Achaogen (AKAO) CEO Blake Wise on Q3 2018 Results - Earnings Call Transcript

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About: Achaogen (AKAO)
by: SA Transcripts

Achaogen (NASDAQ:AKAO) Q3 2018 Results Earnings Conference Call November 8, 2018 8:30 AM ET

Executives

Gary Loeb - General Counsel

Blake Wise - Chief Executive Officer

Kenneth Hillan - President, R&D

Janet Dorling - Chief Commercial Officer

Zeryn Sarpangal - CFO

Analysts

Alan Carr - Needham and Company

Ed Arce - H.C. Wainwright and Company

Stephen Willey - Stifel

Kevin Kedra - Gabelli

Robert Driscoll - Wedbush

Operator

Good day, everyone. And welcome to the Achaogen Inc. Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, today’s call may be recorded. And I will be standing by if you should need any assistance. It is now my pleasure to turn today’s conference over to Gary Loeb, General Counsel. Please go ahead, sir.

Gary Loeb

Thanks David. Good afternoon, everyone, and thanks for joining. A press release with the company’s third quarter 2018 financial results was issued this morning and can be found on our website. This conference is being recorded and will also be available on our website at www.achaogen.com. for 30 days following the conference call.

Before we get started, just a reminder that this conference call will contain forward-looking statements. Other than historical facts, all statements in this presentation, including but not limited to the outcome of Achaogen strategic review, Achaogen’s expectations regarding the timing and impact of its restructuring, Achaogen’s strategic and commercial objectives, funding, product approvals, clinical or regulatory pathways, timing of activities, and likelihood of success for activities, including the commercial potential approval of ZEMDRI and future results of current and anticipated products, are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the Safe Harbor provision of the United States Securities Law.

Because forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties that the strategic review may not be successful, the risks and uncertainties of commercialization in gaining market acceptance and other risks and uncertainties some of which cannot be predicted or are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Our actual results and the events identified in our forward-looking statements may not occur, and actual results could differ materially from those projected.

For a further description of these risks and uncertainties, as well as risks related to our general business, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, or quarterly report on Form-10Q to be filed later this week and other periodic public filings with the Securities and Exchange Commission.

Except as required by law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

This conference discusses products other than ZEMDRI that are under clinical investigation, and have yet been approved for commercial use. For example, C-Scape is currently limited by Federal Law to investigational use. No representation is made as to its safety or effectiveness for the purpose for which it is being investigated.

I'll now turn the call over to Blake Wise, Achaogen's CEO.

Blake Wise

Thanks, Gary. And good morning to everyone and thank you for joining us for our third quarter earnings call and corporate update. It has been a productive and important time for Achaogen over the past quarter where our focus has been on building the foundation for ZEMDRI use in the U.S. or simultaneously streamlining operations, reducing expenses and considering our strategic path forward. We have made considerable progress on all of these fronts.

In my remarks today, I’ll share my perspective on ZEMDRI’s market opportunity, how we are positioning the product and what metrics we are using to measure launch progress. Janet Dorling, our Chief Commercial Officer will then pick up with an update on ZEMDRI launch activities and will walk us through our latest metrics. I will then provide an update on our announcement to pursue strategic alternatives for the company, while further reducing expenses.

Zeryn Sarpangal, our CFO will follow with a review of the quarter’s financial results and an update on the company’s cash runway. After that we’ll open the call to your questions.

Turning to the ZEMDRI launch. We launched ZEMDRI into the U.S. market in late July and we see momentum and interest for the product in our two target patient populations. We are seeing early uptake in the complicated UTI patient population where additional treatment options are needed for roughly one million patients with multi-drug resistant and recurrent infections. We also believe ZEMDRI is an important option for the estimated 90,000 patients with CRE infections.

ZEMDRI has a strong value proposition because it delivers clinical differentiation alongside the convenience of a once-daily, 30-minute infusion. This is particularly important to physicians whose goal is often to effectively treat patients outside of the hospital setting. They see ZEMDRI as a versatile treatment option for recurrent and MDR patients in both the hospital and the outpatient setting.

Our focus at this stage of the launch is building a foundation that supports the use of ZEMDRI and our launch metrics are designed to measure the capabilities at hospitals and outpatient facilities are developing to support this use. These metrics are critically important at this stage of launch and Janet will walk you through our progress here.

ZEMDRI revenues this past quarter represent approximately two months of product sales prior to broad formulary approval or the availability of the NTAP supplementary reimbursement, which went into effect on October 1st.

During the quarter, ZEMDRI achieved net revenues of $291,000 and to date we are seeing about 60% of use in the outpatient setting. While we are pleased with the level of interest we are seeing in ZEMDRI, particularly for outpatient use, we are not satisfied with these initial sales results and we expect to see significant growth in ZEMDRI treated patients and acceleration of ZEMDRI revenues once ZEMDRI gets added to hospital formularies, reimbursement experience grows in the outpatient setting, and hospitals complete the build out of infrastructure and procedures.

Next, an update on our recent NAA filing of plazomicin We submitted an application to the EMEA in mid-October seeking approval to treat complicated urinary tract infections, bloodstream infections due to certain enterobacteriaceae and infections due to enterobacteriaceae in adult patients with limited treatment options.

The MAA for plazomicin has subsequently been validated and review of our application is underway.

Moving on to our recent meeting with the FDA regarding a bloodstream infection indication for plazomicin and progress on C-Scape. We have had productive discussions with the FDA regarding BSI. We continue to explore expedient ways to support a label for BSI to help guide treatment decisions and an indication where physicians and hospitals continue to see a need and a potential role for ZEMDRI. This dialogue with FDA is expected to continue.

Regarding C-Scape, we have made excellent progress on the additional development work we've been focused on in 2018. We have completed in vitro and in vivo experiments with a revised drug product and the data from these studies are quite encouraging and addressing the issues identified in our first Phase 1 study.

These recent data support taking this new C-Scape drug product into the Phase 1 clinical pharmacology study in 2019 as planned. With the additional work, we've done on the product we are further encouraged that the potential for extended IP protection of C-Scape beyond the expected eight years of regulatory exclusivity based on QIDP status.

Now, Janet will provide you with an update on our ZEMDRI launch progress in the U.S.

Janet Dorling

Thanks Blake and good morning to everyone on the call. We are now in our second quarter of the U.S. ZEMDRI launch, and I am pleased to report that we continue to build on the momentum we established in the early days of launch.

ZEMDRI was launched on July 23 and in early August we received NTAP designation, which went into effect October 1st, which brings an important component to our value proposition for hospitals, who plan to use ZEMDRI in the inpatient setting.

I'd like to start by sharing with you some context about the patient populations we are targeting, why the ZEMDRI value proposition is resonating with physicians as well as where in-house ZEMDRI is being prescribed.

We expect to see ZEMDRI use in the theory population of about 90,000 patients as well as in the recurrent, or multidrug resistant complicated urinary tract infection population, which when combined have about 1 million patients.

The ZEMDRI launch is focused on this combined population and we are seeing the majority of our initial use in the outpatient types of care for multidrug resistant, recurrent, complicated urinary tract infections.

As we talked to physicians, they reiterate that this is a common type of patient they see in their practices. They are looking for additional treatment here for these complicated urinary tract infection patients.

ZEMDRI is a novel aminoglycoside that provide physicians with an [Indiscernible] infusion which supports use in both the hospital and the outpatient setting. This treatment setting versatility is an important – infusion which supports use in both the hospital and the outpatient setting.

This treatment setting versatility is an important component when treating complicated urinary tract infection patients. Although there are some patients who need to remain in the hospital because of comorbodities, there are also many patients who are hospitalized solely because they receiving multiple antibiotics infusion per day.

ZEMDRI allows physicians and patients the option to start in the hospital and then transition to an outpatient or home care center, which benefits both hospitals and patients from a cost saving and a quality of care perspective.

In addition, [Indiscernible] with ZEMDRI are also avoiding hospitalization altogether. Our key launch focus remains on building a foundation to support use in both the endpatient and outpatient setting, building a strong commercial foundation takes time, but it is important as routine use is dependent on new products being incorporated into established systems and processes.

We continue to work on educating key stakeholders on ZEMDRI’s clinical profile and value proposition, establishing antibiotic susceptibility testing or ASP capabilities and establishing therapeutic drug management or TDM capabilities.

In addition, in the hospital setting we are focused on supporting formulary reviews and then being incorporated into the electronic health record systems. In the outpatient setting, we are focused on educating office and reimbursement managers on billing and coding and building reimbursement confidence.

Building reimbursement confidence is important as officers are submitting their first ZEMDRI claims with the miscellaneous J-code and on this note we are now starting to see initial claims being paid to both private and public payers.

Now turning to our metrics, through Friday November 2, we have about 100 formulary reviews planned or proved and this includes 20 individual formulary approvals achieved with one hospital system approval, 172 accounts that have been set up for therapeutic drug management, 67 unique accounts have ordered antibiotic susceptibility just testing materials representing a 100 plus overall orders and approximately 50 unique accounts ordering ZEMDRI.

In addition, 160 physicians owned infusion centers are under contract for purchase of ZEMDRI. 60% of our sales are outpatient and 40% of our hospital and hospital – and 40% are hospital or hospital outpatient department.

These metrics really leading indicators charter our progress in building a solid and sustainable foundation for the ZEMDRI launch. We will continue to update these metrics in subsequent quarters and will use them along with our products build trajectory to evaluate our progress.

Before I close, I’d like to address the restructuring impact on the commercial team. Our commercial organization has been laser focused on building the commercial foundation for ZEMDRI and has been the driving force behind the momentum building in the market place.

Despite their many accomplishments during early launch, we have made the difficult yet necessary decisions to reduce the size of the commercial team as part of our recently announced restructuring.

With the smaller field force, we will prioritize our efforts on the most significant hospital and outpatient opportunities, based on our market intelligence to date. I remain fully confident that those who are part of our commercial organization going forward will remain committed to ensuring ZEMDRI’s success.

I’ll now turn the call back to Blake.

Blake Wise

Thanks, Janet. Earlier this week, we announced plans to pursue strategic alternatives for the company, while further reducing expenses to maximize shareholder value. We remain confident in the commercial potential for ZEMDRI and the path forward for C-Scape.

However, we acknowledge the current market dynamics for companies launching products into the hospital sector and believe the time is right for consolidation. Many of these companies are confronting the need to invest in product launches at a time when evaluations don’t reflect the commercial potential of novel products that are early in the stages of launch.

We see M&A and/or consolidation in this sector as potentially viable paths to enhancing a shareholder value by taking advantage of common or existing infrastructures to commercialize several products. We believe ZEMDRI has the clear potential to be a cornerstone asset in any anti infective or hospital focused portfolio.

As such we are taking proactive steps to pursue a full range of strategic options to maximize stock holder value at this time, including but not limited to the potential sale or merger of the company or its assets.

We have engaged Evercore as an independent financial advisor to assist the company and the board in this strategic review. We do not intend to publicly discuss or disclose further developments during this strategic review unless the board of directors had approved a specific action or we otherwise determine that further disclosures is appropriate.

Turning the restructuring, we are making additional expense reductions in addition to the restructuring we announced in July as we explore strategic alternatives. We are planning to reduce total operating costs by an additional 35% to 40% excluding onetime charges with a goal of conserving our cash resources.

These expense cutting measure measures are painful, but necessary to ensure that ZEMDRI is well positioned for commercial success, and that the company conserves capital during the strategic review.

Zeryn will now walk you through the financials.

Zeryn Sarpangal

Thank you, Blake. Today I will review the progress we have made in reducing expenses as a result of completing the restructuring that we announced in July, provide additional details about our new expense targets under the current restructuring, and walk through assumptions for our cash runway.

As I said on the last earnings call, the goal of the July restructuring was conservation of capital. In the third quarter, our R&D expenses were $21.7 million and SG&A expenses were $18.6 million, for a total of $40.6 million.

In addition, our operating expenses include restructuring charges of $7.9 million of which 47% or $3.7 million is cash related. This charge includes severance and related employee costs, which were included in the estimates provided in our Q2 earnings call.

In addition, it includes non-cash impairment costs of existing leasehold improvements as we sublease part of our facilities recently. Looking to 2019, when the financial impact of the current November restructuring is realized, we expect to reduce total operating costs by 35% to 40% excluding onetime charges.

Therefore, our total operating costs excluding onetime charges and non-cash compensation is expected to be on average approximately $25 million per quarter in 2019. In addition, we estimate our fourth quarter restructuring charge to be approximately $10 million of which 38% or $3.8 million will be cash related. The rest is for stock based compensation and fixed asset impairments, which are non-cash item.

We have brought in capital over the last quarter in two different ways. First, we drew down $25 million available under our Silicon Valley Bank facility at the end of October. This is part of our second tranche of the $50 million facility we have with SVB. Secondly, we've utilized our ATM to bring in $3.3 million over the last quarter.

We have approximately $46 million available under our current ATM facility. Regarding cash runway, our current usable cash is sufficient to get us to the middle of Q1 of 2019. This excludes $6 million in restricted cash which is primarily related to the Gates Foundation equity investment for the antibody platform, which will de-prioritize as part of our July restructuring and our facilities lease deposit.

It also excludes $25 million of cash that is collateralized by SVB if we get below a cash balance of $48 million. This cash covenant is part of our debt agreement with SVB. We are continuing to explore alternatives and how we could potentially utilize the $25 million towards our operations, as doing so would extend our current usable cash runway to Q2 of 2019.

I'll now turn the call over to Blake for closing remarks.

Blake Wise

Thanks Aaron. In closing, we remain steadfast in our commitment to a successful ZEMDRI commercial launch in the U.S. and believe our plan to reduce expenses and pursue strategic alternatives for the company will maximize value for shareholders.

We will now gladly take your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Difei Yang with Mizuho Securities. Please go ahead your line is open.

Unidentified Analyst

Good morning guys. This is Alex on for Difei. Thank you for taking the question. I had a question on the European marketing application. To what extent do you anticipate dEMA would look at the recent FDA decision in terms of their review and what are your expectations as it relates to getting approval for one or more indications in Europe? Thank you.

Blake Wise

Sure, thanks Alex. So we -- we don't think that the EMEA will look to the FDA decisions on the NDA that we submitted in the U.S. but independently, we’ll review the application that we submitted. It may be worth noting that you've seen recent approvals in Europe or CHMP opinions in Europe that include a broader set of indications than what the FDA approved those antibiotics for in the U.S. So, I think they are independent reviews and evidence that we've put forth for the complicated cUTI, bloodstream infection and limited treatment options on indications in Europe we feel well support those indications on the review. So we'll look forward to 120 day questions from ENA [ph] which should come around late February, early March.

Unidentified Analyst

Great. Thank you.

Operator

Thank you. We’ll take our next question from Alan Carr with Needham and Company. Please go ahead, your line is open.

Alan Carr

Hi, thanks for taking my questions. A couple of them. One of them, can you go over I guess, the -- what was cut back in July versus November in terms of personnel and meeting, give us a sense of the size of the sales force at this point. And then, also around public policy, can you give us the latest thoughts on what may be pending with respect to antibiotics and what might help the industry and anything change in the election Tuesday good or bad on that front? Thanks.

Blake Wise

Sure, thanks Alan. So first on the restructuring. So in the July restructuring, when we announced that we eliminated approximately 80 people from the company and in this restructuring about 85 positions were eliminated from across the company, and that impacts all departments and for your specific question on the field force, we now have 40 to 45 field based customer facing personnel.

So that's what the front facing customer organization now looks like. And then on the question of public policy, so I think it's encouraging that both domestically at the national level as well as globally, the conversation about the AMR crisis and things that need to happen to ensure continued development and commercialization ultimately of antibiotics is encouraging.

I think in the U.S. we continue to have more coming from the FDA around the need for potential changes to the reimbursement system for antibiotics, which I think is awfully encouraging that you've got the head of the FDA speaking now repeatedly on the need for that, and that there's work ongoing directly with CMS and FDA to try to come up with a model that might address the reimbursement dynamics for hospital based antibiotics.

And then in the Congress side, I think it's too early to know what know the changes this week in the house, and then ultimately what the balance now looks like might mean. But I think, in general we've got bipartisan support and vocal support for doing something meaningful about the need for new development in the space, and so that remains encouraging.

And we saw a bill dropped earlier this year that had bought it bipartisan support, and I think going into 2019, we hope and expect to see continued advancement of initiatives that can make a difference here.

Alan Carr

Thanks. I want to come back to the split in terms of the drugs being used. I think you said that 50 unique hospital accounts had ordered it. I’m wondering if you could confirm that, and then also, any shift in this split between 60:40 hospitals versus infusion centers and home health is, has that been pretty stable since the beginning that 60:40 or is it any dynamic shifting there, and I realize it's only a few months. I'm just wondering if there's any shift in that?

Janet Dorling

Absolutely happy to answer that. So yes, you're correct. 50 unique accounts ordering the product and actually it's -- well I wouldn't say that it's moving dramatically, it is early days, but we have seen that number just continue to flow upwards. So last time, we reported, I think we said 50/50 and now its 60:40 and it continues to move in the outpatient direction.

And I would just say to be transparent, when I say hospital that also includes hospital outpatient because we can't actually separate the sales between those two places. So even a portion of the hospital sales can be for outpatient use.

Alan Carr

Okay, thanks for taking my question.

Operator

We'll take our next question from Adnan Butt with Guggenheim Securities. Please go ahead. Your line is open.

Unidentified Analyst

Hi, this is Blair on for Adnan. Just curious, if you can give us any more details regarding the FDA meetings on BSI. Do you think another study is coming? And then, also could you give us like a breakdown between the sales between [Indiscernible? Thank you.

Blake Wise

Hi, sure. So -- they're really not more to share on the discussion with the FDA regarding BSI at this time other than we did our productive dialogue with them and expect that discussion to continue. So, not a lot of additional color at this point on that front. And then I'll let Janet take the second question.

Janet Dorling

Sure. So far, the majority of our use has been in complicated urinary tract infections and those are multidrug resistant and recurrent. We obviously don't get perfect information on this, but I’d say, limited use of CRE just further add some color, most of the CRE patients are going to be treated in the hospital and we don't have formulary review there yet, but we’re seeing a ton of use in the hospital that just to be transparent and that may shift overtime as we get more in-hospital use. But to remind and provide context on the patient population size, we think the cUTI patient population is around 1 million patients for multidrug resistant, recurrent cUTI and the CRE patient is about a little bit less than a 10th of that.

Unidentified Analyst

Okay. Thank you very much.

Operator

We’ll take our next question from Ed Arce with H.C. Wainwright and Company. Please go ahead. Your line is open.

Ed Arce

Hi, great. Thanks for taking my questions. Just a couple of here. On some of the metrics that you mentioned, I think you said, so far you've seen 20 formulary approvals at various facilities, obviously very early days still. But how do you see that growing over say the next three to six months in terms of the acceleration as more and more facilities schedule these reviews?

And then secondly, if you could let us know what is the plan ultimately with C-Scape. I know you mentioned a trial next year, but just wondering how that fits overall with your development plans and also with discussions that you might have with potential strategic partners?

Zeryn Sarpangal

Thanks for the question. I'll start with formulary review. It is early days that we’re pleased with the progress we’re seeing and the interest in reviewing ZEMDRI for formulary. We expect – as we’ve seen so far, every week the numbers seem to change and grow, and so we expect to see more formulary reviews being scheduled and we’ll continue to share those numbers with you as we report in at each quarter. I think as far as acceleration that’s what we’ve seen to-date and so I would expect to continue to see it. And we’ll -- again, we’ll be transparent as those numbers come in.

Blake Wise

So, Ed, I’ll talk about C-Scape. So the plan in terms of ongoing development and then how it plays into the strategic review. So maybe just to start and to remind everyone that BARDA supports the C-Scape program, so development on the program from an expense perspective is quite efficient, and so C-Scape remains a priority in the company. And our plans there have not changed at all in terms of the work we’ve been doing on the development of the drug product. And like I mentioned in the prepared remarks we’ve made really progress slightly that set up for a drug product that we expect now to take into the Phase 1 clinical pharmacology study in 2019.

From there we expect single Phase 3 study as we’ve previously discussed with the FDA in complicated UTI. So the plan based on a successful Phase 1 clinical pharmacology study would to then head towards Phase 3. So how that plays into the strategic review? I think C-Scape is a very important component of our portfolio and the value that sits within the Achaogen portfolio. It’s a beta-lactam/beta-lactamase inhibitor combination that could provide an oral option to patient who -- we’re seeing even an early days of ZEMDRI launch just how important it is to get patients out of the hospital. And this might be yet another population with complicated UTIs where you could treat with an oral therapy and get them out of the hospital and/or out of an outpatient treatment facility. So, we think it’s an important value component of what we’re working on Achaogen and therefore will be an important part of any discussion with strategic.

Ed Arce

Okay, great. Actually, one final question, I know it’s been still little over a month now, but if you could share with us what you're seeing so far in terms of the impact of the NTAP designation? Thanks.

Zeryn Sarpangal

Sure. So, with limited use in the hospital as far as people filing claims I assume that hasn’t been happening that much. But I think where it is really important is as hospitals evaluate ZEMDRI for formulary review especially for inpatient use. This will come in to the sort of overall discussion and review especially on the economic side as they consider ZEMDRI for formulary approval.

Ed Arce

Great. Thanks for taking my questions.

Operator

We’ll take our next question from Stephen Willey with Stifel. Please go ahead. Your line is open.

Stephen Willey

Yes. Thanks for taking the questions. Blake, now that you’ve launched the process here and you’re probably limited in terms of what you can say, but I guess high-level just what's the level of confidence that you can close on a potential transaction or solution here that fits within the confines of the current balance sheet runway?

Blake Wise

Yes, Steve. So you’re right. There’s limited I can say. But I can say that I think we've been very thoughtful about the situation that we sit in the marketplace dynamics within the space and that is the backdrop for the strategic review. I think we have a highly important and very interesting product in ZEMDRI and we’re seeing that in the early days of the launch. And so, I think that -- for anyone who is considering either have a hospital business or is considering how to think about putting products together. It really is a unique cornerstone asset that could plan any portfolio incredibly well.

And so, as that relates to the process, I think we go into with a lot of confidence and look forward to the process unfolding. In terms of predicting timeline that is clearly hard at the early stages of the process. But we’re being equally thoughtful about how we think about cash runway, and how we think about really doing -- running a robust strategic process while managing the capital side in a thoughtful way to make sure that we get the best of outcome on those fronts. Hope that’s helpful.

Stephen Willey

Yes. And then I guess when you just think about the potential suitors here or interested parties and a lot of the various hospital players have access to an asset that's of somewhat similar profile to ZEMDRI in the sense that it's kind of a higher price multi-drug-resistant targeting agent. So, just kind of wondering how you think about the universe of potential suitors here? And whether or not you think Plazo would actually be complementary to a company that might already have an asset that's kind of position in the marketplace as kind of a multi-drug-resistant gram-negative drug?

Blake Wise

So, I really don’t want to speculate on specifics in companies, but I think whether you’ve got a portfolio that is generally hospital-based in your any acute care setting and in the outpatient setting then ZEMDRI is a potentially fantastic portfolio match with any of those. So I don’t think there’s limited universe. All it takes is having a focus in this area or wanting to build [ph]. And equally if you have a portfolio that includes a gram-negative asset or frankly a gram-positive asset or I think any variety on there, I think our strong synergies that can be played across the portfolio and with the wide set of products. And so, I don’t think there's any narrowing of the potential universe at this point. And there are lot potentially really interesting combinations out there that could make sense.

Stephen Willey

Got it. And then, just a clarification on the SVB loan collateralization; I guess in the recent filing on prior Qs, it suggested that the collateralized balance needs to be 48 million. Can you help me just kind of reconcile I guess what was said earlier as being a $25 million collateralization balance?

Zeryn Sarpangal

Yes. So I’ll clarify. It’s a $25 million collateralization if our cash balance falls below $48 million. So we have that $48 million in the bank. If the cash goes below that then $25 million gets collateralized which is the size of first trench of their facility.

Stephen Willey

Got it. Thanks for taking the questions.

Operator

We’ll take our next question from Kevin Kedra with Gabelli. Please go ahead. Your line is open.

Kevin Kedra

All right. Thanks for taking my questions. First, you mention the field basic sales force around 40 to 45 reps. Can you give a sense of how that split between those targeting hospital versus more the outpatient setting? Or is there – is that more kind of a blended use of that sales force?

Blake Wise

So Kevin, thanks for the questions. The 40 to 45 customer facing personnel to be clear is includes commercial and medical affairs that is broadly the folks that are targeting customers. When you look at the commercial component and if you are more specific let me know. But there are about now 30 hospital account managers that are specifically the promotional arm and then there's additional support for reimbursement, market access and hospital systems, but that is generally the individuals that will be targeting hospital account. So, Janet, you may want to add some detail.

Janet Dorling

And I’ll just add on that. As we look to target where we put these people and how many people we have. We really thought through both the outpatient opportunity and the hospital opportunity, and so these capital account managers will be calling on both and we took everything we’ve learned from our initial months and launched to ensure that were again targeting those high potential and important accounts that we think are critical to drive the business in the short and mid-term.

Kevin Kedra

Great. And then secondly, I want to ask you if there’s any update on when we might see a publication of the case study?

Blake Wise

Sure. So, we continue to wait for final publication of both EPIC and CARE, maybe just to give a little bit of background. We submitted both manuscripts at the beginning of this year. And as you well know once you submit it goes through a process of which the company has little control. It's up to the Journal and they work directly with the lead authors on those. And so – and we’re really excited and encouraged for the publication of both manuscripts. And at this point we’re just waiting for the final confirmation and then ultimately those publications to come out.

Operator

[Operator Instructions] We’ll take our next question from Robert Driscoll with Wedbush. Please go ahead. Your line is open.

Robert Driscoll

Good morning, guys. Thanks for taking the question. Just one, so just one that if you can talk a little bit of any differences you might for how ZEMDRI might be due if approved in Europe versus the U.S. Just think about how patient versus hospital use? Thanks.

Blake Wise

Thanks, Robert. So, I think the clinical profile of the product, obviously would revive [ph] where people decide to use. And I think the dynamics in Europe are maybe a little bit different in the U.S. where that economic driver and the interest in getting patients out of the hospital in the U.S. is particularly acute. And in Europe I think it's about how do you treat the patient in the way that is best for the patient. And so the treatment setting has maybe some different motivators behind it. So I think the inpatient world in the European setting is going to be really important, but the outpatient potential there for getting patients -- the versatility to treat inpatient/outpatient I think is also very important.

In terms of what kind of patients – and I think we’ve been really clear on this call just about how important the complicated UTI patient has been and specifically the patient who has seen prior carbapenems and have failed in recurrent, come back and get treated again and again that will be equally important in Europe as it is in the U.S., as well as you know there are countries in Europe that have significant problems with CRE and so new agents for those most serious infections also is very important. So, I think you will now look radically different than the U.S. but some the dynamics might be slight different in Europe.

Robert Driscoll

Great. Thanks.

Operator

And at this time, now I’ll turn the program to our speakers for any closing remarks.

Blake Wise

So thanks very much. As always we appreciated your continued support and the questions. And we look forward to updating you in the coming quarters on our progress. Thank you.

Operator

This does conclude today’s program. Thank you for your participation and you may disconnect at any time.