Paratek Gets FDA Approval for Moderate to Severe Acne Treatment

Equities Research  |

~ FDA is due to decide later this week on Paratek's lead compound for acute bacterial skin and skin structure infections and community-acquired bacterial pneumonia ~

Acne vulgaris, better known as acne, is the most common skin condition in the US, according to the American Academy of Dermatology (AAD), affecting up to 50 million Americans annually. About 85% of people between the ages of 12 and 24 experience at least minor acne, though acne can occur at any stage of life. According to the AAD's 2017 Burden of Skin Disease study, costs associated with treatment and lost productivity by those who sought medical care for acne exceeded $1.2 billion, and more than 5.1 million people sought medical treatment for acne.

Boston-based Paratek Pharmaceuticals  (PRTK) announced this morning that it received FDA approval for Seysara (sarecycline) for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in patients 9 years of age and older. Seysara is a once-daily, oral, narrow spectrum tetracycline-derived antibiotic with anti-inflammatory properties. Paratek has exclusively licensed US marketing rights of Seysara to Allergan  (AGN), who has assigned such rights to Almirall. Paratek retains development and commercialization rights in the rest of the world. Under the parties' agreement, Paratek earned a $12 million milestone payment upon FDA approval and is now entitled to receive tiered royalties at rates ranging from high-single to low double digits on net sales of Seysara.

Phase 3 studies of Seysara had demonstrated that a once-daily dose significantly improved acne severity based on Investigator's Global Assessment (IGA) success and significantly reduced inflammatory lesion count vs placebo at week 12 in patients with moderate to severe facial acne.

The approval of Seysara is perhaps a good omen for Paratek, as the company is expecting the FDA's decision on its lead compound, omadacycline, by Thursday, Oct. 4th, for the treatment of acute bacterial skin and skin structure infections (ABSSSI) and community-acquired bacterial pneumonia (CABP). Like Seysara, omadacycline is a modernized tetracycline being developed by Paratek as a once-daily, broad spectrum antibiotic. Notably, Paratek holds exclusive worldwide rights to omadacycline, which the company estimates has an addressable market of $9 billion in the US alone. In August 2018, the FDA's Antimicrobials Drug Advisory Committee voted in favor of the approval of omadacycline, 17-1 for ABSSSI and 14-4 for CABP.

Source: Paratek Pharmaceuticals

The approval of Seysara is perhaps a good omen for Paratek, as the company is expecting the FDA's decision on its lead compound, omadacycline, by Thursday, Oct. 4th, for the treatment of acute bacterial skin and skin structure infections (ABSSSI) and community-acquired bacterial pneumonia (CABP). Like Seysara, omadacycline is a modernized tetracycline being developed by Paratek as a once-daily, broad spectrum antibiotic. Notably, Paratek holds exclusive worldwide rights to omadacycline, which the company estimates has an addressable market of $9 billion in the US alone. In August 2018, the FDA's Antimicrobials Drug Advisory Committee voted in favor of the approval of omadacycline, 17-1 for ABSSSI and 14-4 for CABP.

As part of its recommendation, the Advisory Committee considered data from the omadacycline global development program, which included three completed Phase 3 studies evaluating the safety and efficacy of the once-daily IV and oral formulations of omadacycline for the treatment of ABSSSI and CABP. In all three studies, omadacycline met all primary and secondary efficacy outcomes designated by the FDA and was generally safe and well-tolerated.

As resistance to older antibiotic therapy continues to cause treatment failure, Paratek's vision is for omadacycline to become the primary antibiotic choice of physicians for use as an empiric monotherapy for acute bacterial skin and skin structure infections, community-acquired bacterial pneumonia, urinary tract infections and other serious community-acquired bacterial infections.

The stock trades with a market capitalization of only $290 million and is lower today on the Seysara approval. The stock is down about 65% in the past 12 months, and the current valuation seems unduly depressed in the face of the upcoming decision by the FDA on Thursday for its lead compound. It would be a surprise to us if the FDA ruled against the strong recommendations of the Antimicrobials Drug Advisory Committee.


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Companies

Symbol Name Price Change % Volume
AGN Allergan plc 183.11 -0.18 -0.10 329,395 Trade
PRTK Paratek Pharmaceuticals Inc. 9.18 -0.14 -1.52 177,999 Trade

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