Nabriva Therapeutics PLC (NBRV) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Nabriva Therapeutics Fourth Quarter 2020 Financial Results Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Mr. Gary Sender, Chief Financial Officer. The floor is yours.

Thank you, and good afternoon, everyone. Welcome to Nabriva's conference call and webcast to discuss the fourth quarter and full year 2020 earnings and business updates.

Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to the risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events.

Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K filed with the SEC.

Moving to Slide 3. I'd like to share the agenda for today. Ted Schroeder, Nabriva's CEO, will start with a review of key business items in 2020. He will provide an overview of our 2021 priorities and will take you through a thorough commercial update. Jennifer Schranz, our Chief Medical Officer, will then discuss an exciting new development project as we explore the potential use of XENLETA in patients with respiratory infections due to cystic fibrosis.

I will provide a financial review, and Ted will wrap up the discussion and lead a Q&A session. In addition to Ted, Jennifer, and me joining us on the call for the Q&A session is Steve Gelone, our President and Chief Operating Officer. The slides for today's presentation could be found on our website under the Investors section.

I would now like to turn the call over to our Chief Executive Officer, Ted Schroeder.

Thank you, Gary, and thanks to everyone joining our call this afternoon. Starting with a review of 2020, there is no doubt that COVID-19 made for a challenging year for the world, the pharmaceutical industry and for Nabriva. I am so incredibly proud of the perseverance and dedication demonstrated by everyone on the Nabriva team.

For 2020 -- for Nabriva, 2020 represented a year of making great strides and shifting our focus to serve patients in the community and building positive momentum heading into 2021. One of our major achievements last year was obtaining the U.S. rights from Merck to promote and distribute SIVEXTRO for patients with acute bacterial skin and skin structure infections, also known as ABSSSI.

Gaining the rights to SIVEXTRO provided a complementary product alongside our first marketed drug, XENLETA, which was approved by the FDA in August 2019 for the treatment of adults with community-acquired bacterial pneumonia, or CAP.

It's a testament to Merck's confidence in our ability to market innovative antibiotics. We remain keenly focused on business development opportunities as we move forward. At the same time of the SIVEXTRO transaction, Nabriva announced a partnership with Amplity Health, a leading contract sales organization. Through Amplity, we are now pleased to have 60 sales representatives deployed, reaching almost 8,000 community health care providers. This effort, coupled with the continued excellent managed care coverage for XENLETA, has positioned us well towards our commercialization goals to expand the awareness and prescription growth for both products in the community setting.

Approximately 92% of total commercial lives have access to XENLETA, with most of the coverage still being unrestricted without the requirements for prior authorization or a step edit. Internationally in 2020, XENLETA secured regulatory approvals in Europe and Canada and the Phase III trial completed enrollment in China. A regulatory filing in China is expected by the second half of 2021 by Sinovant, our local partner.

And as Gary will comment on later in the presentation, in 2020, we removed risk by paying down debt and recently strengthened our balance sheet with an extended cash runway that now gets us into the fourth quarter of 2021.

With that as an overview of how we executed in 2020, let me discuss our key objectives for 2021 on Slide 6. First and foremost is to build upon the commercial infrastructure we implemented last year to broaden the prescription uptake for both XENLETA and SIVEXTRO.

Please keep in mind that 3 quarters of our current field force started after Thanksgiving. Early trends remain encouraging, especially our ability to get direct access to medical providers. We also anticipate that SIVEXTRO will be transitioned to a Nabriva-branded product early in the second quarter, and we will begin recording 100% of the net sales on our P&L. More to come on that in Gary's financial section.

An important objective for Nabriva this year is to remain opportunistic in finding ways to expand organically and through synergistic business development initiatives. In this regard, you will hear from Dr. Schranz about our plans to initiate an important Phase I study for XENLETA in patients with cystic fibrosis, or CF, who often take antibiotics chronically.

Our decision was based on XENLETA's ability to achieve high concentrations in the lung, coverage of resistant organisms, favorable safety profile, and the large unmet medical need. We anticipate having meaningful data readouts to share with you beginning later this year.

Additionally, we continue to focus on business development for XENLETA in Europe and other territories as we look to find partners to market the drug outside of the U.S. With regards to CONTEPO and our new drug application resubmission, the FDA still has not determined how it will conduct international manufacturing inspections during the COVID-19 pandemic. This has negatively impacted many FDA product reviews.

It's important to know that we and our manufacturing partners have been in active dialogue with the FDA to ensure that all parties are prepared for a resubmission. As a result, next steps in specific timing of the CONTEPO NDA resubmission cannot be finalized until the agency issues industry guidance.

We, in the industry, await future communication from the FDA on the matter and how the agency plans to address foreign facility inspections. Recall that no new nonclinical or clinical data were requested, and the FDA did not raise any other concerns with respect to the safety or efficacy of CONTEPO. Please keep in mind that our 8-year market exclusivity does not begin until CONTEPO is approved by the FDA.

We will provide an update once we have greater clarity. We know that you, our investors, are eager to hear about the path forward and so are we. And lastly, we will pursue our 2021 objectives while prudently managing our balance sheet and expenses as we have historically done.

Now turning to Slide 8. Let me walk you through our commercial progress and outlook. You've seen this slide before but let me use it to reinforce the complementary overlap in our targeted calling markets.

I think it's important to reiterate the shared physician specialties and focus for SIVEXTRO in ABSSSI and for XENLETA in CAP. Strategically, there are considerable similarities in the prescriber base, particularly within primary care, urgent care, and an infectious disease. The market is large with these 2 products having a combined total in excess of 5 million potential patients in the outpatient setting.

On Slide 9, we show the updated sales territories with 60 Amplity representatives now in the field, 45 of them being added after Thanksgiving of last year. We believe that the footprint of these 60 salespeople will effectively cover our target of 7,800 physicians across the country. We believe our current alignment gives us the ability to reach approximately 61% of the historical SIVEXTRO prescribers and roughly 57% of the potential XENLETA prescribers.

That gives you some perspective on the health care provider side. So let me shift and talk now about what we are currently seeing in the market and how we are systematically approaching our brand awareness and medical education campaign, given the COVID-19 dynamics.

What we have seen in the market is a meaningful falloff in non-COVID related respiratory ailments versus the prior year's level. Looking at total prescriptions for oral levofloxacin, a commonly used quinolone antibiotic to treat bacterial infections as a benchmark, the graph shows a steep 50% drop in total prescriptions year-over-year. But it's still a big opportunity, and we hope to participate even more as trends return to normal. While the market is challenging, we are getting meaningful interactions with health care providers.

Starting with Slide 11. I am pleased to share that 33,000 total sales calls have occurred since October, over 6,000 in family medicine alone. Other top medical specialties include podiatry, dermatology, infectious disease, and internal medicine.

Based on our efforts to date, we have reached approximately 96% of the top 2 deciles of potential SIVEXTRO prescribers and 98% of potential top deciles and letter prescribers, truly a demonstration of our execution and ability to be able to reach our target physician audience.

The next slide shows that the majority of the primary care engagements, approximately 56%, had been in-person, which is 1/3 higher than the industry average. Overall, we are seeing some reassuring signs with improvements in access for certain regions.

Our feedback from the sales force shows an increase in physician offices, allowing sales professionals to conduct educational lunches, fulfill sample requests, and deliver clinical messages. Admittedly, we are still in the early days as it takes multiple visits with physicians to educate them on a new drug, especially given the fact that there has been a dearth of new antibiotics. However, what we are seeing is directionally positive, and we remain hopeful that our access for face-to-face interactions will improve.

We have proceeded cautiously given the dynamics of the COVID-19 environment. But given our current confidence, we are rolling out enhanced marketing materials and medical education programs in the weeks and months ahead as we aim to expand XENLETA's brand recognition in order to drive new prescription growth. Some examples of these new initiatives for XENLETA can be seen on the next slide.

Our goal is to optimize resources by focusing on enhanced marketing resources for XENLETA, which include both rep-driven and nonpersonal promotion materials. A few highlights include virtual education seminars delivered by leading specialists in the pulmonary community as well as outpatient-focused promotional pieces, highlighting XENLETA's inclusion and up-to-date recommendations for community-acquired pneumonia outpatient treatment.

Additionally, we are focused on a new creative campaign, expanded HCP education and additional rep-directed resources. In parallel, the managed market team continues to secure excellent managed care coverage for XENLETA. This can be seen on Slide 14. Over 248 million lives have coverage with XENLETA, and we expect to further expand formulary coverage in 2021.

Unrestricted access has edged over 78% versus 74% in the prior quarter. Major plans are being added. As we conveyed last quarter, Humana, which has nearly 1 million lives, came on board as of January 1, 2021, also with unrestricted coverage.

In summary, before I hand the call over to Jennifer, it is important to note that physicians' historic knowledge job and experience with SIVEXTRO has initially helped opened the door for discussing XENLETA. With 60 field personnel now fully trained and deployed, we would expect to see the pull-through of prescriptions to increase as we move through the year. And as Gary will explain in more detail, we are excited to be able to sell SIVEXTRO in the coming months under the Nabriva label.

Now let me have Jennifer talk more about why we are exploring the use of XENLETA in cystic fibrosis. Jennifer?

Thank you, Ted. I'm excited to provide an update on our life cycle management activities for XENLETA. While a great deal of effort has been rightfully focused on diagnostics, vaccines, and therapeutics for the COVID-19 pandemic, innovation directed at the silent epidemic of antimicrobial resistance continues to fail to meet the growing unmet medical need.

Since its founding in 2006, Nabriva has been driven to develop new agents to address antimicrobial resistance. XENLETA discovered in the labs at Nabriva represents the first antibiotic with a truly novel mechanism of action approved in the U.S. and Europe in over 20 years. To fully leverage XENLETA's unique characteristics, our team is actively advancing projects focused on important unmet medical needs that XENLETA may have the potential to address.

Turning to Slide 16. I would like to discuss the first of these projects focused on the treatment of bacterial exacerbation in patients with cystic fibrosis. Cystic fibrosis is a rare multisystem disease. The major cause of morbidity and mortality in patients with CF is pulmonary complications due to the vicious cycle of airway obstruction, inflammation, and infection that ultimately leads to end-stage lung disease. This process results from mutations in the CFTR gene that leads to impaired ion transport across cells and various organs.

As shown on Slide 17, an abnormal CFTR protein leads to an imbalance of ion regulation, depleting water, decreasing PH, and increasing mucin polymer cross links in the airways. As a result, Mucus becomes dehydrated, thick and sticky and cannot be efficiently cleared by the muco-ciliary system.

Mucus buildup leads to obstruction, chronic inflammation, and bronchiectasis, creating an environment right for bacteria to multiply, overtake the host defenses and ultimately cause acute and chronic bacterial infection.

Turning to Slide 18. Data from the Cystic Fibrosis Foundation Research Registry demonstrate that Staphylococcus aureus is the most prevalent organism isolated from the respiratory tract of CF patients with 70% having staph aureus and up to 26% with persistent methicillin resistant Staphylococcus aureus or MRSA colonization.

Importantly, the presence of staff pulmonary infection is associated with worse patient outcome, such as airway obstruction and increased hospitalization. And notably, the presence of MRSA has been associated with a median survival time, that is 6.2 years shorter compared to CF patients without MRSA.

Additionally concerning, our trends of increasing MRSA colonization and infection rates in older patients as well as co-infection with Pseudomonas aeruginosa. Unfortunately, there are no approved treatments with a potentially modifiable risk factor for mortality.

As shown on Slide 19, data from a national cross-sectional survey of cystic fibrosis foundation accredited program evaluating utilization of antibiotics for chronic MRSA infections and CF patients who have acute pulmonary exacerbation, demonstrated that there is a high variability in the antibiotics and dosages prescribed with sulfamethoxazole-trimethoprim, trimethoprim, linezolid, and doxycycline, being the most commonly prescribed agents in adults in the outpatient setting. Importantly, the office concluded there was no consensus of the best treatment approach for these patients.

Turning to Slide 20. It is important to note that the most commonly prescribed treatments are limited by high rates of resistance as well as safety and tolerability issues, including leukopenia, thrombocytopenia and peripheral optic neuropathy or renal toxicity, which may limit patient adherence to therapy.

Slide 21 summarizes our XENLETA's unique properties aligned to potentially address the unmet medical need in patients with cystic fibrosis, who have Staphylococcal pulmonary infections. Importantly, XENLETA is approved for the treatment of community-acquired bacterial pneumonia in the U.S., Europe, U.K., and Canada for susceptible organism, including Staphylococcus aureus based on clinical response rates demonstrated in 2 Phase III clinical trials.

In addition, as outlined on Slide 22, XENLETA is a known potent anti-Staphylococcal antibiotic and its activity is unaffected by the presence of biofilms. Lastly, XENLETA possesses a low mutation frequency against staph aureus, which is critical given the chronic nature of many of these infections in CF patients.

Crucial for the treatment of lung infections, as shown on Slide 23, XENLETA had excellent penetration into the epithelial lining fluid and macrophages in the lung and has anti-inflammatory properties that may disrupt the vicious cycle of obstruction and inflammation that create an environment conducive for chronic bacterial infections.

Advancing to Slide 24, I've summarized XENLETA's characteristics that I just shared with you. Our team is actively advancing several studies to evaluate the potential of XENLETA in patients with cystic fibrosis. We received extremely supportive feedback from a global scientific advisory board of CF clinician scientists for the development of XENLETA for treatment of Staphylococcal pulmonary exacerbations.

Based on advisory input, Nabriva has mapped out a targeted development program, beginning with the Phase I safety and PK study in cystic fibrosis patients, expected to initiate enrollment in third quarter '21. Additional activities to be conducted in 2021 to support clinician decision-making, include assessing the potential for drug-drug interactions with commonly prescribed medications and CF patients utilizing physiologically based pharmacokinetic modeling as well as in-vitro studies of XENLETA's activity and sputa from CF patients.

Our team is excited to initiate these studies as soon as possible and for other data readout beginning later this year. In summary, XENLETA is a proven and potent anti-Staphylococcal antibiotic with unique properties that make it well suited as a potential treatment option for pulmonary exacerbation in patients with cystic fibrosis caused by Staphylococcus aureus. We are enthusiastic to work with the CF community to assess XENLETA's potential to address this important unmet medical need.

I will now turn the presentation over to Gary for the financial review.

Thanks, Jennifer. On Slide 26, I've listed some key financial highlights. Nabriva generated total revenue of approximately $2.5 million in the fourth quarter and $5 million for the full year 2020. Fourth quarter revenues were driven by approximately $2 million in collaboration revenues, including our portion of SIVEXTRO sales. Other revenue consists of XENLETA product sales of $47,000 and continued grant income from the Austrian government.

Full year revenues include $2.8 million in collaboration revenue, including our portion of SIVEXTRO sales commencing in the last week of September as well as milestone payments from our partners in China and Canada. Also included in full year revenues was $108,000 of XENLETA product sales and $2.2 million in research premiums and grant income from the Austrian government.

In 2020, in particular, we actively managed our expenses to optimize resources. We always want to ensure that our investments in commercial activities achieve our expected returns. Our operating expenses increased by $6.2 million in the fourth quarter compared to the third quarter of 2020, primarily due to SG&A expenses resulting from the relaunch efforts in the community with the expansion to 60 sales reps in late November. Additionally, in the fourth quarter, we recorded a noncash reserve for a minimum contract obligation associated with our contract manufacturing partners.

We expect that our commercial investments will increase in 2021, as we fully realize the full year impact of 60 reps and the potential for a modest expansion as we monitor the macro environment and access to physicians. We ended the fourth quarter with cash of $41.6 million, an increase of $0.2 million from the third quarter, driven by proceeds from our December financing, cash flows from collaborations and grants offset by our fourth quarter investments.

In March 2021, we completed a registered direct offering to bring in an additional $23.4 million of net proceeds into the company. Together with ATM proceeds received in 2021, we expect that our current cash balances will fund operations into the fourth quarter of 2021.

Let's now look at the details of our P&L and balance sheet. Please advance to Slide 27. Slide 27 provides details of our P&L, and I ask that you look at the notes on the right side. Our full year 2020 revenues of $5 million were driven primarily by collaboration revenue and government grants. Collaboration revenue included contribution from SIVEXTRO sales in the fourth quarter and the last few days of September.

XENLETA product sales were impacted by us not investing in commercial efforts from April until the end of September and by the second quarter write-down of IV inventory, resulting in full year sales of $108,000. This was clearly below our expectations coming into the year. And as I said, we optimized and preserved the resources as we and everyone tried to manage the uncertainties of the pandemic.

R&D expense was significantly lower year-over-year due to a decrease in development activities. SG&A expense was lower compared to 2019 due to the termination of our sales force in April 2020 and a significant reduction in commercial efforts until the community relaunch of XENLETA and SIVEXTRO in late September 2020. We continue to allocate our resources in a thoughtful manner and make investments where the expected return is justified. Interest expense was significantly lower, given the reduction in our debt balances.

Please turn to Slide 28, which has our December 31 balance sheet. We previously discussed our cash balances. Inventory has increased primarily as a result of supply purchases in accordance with our contractual obligations. Prepaid expenses increased due to the payments made to our contract manufacturing partners for a new XENLETA inventory. Year-over-year debt balances are significantly lower due to the pay down of debt, which occurred in the first quarter of 2020.

Please advance to Slide 29. Focusing on SIVEXTRO revenues for a moment, I'd like to provide more color around the transaction, specifically as it pertains to revenue recognition. We currently receive a percentage of Merck's gross sales, and we record those sales under collaboration revenue in our financial statements.

Once Nabriva begins selling SIVEXTRO under its own NDC code and meets the requirements for distribution, we will record 100% of net sales under product revenue. One could expect our reported SIVEXTRO sales to increase by a mid- to high single-digit multiple as we go from what, in effect, is like an earned royalty on Merck sales to 100% consolidation of net sales. And the overall economics are better for Nabriva, and our gross profit from SIVEXTRO will meaningfully contribute to our marketing and selling investments.

For the next part of the call, Ted will make some closing remarks, and then we will head into a Q&A session. Ted?

Thanks, Gary. In conclusion, on Slide 31, I want to focus on our priorities for 2021. Last year, based on market dynamics and our excellent managed care coverage, we adapted our commercialization strategy and pivoted to the community.

As we look at what we have accomplished in 2020 and where we are headed this year, we absolutely believe this was the right decision. We believe that this best serves the needs of patients that require short course, novel anti-infective therapies for both CAP and ABSSSI.

The addition of SIVEXTRO, a well-known antibiotic, has certainly facilitated greater access to providers, leading to meaningful discussions about XENLETA's benefits. Based on its promotional responsiveness and brand recognition, we anticipate seeing the return of historical peak sales trends for SIVEXTRO by mid-2022.

We recently announced the publication of a study documenting the high rates of macrolide resistant Streptococcus pneumoniae throughout the United States. As a reminder, Streptococcus pneumoniae is the leading cause of bacterial pneumonia in the United States, an example of a macrolide is azithromycin or a Z-Pak. The data showed that while the overall rate of macrolide resistance was 39.5%, more concerning macrolide resistance in respiratory isolates was greater than or equal to 25% in every region of the U.S. Macrolide resistance was also shown to be significantly more common in outpatients versus inpatients.

An updated 2019 guidelines issued by the Infectious Diseases Society of America and the American Thoracic Society, it was stated that macrolides should not be used as monotherapy if resistance rates are above 25%. And instead, physicians should consider other antibiotics. We believe that these data further support our medical education around the appropriate use of XENLETA for the treatment of adult patients with CAP, and our focus goes beyond CAP.

As we discussed, we are seeking potential expanded indications for XENLETA in patients with cystic fibrosis. This could be a $100 million to $150 million per year incremental revenue opportunity so well worth a focused clinical trial investment. And we will continue to look for business development opportunities to license XENLETA outside of the United States and seek more complementary assets for our U.S. business.

Work continues on CONTEPO, and we remain hopeful that the FDA will find ways to approve drugs awaiting foreign manufacturing inspections. There are headwinds that we and others continue to battle, given the ongoing impact of the COVID-19 pandemic.

For example, the CDC has reported data showing that fewer people are getting sick this year with the flu. In fact, there has been a 95% drop in flu cases year-over-year, equating to a significant dip in antibiotic prescriptions overall. But Nabriva team has experienced flexible and patient focused. We demonstrated our nimbleness in 2020, and I am confident that our results will improve.

Before we begin Q&A, I want to take a moment to personally thank Gary for his leadership, hard work and insights over the past, almost, 5 years. It was important to me and to Gary to have him consult for an extended period of time as he turns his attention to serving on boards.

I want to officially welcome Dan Dolan as the company's incoming CFO. Dan will become the CFO after tomorrow's close of business, and I look forward to benefiting from his more than 20 years of experience.

Additionally, I also would like to thank Jennifer for her contributions as Nabriva's Chief Medical Officer and wish her the very best. Gary and Jennifer helped in important chapters of Nabriva's long history, and we are grateful for their efforts throughout this critical period.

I would now like to ask the operator to open up the line for questions.

(Operator Instructions) You have your first question comes from the line of Ed Arce from H.C. Wainwright.

First question is on the expected ramp in SIVEXTRO, now that you have your full sales force in place and trained and out making calls and also importantly, with SIVEXTRO also kind of helping complementarily with the calls. First question is around the statement that you gave on the pathway as you move into the second quarter ending this year's run rate, excuse me, for SIVEXTRO, aligning with the historic peak trends by mid-2022. I wonder if you could explain a bit more what you mean by that statement? And also, if you could help us with some sort of quantification of that, even if perhaps just a range would be helpful.

Yes. Sure, Ed. Thanks for the question. I think I'm going to let Gary talk about the financial pieces. The one thing I would say in response is kind of what would drive the business for the rest of the year. One thing that is true about SIVEXTRO is there is some seasonality associated with skin and construction infections just like -- not quite as severe as antibiotics for respiratory infections, but overall prescriptions across all kinds of infections have been depressed because of the pandemic.

And so we do expect, as we see things open up more, people are out and about doing things and we move into the warmer months. We do expect to see a rise in the overall market, and that will benefit SIVEXTRO.

And then a return to the kind of prescription trends we were seeing from Merck prior to them pulling personal promotion of the product. And so it will take some time for us to rebuild those relationships and get samples, remind people of the product, but there's a built-in base of prescribers that we are targeting to get them reenergized.

Gary, I don't know if you wanted to talk about kind of the financial impacts of that.

Yes. Ed, so if you use kind of IMF data in 2019 and kind of dollarize it, you'd roughly -- you'd see that roughly the sales were about $60 million on a gross basis. So what we hope is that through the very focused effort that we've talked about, maybe some lessening of the COVID headwinds that by the middle of next year, we could get back to levels like that. And again, right now, we are recording basically a -- which was, in effect, a royalty on Merck's gross sales.

But once we flip to having the Nabriva zone brand in which we expect in early in the second quarter, we will start to record 100% of the net sales on our product revenue line. And so that one should expect to see a pretty big increase there. Because, again, we're -- in fact, we're getting a royalty today, and we will eventually be booking 100% of net sales.

Right. Right. Okay. And then just from a big picture perspective, as we think about the cadence of sales from both products through the year, is it -- I'm just trying to confirm that my sense about this is correct. But through the year, I would imagine XENLETA is still going to be the overwhelming majority of revenues, you would expect for this year?

Yes. Gary, you want to talk about that.

Yes. I mean, Ed, we don't give specific product forecasts, but I think certainly, XENLETA is in a very early stage of its product life cycle, right?

I mean, we launched yes, and that's right. So in light -- yes, one should expect that SIVEXTRO would be larger just because it is a more established brand. And whereas with XENLETA, we're still in the early stages of educating community-based physicians about its attributes.

Right. Of course. And if I may, one question perhaps for Jennifer. On your opportunity with CF, again, appreciate all of the detail around the thesis here. But wondering specifically, as you begin to prosecute this potential and look for confirmation that this could work, where do you think is perhaps the areas of risk where it could fail. And in particular, I'm wondering -- I realize that, of course, in CAP, XENLETA has excellent penetration in the lung. But CF, as you mentioned, is a whole different story. It's a very heavy thick Mucus, and it's been a problem for other drugs in penetration as well. So I'm wondering if that's one of the areas that you're especially keen on understanding, any thoughts there would be helpful.

Yes, for sure. Thank you. That was a good question. And certainly, the track record for treatment, especially for some of the aerosolized treatments have unfortunately have had some failed Phase III studies. And I think where we saw the fact that we have extremely good activity for both staff and MRSA and in fact, we do have breakpoints from MRSA awarded by the CLSI.

I think your point being -- it's important to get the sputa from cystic fibrosis patients because there are some differences in the type of staff that grow over time in this environment, as you mentioned, the thick Mucus, the biofilms, the anaerobic environment. So we'll be looking at the in-vitro activity of lefamulin, from the sputa of contemporary cystic fibrosis patients to look at activity and compare it to non-CF patients.

We also are interested in looking at from a PK perspective. When we do our Phase I study, we're going to be looking at concentrations of lefamulin and murine obviously for metabolites, but also specifically in the sputa and so we're getting ready to look at that as a bit of a perhaps surrogate. We also have done a lot of work in the earlier program for XENLETA and did see very high penetration into tissues. It's one of the key attributes of lefamulin and it goes to tissues. And that would be the glandular tissue around in the area where you might be concerned of the bacteria kind of hiding in a sanctuary spot.

So I think the Phase I study will inform dosing and patients and tolerability. I think, the nonclinical work will help us with in-vitro activity. We also are looking at doing an animal model in CF. You also look at lefamulin to look at probability of target attainment as well. So I think the totality of data that we'll be able to get from these -- both nonclinical and clinical program and from what we understand from our global advisers, that is sufficient information for them to inform future development. And at that point, then we would make some decisions whether additional studies would be needed.

Yes. To kind of put that into perspective, the good news here, I think, is that we can get those answers with relatively low spend and understand whether the current commercial product -- the oral product actually is appropriate. And our scientists, in Vienna, think that it is.

The benefit there from a patient standpoint is that the obvious convenience certainly way better patient convenience than having to be hospitalized and put in an IV antibiotic for these exacerbations. I think from our perspective, it takes a 5-day prescription for community-acquired pneumonia and turns it into a 30-day prescription, and that patient at today's pricing would be worth about $8,000. And it wouldn't be unusual to see that same patient have 2 or 3 exacerbations per year, which would put us squarely in a kind of a rare disease model for incremental business above CAP.

So it's worth the effort. There's -- it's not all coming out of the -- directly out of the Nabriva treasury. There is some grant funding that supports some of these activities, and it's relatively straightforward to get an answer. So we'll know whether there's a future program or not for a pretty insignificant spend.

You don't have any more questions at this time. Ladies and gentlemen, that concludes this conference call. Thank you for participating. You may now all disconnect.