Cempra's (CEMP) CEO David Zaccardelli on Q4 2016 Results - Earnings Call Transcript

| About: Cempra, Inc. (CEMP)
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Cempra, Inc. (NASDAQ:CEMP) Q4 2016 Earnings Conference Call February 28, 2017 8:45 AM ET

Executives

John Bluth - EVP of IR and Corporate Communication

David Zaccardelli - Acting CEO

David Moore - President and CCO

Mark Hahn - CFO

David Oldach - CMO

Analysts

Kevin Patel - Cowen

Michael Higgins - Roth Capital

Yuko Oku - J.P. Morgan

Alan Carr - Needham & Company

Andrew Barnes - Morgan Stanley

Debjit Chattopadhyay - Janney Montgomery Scott

Laura Chico - Raymond James

Stephen Willey - Stifel

Kevin DeGeeter - Ladenburg

Operator

Good day, ladies and gentlemen and welcome to the Cempra Fourth Quarter 2016 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today’s conference, John Bluth, Executive Vice President of Investor Relations and Corporate Communications. Sir, you may begin.

John Bluth

Thank you, James, and thank you all for joining us this morning. In addition to reviewing our fourth quarter and full year financial results, we have a number of important corporate updates to discuss with you, including our recent interactions with the FDA on solithromycin, significant cost reduction activities we’ve implemented and updates on several of our clinical programs, including the positive Phase 3 results we reported last week with fusidic acid. Joining me on the call from Cempra are Dr. David Zaccardelli, Acting Chief Executive Officer; David Moore, President and Chief Commercial Officer; Mark Hahn, Chief Financial Officer and Dr. David Oldach, Chief Medical Officer.

Before we begin, I would like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Cempra's SEC filings, which are available on the SEC website or the Cempra website for information concerning the risk factors that could affect the company.

I’ll now turn the call over Dr. Zaccardelli.

David Zaccardelli

Thank you, John and good morning, everyone. We covered a lot of ground in the press release and although we do not intend to recap every detail with you on the call, we do want to spend the time to clarify and clearly describe for you three important topics. First, what is our strategy with solithromycin based on the meeting with the FDA? Second, what is our strategy with fusidic acid after positive Phase 3 results in ABSSSI? And importantly third, what is our strategy for Cempra as we reduce cost and move forward with business development activity.

So, let's start with solithromycin. We had a very productive meeting last week with the FDA to discuss the complete response letter in how we can progress solithromycin. While we do not yet have the official written minutes of the meeting, we feel it is important to share with you our perspective from it. At the meeting, the FDA reiterated to us they believe there is a potential liver injury signal in our clinical data and they will require additional clinical safety data prior to approval.

And we made it clear to the FDA at the meeting that it was not practical for Cempra to proceed with a 9,000 plus patient pre-approval study. They acknowledged our position and encouraged us to submit a protocol that we would find acceptable so they could evaluate it. Based on the input we received from the FDA, Cempra is developing a protocol, which will propose including fewer than 9,000 patients at the time we respond to the CRL and we’ll propose to deliver data from defined cohorts as the study progresses. We plan to discuss the protocol with the FDA to determine if it could support an initial approval in a limited group of patients with urgent unmet need, while the company continues to accumulate a larger post-approval safety database to support potential label expansion into the broader CABP population. Of course, this clinical work would be costly and considering our cash resources and other potential value creating opportunities we see in our pipeline as well as from business development activities, we would plan to seek non-dilutive financing if available to support any additional solithromycin clinical study.

We are fortunate to have existing non-dilutive funding partners in BARDA and the NIAID. And in fact, BARDA was with us at the FDA meeting last week and continues to fund our pediatric CABP study. We’re considerably more optimistic about the future of solithromycin following our meeting last week than we were at the receipt of CRL. But if we are unable to reach an agreement with the FDA on an approach that is practical for Cempra and deliver the additional clinical safety data they require, we would be very reluctant to commit further resources to the CABP program. And if we are able to agree on a study protocol, we would plan to utilize new non-dilutive funding to support the study. At the meeting, we also discussed our progress with Uquifa which as you know is the manufacturing facility we are bringing on line to supply solithromycin API given the regulatory status of Wockhardt.

We now have progressed multiple batches at Uquifia, initiated stability testing and if we continue on our current timeline, we would expect to have the necessary data from Uquifia ready to submit to the FDA in the second half of 2017. With regard to Hospira and consistent with comments in our CRL, they recently received a warning letter which describes deficiencies at the facility we are using to reproduce intravenous solithromycin. We would evaluate the results of any potential future re-inspection of this facility to determine our next step. In the meantime, we are moving forward to qualify another supplier for IV solithromycin in case we need them. Based on what we know today, when we look at the need for clinical data and the need for manufacturing data, we believe the time it will take to accumulate the additional pre-approval clinical data is the rate limiting step in providing response to the CRL.

With patent protection through 2032 along with additional QIDP and GAIN Act protection and the significant unmet medical need that solithromycin addresses, our goal is to work with the FDA to get solithromycin approved in what is likely to initially be a limited population with the greatest unmet medical need. Once approved in a limited patient population, we would accumulate additional post approval safety data to expand the label to a broader CABP population. Even if it took us another three to five years to expand the label to include the broader population, we would still have over a decade of patent protection as well as regulatory exclusivity in what we believe would be a very large market. So the plan is to press hard with our efforts to advance solithromycin to the market, but we do not plan to commit substantial existing cash resources to get there in light of our current cash position and the other investment opportunities we are seeking and considering.

Now, let me comment on the status of the MAA in Europe. Many of the same concerns the FDA has raised are evident in the Day 120 questions we have received from the EMA. The EMA has suggested a post-approval clinical safety study in the EU and we believe the EMA may request additional data prior to approval. We are currently assessing the path forward with the EMA that we believe would be most likely to achieve a positive benefit risk assessment from them. And to be clear, this does include assessing whether we are better off withdrawing the MAA for now and not spending the considerable money required to push it to an opinion if we believe that opinion would be negative without further pre-approval data. We have just begun this assessment and we will keep you informed as we make progress here.

As we look at our other development opportunities with solithromycin, we have made some important decisions to streamline our approach. We have reviewed the portfolio over the past couple of months to focus on programs we believe could deliver the most substantial value for the required investment. Based on the data we saw in our exploratory studies, we have closed our COPD study and also suspended our NASH development program at this time.

In gonorrhea, as we described in the press release, we have analyzed the data from our first cohort of patients. This data did not demonstrate non-inferiority, but did show high levels of efficacy for solithromycin and importantly resistance for solithromycin did not emerge. The NIAID is supporting an extension study to add data from women and older adolescents and this is another area where we may be able to access non-dilutive financing to progress the program. Our next step with the GC program is to talk with the NIAID and FDA about how we can build on the data we have achieved to achieve approval in a disease that is in desperate need of new therapy. We look forward to keeping you posted on our progress.

We are also advancing our solithromycin ophthalmic program towards a planned IND later this year. Many of the pathogens that cause CABP are the same as or similar to pathogens that cause eye infections and we believe the ophthalmic formulation of solithromycin we are developing has the potential to be an important treatment for bacterial conjunctivitis and other ophthalmic conditions. We plan to request a pre-IND meeting with the FDA in 2017 to discuss moving our ophthalmic programs forward into clinical trials. We believe there would be minimal spending required over the next 12 months to advance this program.

Now, let's turn to our other internal program, fusidic acid which we refer to as TAKSTA and which recently had positive news. The Phase 3 ABSSSI study delivered outstanding data, which are described in the press release we issued last week. Our strategy with TAKSTA is to meet with the FDA and review the best steps to gain approval. For ABSSSI, we expect two Phase 3 studies would be required for approval. However, there may be a possibility to gain approval in a limited population based on the notable results related to MRSA infection. Once we have the input from the FDA on the path forward, we’ll decide how to proceed, but we are extremely excited with the Phase 3 data and look forward to presenting the complete results of the study at an upcoming medical meeting.

In addition, I'd like to remind you that we have an ongoing study with TAKSTA in patients with refractory, bone and joint infections. This study is in the home stretch of enrollment and we hope to have topline data available by the end of the year. When we see the data from the study, we should be able to determine the best next step for TAKSTA in bone and joint infection.

As we progress our clinical programs, we have also actively engaged in a strategic process to evaluate and assess external late stage assets and other potential strategic business opportunities to determine the best use of our resources to deliver value through internal and/or potential external opportunities. We want to preserve our cash and take a very full view here of the available assets, opportunity and strategic business options we have, so we can make a fully informed decision on the best next step for Cempra.

To this end, we have initiated a very significant cost saving at the company. Our cost saving action includes a restructuring of personnel that included a 67% reduction of our workforce from 136 to 45 employees. Of course with this difficult action, we want to acknowledge the efforts of all of our colleagues and we are incredibly grateful to each one of them for all of their contributions to Cempra. We entered the strategic assessment period in a very strong position as we ended 2016 with 231.6 million in cash. As a result of our cost saving restructuring activity, we expect our research and corporate expenses to trend significantly downward beginning in the second quarter of this year. We expect to reduce second half 2017 expenses by more than 70% compared to the second half of 2016.

These operating expense assumptions do not contemplate costs associated with the commercial launch of solithromycin or any additional significant clinical trials with our product candidate. Future discussions with regulatory authorities and agreement on further clinical development requirements may lead to additional expense and if that’s the case, we would expect to provide more detailed expense guidance at that time.

Now, let me comment on some corporate housekeeping and our financial results from the fourth quarter of 2016 as well as the full year of 2016. As our unaffiliated market cap is below 750 million at the time of filing our 10-K today, we will no longer qualify as a well-known seasoned issue or WKSI filer with the SEC. So our open-shop registration statement already in place was amended yesterday to register a specific dollar amount. And to comply with SEC rules governing these filings, we must file a second amendment after the Form 10-K is filed before this amendment registration can be declared effective. I want to mention this and clarify that while circumstances could change, we currently have no plans to raise dilutive funds.

You can see the details from our fourth quarter and full-year financial results in the press release and Mark is happy to elaborate on any questions you have. As you will note, our R&D expenses in Q4, 2016 were lower compared to Q4 of 2015 because we had less clinical trial expense and we were not purchasing API for a potential launch as we were in Q4, 2015. G&A expenses in Q4 2016 were significantly higher than it was in Q4 2015 primarily because we were scaling the commercial organization for a potential launch and due to obligations related to the retirement of our former CEO.

Our net loss for the fourth quarter of 2016 was 31.4 million or $0.60 per share compared to a net loss of 21.2 million or $0.48 per share in the fourth quarter of 2015. For the full year 2016, our net loss was 118 million or $2.34 per share compared to a net loss of 91.1 million or $2.09 per share for the year ended December 31, 2015. As I noted, our cash position as of December 31 was a robust 231.6 million. We believe we’ve made substantial progress in many areas since we received our complete response letter in late December and we hope you have a clear understanding of our strategy going forward with solithromycin, for fusidic acid and for Cempra.

With that operator, we are now happy to open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Ritu Baral with Cowen. Your question please.

Kevin Patel

Hi, this is Kevin Patel on for Ritu Baral. With respect to your FDA meeting that you had last week, do you expect the updated response to the CRL to be a [indiscernible] response?

David Zaccardelli

Thanks for the question, Kevin. I think we're in the early stages of discussing that with the agency. Clearly at the meeting, as I mentioned, they are going to need additional clinical safety data. In response to the CRL, we will propose a number less than 9,000 for the submission in response to the CRL. How much and when the additional data would be provided remains to be seen. In any case, we expect to get through that discussion with the FDA in the next quarter or two to ensure that we can negotiate an acceptable protocol with them to move forward.

Kevin Patel

Okay. And as a follow-up, what is best defined population of unmet need as you guys see it?

David Zaccardelli

Yeah. Thanks for the question. Again, we're discussing that with the agency. They understand our point in providing information on safety that allows them to move forward. We also understand that we would be able to target patients that would have the greatest benefit from solithromycin, those patients that may not have better treatment options and so we are in the midst of discussing that with the agency now and I think we'll have greater clarity on that as we define the protocol.

Operator

Our next question comes from Michael Higgins with Roth Capital. Your question please.

Michael Higgins

Looking back on the Q4 ’15 call, management noted that you may provide an update on 30-patient [indiscernible] trial after the first dozen or so patients. Can you report for us if you’ve crossed that mark yet?

David Zaccardelli

Thanks for the question. I’ll have Dr. Oldach respond on the progress of our trial.

David Oldach

Hi, Michael. This is Oldach here. We have enrolled 27 out of the 30 patients. So we expect in the coming months to complete enrollment. And since our primary end point is a six month look, six months after the final patient is enrolled, the 30th patient, we’ll be able to do an analysis and present those data. We expect to do that by the end of the year.

Michael Higgins

Great. Thank you. Also looks like you're hoping to gain approval in MRSA skin infection early. When is the next update on that, when you expect to meet with the FDA and get back to us?

David Zaccardelli

Yes. We’ll be requesting a meeting with the agency in this quarter and it will depend on their scheduling, a Type C meeting does take I think 75 days to schedule. We’ll have that meeting and discuss the results, present the outcome of the Phase 3 study, specifically discuss MRSA activity that we’ve seen in the study and discuss with them a path forward, potentially utilizing the 21st Century Cures Act and LPAD pathway for products that meet an unmet medical need.

Michael Higgins

Okay. Looks like it may be a Q3 update, would that be a reasonable estimate?

David Zaccardelli

I think that‘s fair unless we have progress otherwise, which we will update you on the next quarter.

Michael Higgins

And also your guidance for cash expenses and burn in the second half of the year, does that assume running a second infection study?

Mark Hahn

This is Mark by the way, it does not assume any additional large clinical trials like that.

Operator

Thank you. Our next question comes from Jessica Fye with J.P. Morgan. Your question please.

Yuko Oku

Hi, this is Yuko on for Jessica. Thank you for taking our questions. In regards to the discussion with the FDA last week, what outcome from the meeting specifically made you think that FDA would accept cohort by cohort safety data as the trial progressed. And also previously you indicated you would not run a 9,000 patient safety study, but how many are you proposing to study? Thank you.

David Zaccardelli

Yeah. Thanks for the question. While we won't get into the actual specific conversations and considering we have not received the official written minutes from the meeting, we did want to provide you our perspective. Clearly, there was a dialog that occurred. As I articulated, we did discuss that we were not in a position to doing 9000 patient pre-approval study prior to submission of the CRL.

The agency understood our position. They also recommended that we go forward and propose a number less than that in order to supply them additional safety data and then probably move forward in that light with additional patients in providing a broader CABP population label. So it’s a bit fluid. The agency definitely encouraged us to move forward. They understood our position and the actual number that we will be proposing are still [indiscernible] and will be discussed with the agency. Clearly, we would plan to submit our responses [indiscernible] would be to negotiate our protocol that would have notably less than 9,000 patients in the resubmission of the CRL.

Operator

Thank you. Our next question comes from Alan Carr with Needham & Company. Your question please.

Alan Carr

Hi. Thanks for taking my questions. You mentioned that you might resubmit with substantially fewer, but in pursuing it, an indication with a higher unmet medical need, I’m wondering what you had in mind and also, excuse me, can you give me an update on the pediatric trial and what's going on with Toyama and their efforts with solithromycin? Thanks.

David Zaccardelli

So, I’ll try to answer the first question and then we’ll move forward from there. I think that we are currently defining the patient population, but as you would expect, it would be patients with limited other therapeutic options, patients where fluoroquinolones or Beta-lactam are not a desired choice and so there are patients with CABP that solithromycin would be a best option for them, considering the other therapeutic options. So I think that is our strategy and discussing with the agency, they also understood that from our conversation.

With regard to the status of our pediatric trial, Dr. Oldach can update you.

David Oldach

Hi. I’m Dave Oldach here. So we announced to JP Morgan that the pediatric study has just gotten off the ground and 14 patients have been enrolling. We are currently enrolling in both North America and in Europe with the trial. We’re not planning on giving a monthly update on the number of patients enrolled, but at the end of the winter season, we’ll plan on giving an update this will summarize how we did through the winter. But the trial is progressing well generally.

David Zaccardelli

And with regard to Toyama, David Moore can update you.

David Moore

Hi, Alan. Yeah, we stay in close touch with our partners in Japan, Toyama. I can’t share specific enrollment data, but they are currently enrolling. They have informed us that enrolling is going quite well in their Phase 3 clinical trials and as soon as they’re able to provide an update in terms of number, we will certainly pass that along as well.

Operator

Thank you. Our next question comes from Andrew Barnes with Morgan Stanley. Your question please.

Andrew Barnes

Hi guys, good morning. I appreciate you taking the question, I just - I’m trying to understand how you think about and how we should think about tax going forward. My recollection is that you in-licensed that product for prostheses and bone infections and it was going to be relatively an orphan drug and now it seems like there's been a switch with the data last week. Are you thinking about this as a soft tissue antibiotic that's going to compete with generic Zyvox or I mean, how do we - and if so, I mean are they going to require another trial to get approval in that indication?

David Moore

Hi, Andy. This is Dave Moore. I’ll talk a little bit about the market and certainly as you’ve heard us mention, we think there is potential utility for fusidic acid in these bone and joint and prosthetic joint infections. And as evidenced, that's why we're studying it and we’ll provide that update in terms of how that trial is going. The path forward which we've described in the past is certainly to do larger trial in acute bacterial skin and skin structure, infections in which we've outlined last week and that's a large market as you mentioned. There's over 14 million prescriptions per year in the outpatient side, much larger than CABP and there's over 3.3 million patients admitted and treated in the hospital every year, also much larger than CABP and certainly the data that we've seen last week, they are encouraging in terms of the limited options for oral therapy.

Many patients that have to go on a antibiotic for MRSA or other types of infections for longer than 10 days or two weeks are many times limited to IV therapy. And so we currently are very enthusiastic about the potential utility for long-term bone and joint infections. We think that the limited treatment options certainly may provide an opportunity for fusidic acid, at the same time, the data in our acute trial looked very promising for the common pathogens related to skin, especially as we noted in MRSA. And so that’s why we need to have this conversation with the FDA, as Dr. Zaccardelli mentioned, the Type C meeting. And keep in mind, fusidic acid is a designated QIDP product and allows us to have that patent protection as we move forward. So it's not just limited to the orphan designation which we were granted years ago. It has granted QIDP as a product and that's how we view it.

Andrew Barnes

Okay. So if you go into the larger soft tissue infection, I think the guidance in the past was you would need additional trial, is there a possibility that you'll be able to leverage some of the existing data and not have to do another trial?

David Moore

Well, at this time, we think that for the broad indication of skin and skin structure, we would need a second Phase 3 trial. With that said, there may be pathway that the new legislation has provided that for patients with significant unmet medical need, for example, possibly MRSA infections that there may be a path forward, either with the current data or with additional data that wouldn’t include a trial of this size that a second Phase 3 ABSSSI study would require.

Andrew Barnes

Okay. And when are we going to see the full datasets presented do you think?

David Oldach

Hi, Andy. This is Dave Oldach here. We’re planning on submitting that study to either ASM or IDSA. We have a open window for ASM. We’re targeting that, but it could be IDSA. So it will be an upcoming scientific meeting.

Operator

Thank you. Our next question comes from Debjit Chattopadhyay with Janney Montgomery Scott. Your question please.

Debjit Chattopadhyay

Thank you, gentlemen and thank you for taking my questions. Could you clarify the dosing schedule and the duration of dosing in the pediatrics in adolescents and how it compares with the previous Phase 3 study in adults?

David Oldach

Right. In the pediatric trial, we’re treating patients for 5 to 7 days just like in the adult population. With solithromycin, the comparator is duration and standard of care at the investigator's discretion.

Debjit Chattopadhyay

So, I mean any concerns that you know the pediatric approval is probably likely to be hinged on a safety database and is the agency comfortable with an adult safety base - safety database for the pediatric segment as well?

David Oldach

We have not had that specific conversation with the FDA, because the trial is still underway, further conversations that would occur demonstrate.

Debjit Chattopadhyay

And then any feedback from the FDA or the EMA on potential patient sensitization to SOLITAIRE based on prior exposure to Macrolides.

David Oldach

So one of the questions they’ve asked us in our design of the Phase 3/4 protocol, the additional safety data protocol is to allow patients the prior Macrolide exposure into the trial, so that they can look at that question. It’s a worthy one and of course we’ll do that.

Debjit Chattopadhyay

Then with the EMA, you had indicated you might need some additional data, so will that include the proposed safety database that you're working on with the FDA and in which case where do you see the likely CHMP nod on SOLITAIRE?

David Moore

Yes. Thanks. As I mentioned, we are in early stages of assessing what requirements they may need. That is in line with our answering the 120-day question. So I think although we are in that assessment and we wanted to articulate that today, we’ve not concluded it. And therefore, we have not decided on what our exact response will be. So we’ll decide in the coming weeks or months on our approach with the EMA.

Debjit Chattopadhyay

And then finally a small philosophical question here. I mean what was the rationale for starting and highlighting the NASH and COPD studies, given the likely liver issues and had you not started those studies and had the signals that you did, would the FDA have taken an alternative approach in community acquired pneumonia?

David Moore

Well, I think it's a bit of a theoretical question. We wouldn’t know what they would decide, because that wouldn’t be able to be assessed. However, our discussions with them are very specific to the CABP data, and so we believe in moving forward, the substantial review and the safety that’s associated with CAPB dosing and duration.

Operator

[Operator Instructions] Our next question comes from Laura Chico with Raymond James. Your question please.

Laura Chico

Good morning. Thank you for taking the question. Apologies if I missed this. But I was just wondering if you could clarify kind of the timing for the next steps with regards to the proposal you're submitting to FDA on the safety study. I guess specifically kind of going from timing to get the minutes to the timing for your submission of a response and then perhaps timing to get feedback on that from FDA?

David Zaccardelli

Yes. So although it is fluid, we expect the minutes within 30 days of the meeting. So we’d expect that by the end of March. We are working based on our meeting and content as we saw with our response currently and we would expect to submit that to the agency in this next quarter and then the meeting will be scheduled and will continue that dialog. Clarity will be dependent on whether that can be done in one meeting or not, but it's our intent to provide the clarity clearly in the next quarter or two and we will definitely update on this issue in our next quarterly report.

Laura Chico

Okay. And then a quick follow-up if I may. I guess I'm still having a little trouble understanding the range of the size of the safety study. Obviously, you had a database of over 900 patients. The FDA is asking for 9,000. So somewhere between there, but I guess as you're considering this, maybe a related question, what are some of the non-dilutive financing options you're considering, kind of what level of financing would that generate.

David Zaccardelli

Right. So, as I mentioned, the number of patients that we would submit in response to the CRL is still under discussion with the agency. They understood that we would not be able to submit 9,000 in response to CRL that would be less than that. During the meeting, there was a receptivity to undergoing a dialog and a protocol design that would allow them to have safety data response to the CRL, but not at the 9,000 level and notably less. And so that is a work in progress. So I think as far as additional non-dilutive funding as mentioned, we do have an ongoing collaboration and partnership with BARDA specifically within CABP and they've been extremely good partners in the development of solithromycin and we hope to continue that collaboration with them as we define what’s required within the safety study.

Laura Chico

Okay. Last question, I apologize if I missed this. In terms of the data that EMA was possibly looking for, was that safety data or was that safety and/or efficacy?

David Zaccardelli

So as they were making their assessment, they are looking at total benefit risk and so that includes efficacy and safety. They have specifically suggested that they wanted a post-approval study and based on the nature of some of their other questions, they may require other data prior to approval and we’re assessing that currently. So we’ll have more information in the coming weeks and months on our assessment of the EMA and the MAA with the EMA.

Operator

Thank you. Our next question comes from Stephen Willey with Stifel. Your question please.

Stephen Willey

Yeah. Good morning. Thanks for taking the questions. Maybe just asked another way with respect to the sizing of the safety study. Maybe kind of agnostic to patient numbers, but is there some range of cash resources that you guys are willing to commit that you can provide some color around.

David Zaccardelli

Well, I think it's premature. As we communicated, we would first seek to fund any such study with non-dilutive monies but I think we will also need to define the exact protocol when the patient and how many are needed and then we'll look at what the cost of such a study is to conduct and in what tranches it’s required. So I think good question. We first needed to find the protocol first and then do an assessment of the study costs.

Stephen Willey

Okay. And then I guess the FDA has previously insinuated I guess in their response that even the additional patient safety data may not necessarily preclude there being some stringent labeling. So just wondering if that's also something that you want to secure clarity on during this meeting?

David Zaccardelli

Yes. I think that’s an excellent question and for sure, we would and as noted in their CRL, which we’ve provided transparency on that is a language that they’ve used without defining exactly what that means. So I think that that’s going to probably be the case. Keep in mind that we would attempt then of course to continue to collect safety data whether it be within the safety study as well as in a commercial setting and continue to provide safety data in order to broaden the label to a larger CABP population. As you know, safety is a continuum and so safety is understood over time and numbers of patients. And so, as we gather and gain more experience, specifically in a commercial setting, the comfort then increases as you can obtain more safety data and that would be our plan - long range plan for solithromycin.

Stephen Willey

Okay. And then maybe just one last tax related question, forgive me if this was already asked, but does a decision to initiate a second skin study, does that hinge upon the results from a prosthetic joint infection study that we're going to be seeing by the end of this year, I’m just trying to get a sense as to whether or not you would actually look to commercialize TAKSTA as a skin only asset. Thanks.

David Zaccardelli

I think the results from the ongoing bone and joint study are important and they're helpful in understanding in totality the value of TAKSTA, both in skin as well as in that indication. The regulatory pathway is a bit clearer for skin. And so that is something that we’re attempted to. But I think it is influenced by potentially able to study it in bone and joint from a regulatory approval type study and we need to see results from our ongoing trial to tell us that. So we're going to assess both carefully and then provide guidance on that over the coming quarter.

Operator

Thank you. Our final question comes from Kevin DeGeeter with Ladenburg. Your question please.

Kevin DeGeeter

Thanks for taking my questions. Really just two quick ones. With regard to tax, can you just comment on your thoughts or strategy for commercializing outside the US, particularly in Europe, given different exclusivity environment there?

David Moore

Thank you Kevin, this is Dave Moore. Yeah. There are no plans to commercialize outside of the United States. That is where we have exclusivity, where we've been granted a patent on the loading dose and we've also been granted QIDP designation. As you know, fusidic acid is available in many countries, including Europe and Canada and it has been used for skin infections and bone and joint infections for decades, which certainly is a big part of our interest in the compound here in the United States. Its long-term safety database and also long-term efficacy data, but we're solely focused right here in the United States.

Kevin DeGeeter

And in the context of business development and evaluating potential assets for free in-license, should we think of that process as being focused solely on antibiotics, more broadly on infectious disease or perhaps including assets even beyond infectious disease?

David Moore

Yes. I think we're going to take a broad view of that and look at all possibilities and so the process will be structured and broad and looking at how best to utilize our cash resources as well as our assets and pipelines that we’ve articulated today.

Operator

Thank you. This concludes the Q&A portion of the call. I would like to turn the call back over to Dr. Zaccardelli for closing remarks.

David Zaccardelli

So thank you everyone for joining us this morning. We will be attending several upcoming investor conferences, including Cowen and Raymond James conferences next week and the Roth conference the following week and we hope to see many of you there. So thank you very much.

Operator

Thank you. Ladies and gentlemen, this does conclude today's conference. You may now disconnect. Have a great day.

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