Q3 2023 Theravance Biopharma Inc Earnings Call

Ladies and gentlemen, good afternoon, I'd like to welcome everyone to the third events Biopharma third quarter 2023 conference call. During the presentation. All participants will be in a listen only mode. A question and answer session will follow the comp.

Today's formal remarks to ask a question. Please press the star key followed by the digit one digit one on your phone again that star one one to ask a question if listening via webcast. Please mute audio on your webcast device before asking a question over the phone.

To 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 Rick Winningham, Chief Executive Officer. Please go ahead Sir.

Good afternoon, everyone and thank you for joining with their events Biopharma third quarter 2023 earnings results Conference call.

Turning to slide two I'd 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 and expected financial results.

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

On slide three I'm again joined today by Rick Grant them, our head of research and development.

Honda Farnham, there are answers chief business officer, and he swore off our Chief Financial Officer.

Moving to slide four throughout the year, we communicated progress on several strategic objectives for the company.

Namely to grow your Perl right Walt completing of disclosing the results of the <unk> two study.

Initiating and advancing our phase III Cypress study at.

And advancing achieving non-GAAP profitability.

During the second half of the year subject to you Pal <unk> continued growth.

Based on our third quarter performance, we continue to make good progress against these objectives.

Beginning with your Perl rate, our combined team achieved $58 3 million in total third quarter net sales representing growth of 9% year on year and the highest quarterly net sales results since launch.

Highlights include another outstanding performance by our hospital based commercial organization continued growth in the retail channel.

And further market share gains.

We completed our peffer to study enrollment in the third quarter and continue to expect to share top line data in January.

And a new and exciting development, we just learned that the fee interest in this phase III study of your Perl rate in Chinese patients with moderate to very severe COPD was positive and that that data were consistent with the previous findings of <unk> strong efficacy.

Our partners at via <unk> planning to move forward with a registrational filing in China in mid 2024.

As a reminder, COPD is a leading cause of morbidity and mortality in China with over 100 million individuals affected and thorough event stands to receive development and sales milestones as well as low double digit royalties on sales in China.

And adjacent territories under our expanded 2019 agreement with Beatrice.

Moving to <unk> in Cyprus, we continue to open sites globally during the quarter and we presented two abstracts at the International Congress on Parkinson's disease and movement disorders in August.

We will present additional data later this month at the American Autonomic Society in Puerto Rico.

Next on the financials, we reported a non-GAAP loss of $700000 approximately during the quarter.

I'm in close to our objective of achieving non-GAAP profitability. This was driven by a combination of <unk> growth and effective expense management. We returned another 31 million through our capital returns program, bringing us to a total of $295 million since inception, and putting us in a position to return.

The final $30 million in the fourth quarter.

On slide five I'd like to take a moment to level set how we see <unk> today.

<unk> has become a streamlined organization focused on maximizing the value of two key assets <unk>, a growing source of cash flows with a bright future and <unk>, a rare neurological asset roughly a year and a half from topline data there.

<unk> is currently debt free with no need to access the capital markets to realize the full potential of these assets in short we believe we embody a unique profile in biotech at a time when the capital markets have been challenging.

As we complete the substantial return of capital program pay down of debt board enhancements and expense streamlining the company undertook following the sale of our trilogy royalty interest management and the board continue to comprehensively review all elements of the business the strategy and opportunities to maximize shareholder.

Holder value.

Now turning to slide six Rick Graham and I will cover <unk> teams potential and MSA, beginning with the addressable patient population.

We've discussed in the past MSA is a rare neurological disorder affecting 50000 people in the United States of which approximately 35 to 45000 would suffer from symptomatic NIH.

While this represents a substantial opportunity on its own. We're also exploring ways in which we can make <unk> available globally. Since our hope is to improve the lives of as many MSA patients.

Operating from NIH as possible given the profound impact this condition can have on the quality of life of patients and their caregivers and the lift there are limited treatment options currently available.

If you turn to slide seven you can see that the number of MSA patients estimated to have symptoms of NIH increases by roughly a factor of five if one includes Europe, Japan and China.

Given the need that remains for patients worldwide, we are committed to exploring ways to reach patients outside the U S as well.

On slide eight I'd note that <unk> retained global rights to <unk> granted granted IP extended extending to 2037 in the U S.

In addition, we received orphan drug designation earlier this year as many of you know orphan drug designation confirm seven years of market exclusivity go product as well as the exemption from user fees.

However, it's also particularly important when it comes to pricing.

The inflation reduction mandates that Medicare negotiate price reductions for certain drugs with high spending after nine years of commercial availability for small molecules.

Drugs with a single orphan designation such as <unk> are excluded from this requirement, which protects their value and supports the investments made in their development.

Before I turn the call over to Rick Graham.

I'd like to address the transition and R&D leadership, we announced today.

Rick will be leaving the company with Anya mill or taking over as head of development.

Although it would be staying for several months to ensure a successful transition as we approach the completion of the <unk> II study and the Cypress with the Cypress study well underway now is an ideal time to begin this transition.

Over his tenure at their advanced Rick built an exceptional development organization established many of its key clinical capabilities.

Their events relies on for its success.

And we're thrilled to have on your guide the organization through Cypress's conclusion, ample ox teams potential filing and approval and beyond.

With our proven track record of strategic and regulatory leadership <unk> been ready to take on this role for some time and she will be an exceptional head of development.

With that I'll turn the call over to Rick to make some additional comments on <unk> Rick.

Thanks, Rick let me begin on slide nine by providing some additional detail on the unmet need in MSA for patients with NIH as well as why we believe we can quickly and successfully moved <unk> toward NDA filing and approval.

First it's important to recognize that NIH symptoms are persistent upon sitting or standing and without effective treatment led to decommissioning that can have lasting effects.

Moreover, the combined effects of symptomatic <unk>, an MSA disease progression have a significant impact on quality of life over time.

As we highlight here studies evaluating the effects of NIH symptoms on patients' quality of life consistently highlight a substantial negative impact despite the availability and use of therapeutic intervention.

Currently approved therapies to treat orthostatic hypotension carry safety warnings for supine hypertension, which is an important side effect impacting us, especially amongst the many MSA patients that have preexisting supine hypertension, resulting from their disease.

<unk> works differently than available therapies, using a patient's own norepinephrine, which we believe is why there was no impact on supine blood pressure and the phase III study of 170 and no signal for supine hypertension, and over 800 patients and healthy volunteer study to date.

And the 170 study <unk> demonstrated a durable and clinically relevant treatment effect compared to placebo at MSA patients as well as abroad and consistent effect on the fixed cardinal symptoms of NIH evaluated by the IHS a composite score.

If this efficacy and safety profile is replicated in the ongoing phase III Cypress study, we believe ample occitan will bring compelling value to patients and caregivers.

So let's talk more about Cyprus on slide 10, and.

In the past, we've described ample occitan mechanism of action and why it's particularly well suited to address the symptoms of NIH and MSA patient.

<unk> works on intact, peripheral nerves and MSA patients to raise endogenous norepinephrine levels.

With an approximate one five fold increase after four weeks of administration as shown in our prior clinical trials.

What's the particular importance is the impact that ample occitane treatment showed on standing systolic blood pressure in study 170.

Patients with neurogenic O H experienced persistent decreases in blood pressure upon sitting or standing, which often leads to debilitating symptoms, which impact their sense of independents and their quality of life.

As a norepinephrine reuptake inhibitor ample occitane and restores vascular town and has increased blood pressure by increasing the endogenous norepinephrine, thereby impacting symptoms with a reduced potential to impact blood pressure during the resting state.

After 22 weeks of treatment in study 170, <unk> was able to prevent blood pressure decrease in patients remaining on therapy for those entering the randomized withdrawal period on placebo saw a marked decrease in blood pressure after three minutes of standing.

Finally in the same study patients receiving ample occitane experienced an improvement of one six points relative to placebo on the IHS a symptom composite score, which was nominally statistically significant as well as clinically significant.

Together, we believe Cypress has potential for technical success lands at the upper end of the range of studies conducted in rare and neurological diseases in recent years.

Moving to the bottom of the slide I'll briefly recap amp of OXXO teams regulatory outlook as a reminder, the phase III study 170 included patients with MSA, Parkinson's disease and pure autonomic failure.

Upon completion of study 170, the company held a type C meeting with the FDA to discuss the pre specified analysis of MSA patients.

<unk> agreed with both our interpretation of the 170 study results and the proposal to use our HSA composite score as the primary endpoint for Cypress.

In addition, given the results of $1 70, and the seriousness of NIH and MSA. The FDA agreed that we could meet the substantial evidence standard required for full approval with one additional successful well controlled trial.

Cypress.

Finally, we believe it's important to understand that we have already completed the substantial body of work necessary to file an NDA for <unk> team should cypress be successful.

Thus, we believe that the time from topline disclosure to filing and potential approval could be expedited.

Before I turn it over to Rhonda I'd like to say a few words about my upcoming departure from the company.

I am committed to ensuring a seamless transition to the new head of development on your Miller and I am genuinely thrilled for Anya and fully support our appointment I will continue with the company through early 2024 with several deliverables, including the readout of the pepper to topline results and capitalizing on the current momentum we have with Cypress, while then transitioning the account.

The ability to Anya.

Thank you Rick Winningham for his trust and Mentorship to the colleagues and friends I've worked with over the past eight years and to our external stakeholders for your support and confidence in the company I am optimistic about the path ahead in the future success of <unk> Biopharma.

Now I will turn the call over to Rhonda to discuss recovery.

Thanks, Craig.

Let's begin on slide 12, with a snapshot of your tolerance value to their events.

I will cover in greater detail in a moment <unk> enjoyed another successful quarter of growth.

This last 12 months sales to approximately $216 million.

As we always note their vans is entitled Q.

35% of your colleagues profits through our collaboration with DHS.

In addition to the direct contribution of <unk> profits in the U S. We also stand to achieve potential E calorie value through milestones and royalties to our relationship with CHS.

One important source of this value is in China and adjacent territories, whether it be interest just completed a successful phase III registration enabling study.

This study for which we plan to make additional details available. Shortly demonstrated you tolerate a strong lung function benefits and the advantages of Lama therapy is foundational for the maintenance treatment of COPD.

On the basis of these results our partners at Beatrix plan to file for approval in China in mid 2024.

Andrew receive up to $45 million in milestone payments associated with <unk> monotherapy as well as low double digit tiered royalties on sales in these territories.

Turning to slide 13, you can see the continuation of <unk> net sales performance with total sales up 9% year on year, and 6% quarter on quarter to $58 3 million.

We have an implied 35% share of net sales for <unk> during the third quarter of 2023 was $24 million.

This represents the highest level of sales achieved since launch.

From growing demand generation in both the hospital and community settings.

We believe that this is a direct result of our strategic initiatives, including educating on concomitant use of <unk> with a lava transition of care coordination and fulfillment support which we see impacting important key performance indicators internally.

On slide 14, I'll cover our hospital performance, which remains strong and consistent relative to previous quarters.

As we continue to note the hospital point of care is a strategic catalyst for the higher persistency community UW tolerate.

Accounting for a smaller percentage of the total business.

Many patients with COPD experienced an acute respiratory episodes serious enough to require a trip to the hospital at which time caregivers may consider switching to we're adding new calorie as part of a treatment regimen.

Thus our ability to generate demand in the hospital setting has a meaningful and growing impact on subsequent <unk> prescribing in the community setting.

As you can see on the right hand side of the graph.

Q3 hospital doses represents the highest quarterly volume of new power units sold since launch and increased 41% year over year.

Turning to slide 15, you can see that our hospital performance translated into another improvement in <unk> overall share of the hospital based long acting <unk> market.

Year over year, we improved nearly three percentage points to 16, 1% overall.

As we have indicated in the past this metric reflects the progress we are making both in terms of the number of accounts that have placed <unk> on formulary as well as our team's success and supporting on that protocol implementation and therapeutic interchange adoption.

These initiatives are the foundation of our transition of care strategy, and we've achieved a higher market share in those hospitals, where we have successfully implemented these programs.

Consistent with past quarters.

You already have patients receiving <unk> in the hospital during the quarter received a prescription at discharge to continue empowering in the community setting.

Turning to our market share development in the community setting on the right hand side of the slide it is much the same story.

At 32% quarterly <unk> long acting them market share represented an all time high and an improvement of over a percentage point sequentially.

Picking up on this performance on slide 16, the combined efforts of Darrow Manson via trends drove another solid performance in the retail channel, which represents approximately 40% of overall community volume.

As depicted on the left hand side of the slide total prescription growth at retail accelerated slightly to 9% sequentially and 30% year on year.

While prescriptions filled at retail remain our best realtime metric to gauge total community demand trends.

<unk> medical equipment or <unk> fulfillment still accounts for a larger portion of overall community volume and our ability to report trends lagged a quarter behind in reporting due to the Medicare part B adjudication process.

As such retail activity alone may not be indicative of that sales performance in any given quarter due to a number of factors, including inventory, which we've experienced from time to time.

Turning to our new to product performance on the right hand side volumes declined 4% quarter on quarter, but grew 40% year on year.

While overall <unk> exhibit only modest seasonality. This particular figure tends to fluctuate more significantly due to the seasonal factors as we seek as seen with other respiratory therapy trends in the market.

Such as exacerbation frequency, which in turn correlates with hospital and doctors office visits and potential therapy modifications.

Based on the continued success of our recently introduced commercial initiatives as well as internal performance indicators, we would expect to see continued strong results in the fourth quarter.

We also remain excited about the potential growth opportunities for the overall <unk> brand going into 2024 and beyond.

The golf report treatment recommendation of Ramen therapy being foundational in addition to our concomitant use messaging provides continued opportunities for <unk> to be considered as a switch or add on therapy within the existing long acting <unk> market.

Although there remains a sizable population of COPD patients, who could benefit from <unk>, including does inappropriate Lee using short acting agents as maintenance therapies as well as patients who remain uncontrolled on handheld only maintenance regimens with the latter patient population being the focus of our <unk>.

Part two study.

So the next milestone for the China opportunity will be seven five if the China regulatory authority has approved the product.

And then in addition to the development and sales milestones, we have low double digit tiered royalties in China.

Outside of China, which I think is probably going to be a bit of a smaller opportunity. We're actually already getting low double digit to mid teen royalties. We have a little we had won recognized Q4 of last year, we have a tiny bit each quarter, but they are they.

They are pretty much immaterial I would focus most of.

Our modeling on the China opportunity.

Great. Thank you.

Thank you.

One moment for questions.

Our next question comes from Douglas Tsao with H C. Wainwright you May proceed.

Hi, good afternoon. Thanks for taking the question so just.

Maybe starting on your salary.

<unk>.

We saw.

This quarter.

A new high in terms of your hospital market share at 16, 1%, but if I look at it.

Just sort of hospital sales in terms of doses. It looks like it was relatively flat to the first quarter. So can you maybe just help us understand some of those dynamics because if I look at the share versus the fourth quarter Youre up like 120 basis points. So some really nice performance. There. So just what's going on in the <unk>.

Overall market.

Yes.

Ron do you want to describe the Q1 and then.

Yeah Q3, yes.

Recall Q1 was definitely on the high performance quarter for the hospital business.

Certainly we had some situation associated with the challenges and short octane shortages.

I think certainly contributed a bit to that.

As well as what we typically experience in Q3 of each year seasonally is the lower kind of.

Opportunity and what is reflected with reduction in exacerbations reduction in hospital.

Admissions as well as even doctor appointments for these patients it's typically the lower the.

Year.

To look at the growth that certainly hasnt returned within this quarter and seen that build over time.

Two successful quarters again as the first half of the year I'm very pleased to see the market share continue to grow this being built off of the continued acceptance and adoption.

The protocol and formulary approvals both in systems as well as individual accounts team has been able to accomplish that continuing to contribute to this ongoing bill across.

On the hospital business for the teams is that contributing to the 16, 1% market share.

Okay and.

As a follow up when we look at the retail side and I know that's not necessarily what you have as much focus on.

We saw really nice quarter on quarter growth at 9%, we did see a slight decline in terms of the new product Rx. So just help us understand.

Or put some context around that trend.

Yeah. So.

The retail is certainly continuing to occur for those patients that had already received or have been prescribed in the prior quarter. So the Trs is continuing to build which I think you already appreciate that growth, but looking at the metric or the indicator associated with new product I'm seeing that typically.

<unk> to be lesser foremost respiratory products as I mentioned earlier Q3 is typically for us certainly the lower quarter.

Okay.

Rhonda are most of the retail scripts originating from hospitalization. So.

We still see a majority of patients that are exposed to you with pillory during in their inpatient stay which I'll remind you. This for a shorter persistency it averages around three five days per se.

And those patients exiting the majority are leaving with a script in hand to be prescribed in the outpatient or maintenance care city.

Okay.

Thank you so much.

Thank you and as a reminder to ask a question. Please press star one on your telephone.

One moment for questions.

Our next question comes from Evo Privitera with TD Cowen you May proceed.

Hi, congrats on the great quarter, and thanks for taking our questions.

I have a question about your <unk> can you maybe talk about <unk> growth trends in that.

<unk> segment versus retail.

It's the larger portion.

Sure.

How are you and your partners thinking about.

Within that segment.

Yes.

Yeah go ahead, yeah. So.

Already reflected and in the.

In the call.

The challenge with that particular view not being real time or Danny it's due to the adjudication process associated with Medicare part D scripts and that lags approximately a quarter. So the best I can reflect on performance for you in its totality is.

In contrast to Q2 performance. So the Dms space grew approximately 6% in Q2 and I'll contrast that to what we reported in the retail space, which was 8% for Q2.

Unfortunately, I don't have the latest.

You to offer other than we continue to focus.

And ensure that for patients that are being supported in sell through that channel.

The best possible support to ensure that that progress is moving as quickly as possible and equating to the highest level of test helmet, regardless of where they choose to to go whether that CME or conventional retail.

Thanks Rhonda.

Follow up question on the preferred two trial assuming that the trial is successful since these patients are already on label.

With publication of the data be gating to driving uptake in what would be the potential timeline for publication.

I can take that Rick Yes go ahead.

So yes, you hit the guiding factor.

Had on publication is vastly important and the team will move as expeditiously as possible to ensure we have published and the highest standard peer reviewed journal. So that we will then have the ability to educate on those data.

Great. Thank you and given the variability on timelines associated with individual peer review journals I can't really speak to specifically.

Thank you.

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.

Yes. Thank you very much I'd like to thank everyone for joining us today.

We're pleased with the progress that we made this quarter, we look forward to continuing that progress in the fourth quarter and into 2024, as we really align resources behind the two growth drivers of the company.

<unk> team. So thank you very much for joining us and have a great day.

Thank you. This concludes today's conference call. We thank you for your participation you may now disconnect.

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