Skin Structure Infections or ABSSSI. The study has been rolling faster than originally planned due impart to significant interest from the clinical investigators in the study, which we believe is consistent with a demonstrated need for new broad-spectrum once-daily oral and IV antibiotics that address bacterial resistance in patients with serious community-acquired infection.

The skin Phase 3 registration study initiated enrollment in June of last year and as we noted last month we expect to provide top-line efficacy and safety results in mid-2016. Our experience with this study supported by our market research and feedback from KOL suggest that there is strong interest in a broad-spectrum antibiotic that can be delivered in a well-tolerated once-daily oral and IV formulation.

We are encouraged by the interest in this particular aspect of Omadacycline profile. In November of last year we began enrollment in our second Phase 3 registration study with Omadacycline for the treatment of Community Acquired Bacterial Pneumonia or CABP. That initiations are progressing very well and this study remains on track. We continue to expect to report top-line data in the second half of 2017.

Given the progress with our pivotal study and discussions to state with the FDA we remain on track to file our NDA for Omadacycline during the first half of 2018 and potentially have both oral and IV formulations approved for both ABSSSI and Community Acquired Pneumonia as early as the end of 2018.

In anticipation of that time line in 2016 we will transition into an important phase of manufacturing. With the completion of our registration batches of Omadacycline and the initiation of stability testing on those batches. Beyond our current Phase 3 studies as Michael has already noted the company will commence two Phase 1B studies in urine tract infection and sinusitis. These studies are expected to begin in the first half of 2016 for UTI and the second half of 2016 for sinusitis. As these are Phase 1B studies the primary study end point will focus on Omadacycline PK and PD profile. In patients with sitis or sinusitis. These data will aim to elucidate the potential oral dosing regimens for Omadacycline in these potential new indications.

Further these studies will also provide an initial evaluation of the rate and magnitude of reduction in bacterial colony forming unit or CFU counts in these patients while being treated with Omadacycline. Together these two studies will lay the ground work, for expansion of Omadacycline into oral only indication and thereby enable commercialization in the community setting.

Additionally the company has begun preparatory work for potential late-stage development of other oral only indication. In addition to advancing our clinical program we are excited to have engage the medical and scientific community to several poster presentations last year at the ICAAC Conference in September and with continued publications of our work in peer review journal.

Importantly Paratek has 10 Omadacycline poster accepted for presentation at ECCMID in April of 2016 in Copenhagen. This poster presentation contains data that spans both the preclinical and clinical domain.

Now Doug will share an update on our financial results for the year as well as for the quarter. Doug?

Doug Pagan

Thank you, Evan. We continue to be in strong financial position as we advance the late stage development program for Omadacycline. The company ended 2015 with $131.3 million in cash and cash equivalents and $19.6 million in debt. Our full year operating expenses were $70.9 million.

R&D expenses were $50.8 million for the full year ended December 31, 2015. The primary drivers for this expense were external cost associated with the Phase 3 clinical studies for Omadacycline as well as personnel cost as we have continued to strengthen our development team.

G&A expenses were $20.0 million for the full year ended December 31, 2015. The bulk of these expenses were related to personnel cost as well as the necessary expenses due to being a public company. Based on current assumptions company’s cash and cash equivalents are expected to fund operations through the readout of top-line results from our second Phase 3 registration study, which is expected in the second half of 2017.

And now I’ll turn the call back over to Michael to close. Michael?

Michael Bigham

Thank you, Doug. In summary we had a very productive 2015. We delivered on our goals and milestones by building an experienced senior management team, strengthening our balance sheet and initiating two global Phase 3 registration studies for Omadacycline. In just a few short months we anticipate sharing with you the top-line results from the first of our two registration studies for Omadacycline. Later in the year we look forward to sharing with you top-line data from the Phase 3 registration studies on Sarecycline being conducted by our partner Allergan.

While we are proud of the progress we have made to-date we recognize that our work is not yet done. We are privileged to be the stewards of the exciting drug candidate that we have entrusted to develop. Our team knows well how much good these compounds can do for patients worldwide. In short antibiotic steward terrible infections and in many cases stabilize that motive us daily. We know that you too appreciate the importance of the work that we do so we very much appreciate your continued support.

With that I’ll turn it back over to Paul for the question and answer portion of the call.

Question-and-Answer Session

Operator

[Operator Instructions] Looks like our first question come from Paul Matteis from Leerink.

Paul Matteis

Thanks very much for the update. I have a couple of quick ones. The first one is on Sarecycline, I was wondering if you can give us any more color on when it’s reasonable to expect that data? And then maybe Evan could you just review quickly on that study the key similarities and differences between the Phase 3 design and endpoints in the Phase 2? Thanks.

Evan Loh

Good morning, Paul thank you for the question. And I think that when you look at the guidance as provided by Allergan they’ve only talked about 2016 so that’s the only visibility that we have currently. They have said that they are expecting to be on the market in 2017 and you can do your own back calculations for standard FDA review in terms of when they should have data in hand in order to be doing an NDA filing.

Sarecycline as you know is a once-daily well tolerated oral antibiotic. That is a narrow-narrow spectrum product that is actually addressing the specific bacteria P-acne and MRSA primarily in individuals of moderate to severe acne. It also possesses potent anti-inflammatory properties that tetracycline generally have as well. The endpoints that they’ll be looking at in their Phase 3 trials they’ll specifically be looking at a combined endpoint that is looking at an endpoint specifically around the physician assessment of an inflammatory index as well as looking and counting actual number of acne reasons overtime. The 12 week endpoint it will be composite of both having to be positive and we believe from what we can see from clinicaltrials.gov that is exactly the endpoint are very similar to what was examined in Phase 2.

Paul Matteis

Okay, thanks Evan. And maybe if I could just ask one more on the UTI study if you don’t mind. You talked about that being a PK/PD study, maybe you can just share with us your updated thinking on how you conceptualize PK in UTI, where exactly will you be performing pharmacokinetic analysis of the drug?

Evan Loh

So I think when we talk to the thought leaders specifically around the urinary space they continue to articulate that there are two major seas that you need to look at and it’s not clear to us to be honest with you that either one is more dominant. There is the classic PK/PD of looking at AUC to MIC in serum, which we will be doing, which won’t be any different than what we’ve already established for our current ongoing studies. We’ll also be looking at the PK/PD and clearance of Omadacycline and its levels in the urine itself and we believe that that is a relevant nature because that’s in fact individuals with sinusitis typically will have for instance equalize in their urine.

We’ll be looking at these levels of Omadacycline get cleared and what continues to be our confidence as we’ve noted is that Omadacycline is the compound that actually is not metabolized in human. And we know that it gets cleared [indiscernible] in the urine and it is in fact parent compound that we see in the urine itself. We will though Paul as we said before be looking at potentially higher doses of an oral only regimen. We can’t do that because we do not have a tolerability viewing. We believe that a once-daily therapy will be useful and we are still trying to determine exactly what that final dose would be as well as the treatment duration whether it’d be five days or seven days somewhere in that period of time Paul.

Paul Matteis

Okay, got it. Great. Thanks very much Evan.

Evan Loh

Thank you Paul. Bye.

Operator

We'll go next to Louise Chen with Guggenheim Securities.

Louise Chen

Hi, thanks for taking my question. I had a few here. So one question that we get quite a bit from investors is that there are a couple of antibiotics in development and curious what the specific competitive advantages of your drugs are for skin pneumonia? And then secondly you talked about the UTI and sinusitis curious what the market opportunity is here and then in sinusitis if there been any recent developments, drug development for that indication? And then last thing here is on the ECCMID data in April curious if we’ll see any new data? And if you will be presenting it any other medical conferences this year as well. Thanks.

Michael Bigham

Louise we have Adam Woodrow here who is our Chief Commercial Officer and I’ll hand maybe Adam you could take on the question of the competitive situation.

Adam Woodrow

Thanks, Louise. Fundamentally the different check factors around the [indiscernible] is that it’s a broad spectrum well tolerated once-daily drug with both an IV and an oral form. Many of the drug that have been in developing over the last few years as you'll probably recall are IV only, and if they are not IV only they are often narrow-spectrum drugs and they will have multiple doses. So feedback that we’ve been getting in our opinion leader meetings and also in our research is that there is a need for empiric agent that has an oral option that’s broad-spectrum.

Michael Bigham

She had a list of questions, did you get them all?

Adam Woodrow

Yeah.

Michael Bigham

So the marketplace for sinusitis in terms of the opportunities.

Adam Woodrow

I mean again what we are in here is that sinusitis for many, many years as you well know and it’s only recently that there has been guidance been set up for how you might get an approval in a sinusitis setting. The resistance rate that exist today for the most commonly used drug are in the 40% or more range and to enter that space you have to have a well tolerated oral drug. There has also been as you are also aware recently a lot of concern around the safety profile but there is a need for drug life equivalent in this space and we believe that’s a big opportunity for us.

And then in the UTI setting it’s exactly the same. I mean the most common treatment, the urinary tract infections quinolones, Ciprofloxacin resistance to [indiscernible] in the United States around 20% today again you got the concerns around the safety and the irreversible neurological toxicities again another opportunity for us should we be successful in establishing the dosing on a Phase 3 clinical trial. Again, you have to have a well-tolerated oral drug and the benefit is even greater if it’s once a day.

Michael Bigham

To address your questions specifically around ECCMID, I think many of these data we talked about, but it’s important for us to actually get it into publication form. We will be showing some broad microbiology data, we talked about efficacy against each [indiscernible]. That data will be presented there as well. And we’ll also have some data on [indiscernible]. And from the clinical side we will be looking at an integrated analysis of our Phase 2 and Phase 3 randomized clinical studies and we will also be looking at our -- presenting our QTc [ph] data and we’ll also be having an initial PK model, modeling our PK drivers of efficacy. So, it really is a very broad expense of relevant and important data for us to further be able to share with the scientific community.

Louise Chen

Thank you.

Evan Loh

One other, I don't know if we have talked this but one other element I believe Louise of your question about how this drug will be used and our position within both the skin and the cap marketplaces. And we actually have slide that are I think on our website that would be very helpful to walk through that our thoughts there or our thinking in that regard. But we don’t have those handy here, but Adam you might when talk a little bit about the go home, stay home concept that has evolved through our market research and ongoing discussion with thought leaders and practitioners.

Adam Woodrow

Yeah. We have obviously stay you come from the market without having a value proposition we affectionately term our value proposition to go home, stay home strategy. The go home is very simple because we have the benefit of a well-tolerated IV and an oral. In the hospital setting we enable early discharge on an oral send patient home will go home earlier. So, that’s obviously have importance to the hospitals as they like to get the IV payment and then they like to obviously offset cost of getting the patient out of the hospital as soon as they can. And you can only do that if you’ve got the benefit of bio equivalent IV oral and be assured that you can get the same response. That’s actually played very, very well there were many, many times in either we’ve identified plenty of patient opportunities both in skin and in community acquired bacterial pneumonia.

We know that the first will occur many times will be generic [indiscernible] for example in skin, but there is at least 20% of the time that can’t be used, there're either tolerability issues or they tried and failed. We would obviously be expected line option in those -- first line option in that regard. But if those patients are failing on that regiment you can be assured that a broad spectrum drug like Omadacycline would be an option if patients are failing on and they don’t have the sensitivity that's required.

The stay home strategy slightly different and if we’ve manage to get patients out of hospital what we know is many patients actually turn up to the hospital because primary care docs have exhausted their option and they’ve got no choice but to refer patients to hospital.

What we believe is that Omadacycline would provide them with a value for oral only option that can prevent hospitalization or avoid hospitalization in those patients and that’s what we call our stay home strategy.

Louise Chen

Okay, thank you.

Evan Loh

You also had question about other meetings as well, I mean we plan to have other submissions too ECAC/ASM which is a combined meeting in June in Boston and we’ll also be looking for the ID week in the fall and with our anticipated top-line data coming out of the middle of the year maybe one of those fall meetings would be a good place for that data to be shared with the scientific and clinical care community. We’ve covered the questions Luis.

Louise Chen

Yeah. Thank you very much. A very detailed, appreciate it.

Michael Bigham

Thanks Luis. You’re welcome. Thank you.

Operator

We’ll go next to Bert Hazlett with Ladenburg.

Bert Hazlett

Yeah, thanks. Congratulations on the progress. Thanks for taking the questions. A little more granularity on the all oral regimens for ABSSSI if you wouldn’t mind, could you talk about the timing again the enrollment for your first skin trial has succeeded quite well. Would you expect an all oral regimen trial to up potentially be along the same lines 12 months enrollment timeline? And then could you just talk about the opportunity that in all oral regimen in that indication might provide you. I think you touched on it just with the answer previously. But a little more granularity there with skin indications specifically in all oral would be helpful. Thank you.

Evan Loh

So very thank you for the question. As we’ve said from the outset there is significant value for a broad spectrum well tolerated once daily-oral antibiotic for serious community acquired infections where resistance is a concern. And our initial commitment right now is to explore it in a Phase 1 setting with urinary tract infection as well as with sinusitis in our current balance sheet allows us to be able to take on those particular studies. But in order to access the value as you’ve already alluded there need to be an oral only treatment regimen approved within a label. And that will enable us to have access to the market will allow Adam and then our commercial colleagues to actually go ahead and actually do the detailed work and achieve the intended benefits as he has already mentioned in our stay home strategy with that oral only.

And with the interest that we’re seeing from our KOL as well as interest from our market research as well as interest from our current investigators. We see that there is clearly a need out there that they’ve articulated. So it is up to us to do that proprietary work which we started doing. Specifically around clinical trial materials and designing a protocol and we will need time to go to the FDA. We talked to them about our protocol design and also go back and forth with our KOL to refine the protocol to make sure that it’s sharp and meets the particular endpoint that we want to look at.

As you noted there are multiple benefits from an oral only program in terms of having this. I think the first big value was that it actually would as we’ve already mentioned provide access to the community setting for those patients and that community setting as we know from a market research as we noted in our corporate deck is much larger than the hospital based IV to orals switch market.

Second value is that it would provide a clear pathway or approval in Europe as it relates to our feedback and [indiscernible] date, by having a second in trial in our midst. Third, based upon our current experience with our skin trail, as you’ve already alluded too we believe that the overall enrollment timing for this protocol should be very similar if not potentially a little quicker based upon similarity that the investigators have with our products, but also the fact that this protocol will not require a hospitalization phase it will only be a strictly community setting with ambulatory patients.

And finally, we think that in oral only trial, could further the appeal of Omadacycline to potential partners. Now you’ve asked about timing, the timing is not determined. We are aware of the value, but for us we will not place the balance sheet nor our current runway at risk. And so at this point in time, we still think we have lots of options for non-dilutive financing that Doug can speak to as well to help strengthen our balance sheet in the coming months and this year. Doug?

Doug Pagan

Sure Bert as Evan mentioned, the study is not currently funded so we are doing the preparatory work, but we want to bring in additional resources, maintain the runway and the balance sheet strength we have today. So as we look forward and think about options to do so. We look particularly at non-dilutive sources of capital available to us. And those involved business development opportunities with Omadacycline in certain markets and regions particularly Asia, Latin America and others that are less course with the strategic development of the asset as well as with Sarecycline.

Recall we the company owes ex-U.S. rights to Sarecycline and we’ve been talking with potential partners about development outside of the United States as well as the opportunity to monetize U.S. royalty stream that we would have from Allergan in an upfront cash payment arrangement. And of course we’ll always look at the equity capital market and other options available to us to fund this program. So we do as Evan alluded we see significant value to adding an oral only community based label to the drug. But at this time, we don’t have a specific timing answer for you.

Bert Hazlett

Okay. Well thank you. Again it’s an encouraging approach. And we look forward to hearing more as the program manifest itself. Just in terms of the balance sheet as you touched on. You do have a debt line outstanding, would you anticipate drawing that down as you move forward? Again I think $30 million still outstanding or maybe $20 million would you just talk about share willingness and want to have that debt line?

Doug Pagan

Yeah sure Bert, to recall we have a $40 million debt line available to us of which we have drawn down $20 million so that leaves $20 million available balance. The additional $20 million available has not been included in our runway forecast when I talk about runway through the top-line data results with cap that is with our current cash and cash equivalents. So we maintain that as available and as a backdrop, we don’t have current plans to pull it down however we would incorporate that in our broader sources of funding as we explore further development. So as of no current plans, but yes available and would be added to the list as I mentioned earlier.

Bert Hazlett

Okay, thank you. Congratulations on the progress. Thanks, guys.

Doug Pagan

Thank you.

Operator

[Operator Instructions] We’ll go next to Hartaj Singh with BTIG.

Hartaj Singh

Hi there, can you hear me?

Michael Bigham

Hi Hartaj.

Hartaj Singh

Hey, thanks guys. Just a couple of very quick questions, actually most of my questions have been answered very thoroughly. Just on ex-U.S. partnership I assume that after the data readout in the middle of the year is when things will probably speed up from BD perspective or maybe earlier, but what’s the sort of framework to think about what a potential ex-U.S. partnership for Omadacycline or Sarecycline could look like just would they be sort of Phase 3 sort of late stage assets or would certain kinds of upfront just basic scenarios if you can just kind of help us with a little bit?

Then the other thing is, is there any possibility I know a lot of people probably asked you and I don’t want to kind of kill us to death, but any possibility of the pneumonia trial could also benefit from the skin kind of the just the fast recruitment that’s happened there could also somehow benefit pneumonia and move that up potentially? Just any thoughts there. Thank you.

Michael Bigham

So the halo effect. So maybe Evan will take the second part first and talk.

Evan Loh

Yeah it’s hard to know. They are different investigators because it is a different disease and so we focus more on pulmonologists than individuals that run that type of clinical practice, but then again as the top-line data for skin come out as there continues to be enthusiasm and excitement about the compound and seeing how it performs after our initial top-line data I would imagine that there would be more enthusiasm from the investigators because they know that their contributions will allow this compound to be registered on our current timeline.

So I think there might be a halo effect going down the road, but I think the biggest factor that’s always something we can’t predict that we’re being very conservative about is the severity of the flu season. And so the severity of the flu season will dictate the incidence rate of pneumonia and so far for this northern hemisphere season it’s actually been relatively mild. That being said, that initiations that we have completed that we placed on clinicaltrails.gov has been very enthusiastic and we’ve made great progress there and so right now our current projections are that we remain on track for our second half 2017 top-line data output for pneumonia.

Michael Bigham

Yes hi Hartaj, Mike Bigham. Talking about business development so you’re right to think that the top-line results from the first registration study is a little bit sort of like the starting gun for us as you would expect and while we’ve been having ongoing conversations raising the profile of both compounds with respect partners outside the U.S. our guess is that the pretty serious discussions around numbers start when the data becomes available. So from a BD perspective our own internal expectation is something might happen as early as late ‘16 or by mid ‘17 in some of these regions.

We’ve had a region-by-region focus for both compounds. So regions that we’re particularly interested in right now would be Latin America, South America looking for partners there. But also is the Asia Pacific theater same in respect to both compounds even Canada for example is a separate and distinct region. But we have not pursued yet with bigger as Europe strategy because frankly we are still keeping that as part of the core asset along with the U.S. rights and will be able to have issued separately in the bonus of time.

In terms of the kinds of deal structures that we’re looking at they are pretty standard conceptually. Obviously, we’re looking for some upfront money as well as milestone based payment around subsequent clinical trial data filing approval those kinds of natural milestones with these compounds went themselves well too, and in all likelihood some kind of a royalty arrangement on the backend.

But we’re busy we’ve got our BD people living on airplanes we don’t see them much. We get emails from them, sort of toeing the soil. So we’re encouraged by the level of interest and by the level of activity. And as I said data will be the starting gun for that process to heat in earning.

Hartaj Singh

Great, Mike thank you. Thanks Evan, really appreciate it.

Michael Bigham

Alright, thanks Hartaj.

Operator

We’ll take a follow-up from Bert Hazlett with Ladenburg.

Bert Hazlett

Just a brief follow-up gentlemen. Thank you for taking it, could you just articulate maybe why you’ve seen the good enrollment in the first skin trial the rapid enrollment? Again just a little bit I know we’ve talked about the once daily all oral characteristics, but is there anything beyond that that’s resonating with the investigators to drive that enrollment in the skin trial? Thanks.

Evan Loh

So I think Bert you’ve identified something very important and it’s a key factor whenever you look at the rate of enrollment of any particular pivotal trial. Investigators generally get more enthusiastic as they continue to see results that tell us tell them that the efficacy rates are not seeming to differ at all from the known active comparator in this particular case Zyvox, which is a very effective skin drug with reasonable tolerability overall.

And in addition to that they’re not seeing any untold adverse events that would give them pause or potentially approaching and enrolling other patients into the trial. I think that the other pieces of feedback that they’ve given us is that here we have unlike Zyvox the potential for a well-tolerated once-daily oral that is also a broad spectrum antibiotic that can address not only the more narrow staph and streph [ph] type of species, but also could address potentially those individuals that require a broad spectrum antibiotic for when they present with a moderate to severe skin infection. That includes individuals who maybe diabetic they often times they are [indiscernible] negative. You might have individuals coming from nursing homes or individuals with fire treatment as Adam has noted have failed other prior therapies that would be I think more prone to having resistance as well.

I think the other nice feature of what they’re seeing in terms of the feedback is they like the fact that this is a compound, but again as I said earlier it’s not metabolized and because of that it also has no interaction with the stiff system. So we do not anticipate right now based upon any discussions that we’ve had or with the data that we have in hand any drug-drug interaction limitation this being used in combination with whatever someone would have on board that could limit the use of these compounds I mean the classic example of this would be the limitation with regards to the serotonin SSRI reuptake inhibitors as well as MAO inhibitors that permit I mean that prevent the use of concomitant Zyvox. And so we will not see any of those particular restrictions and that gives I think doctors lots of options to consider omadacycline for use in these patients.

Bert Hazlett

I appreciate the additional color. Again we look forward to the progress with the all oral opportunities as well. Thank you.

Evan Loh

Bert just to clarify one point that again the study has not been unblinded in anyway shape or form. This is just looking at their anecdotes of how people are doing. So there is no I don’t need to infer that we have any visibility on that at all. This is a fully blinded prospective study that won’t be blinded unblended until the entire study is completed.

Bert Hazlett

Okay, thank you.

Operator

And there are no further questions in the queue. I would like to turn the call back over to Michael Bigham with any additional or closing remarks.

Michael Bigham

Thank you. I think we’ve been -- we’ve covered the water front pretty thoroughly between the Q&A and prepared remarks. So unless there are any other last minute questions I think we can conclude the call. So with that Paul perhaps I hand it back over to you if you’re still on the line. Paul is not so I think we can successfully conclude the call. Thank you very much for your time and patience and your continued interest and support. Take care.

Operator

And again this does conclude today’s conference. We thank you for your participation.

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