Paratek Pharmaceuticals (Nasdaq: PRTK) was founded in 1996 on the premise that antibiotic resistance was becoming an increasing problem, compounded by the declining investment by large pharmaceutical companies in this space. The company chose tetracyclines as the basis of their efforts for two principal reasons: tetracyclines have a long history of being both effective and generally well-tolerated; and, importantly, because only two main mechanisms of antibiotic resistance had emerged over the long tenure of tetracycline use. Through extensive SAR work over almost a decade Paratek generated about 5,500 novel tetracycline analogues. Two of these are now in Phase III development.
The opportunity to invest at an attractive valuation arose due to a change in the regulatory environment for antibiotics. In 2010, the FDA made an industry-wide decision to change the clinical endpoints for all antibiotics. Unfortunately, Paratek had only recently started its first Phase III clinical study with its partner Novartis. Due to the likelihood of protracted regulatory uncertainty as the FDA finalised its new endpoints, Novartis exited the programme. As a result, Paratek reduced its headcount dramatically and suspended all clinical development.
It was not until the passage of the GAIN Act by Congress in 2012 that regulatory certainty returned to the antibiotic drug development space. Paratek finalised its Phase III registration pathway for its lead drug, omadacycline, in late 2013. The company was then in a position to refinance and re-commence its Phase III programme.
We were approached in early 2014 to consider an investment in Paratek. Specifically, the investors requested that Michael Bigham serve as Chairman and Part-Time CEO as part of leading the financing that would essentially re-launch the company. After significant due diligence we committed to leading the investment in June 2015 with Michael accepting the proposed roles. The financing was structured as a reverse merger into a clean, fully-listed Nasdaq company and became effective with the approval of the reverse merger in October 2014. The shares in the VIPE (Venture Investment in Public Equity) are publicly traded. Paratek completed a successful follow-on equity offering in May 2015 raising an additional $72 million.
In June 2015, Paratek initiated the first of two planned Phase III registration studies for its lead drug candidate, omadacycline, which is a broad spectrum, once-daily oral and IV, well tolerated antibiotic. The first study is in moderate to severe ABSSSI (Skin) infections. The second planned registration study will be in moderate to severe CABP (pneumonia) patients.