Q1 2022 Theravance Biopharma Inc Earnings Call

May 5, 2022

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During the day.

[music].

Ladies and gentlemen, good afternoon, I'd like to welcome everyone should eat their events Biopharma first quarter 2022 conference calls.

During the presentation, all participants will be in a listen only mode.

Question and answer session will follow the Companys formal remarks.

To ask a question press the star key followed by the digit one on your phone.

Again, Thats star one to ask a question.

It listening via webcast. Please mute audio on 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 first quarter 2022 conference call to discuss our business.

As always I remind you that this call will contain forward looking statements that involve risks and uncertainties.

Statements about our development pipeline expected benefits of our products and anticipated timing of clinical trials regulatory filings and expected financial results.

And for me some concern.

Factors that could cause results to differ materially from our forward looking statements is described further in our filings with the SEC.

I would direct your attention to slide three.

Turning us are Rick Winningham, Chief Executive Officer, followed by Rhonda <unk> Senior Vice President and Chief Business Officer, Rick Graham 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 and turning to slide four.

Last September we announced the restructuring of the company to optimize our business. Since then we rapidly transitioned to a focused and streamlined their events biopharma.

We're focused on leveraging.

Our expertise in developing and commercializing respiratory therapeutics, we've streamlined our R&D investments to concentrate on highest value opportunities and were exploring strategic partnerships for our pipeline assets to unlock additional value.

All of these actions drive towards our goal to maximize shareholder value.

There are three key pillars of value creation as highlighted on slide five for the go forward plan that builds on our proven record of respiratory innovation supporting several approved medicines for COPD and asthma.

These pillars include <unk>, which was discovered and developed by <unk> Biopharma is commercialized in partnership with Beatrice.

<unk> has continued quarter over quarter market share growth despite the respiratory pandemic.

Sell side analysts covering thorough dance Biopharm estimate you power. It has the potential to generate USP sales of approximately $400 million annually.

We announced in early January the enrollment of the first patient in the <unk> Phase <unk> study.

The study is successful our addressable U S market could potentially include all patients with low peak inspiratory flow, which is estimated to be one in five patients with COPD.

The impact of this study obviously is not included in current analyst peak sales estimates.

And we'll speak to you calories successes from this most recent quarter.

Second our pipeline the second pillar of value creation. It includes our most advanced respiratory candidate nozzle set nib, our dry powder inhaled JAK inhibitor program, which we have said before we would advance the drug candidate into the clinic with a strategic partner in.

It also includes <unk> <unk>, an investigational <unk> biopharma discovered once daily norepinephrine reuptake inhibitor in development for the treatment of symptomatic neurogenic orthostatic hypotension or in a wage results from a phase III study of <unk>. We reported last month showed a benefit in patients with multiple systems atrophy.

Rick Graham will walk through the data and the next steps for that program is a third pillars, our economic interest in trilogy respiratory medicine developed by Glaxosmithkline also known as GSK in collaboration with the company's predecessor their events, Inc. Now notice and Aviva.

<unk> is the first and only once daily single Inhaler Triple combination therapy approved for the treatment of COPD and asthma and has owned controlled and marketed globally by GSK.

Given the strength of the clinical data underlying trilogy, and it's indicated uses coupled with Gsk's commercial excellence trilogy continues to experience exceptional revenue growth trends, even in the face of the global respiratory pandemic at.

At present GSK sell side analysts projected trilogy could generate global peak sales of $3 5 billion annually.

Andrew will review <unk> first quarter performance of 2022, as well as review Thayer events financials.

We continue to believe the strong and growing cash flows of <unk> in trilogy, we expected future robust revenue performance for both coupled with several sources of potential upside in our development pipeline can generate significant value creation opportunities for our shareholders I will now turn the call over to Ron to review your powers.

Thanks, Rick.

I am pleased to have the opportunity to share our latest performance update on <unk>, which 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 because of the global respiratory pandemic.

We are encouraged by <unk> growth and believe we are seeing evidence of receding pandemic impact.

As a reminder, <unk> biopharma and Beatrice co promote in the U S with our combined sales infrastructure targeting healthcare professionals, who treat COPD COPD patients suitable for empowering.

<unk> Biopharma commercial and medical teams cover the hospital segment.

The interest covers outpatient based community health care professional.

From a financial.

Prospectively share profits on <unk> in the U S was 65% going to the interest and 35% to <unk> Biopharma.

Looking specifically at the <unk> field sales deployment efforts on slide eight in Q1 of 2022 doses sold exclusively in the hospital setting.

Representing a year over year increase of 73, 2% from Q1 of 2021, and an increase of four 3% from the prior quarter, demonstrating the highest quarter volume launched today.

The respiratory pandemic impacted the launch phase of <unk> growth in 2020, but we have seen you tolerate hospital volume returned to growth in the second half of 2021.

The achievement of New key hospital system formulary placements and the continued addition of new purchasing accounts. We believe these wins will yield significant growth in 2022 as <unk> will be the first Lama of choice in many hospital systems.

Turning to slide nine you can see that <unk> share of the hospital setting increased to 11, 3% in Q1 of 2022, which is up seven 8% from seven 8% in Q1 of 2021.

<unk> market share in the community setting increased to 23, 5% through January of 2022, which is our latest data point and up from 19, 7% in Q1 of 2021.

As we have noted previously many patients with COPD experience, an acute respiratory episode serious enough to require a trip to the hospital and therefore, the hospital becomes a key point to assess a person with COPD and convert our switch them from their current medicine to you tolerate.

Data shows that many patients who received <unk> in the hospital are discharged with a prescription to continue their treatment, allowing for continuity of <unk> maintenance therapy post hospitalization.

The <unk> biopharma in the interest teams continue to work collaboratively and effectively to convert appropriate patients to you tolerate during their hospital visit providing support to discharge and enabling them to be maintained on <unk> after their return home.

Slide 10 shows <unk> Biopharma is implies 35% of net sales or <unk> during the first quarter of 2022, a $15 3 million.

I'm also pleased to highlight that <unk> <unk> year over year net sales have increased 19% comparing Q1 of 2022 versus Q1 of 2021.

Demand doses for you Corey also increased with 23, 4% year over year growth.

As was the case last quarter, while institutions in many parts of the country are allowing increasing in person access.

In person engagement still remain below pre pandemic levels for our teams.

It is also important to note that although total prescription volumes continue to demonstrate growth across most therapeutic specialties with volumes heading toward parity with 2020.

Prescription volumes within the pulmonary.

Specialty continued to remain below pre pandemic levels for the first quarter of 2022.

We believe this challenging period is ending and provides upside to the brand as we move in the direction of a more normal environment for Pulmonologists trading COPD patients.

Picking up on Yupelri the face for prefer to study comparing improvements in lung function in adults with severe to very severe C. O P D and.

<unk> optimal into Batori flow rates following once daily treatment with either <unk> delivered via standard jet and that'd be wiser, 40th Tropaeum delivered via dry powder inhaler is actively enrolling patients there.

<unk> is responsible for 35% of the cost of this study and we continued to guide to top line resolved within the first quarter of 2023.

As Rick mentioned, we aim to unlock the value of our pipeline assets strategic partnerships today I'm going to focus on the recently announced <unk> phase three study results, which demonstrated a clear benefit and study patients with multiple system atrophy and symptomatic neurogenic orthostatic hypotension.

Moving to slide 12, Danville Occitane Phase III program included three studies study 169, 70, 170, and the open label extension study 171 and enrolled patients with Parkinson's disease multiple system ACH for your MSA and pure autonomic failure.

In September of last year, we reported that the 169 study did not meet its primary endpoint and we took action to reorganize the company and close out the ongoing clinical studies.

Last month, we disclose the results from study 170, and the complete data slides that can be found on our website today I'd like to focus the conversation on the benefit that ample occitane treatment provided MFA patients in the study.

On Slide 13, you can see the study design study 170 was a 22 week phase III study comprised of a 16 week open label period, followed by a six week double blind placebo controlled randomized withdrawal period.

Patient entered the open label period of study 170 by either completing the four week efficacy study 169 or by entering 170 dinovo.

After receiving 10 milligram <unk> once daily for 16 weeks patient been entered the six week randomize withdrawal period, where they either remained on <unk> or were randomized placebo.

At the end of the randomize withdrawal period, 31% of the study population was MSA patients.

On slide 14, we present, the pre specified subgroup analyses of patient reported outcomes on.

On each of the four o'clock the data points to the left of the vertical line favor ample occitane treatment and data points to the right favorite placebo.

The top left panel shows the results for the primary endpoint of treatment failure, which was defined as a worsening of both Oh HSA item, one and the patient global impression of severity.

While there was a beneficial effect of <unk> in the overall study population.

Benefit was largely driven by MSA patient.

The benefit to MSA patients was observed in multiple endpoints, including Oh HSA composite is shown in the top right panel Oh HSA item number one on the bottom left panel and the orthostatic hypotension daily activities scale or O H D. I S on the bottom right.

Orthostatic hypotension questionnaire composite scores in the individual items scores from the patients with MSA are shown on slide 15.

Starting on the top half of the slide you can see that the symptom composite score was nominally statistically significant with the upper bound of the 95% confidence interval to the left of zero.

This effect on the U H S. A composite was driven by all six items on the questionnaire favoring Ampelopsis. These include dizziness vision weakness fatigue, trouble, concentrating and head and neck discomfort.

Moving to the bottom half of the slide the daily activities composite score also favorite amp for lots of team and in this case, all but one item on the questionnaire favoured ample accessing treatment.

The largest impact for the MSA patients was standing for a short time for.

For someone with MSA suffering with symptomatic NIH, even standing for a short time can be enormous impact on quality of life that can mean, the difference of transferring from the bed to a wheelchair from the wheelchair to the restroom.

The idea that slightly the item that slightly favorite placebo was walking for a long time, which isn't surprising considering that MSA is a disease with severely debilitating consequences.

Finally, the last row of the table shows the O H Q composite score, which is the integrated results of O H S. A N O H.

B O H Q composite score favorite ample occitane treatment and this effect was also nominally statistically significant.

The MSA subgroup represents the patient population within O H for which no. Currently approved therapy has been shown to provide sustained efficacy in mitigating the debilitating symptoms related to N O H.

<unk> data set in the current ample oxime program constitutes more than a third of the overall study population in this subgroup has the largest number of MSA patients evaluated in a clinical program investigating and interventions treatment for symptomatic Moh today's.

There is an urgency to treat MSA patients suffering with an O H two the impact on quality of life and the extreme caregiver burden rare diseases and conditions pose a significant economic burden and the cost burden applies to direct medical as well as indirect and nonmedical costs.

With the benefit that ample ox team provided to the MSA patients in the 170 study it's important to consider why a similar result wasn't observed and study 1694 week efficacy study.

Phone on slide 16 longitudinal data analysis demonstrates that a treatment duration of more than four weeks with ample ox team is required for maximum effect.

The Y axis on the plot is the you HSA composite score and a lower number here means that patients are feeling better.

X access as time bye week in each period of the study.

As shown on the left side of the figure there was a minimal difference between Apple oxygen treatment and green and placebo and gray after four weeks and study 169, however, as patients moved into the open label period of 170, Theo HSA composite continued to decrease reaching a nader or lowest level around week eight to 12.

For patients that continued on <unk> shown by the Green line into the randomize withdrawal period the effect was durable.

Whereas those patients withdrawn from ample box to insure them by the graveline worsened over the next six weeks.

Again, the longitudinal data demonstrate that a treatment duration of more than four weeks with ample oxygen is required for maximum effect.

Given the clear unmet need for MSA patients suffering with symptomatic moh, coupled with the benefit plan for locks team provided in 70 170, we will define a path forward through ongoing discussion with regulators and strategic partners.

I'll now turn the call over to Andrew to review the financials.

Thanks, Rick.

Turning to slide 18, we look at the performance of trilogy, the third pillar of our value creation plan.

As a reminder, trilogy is owned and marketed globally by G. S. K.

You are 85 per cent ownership interest in their events respiratory company L. L C or Trc LLC, we are entitled to receive upwards hearing loyalties on global net sales of trilogy.

At present, 75% of income received from our economic interest has pledged to serve as principal and interest payments on our outstanding 2035, non recourse notes and the remaining 25% of income is retained by us.

On 518, we've captured the most recent information GSP shared during their earnings call unable 27th.

GSK noted that trilogy continued to lead the market as a single inhaler triple therapy with year over year global sales growth of 33% generating global net sales of $454 million during the first quarter of 2022.

This growth is primarily driven by the continued adoption of trilogy in the asthma indication and strong global commercial performance by Gsk's team.

Moving to our consolidated financials on slide 19, we provide our first quarter financial highlights for 2022 compared to the first quarter of 2021.

R&D expenses for the first quarter of 2022 or $19 million compared to $60 million for the first quarter of 2021.

SG&A expenses for the first quarter of 2022 or $14 million compared to $23 million in the first quarter of 2021.

Quarterly figures exclude sure based compensation and one time restructuring expenses.

We ended the first quarter of 2022 with $148 million in cash and cash equivalents.

On slide 20, we provide our financial guidance for 2022 and for R&D expenses, we expect to invest between $45 million to $55 million relative to actual investment of $168 million in 2021.

Of this expense range approximately 10 million is non-recurring spending that wasn't hurt in Q1 2022 to support the completion of the island fitness and Ampelos team clinical programs.

R&D you spend in Q2 and beyond will normalize and reflect the recurring limited strategic investments in our pipeline.

We're SG&A expenses, we expect to invest between $35 million to $45 million relative to actual of $71 million in 2021.

And again, our operating expense guideline exclude sure based compensation and one time restructuring expenses.

As a result of our reduced spending an improved cash flow generation from Yupelri M trilogy, we reiterate our expectation to become sustainably cash flow positive on an annual basis in the second half of 2022.

And with that I'll return the call back to Rick for closing remarks.

Thanks, Andrew turning to slide 21 service, while farmers focused and streamlined we're executing against three pillars of value creation maximizing the value of yupelri limiting strategic investments to advance our pipeline well leveraging our internal expertise of the development of inhaled <unk>.

Active agents in pursuing strategic collaborations to optimize value and the third.

Key pillar value creation as our economic interest in trilogy, which is experiencing strong revenue growth based on Gsk's commercial performance.

We continue to move towards our goal of becoming sustainably cash flow positive we're getting in the second half of 2022 and to maximize shareholder value and closing once again, thank our internal team for their perseverance I'm grateful to their commitment to our mission of continuing to develop medicines that make a difference in progress.

Clinical pipeline Yupelri as well as the patient communities, we serve well now.

And the call back to the operator for questions.

Thank you Sir.

Once again, if you would like to ask a question you may do so by pressing the star key followed by the digit one on your touch tongue found.

Listening via webcast. Please mute audio on your webcast device before asking a question of it I found.

Any way you can speak us on for today's call. Please make sure you on mute function is turned off to allow your signal to reach our equipment.

That's star one if you would like to ask a question.

<unk> for a moment to assemble I've asked her.

First question will come from <unk>.

Okay. So it looks like you tell the volume increased.

Kennedy.

Yeah.

Huh.

And can the market share data.

Per cent there over a year.

Okay setting.

With sales increasing 19 per cent.

Over a year.

Possibly due to decreasing.

Pricing or how should we interpret that.

Randa, you ought to take that.

No I wouldn't change that to an adjustment in pricing where where stuffiness.

Okay.

<unk> get back to a point.

<unk> <unk> I don't know if your question is more separately relative to each channel of business or chest, China under yeah, Yeah theory uhm.

I guess in China, I understand with.

Discrepancy there and also I understand.

What they can ma'am trajectories like in a community setting hospital.

Are there any specific challenges.

Setting.

So.

Go ahead <unk> so the.

The hospital patient.

We focus on the hospital, because it's Rhonda indicated.

That is a a very good time to reassess the patient for the health care professional and with what they have been on has not been working because of the reason, causing him to go into the hospital. It may in the appropriate patient facilitated change the yupelri. So the so the the effect of the hospital.

Pedal and the growth of the hospital channel would likely be seen first and then it would flow into the flow into the community setting the.

The community setting.

<unk>, obviously and first.

First quarter.

Some issues generally with the community relative to to payers, which is seen in many different as as co pays reset the sofa and cost shares reset.

That's obviously something that's happened.

The first quarter of this year, but we certainly is rhonda indicated in her remarks.

At the growth that we've seen in the hospital.

Look at the increase in face to face.

Interchanges that we've had with health care professionals across both the via <unk> there'll be a smile form of Salesforce sales forces.

It was a precursor to improving improving growth profile throughout the rest of the year sorry, Ron to go ahead.

I think the <unk>, which I think is somewhat obvious and certainly the volume contribution at all.

T. The community setting Gimme one can appreciate the time on therapy is a different duration.

At all.

Approximately three to five days and then looking at the longer duration in me outpatient setting and that's correct stuff down there.

Alright, thank you so much.

Thank you.

Our next question will come from different Charlotte Morgan Stanley .

Good day, everyone. This is gospel unfold vikram.

So.

Wondering what did you think at fault for emphasis ballistic Tim and Msf could look like in terms of an adventure crowd design.

Number of studies that you might need to be conducted for potential approval.

What is your current thinking thinking on how you would support the costs associated with running any additional studies.

Thank you.

Yeah. Thank you for the question this is Rick Graham.

I don't want to get too far ahead of ourselves because our first step is to have a conversation with the F. D. A here based on the results that we have on hand that I went through today and will am to have a meeting with the F. D. A towards mid summer of this year, but if you look at the data that I presented today or <unk>.

LS are pretty impressed with the consistency and the data the totality of the data and the fact that we were able to see nominal significance and just 38 MSA patients looking at the O H S. A composite so taken together depending on the outcome of the interaction with FDA.

There could be a way to complete.

Complete a body of work in a very I think streamlined minimal way given the data that we have on hand.

Oh, thank you.

Thank you.

Again to ask a question telephone that is star one.

And our next question comes from just hang out with meat and company.

Hi, This is Ben Ricard on for Jerry Springer, Thanks for taking my question.

So assuming that the two for two trial is positive and we would see yupelri label expansion.

Would that change anything about the profit sharing agreement was the address or the division of sales marketing between the two companies.

No. Thanks for the question that it wouldn't change the wouldn't change the profit share of the profit share would remain would remain the same I think what it what it does change as it opens up a little bit more broadly the.

Segment of the market.

And which yupelri may be able to compete very effectively versus you'll other handhelds right now as we.

Mentioned over time, we really are focused on a segment of the COPD market. That's about one in 10.

C O P D patients who required nebulization for.

For control of their disease, if the paper to study is successful.

<unk> could expand to as much as one in five in other words.

Today, there are patients that are not getting.

Optimal benefit from a handheld device that might benefit from therapy with with Yupelri. So that's really what the target is the target is.

Expanding the the rather sizable niche that yupelri already occupies and can participate in.

To facilitate longer term growth the brand.

Rick I, just wanted to add and Ben. Thanks for the question is one that comes up a lot about the label change just to remember that our current indications statement for your <unk> is already very broad and captures patients with low pipher. The point here is that we need to do a clinical trial to better understand the impact of Nebulized therapy.

<unk> dry powder inhaler on these patients with royalty against Batori flow. If there were to be a label update. These results would go into let's say the clinical trial section of the label, but we aren't expecting to change the indications statements because it already captures those patients.

Great. Thank you very much.

Thank you.

My next question will come from that David Rice with S. D P Securities.

Yes, thanks, very much I had three questions on the revenue. Please first.

Via <unk> collaboration revenue rose, 3% and the March quarter.

Year over year, if you could please provide some color on that second the collaboration revenue.

Declined from 3.9 million in the first quarter of 21.

To just nine and the first quarter of 22, if you could explain that.

And in terms of licensing revenue. The figure was 2.5, if you could please explain Matt. Thank you.

Andrew You Wanna, Yeah, Hi, David This is Andrew I'm, so going down the list there the collaboration agreement revenue from the interest is essentially.

Essentially the risks the receivable do from via <unk> for the quarter.

So there's some complex collaboration counting behind to get to get to that <unk> number.

But that's effectively the receivable.

Collaborate to the the next line down the collaboration revenue line, Yes, nine 9000 was.

It was booked for the the first quarter of 2022 down from just under $4 million for the first quarter of 21. This is really related to the amortization of the upfront expand upfront payment received <unk> for our <unk>.

Formerly with the collaboration we had an island fitness.

And then the licensing revenue $2.5 million for this quarter was the first milestone payment received from Pfizer on the Dermatological Jack program that we license to them in 2019.

That payment was for the entry of the first product into the human clinical studies.

Thank you.

You're welcome.

Thank you.

It appears to be have no further questions on the phone now.

Now like to turn the corner things back to Mister Cunningham. Please go ahead Sir.

Yeah, I'd like to thank everyone for joining us today and for the for the questions. We look forward to updating you throughout the rest of 2022 or very very excited and encouraged about our progress to date in the year and look forward to to finishing the next three quarters quite strongly with our growth drivers. So.

Thank you very much have a great day.

Ladies and gentlemen. This concludes today's conference call. We thank you for your participation and you may disconnect at anytime.

[music].

Ladies and gentlemen, good afternoon, I'd like to welcome everyone to be fair events, Biopharma first quarter 2022 conference call.

During the presentation, all participants will be in a listen only mode.

Question and answer session will follow the company's formal remarks.

To ask a question press the star key followed by the digit one on your phone.

Again, that's star one to ask a question.

It listening via webcast. Please mute audio on 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 Gal Cohen Vice President Corporate Communications. Please go ahead.

Good afternoon, and thank you for joining the <unk> Biopharma first quarter 2022 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 and anticipated timing of clinical trials regulatory filings and expected financial results.

And for me some concerning factors that could cause results to differ materially from our forward looking statements.

Described further in our filings with the FTC.

I would direct your attention to slide three joining us are Rick Winningham, Chief Executive Officer, followed by Rhonda <unk> Senior Vice President Chief Business Officer, Rick Graham 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 and turning to slide four.

Last September we announced the restructuring of the company to optimize their business. Since then we rapidly transitioned to a focused and streamlined their advanced biopharma.

We're focused on leveraging.

Our expertise in developing and commercializing respiratory therapeutics, we've streamlined our R&D investments to concentrate on the highest value opportunities.

We're exploring strategic partnerships for our pipeline assets to unlock additional value.

All of these actions drive towards our goal to maximize shareholder value.

These pillars include <unk>, which was discovered and developed by <unk> Biopharma is commercialized in partnership with Beatrice.

<unk> has continued quarter over quarter market share growth despite the respiratory pandemic.

Sell side analysts covering therapy, that's biopharma estimate you power. It has the potential to generate USP sales of approximately $400 million annually, we announced in early January the enrollment of the first patient in the <unk> phase four peffer to study.

The study is successful our addressable U S market could potentially include all patients with low peak inspiratory flow, which is estimated to be one in five patients with COPD the.

The impact of this study obviously is not included in current analyst peak sales estimates Rhonda.

Rhonda will speak to you powers successes from this most recent quarter.

Second our pipeline our second pillar of value creation. It includes our most advanced respiratory candidate nozzle set nib, our dry powder inhaled JAK inhibitor program, which we have said before we advance the drug candidate into the clinic with a strategic partner.

It also includes ample oxy and investigational <unk> Biopharma discovered once daily norepinephrine reuptake inhibitor in development for the treatment of symptomatic neurogenic orthostatic hypotension or in a wage results from a phase III study of <unk>. We reported last month showed a benefit in patients with multiple systems atrophy.

Rick Graham will walk through the data and the next steps for that program.

The third pillar is our economic interest in trilogy respiratory medicine developed by Glaxosmithkline also known as GSK in collaboration with the company's predecessor their events, Inc. Now known as <unk>.

<unk> is the first and only once daily single Inhaler Triple combination therapy approved for the treatment of COPD and asthma and has owned controlled and marketed globally by GSK.

At present GSK sell side analysts projected trilogy could generate global peak sales of $3 5 billion annually.

Andrew will review <unk> first quarter performance of 2022, as well as review Thayer events financials we.

We continue to believe in the strong and growing cash flows of <unk>. The expected future robust revenue performance for both coupled with several sources of potential upside in our development pipeline can generate significant value creation opportunities for our shareholders I will now turn the call over to Ron to review your power.

Thanks, Rick.

I am pleased to have the opportunity to share our latest performance update on <unk>, which is the first and only once daily <unk> long acting muscarinic antagonist.

The full 24 hours of control for patients and is indicated for the maintenance treatment of patients with COPD.

Despite the continued headwinds created because of the global respiratory pandemic.

We are encouraged by <unk> progress and believe we are seeing evidence of receding pandemic impact.

Reminder, there man Biopharma and DHS co promote in the U S with our combined sales infrastructure targeting healthcare professionals, who treat COPD COPD patients suitable for empowering.

<unk> Biopharma commercial and medical teams cover the hospital segment.

The interest cover is outpatient based community health care professional.

From a financial.

Prospectively share profits on <unk> in the us with 65% going to the interest and 35% to bear Vance Biopharma.

Looking specifically at the <unk> field sales deployment efforts on slide eight in Q1 of 2022 doses sold exclusively in the hospital setting.

<unk> presented a year over year increase of 73, 2% from Q1 of 2021, and an increase of four 3% from the prior quarter, demonstrating the highest quarter volume launch today.

The respiratory pandemic impacted the launch phase of <unk> growth in 2020, but we have seen you tolerate hospital volume returned to growth in the second half of 2021.

Turning to slide nine you can see that <unk> share of the hospital setting increased to 11, 3% in Q1 of 2022, which is up seven 8% from seven 8% in Q1 of 2021.

<unk> market share in the community setting increased to 23, 5% through January of 2022, which is our latest data point and up from 19, 7% in Q1 of 2021.

As we have noted previously many patients with COPD experience, an acute respiratory episode serious enough to require a trip to the hospital and therefore, the hospital becomes a key point to assess a person with COPD and converge our switch them from their current medicine you tolerate.

The <unk> Biopharma and VHS teams continue to work collaboratively and effectively convert appropriate patients to you tolerate during their hospital visit providing support to discharge and enabling them to be maintained on <unk> after their return home.

Slide 10 shows <unk> Biopharma implies 35% of net sales or <unk> during the first quarter of 2022, a $15 3 million.

I'm also pleased to highlight that <unk> <unk> year over year net sales have increased 19% comparing Q1 of 2022 versus Q1 of 2021.

Demand doses for you tolerate also increased with 23, 4% year over year growth.

As was the case last quarter, while institutions in many parts of the country are allowing increasing in person access.

In person engagement still remain below pre pandemic levels for our teams.

It is also important to note that although total prescription volumes continue to demonstrate growth across most therapeutic specialties with volumes heading towards parity with 2020.

Prescription volumes within the pulmonary.

Specialty continued to remain below pre pandemic levels for the first quarter of 2022.

We believe this challenging period is ending and provides upside to the brand as we move in the direction of a more normal environment for Pulmonologists trading COPD patients.

Even with these lingering challenges we have been encouraged with growth in total prescriptions, which increased by 30% year over year and new to new to brand prescriptions increased 20% year over year.

As a reminder, these script data include only retail but serves as a useful proxy for retail plus the began me or durable medical equipment fulfillment channel, which represent a majority of the volume of <unk> sales.

Lastly, although the pandemic continue to affect our business during the first quarter in March and April we have seen the impact foreseen, which we believe is leading to improved demand patterns and along with an increasing ability to engage in in person field facing activities.

We anticipate our growth will continue to accelerate throughout 2022.

I will now turn the call over to Rick Graham.

Thanks, Rhonda turning to slide 11 picking up on your salary.

<unk>, 4% for two study comparing improvements in lung function and adults with severe to very severe COPD and sub optimal inventory flow rates. Following once daily treatment with either revenue venison delivered via standard jet nebulizer.

Tropaeum delivered via dry powder inhaler is actively enrolling patients.

<unk> is responsible for 35% of the cost of the study and we continue to guide to topline results within the first quarter of 2023.

As Rick mentioned, we aim to unlock the value of our pipeline assets through strategic partnerships today I'm going to focus on the recently announced <unk> phase III study results, which demonstrated a clear benefit in study patients with multiple system atrophy and symptomatic neurogenic orthostatic hypotension.

Moving to slide 12, the ample oximetry in Phase III program included three studies study 106, nine steady 170, and the open label extension study 171 and enrolled patients with Parkinson's disease multiple system atrophy, our MSA and pure autonomic failure.

In September of last year, we reported that the 169 study did not meet its primary endpoint and we took actions to reorganize the company and closeout the ongoing clinical studies.

Last month, we disclosed the results from study 170, and the complete data slides that can be found on our website today I'd like to focus the conversation on the benefit that <unk> treatment provided MSA patients in the study.

On Slide 13, you can see the study design study $1 70 was a 22 week phase III study comprised of a 16 week open label period, followed by a six week double blind placebo controlled randomized withdrawal period.

Patients entered the open label period of study 170 by either completing the four week efficacy study 106, nine or by entering 170 de Novo.

After receiving 10 milligram <unk> once daily for 16 weeks patients then entered the six week randomized withdrawal period, where they either remained on <unk> or were randomized to placebo.

At the end of the randomized withdrawal period, 31% in the study population with MSA patients.

On slide 14, we present, the pre specified subgroup analysis of patient reported outcomes.

On each of the four plots the data points to the left of the vertical line favor ample oxygen treatment and data points to the right favorite placebo.

The top left panel shows the results for the primary endpoint of treatment failure, which was defined as a worsening of both OE HSA item, one and the patient global impression of severity.

While there was a beneficial effect of ample occitane and the overall study population.

Benefit was largely driven by MSA patient.

The benefit to MSA patients was observed in multiple endpoints, including HSA composite as shown on the top right panel or HSA item number one on the bottom left panel and the orthostatic hypotension daily activity scale or <unk> on the bottom right.

Orthostatic hypotension questionnaire composite scores and the individual items scores from the patients with MSA are shown on slide 15.

Starting on the top half of the slide you can see that the symptom composite score was nominally statistically significant with the upper bound of the 95% confidence intervals for the last two zero.

This effect on the IHS, a composite was driven by all six items on our questionnaire favoring ample oxygen. These include dizziness vision weakness fatigue trouble concentrating in head and neck discomfort.

Moving to the bottom half of the slide the daily activities composite score also favorite ample OXXO team and in this case, all but one item on the questionnaire Favoured <unk> treatment.

The largest impact for the MSA patients withstanding for a short time for.

For someone with MSA suffering with symptomatic moh, even standing for a short time can be enormous impact on quality of life. It can mean, the difference of transferring from the bed to a wheelchair from the wheelchair to the restroom.

The idea that slightly the item thats slightly favorite placebo was walking for a long time, which isn't surprising considering that MSA is a disease with severely debilitating consequences.

Finally, the last row of the table shows the <unk> composite score, which is the integrated results, although HSA NIH taas.

<unk> composite score favorite ample oxiclean treatment and this effect was also nominally statistically significant.

The MSA subgroup represents a patient population with NIH for which no. Currently approved therapy has been shown to provide sustained efficacy in mitigating the debilitating symptoms related to NIH.

As a data set in the current ample oxygen program constitutes more than a third of the overall study population in this subgroup is the largest number of MSA patients evaluated in the clinical program investigating interventional treatment for symptomatic moh to date.

There is an urgency to treat MSA patients suffering with NIH due to the impact on quality of life and the extreme caregiver burden rare diseases and conditions caused a significant economic burden and the cost burden applies to direct medical as well as indirect and non medical costs.

With the benefit that <unk> provided to the MSA patients in the 170 study it's important to consider why a similar result wasn't observed.

Study 100, 694 week efficacy study.

Shown on slide 16 longitudinal data analysis demonstrates that a treatment duration of more than four weeks with ample oxygen is required for maximal effect.

The Y axis on the part of the HSA composite score and a lower number here means that patients are feeling better.

X axis is time by week and each period of the study.

As shown on the left side of the figure there was a minimal difference between Apple oxygen treatment in green and placebo in Gray. After four weeks in study 106, nine however, as patients moved into the open label period of 170, <unk> HSA composite continued to decrease reaching a nadir or lowest level around week eight to 12.

<unk>.

For patients that continued on <unk> team shown by the Green line into the randomized withdrawal period the effect was durable.

Whereas those patients withdrawn from ample ox team shown by the Gray line worsened over the next six weeks.

Again, the longitudinal data demonstrate that a treatment duration of more than four weeks with ample oxygen is required for maximal effects.

Given the clear unmet need for MSA patients suffering with symptomatic NIH, coupled with the benefit that <unk> provided in study 170, we will define a path forward through ongoing discussion with regulators and strategic partners I'll now turn the call over to Andrew to review the financials.

Thanks, Rick.

Turning to slide 18, we look at the performance of trilogy, the third pillar of our value creation plan.

As a reminder, <unk> is owned and marketed globally by GSK.

Through our 85% ownership interest in <unk> respiratory company, LLC or Trc LLC were entitled to receive upward tiered royalties on global net sales of trilogy.

At present, 75% of income received 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 18, we've captured the most recent information GSK shared during their earnings call unable 27.

This growth is primarily driven by the continued adoption of trilogy in the asthma indication and strong global commercial performance by GSK is team.

Moving to our consolidated financials on slide 19, we provide our first quarter financial highlights for 2022 compared to the first quarter of 2021.

R&D expenses for the first quarter of 2022% or $19 million compared to $60 million for the first quarter 2021.

SG&A expenses for the first quarter of 2022 were $14 million compared to $23 million in the first quarter of 2021.

These quarterly figures exclude share based compensation and onetime restructuring expenses.

We ended the first quarter of 2022 with $148 million in cash and cash equivalents.

On slide 20, we provide our financial guidance for 2022 and for R&D expenses, we expect to invest between $45 million to $55 million relative to actual investment of $168 million in 2021.

Of this expense range approximately $10 million is nonrecurring spending that was incurred in Q1 2022 to support the completion of the EIS and fitness and <unk> clinical programs.

R&D spend in Q2 and beyond will normalize and reflect the recurring limited strategic investments in our pipeline.

For SG&A expenses, we expect to invest between 35% to $45 million relative to actuals of $71 million in 2021.

And again, our operating expense guideline excludes share based compensation and onetime restructuring expenses.

As a result of our reduced spending and improved cash flow generation from <unk>, we reiterate our expectation to become sustainably cash flow positive on an annual basis in the second half of 2022.

And with that I'll return the call back to Rick for closing remarks.

Thanks, Andrew turning to slide 21, <unk> Biopharma is focused and streamlined we're executing against three pillars of value creation maximizing the value of your Perl rate eliminate strategic investments to advance our pipeline, while leveraging our internal expertise or the development of inhaled <unk>.

Active agents and pursuing strategic collaborations to optimize value and the third.

Key pillar of value creation as our economic interest in trilogy, which is experiencing strong revenue growth based on Gsk's commercial performance.

We continue to move towards our goal of becoming sustainably cash flow positive beginning in the second half of 2022 and to maximize shareholder value in closing I. Once again, thank our internal team for their perseverance I'm grateful for their commitment to our mission of continuing to develop medicines that make a difference and progress at all.

Our clinical pipeline <unk> as well as the patient communities, we serve while now.

I hand, the call back to the operator for questions.

Thank you Sir.

Once again, if you would like to ask a question you may do so by pressing the star key followed by the digit one on your Touchtone phone.

Listening via webcast. Please mute audio on your webcast device before asking a question over the phone.

If you are using a speakerphone for todays call. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Again, Thats Star one if you would like to ask a question.

And we'll pause for a moment to assemble our roster.

Our first question will come from <unk> <unk> with Cowen.

So it looks like you've totally volumes increased 73% year over year in the hospital study and from the market share data.

It was 30% year over year increase in the community setting.

With sales, increasing 19% year over year.

That possibly due to.

Increase in <unk>.

Pricing or how should we interpret that.

Ron do you want to take that.

No I wouldn't just attribute that to an adjustment in pricing we're still seeing this.

Hum.

A pair or get back to a point.

Pre pandemic growth rates so.

Now to your question is more separately relative to each channel of business or just trying to understand yes Barry.

I guess I'm trying to understand.

The discrepancy there and also understand.

Or would the demand trajectory is like in the community setting versus hospital.

Are there any specific challenges there in the community setting.

So let's.

Go ahead Rick.

The hospital patient.

We focus on the hospital because as Rob indicated.

That is a.

A very good time to reassess the patient for the health care professional.

With what they have been all it has not been working because of the reason, causing them to go into the hospital. It may in the appropriate patient facilitate a change to your Perl right. So that so that the effect of the hospital and the growth of the hospital.

Channel would likely be seen first and then it would flow into the flow into the community setting the.

The community setting.

We obviously.

First quarter, you have some issues generally with the community relative to to payers, which is seen in many different.

Co pays reset that sow cost.

Cost shares reset.

Thats, obviously something Thats happened.

The first quarter of this year, but we certainly as Rhonda indicated in her remarks.

Look at the growth that we've seen in the hospital.

Look at the increase in face to face.

Interchanges that we've had with health care professionals across both the Beatrice and the <unk> Biopharma sales force sales forces.

As a precursor to improving and improving growth profile throughout the rest of the year sorry, Randy go ahead.

I think the other piece to it.

Inc. Is somewhat obvious is certainly the volume contribution of hospital.

To the community setting. Thank everyone can appreciate the time on therapy is a different duration to hospital.

Approximately three to five days and then looking at the longer duration in the outpatient setting and in that script fulfillment.

Okay. Thank you so much.

Thank you.

Our next question will come from Vikram <unk> with Morgan Stanley .

Good day, everyone. This is gospel unfolds vikram.

I was wondering what do you think at full load for Empress and holistic, Tim and MSA. It could look like in terms of adventure trial design.

And the number of studies that you might need to be conducted for a potential approval.

And what is your current thinking on how you would support the costs associated with running any additional studies is it here.

Sure.

Yes. Thank you for the question this is Rick Graham.

I don't want to get too far ahead of ourselves because our first step is to have a conversation with the FDA here based on the results that we have in hand that I went through today and we'll aim to have a meeting with the FDA toward mid summer of this year, but if you look at the data that I presented today.

We and our Kols are pretty impressed with the consistency of the data the totality of the data and the fact that we were able to see nominal significance in just 38 MSA patients looking at the OE HSA composite so taken together depending on the outcome of the interaction with FDA.

There could be a way to <unk>.

<unk> a body of work in a very.

<unk> streamlined and minimal way given the data that we have in hand.

Thank you.

Again to ask a question over the telephone that is star one.

And our next question comes from Joseph Stringer with Needham <unk> Company.

Hi, This is Ben Ricard on for Jerry Springer, Thanks for taking my question.

So assuming that the preferred two trial is positive and we would see a <unk> label expansion.

How would that change anything about the profit sharing agreement was the entre as sort of the division of sales marketing between the two companies. Thank you.

No. Thanks for the question it wouldn't change the wouldn't change the profit share of the profit share.

Would remain would remain the same I think what.

What it does change is that opens up a little bit more broadly.

The segment of the market.

Which <unk> may be able to compete very effectively versus.

Other handhelds right now as we've.

Mentioned over time, we really are focused on a segment of the COPD market. That's about one in 10.

<unk> patients, who required nebulous Asian for control of their disease.

The <unk> study is successful.

And Tim could expand to as much as one in five in other words.

Today, there are patients that are not getting optimal benefit from a handheld device that might benefit from therapy with <unk>. So that's really what the target is the target is.

Expanding the.

The rather sizable niche that <unk> already occupies and can participate in to facilitate longer term growth of the brand.

Rick I just wanted to add and then thanks for the question. It's one that comes up a lot about the label change just to remember that our current indication statement for your salary is already very broad and captures patients with low pipher. The point here is that we need to do a clinical trial to better understand the impact of nebulizer therapy.

Versus dry powder inhaler on these patients with low peak inspiratory flow. If there were to be a label update. These results would go into let's say the clinical trial section of the label, but we arent expecting to change the indication statement because it already capture those patients.

Great. Thank you very much.

Thank you.

Our next question will come from David Risinger with SBB Securities.

Yes, thanks, very much I had.

Three questions on the revenue. Please first the <unk> collaboration revenue rose, 3% in the March quarter.

Year over year, if you could please provide some color on that.

The collaboration revenue.

Decline from $3 9 million.

In the first quarter of 'twenty one.

To just nine and.

The first quarter of 'twenty, two if you could explain that and.

In terms of licensing revenue the figure was two five if you could please explain that thank you.

Andrew you want to yes, hi, David This is Andrew.

So going down the list there the collaboration agreement revenue from Beatrice is essentially de risks the receivable due from via <unk> for the quarter.

So there is some complex collaboration accounting behind to get to get to that netted out number.

But that's effectively.

The receivable.

Collaborate to these in the next line down the collaboration revenue line, Yes, 99000 was.

It was booked for the first quarter of 2022 down from just under $4 million for the first quarter of 'twenty. One. This is really related to the amortization of the upfront expense upfront payment received from Janssen for our.

<unk>, formerly with the collaboration we have an EIS in fitness and then the licensing revenue $2 5 million for this quarter was the first milestone payment received from Pfizer on the Dermatological JAK program that we licensed to them in 2019.

That payment was for the entry of the first product into the human clinical studies.

Thank you.

Youre welcome.

Thank you.

It appears we have no further questions on the phone I'd now like to turn the conference back to Mr. Winningham. Please go ahead Sir.

I'd like to thank everyone for joining us today and for the questions. We look forward to updating you throughout the rest of 2022, we're very very excited and encouraged about our progress to date in the year and look forward to finishing in the next three quarters quite strongly with our growth drivers.

Thank you very much have a great day.

Ladies and gentlemen. This concludes today's conference call. We thank you for your participation and you may disconnect at any time.

Q1 2022 Theravance Biopharma Inc Earnings Call

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