Here’s What’s Next For Paratek Pharmaceuticals Inc (NASDAQ:PRTK)

Paratek Pharmaceuticals Inc (NASDAQ:PRTK) picked up some considerable strength on Monday, as the company put out data from a phase III study of its lead antibiotic asset. The data hit press as favorable, and the company ran up on its release. Well, technically, the run came after hours, as the data didn’t drop until pretty late in the US. This means we’re likely going to see some spillover strength as we move into the session on Tuesday, and standard volume takes control of price.

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So, with this in mind, and ahead of whatever happens during the session, here’s a look at what the data means, what the drug does, and where it fits into Parateks strategy and valuation going forward.

As mentioned, then, it’s an antibiotic asset, and it’s called Omadacycline. To bring some jargon to the table, it’s a broad spectrum antibiotic belonging to what’s called the aminomethylcycline subclass of tetracycline antibiotics. This sort of antibiotic subclass is already widely used for things like urinary tract infections, chlamydia, acne and rosacea, but there’s a problem – the subclass is becoming rapidly obsolete due to the onset of antibiotic resistance.

The antibiotic space is different than many others areas of drug development, and the difference is rooted in the generally trend of antibiotic resistance that’s rendering the above mentioned tetracycline’s obsolete. In short, companies don’t need to show the FDA that their version of a particular antibiotic is better than those currently approved in terms of efficacy. In many cases, they don’t even need to show the agency that they are as good. More often than not, the FDA will accept evidence that a development antibiotic is about as good as one that’s already approved, because we’re in such desperate need of fresh candidates on the shelves.

So, that’s what Paratek set out to do, and as per the latest numbers, it’s done just that. The phase III in question pitched Omadacycline against a drug called moxifloxacin, and was looking at the drug’s efficacy and safety in a target indication of community-acquired bacterial pneumonia (CABP). CABP has been an issue for a while, but it’s becoming an increasingly serious issue as more and more patients become resistant to the drugs that would have previously worked in the past.

So, in a comparison between Omadacycline and moxifloxacin, the data showed that the former was just about as effective at inducing a response in patients within three to five days of their first dose, and a little better than moxifloxacin from an induced response between five to ten days after the dosing has ended. As expected, there were no real safety issues, and tolerability was clean.

There were also a bunch of secondary endpoints that were designed to build upon the primary, and these hit in favor of the drug when compared with moxifloxacin.

So what’s next?

Well, the company is set to put forward a new drug application (NDA) to the FDA in an attempt to pick up a green light for commercialization in this CABP indication. According to management, this NDA should be submitted at some point during the first quarter of next year. This means we’re probably looking at an approval timeframe of somewhere between mid to late 2018. That’s not great (we’d have liked to see Paratek get things moving on the submission a little earlier than first quarter 2018) but it’s better to get it right on the first run than pick up a complete response letter (CRL) and have to address issues before resubmission and, in turn, an extended time to approval.

What do we expect between now and FDA decision day?

The company currently holds a market cap in and around $500 million, and we expect that this will appreciate moving forward as the company approaches revenue collection on this antibacterial asset.

At last count (end year, 2016) cash on hand came in at a little over $53 million, meaning Paratek should have plenty of finds available to it as and when the FDA gives the drug a thumbs up, from a commercialization run perspective.

That said, don’t be surprised if we see the company issue to raise between now and said commercialization push. The company may well take advantage of its current price to raise favorably, and this could dilute anyone with an early stage exposure.

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