Q3 2021 Theravance Biopharma Inc Earnings Call
To ask a question press the star key followed by the digit one on your phone.
Again, Thats star one to ask a question.
If listening via webcast. Please use audio and your webcast device before asking a question over the phone I will repeat these instructions after management completes their prepared remarks also today's conference call is being recorded.
And now I would like to turn the call over to Gail Cohen, Vice President Corporate Communications. Please go ahead.
Good afternoon, and thank you for joining the <unk> Biopharma third corner 2021 conference call to discuss our business.
As always I remind you that this call will contain forward looking statements that involve risks and uncertainties, including statements about our development pipeline expected benefits of our products anticipated timing of clinical trials regulatory filings.
<unk> financial results.
Information concerning factors that could cause results to differ materially from our forward looking statements.
Describe further in our filings with the SEC.
Now I would direct your attention to slide three joining us are Rick Winningham, Chief Executive Officer, followed by Rhonda Farnham Senior Vice President commercial and Medical Affairs break ground Senior Vice President Research and development and Andrew Hindman, Chief Financial Officer.
Now I will hand, the call to Rick Winningham for opening remarks.
Thanks, Gail amidst.
In mid September we announced the decision to restructure the company in order to optimize our business model.
This decision followed a complete scenario planning exercise led by the board and management with the assistance of outside advisors.
Since the announcement, we've made a rapid transition to a streamlined respiratory focused thereabouts biopharma, we immediately initiated a significant.
Cost reduction program, we've taken action to reduce the company's head count by approximately 75%.
Estimated 270 positions and we're on track to complete a large majority of these reductions by the end of this month.
With the remainder to be completed in February of 2022.
We're focused on leveraging expertise in developing and commercializing respiratory therapeutics and streamlined our future R&D investments.
To focus solely on the highest value respiratory assets we.
We will continue to explore strategic partnerships for both core and non core assets to unlock value.
All of these actions drive towards our goal to maximize shareholder value.
Moving to slide five there are three key pillars of value creation for the go forward plan the build build on our track record of respiratory innovation, leading to several approved medicines for COPD and asthma. This.
This includes trilogy of respiratory medicine.
Developed by Glaxo group in collaboration with the company's predecessor, there events, Inc. In your Perl rate, which was discovered and developed by <unk> Biopharma launched in 2019 and is now commercialized in the U S in partnership with Beatrice.
Trilogy is experiencing exceptional growth with its dual indication for COPD and asthma driving higher demand in the U S and gsk's obtained approval for the asthma indication in 10 additional markets.
Trilogy is currently expected to generate global peak sales of approximately $3 billion annually.
<unk> remains early in its product lifecycle as demonstrated market share growth quarter over quarter. Despite the respiratory pandemic, but we believe its got the potential to generate USD sales exceeding 400 billion.
We believe the strong and growing cash flows a trilogy and the calorie and the expected future robust revenue performance for both will generate significant value creation opportunities for our shareholders.
It's my pleasure to have Rhonda foreign them now SVP commercial and medical affairs joined US on the call today, Ron has been a part of that their events leadership team since joining the company in July 2018, as Vice President sales and marketing, where she was responsible for the commercial execution of our branded products, including sales marketing and managed markets.
For deep commercial expertise and success to stir the team well in her new role with expanded responsibility, including medical Affairs I'm confident in our progress will accelerate.
Rhonda will provide an update on our strong and growing cash flows from your calorie and speak to the overall COPD market dynamic.
19 continues to impact COPD patient visits diagnoses in new starts.
Despite this dynamic both <unk> and trilogy. Thanks, Gsk's efforts continue to grow market share and provide significant value to shareholders.
Graham will update you on where we are with the highest value core respiratory programs for the rest of the pipeline.
Moving to slide six as we stated in the announcement regarding our strategic actions Cigna.
Significant operating expense reductions to drive sustainable cash flow generation beginning in the second half of 2022 are critical and we provided preliminary 2022 financial guidance.
Andrew Hindman will follow with the highlights of Gsk's trilogy performance and an overview of our third quarter financials I'll now turn the call over to Rhonda, who will share our commercial team's progress with your perl rate and speak to the COPD marketplace dynamics Rhonda.
Thanks, Rick I appreciate the opportunity to participate and provide this quarter's update.
Turning to slide eight <unk> is the first and only once daily Nebulizer long acting muscarinic antagonist that provides a full 24 hours of control for patients and is indicated for the maintenance treatment of patients with COPD.
Despite the continued headwinds created as a result of the Carnival pandemic. We are encouraged by the growth of the <unk> total prescriptions from Q2 to Q3 as.
As well as the addition of a new hospital accounts that are ordering each week.
As a reminder.
<unk> Biopharma and their trust co promote in the United States with our combined sales infrastructure targeting healthcare professional to treat COPD patients suitable for <unk>.
They are advanced Biopharma commercial and medical field teams cover the hospital segment.
Health care providers and Beatrice covers community health care professionals also remember the interest there Vance Biopharma commercial partnership is a 65 35 profit share split.
Slide nine shows their advanced Biopharma is implied 35% share of net sales for <unk> during the third quarter 2021 of $13 8 million.
<unk> year over year net sales are up by 7%.
Q3, 2021 versus Q3 2020.
The brand also continues to show quarter over quarter.
Market share growth.
Demand doses increased 1% in the third quarter over second quarter, 2021, and 21% year over year.
While institutions in some parts of the country are allowing more in person access in person engagement remain below pre pandemic levels.
Total prescription volumes continue to grow across most specialties with volumes heading towards parity with 2020, however, prescription volumes within the pulmonology specially remain below pre pandemic levels.
Turning to slide 10.
You can see that <unk> share continues to grow both in the hospital and the community retail settings.
As we have noted previously many patients with COPD experience, an acute respiratory episodes.
Serious enough to require a trip to the hospital the.
The hospital becomes a key point to assess a person with COPD and convert our switch them from their current medication T salary.
Data shows that many patients who received <unk> in the hospital are discharged with a prescription to continue treatment, allowing for continuity of <unk> therapy post discharge.
The theaters and Thayer events Biopharma teams continue to work effectively and collaboratively.
Multiple tools and tactics and coordination to convert appropriate patients from competitive products to <unk> during the hospitals to outpatient transition experience.
Over the course of Q3 2021, approximately 33% of all COPD targeted hospitals were physically accessible to our field colleagues.
Which was an actual decline from 62% the previous quarter.
Despite the evolving institutional and outpatient clinic access we have been encouraged with the growth in total prescriptions from Q2 to Q3.
The new to brand prescriptions have remained stable over the same time period in.
In addition, new hospital purchasing accounts are being added weekly.
Looking specifically at the third events field sales deployment efforts in Q3 of 2021 doses sold exclusively in the hospital setting represented an 11, 7% increase from the previous quarter.
September you Pillory hospital volume hit a new launch to date high and we saw a 43, 5% year over year growth from September in 2020.
Looking ahead it is important to understand that according to the gold guidelines or Lama or long acting muscarinic antagonist.
Foundational to COPD maintenance cure.
The execution of our tactical plan will continue to leverage these guidelines in appropriate patient types, while we continue to optimize the marketing mix through rigorous and continued measurement of tactics.
We will be initiating a phase four heifer clinical study, which is aimed at helping to better informed decisions. When physicians are designing a personalized COPD treatment plan with patients.
Study will compare improvements in lung function and adults with severe to very severe COPD and suboptimal inspectors flow rates. Following once daily treatment with either <unk> delivered via a standard jet nebulizer or Tia trophaeum delivered via dry powder inhaler.
Findings from this study are intended to provide data to support a possible label update and helped to better inform physicians as they are working with their patients to design COPD maintenance treatment plans and we expect the study to initiate later this year or early January 2022.
Moving to slide 11, let's take a more macro look at the overall COPD retail market.
You take a rolling view over the past 12 months of both nebulizer and handhelds again in the face of a respiratory pandemic you.
<unk> and GSK astrology demonstrate resilience to many of the external factors.
As a reminder.
<unk> owned and marketed by GSK is the first and only once daily single Inhaler Triple combination therapy approved for the treatment of COPD and asthma.
I'm, not specifically highlighting bradstreet's growth because of its recent launch timing, but let's take a closer look and move to slide 12.
As a result of breast <unk> entrants to the market and the addition of the asthma indication for trilogy in September of 2020.
The overall closed triple market has grown as expected and has also demonstrated on slide 13.
GSK mentioned during their Q3 earnings last week that the dual indication is driving higher demand in the U S. The slide also reconfirms the challenges pulmonologists experienced in the third quarter and throughout the pandemic when three eight when treating COPD patients.
Which includes a decrease in in person patient visit volume.
Limited ability for health care professionals to diagnose and reassess their patients without pulmonary function test or <unk> parameters, which cannot be performed via telemedicine visits.
Both factors contributing to a reduction in prescriber confidence and fewer prescriptions.
The pandemic also has led to increased insurance changes, which include Medicare patients migrating from fee for service Medicare to Medicare advantage plans, which could result in higher patient co pays and create.
And greater concerns of affordability associated with prescription fulfillment.
We expect as more people are vaccinated boosters are given and pulmonologists ability to return to seeing more patients face to face and their offices grows there will be a rise in sales for trilogy, and <unk> in the coming quarter and 2022.
I'll now turn the call over to Rick Graham.
Thanks Rhonda.
The go forward organization is focused on the highest value core respiratory opportunities as outlined on slide 14.
These include no calorie lifecycle management, including a clinical study in partnership with Beatrice as Rhonda mentioned success in the <unk> study will capture more of the <unk> addressable market and further strengthen its competitive advantage.
Will be responsible for 35% of the cost of the study which is planned to initiate in December 'twenty, one or January of 2022.
<unk> is our most advanced clinical candidate and we're finalizing the development program in acute lung injury.
Building on the efficacy and safety data, including the mortality benefit seen in the phase II study, which was reported in June.
We're also looking to participate in externally funded platform studies evaluating its potential role in treating hospitalized patients with severe lung inflammation.
These studies could initiate in early 2022.
We continue to see nasal fitness, having potential application and chronic lung inflammation, including the prevention of lung transplant rejection and fibrotic diseases of the lung.
Finally, our concentrated research effort aimed at developing a dry powder inhaled form of our inhaled Pan JAK inhibitor continues internally and we expect to proceed into the clinic with the next generation compounds after securing a strategic partnership.
Moving to slide 15.
Our pipeline slide has been updated to reflect our respiratory focus and recent study results and decisions.
Regarding the late stage non core assets the key operational activities for all IV <unk> and ample Oxazine studies will be completed by the end of the first quarter of 2022.
The phase II study in Crohn's disease with items fitness has completed enrollment with topline results expected in the first quarter of 'twenty two.
Topline results from the <unk> Phase III study Redwood are also expected in the first quarter of 2022 and as a reminder, all patients in the Redwood study received <unk> treatment for 16 weeks, followed by a six week randomized withdrawal period.
We plan to share topline results and present the data from these programs at future scientific forums.
I'll now turn the call over to Andrew to review the financials.
Thanks, Rick.
Let's first look at trilogy, as Rhonda mentioned trilogy owned and marketed by GSK is the first and only once daily single inhaler Triple combination therapy approved for the treatment of COPD and asthma.
<unk> Biopharma is entitled to receive upward <unk> royalties on global net sales of trilogy.
At present, 75% of the income from our economic interest is pledged to service principal and interest payments on our outstanding 2035 nonrecourse notes.
And the remaining 25% of income is retained by us.
On slide 17, we capture the most recent information GSK shared during their earnings call on October 27th.
<unk> continued to lead the market as a single inhaler Triple therapy with Q3 2021 sales growth of 77% over Q3, 2020 generating global net sales of $449 million.
And year to date in 2021, Chairman's Biopharma has received $59 $4 million from Trc LLC for our economic interest in trilogy.
Moving to <unk> Biopharma is consolidated financials on slide 18, we provide our third quarter 2021 financial highlights compared to the third quarter 2020.
R&D expenses for the third quarter of 2021 were $43 7 million.
<unk> to $67 4 million in the third quarter of 2020.
SG&A expenses for the third quarter were $21 3 million compared to $27 5 million in the third quarter of 2020.
As a reminder, all of these figures exclude share based compensation and.
And we ended the quarter with 216 million $216 2 million of cash and cash equivalents.
Regarding financial guidance for the full year of 2021, we are reiterating our previously issued guidance for R&D, we expect to invest between $180 million to $190 million relative to relative to actual R&D investments of $230 million in 2020.
For SG&A, we provided a range of $70 million to $80 million relative to actual SG&A expense of $77 million in 2020.
Again, all of these figures exclude share based compensation.
And during our announcement in September we provided preliminary 2022 financial guidance for R&D, we guided to investing between $55 million to $65 million and for SG&A, we provided a range of $30 million to $40 million.
We plan to update the 2022 financial guidance in January of 2022.
And with that I'll turn the call back to Rick Winningham for closing remarks.
Thanks, Andrew on Slide 19, we summarize how we're creating a new respiratory focus thereabouts biopharma.
First it's about significant cost reduction to become sustainably cash flow positive beginning in the second half 2022.
<unk> already taken steps to significantly cut costs with a large majority of approximately 75% reduction in force.
Exiting by the end of this month and the remainder by the February 2022 second it's about value creation as we reviewed we have three significant levers.
You powered commercial performance with their advanced Biopharma via <unk> teams have done a great job, serving our COPD community and gain market share during the pandemic, we recognize the U S and global opportunity to increased profit on a brand basis. Once the pandemic further eases and Pulmonologists return to seeing COPD.
So the office <unk>.
Realizing the potential of level setting them. The first inhaled JAK inhibitor targeted directly to the world.
This investigational compound has the potential in multiple indications for hybrid.
<unk> of the lung overtime and strategically designed clinical program to maximize the return on investment will build on our respiratory expertise when design and go forward plan.
And the third lever of value creation, we controls leveraging partnerships to us.
Unlock the value of core and non core assets.
Another key pillar of value creation was our economic interest in trilogy, GSK reported year over year sales growth of 77% this quarter for the same period in 2020.
Estimated peak sales are approximately $3 billion.
The new respiratory focus their advanced Biopharma is driving towards our goal to become sustainably cash flow positive beginning in the second half of 2022 and to maximize shareholder value.
In closing I'd like to thank our internal team for their perseverance through their tenure at the company, especially the last few months that have tested each of them personally and professionally I'm grateful for their commitment to our mission of continuing to develop medicines that make a difference the progress of our clinical pipeline you cull rate as well as the communities. We serve also want.
I think once again, the investigators' sites patients and their families across the globe that are part of our clinical trial programs November's National COPD awareness month, and with early diagnosis and treatment people with COPD can improve their quality of life and breathe better I think all the advocacy groups for their educational efforts I'm hopeful that we can contain the.
Mike and Pulmonologists can start seeing patients with greater frequency face to face once again I will now hand, the call back to the operator for questions.
Thank you Sir once again, if you would like to ask a question may do so by pressing the star key followed by the <unk> one on your touch some telephone.
Via webcast. Please mute audio only webcast device.
Asking a question over the phone.
If you're using a speaker phone for todays call. Please make sure. Your mute function is turned off two largest segments, which are equipment again Thats star one if you'd like to ask a question, we'll pause for a moment to assemble our roster.
Well have our first question from Geoffrey Porges with SBB Leerink. Your line is open.
Thank you very much for taking a few questions.
Mainly financial in nature.
The goal of sustainably breakeven.
Is that.
Aspiration or is it your guidance, but given the trajectory that you see on the plan that you've laid out that you will be sustainably breakeven in the second half.
And then secondly.
Could you give us some sense of the expenses that are associated with your revenue from your power rate so to serve us today.
As you tolerate operationally breakeven or what is the threshold for the common great breakeven and then lastly.
As you consider all the strategic alternatives.
Do you see the company is having any assets that you could sell.
To generate value, but you could reinvest in terms of pipeline or.
Although teapot familiarity opportunities.
Yes. Thanks.
Jeff.
Our plan that we outlined in fact.
As a plan.
Today, we are planned to be sustainably cash flow positive after the in the second half of next year and beyond so that's the that's the financial plan that we put together for 2022 and beyond and that's the plan that we're executing against you.
<unk>.
As a brand is is in fact, a cash flow positive today.
The financial dynamics of <unk> are quite attractive that's one of the reasons that you know.
Future sales growth as is.
Is critical.
Two continuing to grow those cash flow streams to both <unk> and <unk>. So the <unk> cash flow positive today, and we look forward to your Perl rate with sales growth, becoming more cash flow positive in the future now relative relative to the third question, which is which is asset sales.
I commented.
Yes.
In my remarks that.
Our approach is to is to partner, both core and noncore assets as a way to manage the financial.
The dynamics for the company, obviously, we've got what we think are.
Terrific set of core assets.
In respiratory and then also exciting noncore assets that we've taken to a certain point in development and hold more promise and we'll be working to optimize <unk>.
Each of those financially as we as we move forward so.
They take the place of sale may take place in some instances a partnership.
Two to generate cash flow coming back into the company.
Rick Andrew do you want to cut you off.
Hey, Jeff Sorry go ahead Phil.
Follow up on that.
In the case of trilogy.
Really a fairly passive royalty you don't have any direct role in the development or commercialization of that product. So for example.
Thomas.
<unk> revenue growth.
Then.
The amount that you pay.
Doug is paid to the bondholders.
The proportion of the total will presumably come down in the mouth. It comes back to <unk>.
We will go up so.
Have you thought about different strategic alternatives for that royalty for example, since its really youre rolling this negative other than just being dropped off.
That's that's quite quite well described our passive roll in the answer to the question is yes, we think about.
A host of different outcomes with the with trilogy.
Obviously as Ron highlighted and Andrew highlighted we're thrilled with the performance.
Trilogy in the.
And the market in particular, the launch of the 200 microgram dose that's associated the steroid that's associated with the treatment of asthma.
And we'll we'll look to that.
Look to maximize trilogy has impact on the on the market value of their events Biopharma, Andrew any other comments.
Yes, nothing to nothing further to add but then then the concept.
Business development corporate development activities.
At the heart of your question Jeff.
These.
Take time to complete so obviously, it's not it's not prudent to give more specificity, but other than to tell you in the street that we are actively working across that spectrum. Both from a partnering process perspective for the non core and core assets such as the JAK program.
The pulmonary JAK program for asthma, and COPD and pulmonary fibrosis.
As well as looking at the financial assets, which trolley is effectively a financial asset and you properly characterize the way that the royalties are paying off the debt for the 2035 non recourse notes and theres substantial cash flow that we believe that will come off of the future royalties than that.
We will accrue to <unk> biopharma equity holders.
In due course.
Perfect. Thank you.
Our next question comes from Marc Frahm with Cowen <unk> Company. Your line is open.
Yes, thanks for taking my questions.
Maybe just a follow up on some of the <unk> market dynamics that you went through and thanks for all that level of detail.
You pointed out the prescription volumes actually grew slightly in the quarter. Despite the headwinds the whole markets facing.
But.
But revenue has actually declined a little bit is is there some sort of stocking impact that we should be thinking about that was driving that or did you have to take sort of discounting actions to kind of maintain please.
Some of your competitors face generic entrants.
No I think well relative to.
Relative to the financial dynamics of the net sales recognition Milan or Beatrice books. The books for net sales we have seen.
We've seen fairly fairly strong pricing.
In certain markets.
Strong.
<unk> prescriptions, others that were more affected by Covid, obviously when the when we think this is the this is the difference between the asthma COPD markets, you've seen pulmonology visits dropped.
The COPD.
Prescribing, particularly one involves changing.
Device or changing therapy.
<unk> I'll, just like to see the patient in the office and the lack of the lack of patient visits has had an impact on those COPD prescription so.
We still see still see.
Even for optimism just based on individual territory.
Our success in <unk>.
<unk>, where COVID-19 has receded already but I'll, let rhonda sort of complement and add to anything any my comments Rhonda.
Yeah. Thanks, Rick.
Thanks for the question certainly building off of those external factors, where we did see.
Certainly some challenges in access we still were able to obtain new formulary wins and grow the business, particularly in the hospital setting. So what is absolutely key to not only where we did see success in the past quarter, but certainly going forward.
Is to ensure we are maximizing and person HCP access and the team's doing a great job already capitalizing on those opportunities and being mindful of the dynamics of where access is improving and where it's not ensuring that we are executing on hybrid communication Reese.
Horses and tools.
And ensuring that that reach and frequency is also complemented by increased investments in our digital and media assets.
Okay. Thanks, that's very helpful. And then maybe on the phase four trial comparing to Spiriva.
You can provide some details on just kind of the sizing of that trial timelines.
In terms of when we might be able to see data in the label updates.
Rick you want to take that.
Yes sure Mark.
Rhonda said, we're getting close to being able to kick that study off.
The probably the best thing to do is to think back to what we've reported previously on the first step of our study we actually took the learnings from that and designed.
The second study here, we can say at this point, it's several hundred patients.
It will include river, Venison, and Tia Tropaeum as Rhonda mentioned timed.
Timing will start either December January and then we do expect that that will probably take around a year to enroll.
Okay. Thanks very helpful.
Our next question comes from Lisa <unk> with Evercore ISI. Your line is open.
I think you just answered my question with your last response, but I guess, maybe can you also characterize like how how.
How much.
Or do you think the market can be with a paper study under your belt.
Yes.
Yes, I think we've traditionally looked at.
Looked at patients with low peak inspiratory flow and estimates.
Patients with low peak inspiratory flow, representing 15% to 20% of COPD patients.
Today patients, who use nebulizer therapy for maintenance represent about 9% to 10% of all COPD patients. So I think we'd see a pretty significant increase in market opportunity, obviously, tia tropaeum as the market leader in single agent long acting.
Muscarinic antagonist in the end I think.
This is one of the things that excites us is that.
Robin citizen provides very solid FPV. One you just have to look at our label to see those F&B want improvements over placebo and the opportunity to really refine as Rick said, the low pepper population that responds the best two to Nebulize drove instead of centers is a terrific.
The opportunity to to get to market growth Rhonda anything to add there.
Might've lost Rhonda temporarily so we say anything else.
That's it for me.
I'm back in back Okay.
So.
Anything to add on market opportunity sure I lost you a bit but I can't I think I can pick up on some additional commentary there. If he if you think about this phase four study and how it can aid the COPD Commission to understand.
Which patients could could best benefit so thinking about those one in five patients who have low pepper, so which could benefit most from nebulizer therapy, and then assuming a positive outcome of this study that provides us a new data opportunity any data communication and educational opportunity.
For which our team could thereby offer to exhibit and increasing competitive advantage and add value to our overall promotional efforts.
Okay. Thanks.
Our next question comes from Douglas Tsao with H C. Wainwright Your line is open.
Hi, good afternoon, thanks for taking the questions.
Rick maybe it'd be helpful to understand as you sort of with the restructured company.
How are you thinking about resources between the existing portfolio of molecules versus some of the work in terms of identifying new molecules.
Which is obviously if you think about the company's success over the years has been.
Identifying to prevent sort of lung specific organ specific.
No targeted therapies.
Yes, that's a great. That's a great question I think what.
Most of our most of our dollars and as we look forward or are in development. I think we are going to capitalize on the research work that's done historically.
Small commitment of ongoing research, but I think one of the.
One of the strengths of the company is that we do have a portfolio of compounds that.
That or near that or near the clinic that can be that can be leveraged in development I'll kick it over to Rick ramp.
Yes, not much to add other than right now with this reorganization that we just announced six weeks ago, where we have a team of people that we would retain that are laser focused on continuing development of Meselson Amendment, a streamlined way as well as continuing to work through the dry powder inhaled <unk>.
Inhaled JAK inhibitor and remember we're still in the process of closing down. These late stage studies, we had.
101, hundreds of sites for EIS, and certainly have an ample oxygen around the world. So that's going to be our focus for the short term Doug.
Okay.
Thank you.
Okay.
Our next one question comes from Vikram <unk> with Morgan Stanley. Your line is open.
Great. Thanks for taking the question.
Just going back to your calorie I was wondering if the duration of therapy is a metric that you track and have commented on and if so.
I was wondering if you could give us any color on how that's trended since the product launched and through the past couple of months through the pandemic.
Okay.
Yes, I think probably the only comments that we've made on duration of therapy. Overall is that we with is what another aspect of the importance of the hospital.
Point of treatment initiation is that we do see longer.
Longer or levels of persistence with patients who are switched the medicine in the hospital.
I would underscore something that I think both Ron and I mentioned, which is we still consider ourselves.
Relatively early in the launch of <unk> because of the impact of the pandemic hitting and hitting them really February March period.
February 2020.
Anything else.
And it's certainly a metric we attempt to closely track. However, I'll just comment it's it's quite difficult to assemble and recognize that those data lag from patient claims to be able to piece that together.
To answer your question, specifically have we seen a decline during the pandemic we have not the duration has been reasonably stable to what we were seen in early 2020.
Got it that's helpful. Thank you and then a follow up question on a separate topic.
On your.
Agreement with Aviva and Trc <unk> royalties.
Could you just update us on where any dispute with entities are currently stands and if theres been any updates.
On your discussions with many of you over the past couple of months.
Yes, there's I mean the.
But we received another.
13, plus million dollars out of Trc in early October I think we have total of around $59 million, we've received out of Trc.
In 2021.
It's the.
Partnership that's managed by end of vivo, we're not in we're not in those dispute currently with within Aviva, We continue to.
To work with the Aviva on.
Trc and work to protect our rights under the under the agreement and the arbitration rulings that have been that have been held are as I've said before.
<unk>.
The nature of the rulings create a degree of Lumpiness in the cash flow coming out of Trc, but at the end of the day, we receive 85% of the economics out of Trc and Aviva receives 15% and that's unchanged Andrew anything else to comment on that.
Well nothing.
Really further to add although investors will notice that there are changes on our balance sheet for September 32021 that that do reflect the totality of the receivables that we are due and we keep track of every penny of the 85% that Rick just mentioned.
Yeah.
Okay understood. Thank you.
Yeah.
Our next question comes from Brian <unk> with RW Baird. Your line is open.
Hey, this is Luke on for Brian.
We're just wondering for <unk> and then could you talk about the market's clinical plan and timelines in acute lung injury in fibrotic disease, and then secondly was there any more color you can provide on the dry powder jacks and.
Any preclinical color.
Color that makes you optimistic.
What.
Yeah, I'll get started on it I think it's not only the preclinical work that makes us optimistic but it's the clinical work that that makes us optimistic I mean this is a JAK inhibitor, if youre talking about the nebulizer Jack.
Penetrates into the lung.
Yes. It is.
It is a pan JAK inhibitor does reduce inflammation in the lung and Lee.
The affecting the JAK stat pathway, obviously, it's been.
Reducing inhibiting that's been implicated in reduction in fiber.
<unk> fibrosis in a number of different models.
Animal models so.
We're we're we're encouraged I think we see two different segments. One of them is a nebulizer clearly nevertheless, nebulize JAK inhibitor, which is now suddenly hub in the second.
Is the dry powder inhaled JAK program, which does require <unk>.
A different a different chemical design <unk>.
To facilitate delivery through a dry powder inhaler.
C N anti inflammatory effect with the lead there we thought the lead.
It was $82 36, it could be improved on.
And.
And so I think we we think we're just really at the.
Not so much at the very beginning but early in the early stages of leveraging the JAK stat pathway.
<unk> two <unk>.
Address hyper inflammation of the lungs, Rick maybe you want to touch a little bit more on the chronic indications.
Sure sure just a little bit I think.
There are a lot of opportunities here as rich pointed out per nozzle sitting them and just stepping back for a minute. It's worth reminding everybody that we released results from a 200 patient phase II study in COVID-19, with meso sitting there back in June.
Our team subsequently engaged with global health authorities and then we've been in discussions around various externally funded platform study. So there's been a lot a lot of work going on with Nestle sitting them.
We do think that that work and COVID-19 is going to be applicable to future indications, both acute and potentially chronic indications.
So as Rick talked about we are now focused on our streamline R&D organization and what <unk> is our most advanced asset we're looking forward to providing updates in the near future with.
With regard to chronic indications we did talk about.
Fibrotic disease, and just keep in mind that fibrosis is a feature of most chronic inflammatory diseases can effect pretty much every tissue in the body, including alone and when its progressive fibrosis can lead to Oregon malfunction, and ultimately death and importantly, the JAK stat pathway is known to be involved in the development of fibrotic disorders. So.
<unk> had lots of opportunities are and where we're taking a measured approach to to figure this out.
Great. Thanks, so much.
Our next question comes from Joseph Stringer with Needham and company. Your line is open.
Hi, everyone. Thanks for taking my questions two from us on <unk>, just curious given that you are promoting.
The drug in various settings wondering if.
Yeah.
Your guidance for 2022 guidance sort of reflects or gives you flexibility to sort of.
Potentially increase investment there or.
Increased.
Capital in that direction potentially.
<unk> continued to drive drive sales, whether it be expansion of salesforce or something like that.
And then secondly, more on.
And sorry, if I missed this earlier, but.
In the past you've given some metrics around.
HCP interactions.
In person interactions just curious if those.
Those were up.
<unk> relative to <unk>. Thank you.
Ron do you want to take the in person interactions because you've covered part of that so yeah.
Yeah looking at Q3 versus Q2, they were down slightly for our in person engagement, but overall engagement considering the team does still.
Promote virtually.
On par there, but the in person.
What we see as the most important and greater impact.
Yes relative to to you Pal reinvestment in our current plan.
Do we have.
And I would say that our.
As Andrew highlighted we will provide more guidance in January with regard to the.
Spending in 2022, but under the under the current plan. We've got between Milan, There are Beatrice and <unk> Biopharma. We got increased investments that are planned for for <unk>. Because we do we do think it's a significant opportunity for the for the partnership.
Great. Thanks for taking our questions.
Yeah.
Our next question comes from <unk> Rama with Jpmorgan. Your line is open.
Hey, guys just a really quick one for me can you remind us of the sales cutoff for the tearing of the royalties on the global sales of apology for that five five to eight 5%. Thanks so much.
I'll tell you I don't have that were in another tier right now I don't have that handy. That's a that is a that.
That is publicly available on the on the FCC website I don't know Andrew do you have at <unk>.
The first tier is $750 million global net sales and then it goes upwards from there for the second tier off the top of my head latest 125 billion.
And then 1.75 billion and then above that we can double check that I'm sure My I'm correct off the top my head and look back with the schedule that pulled from.
The actual document.
So here you go.
On the.
Up to 750.
And global sales.
The royalty rate six 5% from $7 50 to $1 5 billion.
8% up to from one five to $2 two five its 9% at above 225, its 10% now that is the gross royalty rate and then 85%.
Is the implied royalty that number those numbers or the implied royalty rate back to <unk> biopharma.
Thanks, so much.
Yeah.
Thank you.
We have no further questions on the phone.
I'd now like to turn the conference call back over to Mr. Winningham. Please go ahead Sir.
Yes. Thank you for joining us today for todays quarterly call, we look forward to sharing.
Sharing our progress with you on the future of the new streamlined their events Biopharma have great day.
This concludes today's conference call. We thank you for your participation you may now disconnect.
[music].
Yes.
[music].
[music].
[music].
[music].