Q3 2019 Earnings Call
Ladies and gentlemen, good afternoon, I'd like to welcome everyone to the Theravance Biopharma conference call.
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Today's conference call is being recorded.
And now I would like to turn the call over to Jessica <unk>, Vice President Finance and Investor Relations. Please go ahead.
Joining us or Rick Winningham, Chief Executive Officer, Andrew Hindman, Chief Financial Officer, Brett Helman, Chief Medical Officer, and Frank Pasqualoni.
Chief commercial operations Officer.
Following some prepared remarks, we will open the call for questions a.
A copy of the press release and the slides accompanying this call can be downloaded from our website or you can call Investor Relations at 60, 508, 084, 045, and we'll be happy to assist you.
As always I will remind you that this conference call will contain forward looking statements, which involve certain risks and uncertainties, including statements about our products pipeline expected benefits of our products the anticipated timing of trial results and regulatory filings and expected financial results.
Information concerning factors that could cause results to differ materially from our forward looking statements is describes further in the company's filings with the FCC.
Now I would direct your attention to slide three and hand, the call to Rick.
Thanks, Jessica good afternoon, everyone and thank you for joining us as we approach the end of 2019, a critical your progress for Theravance Biopharma. We believe that are organ selective focus and research translational science and development has generated a portfolio of product candidates that have the potential to transform the treatment of serious grow.
Onek diseases.
As we were prepared to turn the corner into 2020, it's an exciting time for a company with important value, creating milestones expected expected across our key programs.
We have generated a compelling body of evidence attesting to the therapeutic value of Oregon selective medicines. These organ selective medicines are directed at biological targets the cannot be fully leveraged systemically.
Without incurring a serious dose limiting toxicities.
We have demonstrated the potential to maximize the value of proven and potent biology to achieve greater efficacy safety and enhanced outcomes for parents patients.
Over the years, we've honed our ability to engineer and optimize drug properties that allow for precise organ slow activity to target the site of inflammation and avoid systemic liabilities starting with a early work with GSK on lung specific compounds, including components of Breo Anoro and trilogy.
We enhance it applied or know how did the discovery and development of you poultry our once daily Nebulized long acting muscarinic antagonist or Lama approved for the maintenance treatment of C. O Pee Dee partnered with Milan and are inhaled Pan JAK inhibitor, TD 82, 36 and development for inflammatory lung diseases, which has shown encouraged.
During early data in healthy volunteers in mild asthmatic.
We further translated our design insights to be able to deliver drugs into the intestinal track, especially the today, we're advancing to got selective programs in partnership with he Anson or Pan JAK inhibitor. TD 14, 73 and are irreversible Jack three inhibitor TD 52 to both in clinical development for inflammatory.
Intestinal diseases.
Each of these three key programs represent a potentially paradigm changing medicine based on our proprietary Oregon selective approach in each of these programs along with and prolonged routine or once daily norepinephrine re uptake inhibitor for symptomatic neurogenic worth a static hypotension has the potential to offer a transformational valley.
The patients payers in health care providers.
2020 will be an important here for a company in terms of delivering data across all of our key programs.
For 14 73, our phase to be three study in ulcerative colitis, and our phase two study in Crohns disease are actively enrolling patients data from these studies expected in late 2020 would inform an opt in decision by you had said.
Our Registrational phase three program of their prolongs, the teen and symptomatic in a waitress advancing in the four week efficacy study is expected to report in the second half of 2020.
Data from a small exploratory phase two trial of air blocks routine it in a way to underscore the magnitude and durability of effect and the safety of the compound over 20 weeks of treatment given the clear limitations of existing of existing in all each treatments, we believe and prolonged routine may represent an important treatment option for patients.
At a meaningful opportunity that we could commercialize in the U.S.
In September we announced promising data from the phase one study of 82, 36 or lung selective inhaled Pan JAK inhibitor in healthy volunteers and mild asthmatic switch included biomarker valuations in patients with active disease 82, 36 builds upon her expertise in designing targeted therapies for the lung and.
Represents our latest internally discovered development candidate to demonstrate proof of principle of Oregon selected therapy.
We believe 82 36 could play a role of the treatment of patients with moderate to severe asthma, who were not under control with existing inhaled corticosteroid therapy.
Oh.
Number we also announced 52 or two or got selective irreversible Jack three inhibitor progressed into clinical development.
Both.
I've answered or partner Ganson, or believe 52 or two provides a promising additional therapeutic approach for addressing a range of inflammatory intestinal diseases.
The U. pillory U.S. launch continues to perform well against key metrics and we enter a partner Milan are pleased with our progress to date Frank will provide additional details on the launch later in todays call.
Now, let's shift to our economic interest Ngs case trilogy Ellipta. We're pleased by the products continued commercial growth, including launches in key geographies throughout the course of 2019 and achievement of important regulatory milestones, notably the filing of regulatory submission in support of trilogy is used in asthma and and demonstrates.
Greater reduction in all cause mortality versus a normal when CLP d.
We believe trilogy success is a testament GSK is commitment and Susie ASM for the brand Andrew will provide further color on trilogy launch later in the call.
We're pleased with our performance thus far in 2019 and believe our accomplishments of set the stage for an exciting 2020, we're confident in implementing our strategy to discover develop and commercialize transformational medicines with the potential to address important unmet patient payer and health care provider needs we will.
Forward to sharing additional data from these programs as well as introducing additional Oregon selective programs into the clinic over the next 12 to 18 months and they'll pass the call the Brett who will provide an update on our clinical programs.
Thanks, Rick.
Starting on slide full 14, 73 is an oral gut selective pan JAK inhibitor designed to treat inflammatory intestinal disease directly at the signs of inflammation in an organ selective manner with minimal systemic exposure or corresponding immunosuppressive affects.
Our objective is to apply organ selective approach to the wall of the intestinal tract to enhance therapeutic index, providing greater efficacy and safety the conventional systemic therapies.
As Rick noted 14, 73 years into clinical studies, one in ulcerative colitis and the other in Crohns disease.
He is a phase to be slashed three study of 14 73 in patients with moderately to severely active ulcerative colitis.
The phase to be dose finding induction portion of the study is assessing the effect of eight weeks a 14 73 treatment on the change from baseline in total May have school as the primary endpoints as well as assessing rates of clinical response, and remission endoscopic mucosal healing and safety.
Patients in the study receive one of three doses of 14 73 or placebo.
Patients he successfully complete the phase to be induction portion of the study are immediately enrolled into the phase three maintenance portion of the study, which assesses the ongoing efficacy and safety or 14 73 for an additional 44 weeks.
In parallel diet is a phase 212 week randomized double blind placebo controlled study designed to evaluate 14, 73 efficacy and safety in patients with Crohns disease.
The primary endpoint to the study is improvements improvements in the cranes disease activity index measure to 12 weeks.
Patients in the study received one of two doses of 14 73 or placebo.
Patient to complete the 12 week induction phase continue into an active treatment extension phase where all patients receive open label 14 73 for up to 12 months to continue to collect safety data.
We expect data from the phase to be portion of the ulcerative colitis study and from the phase two Crane study in late 2020.
Turning to slide five systemically active JAK inhibitors have been shown to be effective in treating inflammatory diseases, but continue to be challenged by dose limiting side effects that prevents such therapies from being used at the optimal dose.
As an example, tofacitinib demonstrated dose dependent improvements in clinical response in a phase Twob study with the 10 and 15 milligram doses Shane greatest efficacy in that study.
15 milligram dose was subsequently withdrawn from the phase three study and recent post approval data for the 10 milligram dose has led to restrictions on its use in the treatment of ulcerative colitis because of systemic side effects, including from the embolic disease.
14, 73 has been designed to offer the potential for an improved therapeutic index by reducing systemic risk and simultaneously maximizing local anti inflammatory efficacy.
We look forward to continue not 14, 73 development program and generating additional clinical data in our current phase to be slashed three and phase two programs to support what we believe may become a best in class efficacy and safety profile.
Let's turn now to slide six and Prolexic team once daily know what the different re uptake inhibitor for the development of the tree foot in development for the treatment to patients with symptomatic in a wage.
Supplemental data from the previously reported phase two study in any which patients was shared at the recent international Parkinson movement disorder Society or Mds meeting.
That suggest a mechanistic association between symptom improvement has a full weeks and increases in circulating norepinephrine levels over the same period.
Additionally, symptom improvement was associated with an increase in standing systemic blood pressure.
An increase in standing duration.
And sustained improvements in any wage symptoms and activity levels.
The sustained for up to five months of therapy and that west and only when treatment was withdrawn in the six month.
The Registrational phase three program of MPLX team includes two studies as depicted on slide seven.
First the Sequoia study, which assesses the treatment benefit of a 10 milligram dose of MPLX teen versus placebo.
The four weeks in 188 patients to assess efficacy.
This study is expected to generate data in the second half of 2020 .
Second the Redwood study that assesses the durability of response to end products team by placing 254 patients including patients from the Sequoia study.
On open label treatment for four months to assess safety and then randomizing half of the patients to placebo in a double blind six week withdrawal study to assess your ability.
And prolexic seen could offer distinct advantages every existing innoswitch therapies, such as drugs, he data, which carries a boxed warning for supine hypertension.
Our market research shows that there are about 50000 patients within a wage who could benefit from a safety safer and more effective therapy, and who are readily accessible and primarily into Sri centers.
Importantly, we have the capabilities commercialize MPLX Tina cells in the U.S.
Now to slide eight and 82 36.
Lung selective inhaled Pan JAK inhibitor for development for the treatment of inflammatory lung diseases, including storied resistant asthma.
The clinical goal in asthma is to apply organ selective approach to develop 82 said he speaks directly to the lungs to prevent exacerbations and reduced symptoms in patients who are not getting maximal responses from steroids.
As well as for patients who do not have isn't a filyk driven disease.
There's a population of patients, particularly with severe asthma, who have so called th too low.
Rather than th too high inflammation.
And most of these patients don't benefit either from steroids or from biological agents.
We think there's an opportunity with 82 36 to develop a broad based anti inflammatory that could treat th too low and th too high disease.
Including in patients, who have overlapping CPD and ESMA.
Ideally 82, 36 could be used isn't it inhaled alternative to steroids. The for these patients progress to biologics.
Now to slide nine in September we announced encouraging initial results, including positive biomarker responses from our phase one single ascending dose and multiple ascending dose clinical trial of 82 36.
He said he six was generally well tolerated as a single inhaled dose up to 4500 micrograms in healthy subjects.
And as a once daily inhale days of up to 4000 micrograms given for seven consecutive days in patients with my investment.
There was no evidence of a way irritation all bronchoconstriction.
There were no severe or serious adverse events reported and no subject discontinued due to adverse events.
Most adverse events were deemed to be mild and all adverse events result by follow up visits.
None of the adverse events were considered related to 82 36, and there were no clinically relevant changes seen in any of the safety liberty measures, including hematologic parameters or any CJIS Orient vital sign assessments.
The tronc also measured the amount of 82 36 in the bloodstream.
Consistent with our expectations the blood levels of 82 36 in the study subjects was very low several orders of magnitude below the level is predicted to caused systemic activity outside the London.
This is also consistent with data from my preclinical studies and the organ selective design of the compound.
Turning to slide 10, an additional objective of the phase one study was to determine the biological evidence of an anti inflammatory effect in the lungs investment patients.
Evidence of the biological activity of 82 36 in the London was demonstrated in the repeat those portion of the study.
Measuring fractional exhaled nitric oxide ore phenotype.
Pheno has an established disease activity by market in asthma and reductions in Pheno are associated with a decrease in a way inflammation.
Even though the phase one study was conducted in patients with mild ESMA. These patients still had elevated levels of pheno before treatment.
Over the seven days of 82 36 administration once daily by inhalation.
These patients experience reductions in both pre dose and 600 posters pheno compared to placebo at all doses above 150 micrograms.
Importantly, this included a more than 10 parts per billion reduction in pre does pheno on day seven for all doses above 150 micrograms.
As a reminder, predicts reduction in Phoenix attests to the 24 hour duration of action of 82 36 on this biomarker.
Based on these encouraging study results we've initiated the part C extension portion of the phase one trial, that's recruiting patients with moderate to severe asthma.
These patients represent the population that would also but the ultimate PB most likely the benefit from 82 36.
That being enrolled with even high levels of Pheno, then the Mt. ESMA cohort, providing further opportunity to measure the effect of 82 36 on this important biomarker.
These patients are mostly consenting to having bronchoscopies, so we'll be able to sample the fluid in the lungs to look for mark because of information.
In addition, we'll be taking blood samples and looking for confirmation that we're not seeing any evidence of systemic activity.
Evaded systemic levels at the drug.
We expect to see data from part C of the study in the first half of 2020 .
We also plan to initiate a lung allergen challenge phase two study to provide key additional insights that will inform future clinical trials.
This is a mechanistic study, but is often accepted as a strong proof of concept in predicting a reduced risk of exacerbations in patients with asthma.
Patients will in Hiland, Allergan, which prevents an exacerbation like response in the London under very controlled conditions.
An effective anti inflammatory therapy should protect against that response as it's been seen with inhaled corticosteroids and with systemic biological agents, including diplomat.
We plan to initiate the study before the end of this year with results expected in 2020 .
On slide 11, keeping with our early stage programs.
52 to our reversible Jack three inhibitor for inflammatory intestinal diseases patent with Hanson entered the clinic in the third quarter.
The phase one single ascending dose and multiple ascending dose study evaluates the safety and Tolerability of 50 to two in healthy healthy subjects.
We believe 50 to two provides a promising additional therapeutic approach for addressing a range of inflammatory intestinal diseases and we look forward to data from the phase one study in the first half of 2020 .
Next Frank will provide an update on the U.S. commercial launch of you pillory.
Thanks, Brett and good afternoon, everyone.
Starting with slide 12, we continue to be pleased with customer acceptance and brand performance. You Pillory is the first and only once daily Nebulized long acting Musker renick antagonist that provides a full 24 hours of control for patients having gained FDA approval at the end of last year for the maintenance treatment of patients.
Since with C O PD.
Turning to slide 13, remember that in our commercial strategy with Mylan, we focus on the institutional setting while mylan covers the outpatient treatment settings.
There are about 800000 patients admitted each year to U.S. hospitals for worsening of their C O PD.
About half of those patients leave the hospital with a prescription for Nebulized therapy, making the hospital and opportunistic setting to convert patients from competitive products to you calorie.
Importantly, there are additional C O PD patients that are routinely hospitalized for other conditions unrelated to worsening of their CEO PD symptoms, but who require maintenance therapy for their CRPD while hospitalized.
These patients may represent an additional opportunity for treatment with you calorie.
Market feedback and early performance indicators accumulated over the last nine months continue to trend favorably.
As shown on slide 14, we're tracking key performance metrics, including formulary reviews, and wins patient uptake and market access.
During the third quarter, you pillory has been accepted to an additional 28 institutional formulary.
These incremental 28 formulary wins added another 60 accounts to the list of nearly 140 accounts already with you calorie on formulary.
Through the remainder of 2019, we have the potential for more than 60 formulary reviews, which could result in roughly 300 additional accounts.
We currently have 27 academic medical centers as current customers and we've advanced the formulary process and more than 60 additional academic medical centers in hospital systems.
We estimate that approximately 21000 patients have been prescribed you calorie since launch.
Also since launch our field force continues to exceed its productivity goals. Our team has conducted over 51000 health care provider or HCP sales calls, reaching approximately 80% of our targeted institutional accounts.
Based on our most recently fielded marketing research we know the following about how you power is being utilized NCR PD patients.
You Powerreviews, primarily an elderly patients with an average age of 70.
Four of every five you pillory patients have a low peak inspiratory flow rate or pepper and.
And approximately 90% of patience on you calorie our gold stage three and four and are in their later years of C. O PD about 10 years after diagnosis.
Primary drivers for you pillory use according to HCPCS.
Our patient preference for once daily dosing.
Need for Nebulized therapy.
Inability to use other handheld devices.
Low pipher rate and poor dexterity.
Incidentally this data is consistent with our pre launch marketing research. This recent marketing research also reveals that approximately 40% of surveyed H.C. piece have prescribed you calorie to at least one of their C. O PD patients and one third of you pillory patients are using the product in combination with other long acting age.
Yes.
So while we still have much work to do to unlock you power you calories full market potential we're pleased with the awareness level of you calorie among pulmonologists in both the hospital and community office settings.
Nearly one half of targeted office based Pulmonologists and one quarter of targeted hospital Pulmonologists currently prescribe you powering.
Through October approximately two thirds of you pillory prescriptions were written by Pulmonologists and as a proxy for overall performance you calorie share has grown to more than 80% of prescriptions written for Nebulized long acting muscarinic antagonists.
In terms of market access and brand awareness strategies, we're continuing to use a variety of tools and programs to reach Cps and patients be a multichannel communication platforms, which include targeted strategies as well as the you calorie web site.
As previously noted with respect to Medicare part B patients. The early granting of a permanent J code for you calorie has made a meaningful difference facilitating reimbursement and importantly, simplifying the fulfillment process for both pharmacists and patience.
Traditional Medicare, which represents approximately 68% of the calorie patient population has been filling and reimbursing prescription smoothly since the permanent J code was awarded in the third party processing companies have been able to process claims accurately and in a timely manner.
Medicare part D. Open enrollment started October 15th of this year for the 2020 year and part D coverage only applies to you calorie post 100 days in a long term care facility setting and makes up about 6% to the calorie patient opportunity.
Coverage to date from major commercial insurance plans has been positive.
Medicaid covers most products in the Nebulized class, but do require prior authorization, which does not hinder a medicaid patients from access to you calorie.
So in summary, we're pleased with our performance to date and believe we are well position to continue the drive adoption and growth and to build upon the strong base of target prescribers and payers we've established thus far.
Now I'll pass the call over to Andrew for a financial update.
Thank you Frank.
I'll begin on slide 15.
Revenue for the third quarter of 2019 was $12.4 million comprised of collaboration revenue primarily related to our global collaboration agreement with Johnson for 14, 73, and Milan collaboration revenue for you powering.
Revenue for the third quarter of 2019 represents a decrease of approximately approximately zero point fourmillion over the same period in 2018.
The decrease was primarily due to a decrease in product sales, which resulted from the sale of by bad of two Cumberland Pharmaceuticals in late 2018.
Mostly offset by Mylan collaboration revenue for you powering.
R&D expenses for the third quarter of 2019 were 52.0 million 52.0, compared to 52.7 million in the same period in 2018.
The decrease was primarily due to lower employee related costs associated with the reduction in force announced in the first quarter of 2019, partially offset by an increase in external expenses related to the progression of our key programs.
Third quarter R&D expenses included noncash share based compensation of 6.5 million.
SGN a expenses for the third quarter of 2019 were 25.6 million compared to 21.9 million in the same period in 2018.
The increase was primarily due to higher external expenses and share based compensation, partially offset by lower employee related costs associated with the reduction in force announced in the first quarter of 2019.
Third quarter SGN their expenses included noncash share based compensation of 6.6 million.
We ended the quarter in a well capitalized position with approximately 353 million $353 million in cash cash equivalents marketable securities and restricted cash.
Turning to financial guidance, we have reduced our 2019 full year operating loss guidance to $200 million to $210 million, excluding noncash share based compensation.
This is primarily due to licensing revenue recognized in the second quarter of 2019 associated with the upfront received from Mylan for development and commercialization rights for you poultry in China.
As a reminder, operating loss guidance does not include royalty income from trilogy, Ellipta, which we recognize as a non operating.
We recognize in non operating income.
Also as a reminder, our future financial guidance could be impacted by factors, including but not limited to our share of U.S. profits and losses related to the commercialization of UK salary.
Potential future business development collaborations as well as the timing and cost of clinical studies associated with our key programs.
I'll now direct your attention to slide 16, and provide an update on GSK is trilogy ellipta.
The first and only once daily single inhaler Triple therapy approved for treatment of C O PD.
For which Theravance Biopharma holds an economic interest that equates to upward tiering royalties of approximately 5.5% to 8.5% of worldwide trilogy sales net of expenses.
Sales of trilogy for Seo could do you continue to grow.
The product is now available and 38 markets with additional geography is expected in the fourth quarter, including China.
In October GSK announced that it had submitted a supplemental NDA for trilogy in asthma.
Previously GSK announced it had submitted a reagan regulatory filing in support of the revised labeling for travel G. On all on reduction in risk of all cause mortality compared with an aura in C O PD patients.
The addition of an indirect asthma indication as well as a mortality claim in C. O PD could result in meaningful expansion for the use of trilogy overtime.
Before turning the call back to Rick for closing remarks, I'll comment briefly on our arbitration against Innoviva, which concluded in the third ended the third quarter.
We were pleased with the release of previously withheld funds of approximately 10.6 million and who have been awarded injunctive relief that provides us certain additional assurances regarding the future flow of funds from Theravance respiratory company for Trc.
The arbitrators ruling provides innoviva and Trc to seek GSK is consent prior to investing in the implementation of any proposals related to the development or commercialization of trilogy.
Under the ruling Innoviva is permitted to withhold approximately 8.0 million of Trc funds for certain trilogy development and commercialization initiatives proposed by into Vito.
These initiatives must be presented to GSK in the fourth quarter of 2019, GSK must decide whether to consent to the initiatives in the first quarter of 2020 and these initiatives cannot be implemented without GSK is consent.
Now I will turn the call back over to Rick.
Thanks, Andrew looking forward and as shown on slide 17 execution against our key programs is driving us forward toward value, creating events for the near and long term important upcoming milestones include additional U.S. commercial launch metrics, where you pillory in C O PD through the remainder of 29.
Team into 2020.
Progression of our late stage clinical studies van prolonged 13, and 14 73 with important data read outs by the end of 2020.
Continued advancement of our early stage programs 82, 36, and 52 to towards key inflection points throughout 2020, plus additional novel organ selective research programs entering the clinic over the next 12 to 18 months and finally further commercial and regulatory progress by GSK for trilogy.
Including F.D.A. decisions on the Yeltsin da for mortality claim and see LPD Anniston da for an asthma indication in 2020.
We're pleased with our achievements this year, including maintenance of our strong capital position and the promising lined up a value creating milestones we anticipate over the next 12 to 18 months. This is an exciting time for Theravance Biopharma and we appreciate the opportunity to share our progress with you and then I'd like to hand, the call back over to the operator for questions.
Yes.
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Again that star want if you'd like to ask a question and we'll pause for a moment to assemble our roster.
Our first question comes from.
Louise Chen of Cantor Fitzgerald.
It is open.
Hi, Thanks for taking my questions. This is Jennifer on for Louise I have to my first question is on Ari.
We really appreciate the color around launch so far I'm wondering if you can give anymore color on how you're thinking about both into 2020 I think they stuck your comment maybe Medicaid Medicare part D might come online more in like the second quarter 20 timing and I'm wondering why other levers should we think about.
And my second question just on trilogy, just making sure I'm thinking about it correctly.
So its third quarter.
Revenues of around 172 million and assuming 5.5% royalties that gets me to around nine and a half million, but I see you booked are at 7.2 million and I'm wondering.
What we might be missing there and then how you're thinking about.
He took writers thanks.
Sure I'll take the you poultry.
You Pillory question color on the launch into 2020, and then you know press, perhaps ask rank to add I think if you look at where we are with you poultry.
You know in Medicare part B, which is by far the most important segment for us.
Yeah, what your what you're seeing in terms of the increase in patients treated in the effectively in the third quarter going to 21000 from about 7000.
Is is clearly easier reimbursement processing from.
The.
Awarding of the permanent J code.
And durable medical equipment suppliers really coming on line because of an ease of reimbursement processing and the message importantly, as Frank.
Highlighted the message on you pillory for the for the really rather significant niche of C. O. PD patients is is meaningful and the product is delivering on its promise and we're at the worth the very beginning I would say of the you know the launch curve with you pillory, we're really excited.
Added about everything we're seeing and in all of our market research.
Clearly as I've said before anything Franks highlighted before the hospital business. We would do we would expect to be delivering more meaningful sales into the outpatient sector. Throughout 2020, we would also be.
Expect the long term care market to begin delivering business Frank.
Yes, I would add just a couple of things I think the Medicare part D space. Just by definition is always going to be a space. That's that's not very large I mean patients need to progress through 100 days of long term care.
And then they progress into a Medicare part d., so while we pay attention to that and while we work that space.
Obviously, the bulk of our resources are are focused on the Medicare part B space based on what we've seen since the launch we believe that.
You calorie is doing everything that we expected it to do when it was in development.
When we put a plan together for the launch and everything that we've seen so far is very consistent with what we thought about the brand.
When we launched it and then we've got a lot of steam with both the the payer segment as well as treating physicians.
And we believe that's going to carry us through not only in 2020, but.
Beyond we've got we're the only once daily.
Nebulized Lama and we should be the only once daily Nebulized Lama on the market for years to come.
So now the question on trilogy, and the reconciliation of about.
Nine nine to two to seven there were some expenses.
From Trc that that were withheld.
Causing us to book only only 7 million I would expect there to be a certain.
They even list with regard to the translation of the of a pure royalty calculation to the income that we record I mean, we're all in all relatively minor differences.
But but that's the that's the difference it just expenses and in Trc.
That that were deducted in the third quarter.
Alright, thank you.
Thank you My next question comes from.
Tyler Van Buren of Piper Jaffray. Your line is open.
Hey, guys. Good afternoon, thanks for taking the questions.
The first of all of them 14, 73, I understand that we'll be getting a bunch phase two data at the end of next year, but with respect to the safety profile could you just.
You know speak towards how long you think it might take two definitively prove out.
You don't improve safety profile in terms of infections and malignancies and then also.
On the PK side, what additional PK data, we will get with all that phase two data coming next year.
Thanks, Tyler I'll take start on the safety I think probably one of the more meaningful.
Set of work that we've done as been six to nine month.
Having already completed six to nine month.
Talk studies and multiple species.
Over a year ago, and what was critical about that work at the time and we we actually disclose that those studies have been completed was that was that those studies showed a safety margin.
What we saw and.
As any toxicity in animals versus what doses, even at the very highest dose that we were using in human studies.
Thats. Unlike other other JAK inhibitors that that in fact have not shown to have a safety margin that was that was pretty important to us I.
I think the the second piece of information and then I'll turn it over to Brett was the was the extremely low systemic levels that we saw in the phase one be study in patients with ultra ulcerative colitis, they're really orders of magnitude lower than what you see from from any of the sustain.
Cemig JAK inhibitors, so Brett.
Thanks Ray can tonight, thanks for your questions.
Additional elements to emphasize.
The benefit of the Karen program is that patients who complete our eight week.
Induction potion immediately move into the 44 week maintenance and so we're actually generating loan Tim human clinical data on safety even at this.
Sort of mid stage program. If you like so that provides us with additional.
Insights as we get food, obviously, we continue to monitor full infection rates opportunistic infections.
The sorts of things that we know other systemic JAK inhibitors may have a liability full but that we predict we'll have a much lower.
Liability at much lower propensity with a drug thats being designed to remain localized and be organ selective you asked about PK data and we will continue to collect PK data on a mall.
What we call the spots sampling regimen in phase one we collect multiple time points for PK on every patients in phase two and three we distribute that across patients and collect random samples, but that will continue throughout the development programs. So that we continue to confirm what we've seen up to now which is very low levels.
Of the drug in patients with active diseases as Rick was alluding to.
Okay. That's helpful. And then just the last one on trilogy, I know three months does not make a trend, but it kind of appears like its plateaued. The last three months and I know, it's also the end of summer to some extent.
So I guess could you just maybe speak towards that if you've been seeing anything in the market on trilogy, that's caused that and if you do expect that to kind of re.
Accelerate and also are you given the positive Captain study data are you seeing any off label use and as far as well.
Yeah, I think we track trilogy.
Fairly carefully I think you have seen over.
Over the summer months through the launch of trilogy.
Particularly in the respiratory products you see a leveling off.
Sales of then you get into the respiratory season.
Sort of in the fall in the when or where you where you see a further acceleration.
In the seasonality, we we'd expect very broadly to see that with with trilogy. It its existing indication of C O PD.
And.
With regard to the asthma I think there's probably a small amount relatively small amount abuse.
Of trilogy.
Yes.
But I would expect that to be magnified considerably with an indication because of the benefit the trilogy was able to show against a very very good product breo.
In the in the Captain study.
Finally, I think the the the other.
Terrific engine of growth if it were to transpire were were beat of mortality claim.
Versus Sonora, who I think that would be quite unique for trilogy.
Put it on a different.
Different completely different level of.
Product. So we're very excited about you know where trilogy has come in the United States, We look forward to grow through the respiratory season.
Look forward to the asthma indication in the most him as importantly, I think the trilogy launches outside the United States, specifically in China should add a boost overall to trilogy sales.
Great. Thanks, guys.
Thank you. Our next question comes from Douglas.
H.C. Wainwright your line is open.
Hi, good afternoon, and thanks for taking the questions. Just first for for 82 36, just curious in the number of patients that you expect chairman role in the long Allergan study and then just also how long will go Stan 82 36.
In that study before experiencing a long allergan yeah the challenge.
Thanks, Nicholas this is Brian .
So we didn't if we've actually called on to specific number of patients it will be.
Visible and clinical trials Dot Gov imminently.
But the beauty of this design is that these patients act as their end controls that we cross patient say, the and usually a sample size of that he even less patients in the study would be sufficient to take an allergen challenge response any because the same patients then go on to be treated with placebo or different doses of the active.
So these are relatively small mechanistic studies.
They useful in terms of detecting the ability to protect against a big insult in the London.
But we didn't need many patients to be able to be powerade for this this effect. The way. We do this is that we actually checks that these patients have a response to an allergan before they treated with any drug and that's established at baseline and then ready what we're looking for isn't attenuation of that response once they are pretreated in this particular study will be pre tree.
Leasing.
For a period of 14 days before the patients.
Just begun putting before they challenged.
Okay, great. Thank you very much.
Just to answer your question any because we've just ended up it isn't available on clinical trials.
And so I can confirm exactly it's 21 patients in this particular study.
Okay, great. Thank you very much.
And then you calorie just you know the patients today, who have gone on the product just curious how many have actually made that transition from inpatient to outpatient therapy or is that largely been.
Any inpatient side today.
No that the 21000 that were referencing are largely outpatient.
Outpatient abuse.
So.
The you know the strategy of course is really to attack all segments of the market Frank can expand on that.
Yes. It. It does include the entire market I'll, just remind you win when patients do cycle through the hospital. They are only in the hospital typically or a couple of days two or three days and then there are back out into the community.
So.
And that coupled with the long process around formulary approvals, which.
We've been that's an area of the launch that actually exceeded our expectations.
But its formulary approval and then it's a medic SEC sign off and then it has to be loaded into.
Electronic medical record systems in these particular hospital. So there's a lag time so while the majority of patients are always going to come into the community you're going to see an increasing number of patients treated.
And converted and sent back out into the community on EWP salary.
Okay, great. Thanks for that classification.
Thank you again to ask a question. Please press star one on your touched on telephone again that star one on your touched on telephone task for phone question.
Our next question comes from a line of Alan Carr of Needham.
Your line is open.
Hi, Thanks for taking my questions.
Can you give me one.
The more update on 50 to tune terms, you can expect to see.
From this phase one and then what's the next steps and assuming it is what you want to see from that thanks.
Brett.
Thanks.
Really the the plan here is to complete the current program of work in healthy volunteers at this stage will be really looking for very similar.
Since that we did in the early stages of 14 73 in healthy volunteers that the amounts of drug getting into the systemic circulation alone that we didn't see any disruption in the Haematological response of the body, so, particularly wants cell counts remain normal so and so we're looking to ensure that the systemic effects of at Jack in here.
But to answer transferred with this particular localized effect.
We're not dosing patients at this stage. So we went have biomarkers of.
The ready attest to the biological activity at this early points, but to answer your second question that really is the plan for the next phase. The next step here, having confessed safety in healthy volunteers would be to move into a disease states.
Ready, we're still working through that for that puffy ensign as to what would be the ideal setting for this you've seen on slides that we speculated about.
Some disease settings, Sealy disease for example, which looks interesting to us.
But I think it'd be premature at this point too.
To settle on that any because we're still working through this without partner.
Yes, Ellen I think we're we're pretty excited about 52 or two.
What it may be able to do that the doses the dose range that were.
Examining in phase one.
It really goes up.
To a pretty high level.
Assuming that assuming that we see in healthy volunteers and 52 to what we saw in 14 73.
We think we we have another fairly powerful immune modulator that can be restricted to you know to both the small in the large intestine and as Bret sadness. The slide said certainly Sealy ACA is one of those diseases that.
It was quite interesting because theres really not been a pharmacologic intervention.
Thats worked there and.
But we'll we'll be talking about that and probably back to.
The public in the first part of 2020 with the plans after we finish up phase one.
Okay, and then with respect to Interlocks. It team if granted for second half the 20.
Or Sequoia, how is enrollment going in Redwood, what's your what's your sense of when we may see data from that.
That trial.
So Alan good question, we're in the active enrollment phase for both studies actually we were enrolling patients into both the Claire and Redwood.
Yes.
Out of respect for the fact that we once had patients to preferentially get into the Sequoia study first we've been preventing patients who.
Havent, otherwise going into cyclical from going straight into read what does he might appreciate patients who are often full months of open label therapy may.
Preferentially old biased towards just going into the second to the two studies and say we have.
Been working directly with sites to prevent that's the patients who are currently moving into the Redwood study come out of cyclical, but as soon as we have fully enrolled Unsi Clare will open that up so that you have patients the remaining people who need to come into the Redwood study.
So freely across other other centers, so with orchestrating that at the moment I think with with still working through the logistics, which is why we haven't pointed to a readout for redwood, yes, but I think we'll get a good sense event sitting in the early half of 22 and he will be able to answer your question more directly.
Great. Thanks for taking my questions.
Thank you. Our next question comes from Geoff Porges.
SVB Leerink your line is open.
Hey, Thanks for the question this is Andrew on for Jeff.
I have a question about innovative issue. So we understand the innoviva still with has about a million royalties and my question is it going forward what is the proportion of the expected to royalty on trial of the that we should model for.
Service.
Yes, and he said it won't be helpful.
Yes, well you know our expectation is that.
The significant.
Whatever the royalties are that come into Ti Trc.
From travel from trilogy sales end up going through the Trc and.
Be distributed at 85, 15 fashion to Theravance Biopharma Innoviva.
You know the clarity the clarity that was provided by the arbitrator really was that if that if innoviva chose to use any of any of the dollars that came into Trc you on trilogy initiatives. They had to get GSK is approval. The first they had to show up in a play other than they had to get GSK is approval.
And then.
And they had to do it within a relatively short period of time. So I think the the our expectation of the cash flow is in fact to the cash flow to come from the trilogy royalties.
End of the Trc and be distributed in an 85 15 with a relatively minor amount of money.
Being being used by Trc for the operation of the.
Operation of the.
Of the LLC and.
I think we'll as we as we pointed.
Relative to the dispute Innoviva is responsible for presenting their ideas to GSK.
In obtaining GSK consent related to the 8 million no later than the.
We should have resolved no later than the into first quarter next year and in that that's how I would expect things to go going forward and I would be my expectation is that said a majority of royalties that flow into the.
Limited liability Corporation in fact, 85% of imploded Theravance Biopharma.
Right. Thank you very much.
Thank you. It appears we have no further questions on the phone.
Now I'd like to turn the conference back to Mr. Winningham. Please go ahead Sir.
Thanks, everyone for participating we are very excited about the progress that we're making across the across the company and across all of our programs. We look forward to providing you further updates in the upcoming months and we look forward to finishing.
2019, strong and having a good 2020 again, thank you for participating.
This concludes todays conference call. We thank you for your participation you may now disconnect.
No.
Hello.