Analyst Conference Summary

Biotechnology

date: March 12, 2019 press release only
for quarter ending: December 31, 2020 (Q4, fourth quarter 2020)

Forward-looking statements

Overview: No analyst call held. Xerava sales increasing on a low base, issued stock to raise cash to operate.

Basic data (GAAP):

Revenue was $1.7 million, down sequentially from $3.3 million, and down from $4.3 million year-earlier.

Net income was negative $11.4 million, up sequentially from negative $16.3 million, and up from negative $21.5 million year-earlier.

Diluted EPS was negative $2.75, up sequentially from negative $6.00, and up from negative $8.00 year-earlier.

Shares outstanding increased to 4.139 million at end of 2019.

Guidance:

Believe cash can fund operations through Q1 2021.

Conference Highlights:

Larry Edwards, Tetraphase CEO, said "We made significant progress throughout 2019, ending the year with $3.6 million in Xerava net sales for the full year and a quarter-to-quarter net revenue increase in the fourth quarter of 2019 of 49.3%. Our sales consist solely of actual use and not stocking retail or other channels. We believe Xerava is a critically important new addition to the hospital antibiotic armamentarium, and we remain committed to increasing formulary uptake and reaching all of our targeted accounts. The reorganization efforts we undertook in 2019 to create a streamlined organization singularly focused on the commercialization of Xerava, including the elimination of our research and development function, are central to the success of our mission. With two recently completed equity offerings in November 2019 and January 2020 adding to our balance sheet, we are now in a stronger financial position to execute on our goals."

Revenue consisted of $1.5 million Xerava commercial sales, up sequentially from $1.0 million and up from $0.2 million year-earlier and $0.2 million from license and collaboration. Sales of Xerava began in mid-October 2018.

The reorder rate for Xerava was 67%, with the reorder rates as high as 77% within the tier 1 account segment. Xerava is available at over 1200 accounts and approximately 143 formulary reviews are pending or planned to take place in 2020. Believes can continue to execute a successful Xerava launch.

In Q1 2020 Tetraphase raised $15.9 million issueing stock and warrants. In Q4 2029 Tetraphase raised $7 million in cash through sales of common stock and warrants. In August 2019 Tetraphase had paid off all the Solar Capital debt.

During Q3 2019 the stock was reverse-split 20 to 1.

On October 1 got J code and APC code, which should help sales and reimbursement. Also CMS made changes effective October 1, 2019 which should level the playing field so doctors can choose the most effective antibiotic for a patient. There is s clear unmet need for a non-Beta-lactam agent that can cover resistant pathogens. Resistance to beta-lactams continues to increase.

Xerava has a broad label. Wholesale acquisition price is $175 per day. Priced to penetrate the growing intra-abdominal market. Xerava does not require dose adjustment for renal impairment, which is helping. The most used class for the label is seeing increased bacterial resistance, so a new drug is needed. In October 2019, Xerava was featured in seven poster presentations at IDWeek 2019. The data lend additional support for the continued use of Xerava in the hospital setting to treat serious, life-threating multidrug resistant infections, including complicated intra-abdominal infections (cIAI).

Xerava rest of world licensing is hoped for in 2020, with Chinese regulatory approval expected in Q4 2020. The first patient was dosed with Xerava in a Phase 3 cIAI trial in China by Everest Medicines in Q2 2019. In July extended Everest Medicines exclusive license to develop and commercialize eravacycline for cIAI to Malaysia, Thailand, Indonesia, Vietnam and the Philippines

Cash and equivalents ended at $21.2 million, down sequentially from $24.5 million. No debt. After the quarter closed raised another $15.9 million.

TP-6076, a fully synthetic tetracycline, had data from a Phase 1 study presented at IDSA in Q4 2018. Will complete a bronco-pulmonary disposition study in 2019.

Further down the pipeline, TP-271 completed its Phase 1 dosing study in Q4 2018.

Tetraphase presented preclinical data on TP-2846 at the AACR Annual Meeting in April 2019. TP-2846 is a possible therapy for AML (acute myeloid leukemia). Looking for a partner to develop this.

Operating expense was $ million, consisting of cost of goods sold $1.4 million; R&D $2.5 million and SG&A $9.3 million. Loss from operations $11.5 million. Other income $0.2 million.

Q&A summary:

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