Q1 2024 Theravance Biopharma Inc Earnings Call

Okay.

Ladies and gentlemen, good afternoon.

Operator: Ladies and gentlemen, good afternoon. I'd like to welcome everyone to Theravance Biopharma. [inaudible] During the presentation. All participants will be in a listen-only mode. This question and answer session will follow the company's formal remarks. To ask a question, press start, followed by the digit 1-1 on your phone.

Everyone.

Biopharma first quarter 'twenty 'twenty four conference call.

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

Speaker Change: A question and answer session will follow the company's formal remarks.

Speaker Change: Ask a question press Star key followed by the digit one one on your phone.

Operator: Again, that's star number one one to ask a question. Please mute the audio on your webcast or ask a question over the phone. Please repeat the instructions after the management completes their prepared remarks. Today's car.

Speaker Change: In the Star one one to ask a question.

Speaker Change: He is listening via webcast. Please mute audio on your webcast device before asking a question over the phone.

Speaker Change: I will repeat the instructions after the management completes their prepared remarks.

Speaker Change: Also today's conference call is being recorded.

Rick E. Winningham: And now, I would like to turn the call over to Rick Winningham, Chief Executive Officer. Good afternoon, and welcome to Theravance Biopharma's first quarter 2024 earnings results conference call. On slide two, you'll find our Safe Harbor language. And I'd remind everyone that what we call today will include forward-looking statements involving risks and uncertainties pertaining to our development pipeline, expected benefits of our product candidate, 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. Now, please turn to slide three.

Speaker Change: Now I would like to turn the call over to Rick Winningham, Chief Executive Officer. Please go ahead Sir.

Rick E. Winningham: Good afternoon and welcome.

Rick E. Winningham: Because joining me today on the call today are Adya Miller, our Head of Development, Rhonda Farnum, Theravance's Chief Business Officer, and Aziz Sawaf, our Chief Financial Officer. Next, on slide four, I'll begin with a recap of our first quarter highlights before turning the call over to the rest of the team. As you can see on the left side of the slide, we made good commercial progress with Upelri during the quarter, achieving $55.2 million in net sales in partnership with Viatrix. This translates into 18% year-on-year growth.

Rick E. Winningham: Welcome to <unk>.

<unk> first quarter 2024 earnings results conference call on slide two you'll find our safe Harbor language.

Rick E. Winningham: And I'd remind everyone that our call today will include forward looking statements involving risks and uncertainties pertaining to our development pipeline expected benefits of our product candidate anticipated timing of clinical trials regulatory filings and expected financial results.

Rick E. Winningham: Formation concerning factors that could cause results to differ materially from our forward looking statements.

Rick E. Winningham: As described further in our filings with the SEC now please turn to slide three.

Rick E. Winningham: Because joining me today are today joining me on the call today are argue Miller, our head of development.

Speaker Change: Rob the Farnham Fair Vance as Chief business Officer, and Z swap, our Chief Financial Officer.

Speaker Change: Next on slide four I'll begin with a recap of our first quarter highlights before turning the call over to the rest of the team.

As you can see on the left side of the slide we've made good commercial progress with <unk> during the quarter, achieving $55 2 billion of net sales in partnership with via trusts. This translates at the 18% year on year growth.

Speaker Change: Our team at their events got off to a terrific start this year in the hospital setting again, achieving another all time high in terms of hospital doses sold in the quarter up 31% from the prior year.

Rick E. Winningham: Our team at Theravance got off to a terrific start this year in the hospital setting again, achieving another all-time high in terms of hospital doses sold in the quarter, up 31% from the prior year. In addition, we continue to expect our partners at Viatris to complete a regulatory filing for upholery in China by mid-year, based on the strong Phase III results announced last November. Turning to Amproloxetine, in the middle of the slide, we're very excited to be hosting a dedicated virtual investor event on May 23 at 10am Eastern. We are two thought leaders in the field of autonomic dysfunction, and our team at Theravance will discuss the compelling science behind Amber Lockstein's opportunity to address the unmet need in NOH and MSA patients.

Speaker Change: In addition, we continue to expect our partners via trusts to complete our regulatory filings for you Pal, Oregon, China by mid year based on the strong phase III results announced last November.

Speaker Change: Turning to <unk> in the middle of the slide we're very excited to be hosting a dedicated virtual investor Torbay 23rd at 10, a M. Eastern were to thought leaders in the field of autonomic dysfunction as.

Speaker Change: As well as our team at their events will discuss the compelling science behind the <unk> needs opportunity to address the unmet.

Speaker Change: <unk> and NIH and MSA patients.

Rick E. Winningham: We continue to work diligently to complete the Registrational Phase III Cypress Study, with the last patient planned to be enrolled in the second half of this year, as well as put in place the regulatory and commercial framework that will enable Theravance to make amproloxetine available quickly and broadly should Cypress be successful. Finally, we delivered another strong order of financial performance driven in equal parts by good upell regrowth and expense management. Despite experiencing some seasonal transitioning from quarter four to quarter one, which is typical of the pharmaceutical business, we realized a limited cash burn, ending the period with 100 million in cash and no debt.

Speaker Change: We continue to work diligently to complete the Registrational phase III Cypress study with the last patient planned to be enrolled in the second half of this year as well as put in place the regulatory and commercial framework that will enable fair events to make <unk> available available quickly and broadly you should see.

Speaker Change: For us be successful.

Speaker Change: Finally, we delivered another strong quarter of financial performance driven in equal parts by good <unk> growth and expense management.

Despite experiencing some seasonal transitioning from quarter four to quarter wallet, which is typical of the pharmaceutical business, we realized a limited cash burn ending the period with $100 million in cash and no debt.

Rick E. Winningham: As Aziz will discuss later, Trellogy turned in a fantastic performance, which makes us increasingly optimistic about the value that that product stands to deliver to Theravance shareholders in the future. Turning to slide five, I'll briefly touch on how our strategic imperatives position Theravance to deliver compelling value to shareholders over both the near and the long term. We have a detailed plan in place to continue Upelleri's growth for the foreseeable future while still delivering on expanded profitability and cash returns to the company. Over the past 12 months, US upholstery sales have increased 12% to $229 million, while the collaboration revenues we recognize from Beatrice have increased 27%.

Speaker Change: As as these will discuss later trilogy turned in a fantastic performance, which makes us increasingly optimistic for the value that that product stance to delever to <unk> shareholders in the future.

Speaker Change: Turning to slide five I'll briefly touch on how our strategic imperatives position their advanced to deliver compelling value to shareholders over both the deer in the long term.

Speaker Change: We have a detailed plan in place to continue <unk> growth for the foreseeable future, while still delivering on expanded profitability and cash returns to the company over the past 12 months Usu calorie sales have increased 12% 229 million while the collaboration revenues we recognized from via Trust.

Speaker Change: And increased 27%.

Rick E. Winningham: We are expecting top-line data from the CIPHR study in 2025, and if successful, we'll act decisively with our regulatory and pre-commercialization strategies in order to bring about Amprolox Team's successful filing and launch. As Aziz will also discuss, we will execute this strategy while deploying our capital in a way that maintains the company's strong financial position throughout. We believe we are well-positioned to achieve significant milestones in the coming years, as well as meaningful royalties on Upelleri and Trilogy in the future. With that, I'd like to turn the call over to our Head of Development, Anya Miller, who will provide some brief comments on Amproloxetine. Anya?

Speaker Change: We are expecting top line data from the Cypress study in 2025, if successful we will act decisively with a regulatory and pre commercialization strategies in order to bring about <unk> successful filing and launch.

Speaker Change: Is this these will also discuss we will execute this strategy, while deploying our capital in a way that maintains the company's strong financial position throughout.

Speaker Change: We believe we are well positioned to achieve significant milestones in the coming years as well as meaningful royalties.

Speaker Change: <unk> and trilogy in the future.

Speaker Change: With that I'd like to turn the call over to our head of development on the Miller, who will provide some brief comments on <unk> on year.

Miller: Thanks, Rick.

Aine Miller: Thanks, Rick. As Rick indicated, I'm going to keep my comments brief this afternoon, recognizing that in a short 10 days, we'll be providing an extensive overview of the Amperloxidine program, including our ongoing registrational study, Cypress, and how we are seeking to address the unmet need for MSA patients with symptomatic NOH. In Cypress, we continue to activate sites and progress enrollment. We are closely engaged with these sites in order to enroll the right patients and ensure data quality.

Miller: Rick indicated I'm going to keep my comments brief this afternoon, recognizing that in a short 10 days, we'll be providing an extensive overview of beyond productivity program, including our ongoing Registrational study Cyprus and how we are seeking to address the unmet need for MFA patients with symptomatic <unk>.

Miller: In fiber, we continue to activate sites in progress enrollment we are closely engaged with new sites in order to enroll the right patients and ensure data quality. We continue to be pleased with our progress and maintain the expectation of completing enrollment of the open label portion of the study during the second half of the year.

Aine Miller: We continue to be pleased with our progress and maintain the expectation of completing enrollment in the open-label portion of the study during the second half of the year. Also, we continue to prepare for our possible NDA filing shortly on the heels of learning the Cypress results. As we have discussed in the past, we have generated much of the data required for other elements of this mission beyond the Cypress data and are already in the process of altering the NDA.

Miller: Also we continue to prepare for a possible NDA filing shortly on the heels of learning the Cypress results.

Miller: As we have discussed in the past we have generated much of the data required for other elements of information beyond the Cypress data and are already in the process of author in the NDA.

Aine Miller: Finally, given our decision to work directly with these investigators and sites who treat substantial numbers of MSA patients with symptomatic NOH, we are able to coordinate with our analytics and market access teams in order to begin positioning Ampriloxetine for broad availability should Cypress be positive. On slide 8, you'll see the details of the upcoming investor event on May 23rd to discuss the role Amperloxidine stands to play in addressing the unmet need in MSA patients with NOH. It's a virtual event, and it begins at 10am Eastern.

Miller: Finally, given our decision to work directly with these investigators and sites to treat Samsung umbrella MSA patients with symptomatic <unk>, we are able to coordinate with our analytics and market access teams in order to begin positioning umbrella sitting for broad availability cypress be positives.

Miller: On slide eight Youll see the details of the upcoming Investor event on May 20, <unk> to the bulk of the rollout of <unk> tend to play in addressing the unmet need in MSA patients within a range, it's a virtual events and up against the 10 a M. Eastern we have prepared remarks, roughly the first 60 minutes before opening it up to a question and answer session.

Aine Miller: We have prepared remarks for roughly the first 60 minutes before opening it up to a question and answer session. I'd encourage those listening to sign up and participate in the session, and come prepared to ask questions of our key opinion leaders, Dr. Horacio Coffman and Dr. Italo Biagio, who have agreed to share their insights. We believe this will be an informative session that sets the stage for the countdown to Cypress Data in 2025. With that, I'll turn the call over to our Chief Business Officer, Rhonda Farnum, who will cover our utility performance during the course. Rhonda

Miller: I'd encourage those listening to sign up and to participate in the fashion and come prepared to ask questions of our key opinion leader, Dr. Horacio Kaufman and Dr. Inflow, Biagio, who have agreed to share their insights.

Miller: We believe this will be an informative session that sets the stage for the kinds of times of Cypress data in 2025.

Speaker Change: With that I will turn the call over to our Chief business Officer runs Farnham, we'll cover on your salary performance during the fourth Rhonda. Thanks.

Rhonda F. Farnum: Thanks Anya. Beginning on slide 10, I'm pleased to report that the Theravance Beatrice Commercial Partnership finished the first quarter of 2024 with net sales reaching $55.2 million, having driven, you probably know, year over year, net sales growth of 18% and a continued increase in profitability. As Rick mentioned earlier, we have traditionally experienced seasonal dips in reporting net sales as we transition from the fourth quarter to the first quarter of the following year.

Farnham: Thanks Tanya.

Rhonda: Beginning on slide 10, I am pleased to report that there has to be interest commercial partnership finished the first quarter of 2024 with net sales, reaching $55 2 million, having German <unk> year over year net sales growth of 18% and a continued increase in profitability.

Rick Farnham: As Rick mentioned earlier, we have traditionally experienced seasonal depth in.

Rick Farnham: And reported net sales as we transition from the fourth quarter to the first quarter of the following year.

Rhonda F. Farnum: Based on the success we are delivering in the hospital channel and in view of early demand and retail data from April, we remain optimistic about Upelry's continued growth in 2024. Moving to slide 11, I'm also very pleased to share with you the exceptional finish to the quarter our hospital team was able to deliver. Hospital doses shipped in the first quarter increased 31% year over year.

Rick Farnham: Based on the success, we are delivering in the hospital channel.

Rick Farnham: And the view of early demand and retail data from April when you remain optimistic part <unk> continued growth in 2024.

Rick Farnham: Moving to slide 11, I'm also very pleased to share with you the exceptional finish to the quarter. Our hospital team was able to deliver.

Rick Farnham: Hospital doses shipped in the first quarter increased 31% year over year.

Rhonda F. Farnum: This was yet another high-volume quarter for the hospital business. Our goal continues to be to increase the number of patients exposed to Upelry during hospitalization who are then discharged on Upelry as maintenance patients. This is achieved by continuing to gain support for formulary inclusion, implementing hospital protocols involving all nebulization strategies and therapeutic interchanges, and equally important, the HIFAC Transition of Care Program. Our market research continues to demonstrate that the vast majority of patients who initiate upillary care in the hospital setting also receive a prescription for upillary maintenance care when leaving the hospital. It is through the execution of this strategy that our small, targeted, and focused commercial organization is able to make a considerable contribution to the overall cupelry business, both directly and indirectly.

Rick Farnham: This was yet another month to date high volume quarter for the hospital business.

Rick Farnham: Our goal continues to be to increase the number of patients exposed to <unk> calorie. During hospitalization here then discharged on <unk> as maintenance patients.

Rick Farnham: This is achieved by continuing to gain support for formulary inclusion implementing hospital protocols involving our NAV utilization strategy and therapeutic interchanges and equally important.

Rick Farnham: Our high touch transition of care program.

Our market research continues to demonstrate that the vast majority of patients to initiate yukari in the hospital setting also receive a prescription for <unk> maintenance chairman, leaving the hospital.

Rick Farnham: It is with the execution of this strategy that are small targeted and focused commercial organization is able to make a considerable contribution to the overall <unk> business, both directly and indirectly.

Rick Farnham: Turning to slide 12 on the left side you can see our efforts impact on the hospital market share.

Rhonda F. Farnum: Turning to slide 12, on the left side, you can see our efforts impact on the hospital market share. During the quarter, our share of the long-acting NEM market in the hospital segment was steady at 16.6%, and we are encouraged by the April data, which suggests further growth to roughly 18% share so far in Q2. On the right side of the slide, UPL re-maintained an approximately 31% share in the community.

Rick Farnham: During the quarter, our share of the long acting <unk> market in the hospital segment with a steady at 16, 6% and we are encouraged by the April data, which suggests further growth to roughly 18% share so far in Q2.

Rick Farnham: On the right side of the slide.

Rick Farnham: <unk> maintained an approximately 31% share in the community as a reminder, the total community has a three months lag due to the must be adjudication process. So we only have Q1 data through January of this year.

Rhonda F. Farnum: As a reminder, the total community view has a three-month lag due to the MedB adjudication process, so we only have Q1 data through January of this year. We continue to gain traction with our concomitant therapy messaging, which taps into the significant number of COPD patients who remain symptomatic on LABA therapy and could benefit from the addition of a LAMA. Llama therapy is foundational in the treatment of COPD, and current gold report guidelines recommend dual lava llama treatment for category B and E patients.

Rick Farnham: We continue to gain traction with our concomitant therapy messaging, which taps into the significant number of COPD patients who remain symptomatic on LABA therapy and could benefit from the addition of a llama.

Llama therapy is foundational in the treatment of COPD and current gold report guidelines recommend dual llama llama treatment for category B and <unk> patients.

Rick Farnham: Turning to the retail channel view on slide 13.

Rhonda F. Farnum: Turn to the retail channel view on slide 13, where we have our most real-time and current demand view outside of the hospital channel. I will once again remind you that when we share our quarterly results, we do not have a completed data capture of the fulfillment in the DNA channel, which accounts for approximately 55% of our total community business. Because retail, which accounts for the other 45%, generally correlates with total community fulfillment over time, we have historically offered this view. So looking at the left side of the slide, retail prescriptions declined 9% during the quarter.

Rick Farnham: Where we have our most real time and current demand view outside of the hospital channel.

Once again I remind you that when we share our quarterly results. We do not have a completed data capture for fulfillment and the DNA channel, which accounts for approximately 55% of our total community business.

Because retail which accounts for the other 45% generally correlates with total community fulfillment overtime, we have historically offered this year.

Rick Farnham: So looking at the left side of the slide retail prescriptions declined 9% during the quarter.

Rhonda F. Farnum: While we're still in the process of evaluating, we believe that the lower retail volume in Q1 was possibly exacerbated by a cyber incident at Change Healthcare, which is a subsidiary of United Health Group and a processor for nearly 50% of medical claims in the U.S. Looking to the right side of the slide, we saw a 3% dip in new product starts in Q1. In addition to some expected impact from the Change Healthcare cyber incident, it is not atypical for this metric to experience quarter-to-quarter variability.

Rick Farnham: While we're still in the process of evaluating.

Rick Farnham: We believe that the lower retail volume in Q1 was possibly exacerbated by a cyber incident and change healthcare, which is a subsidiary of United Health Group and a processor for nearly 50% of medical claims in the U S.

Rick Farnham: Looking to the right side of the slide we saw a 3% dip in new product starting in Q1.

Rick Farnham: In addition to some expected impact from the change healthcare cyber incident. It is not atypical for this metric can experience quarter to quarter variability.

Rhonda F. Farnum: Similar for both total prescriptions and new product starts, we expect both metrics to return to growth in Q2. Finishing on slide 14, we think it is important to highlight the unique and compelling value proposition we offer patients and caregivers as the only once-daily nebulized long-awaited maintenance treatment of COPD. Upelri has demonstrated consistently meaningful lung function benefits, is typically available at low out-of-pocket costs, and requires only a few minutes to administer once per day.

Rick Farnham: Similar for both total prescriptions and new product starts we expect both metrics to return to growth in Q2.

Rick Farnham: Finishing on slide 14, we think it is important to highlight the unique and compelling value proposition, we offer patients and caregivers as the only once daily nebulizer AMA for maintenance treatment of COPD empowering has demonstrated consistently meaningful lung function benefits is typically available at low out of.

Rick Farnham: Pocket cost and requires only a few minutes to administer once per day.

Rick Farnham: As such we believe <unk> plays a key role in the COPD market, where there remains a substantial opportunity to reach patients who could benefit from <unk>.

Rhonda F. Farnum: As such, we believe upelry plays a key role in the COPD market, where there remains a substantial opportunity to reach patients who could benefit from upelry. Our go-to-market strategy aligns with this profile, which we believe is why Upelri is only one of three branded COPD maintenance therapies in the U.S. delivering consistent growth. Looking ahead, we expect to achieve continued growth and value creation for upillary driven by continued penetration of the US maintenance COPD market and the potential launch of upillary in China. Lastly, in the U.S., where we are eligible to receive a one-time sales milestone of $25 million from Viatris if 1-year Pell-Re-Net sales reach $250 million in any calendar year.

Rick Farnham: Our go to market strategy aligns with this profile, which we believe is Y E. Salary is only one of three branded COPD maintenance therapies in the U S delivering consistent growth.

Rick Farnham: Looking ahead, we expect to achieve continued growth and value creation for <unk> driven by continued penetration of the U S maintenance COPD market and the potential launch of new tolerate in China.

Rick Farnham: Lastly in the U S, where we are eligible to receive a one time sales milestone of $25 million from Beatrice <unk> net sales reached $250 million in any calendar year.

Rhonda F. Farnum: In China, where Beatrice is planning to file for regulatory approval by the middle of this year, we are eligible to receive a $7.5 million milestone upon approval, as well as additional sales milestones and upwardly tiered royalties of between 14% and 20%. That brings us to the end of the Pellery update, so I will turn things over to Aziz to cover our financials.

Rick Farnham: In China, we are Beatrice is planning to file for regulatory approval by the middle of this year, we are eligible to receive a $7 5 million milestone upon approval as well as additional sales milestones and upwardly tiered royalties of between 14 and 28%.

Speaker Change: That brings us to the end of the pillory update so I will turn things over to <unk> to cover our financials.

Speaker Change: Thanks, Rhonda starting off with the results for the quarter Slide 16, and 17 cover the detailed financials I'll briefly cover the highlights on slide 18.

Aziz Sawaf: Thanks, Rhonda. Starting off with the results for the quarter, slides 16 and 17 cover the detailed financials. I'll briefly cover the highlights on slide 18. Starting with collaboration revenue, we reported $14.5 million, representing year-over-year growth of 39%, driven by utility net sales growth and improved operating margins. For the quarter, both our operating expense and non-gap loss metrics were in line with expectations, reflecting meaningful improvement compared with Q1 of 2023. Moving forward into the year, operating expenses will increase slightly over the next couple of quarters as Cypress enrollment continues to accelerate, and we begin to incur Amperloch's team pre-launch commercialization costs in the second half of the year. We closed the period with 100 million in cash and approximately 48.6 million shares outstanding.

Speaker Change: Starting with collaboration revenue, we reported $14 5 million representing year over year growth of 39% driven by <unk> net sales growth and improved operating margins for.

For the quarter, both our operating expense and non-GAAP loss metrics were in line with expectations, reflecting meaningful improvement compared with Q1 of 2023.

Speaker Change: Moving forward into the year operating expenses will increase slightly over the next couple of quarters.

Speaker Change: Cypress enrollment continues to accelerate and we begin to incur ampere lock screen prelaunch commercialization costs in the second half of the year.

Speaker Change: We closed the period with $100 million of cash and approximately $48 6 million shares outstanding.

Speaker Change: On slide 19, I will provide an update on a potential third milestones from trilogy.

Aziz Sawaf: On slide 19, I'll provide an update on our potential to earn milestones from Trilogy, noting that GSK delivered another excellent quarter of growth, again beating consensus. Quarterly net sales reached $749 million, up 32% year over year.

Speaker Change: But GSK delivered another excellent quarter of growth again, beating consensus estimates.

Speaker Change: Quarterly net sales reached $749 million up 32% year over year.

Aziz Sawaf: This quarter's results reinforce our belief that we are well positioned to achieve at least one milestone in 2024, with run rate now trending above the first 25 million milestone threshold of approximately 2.9 billion of net sales, and Runrate approaching the second 25 million milestone threshold of approximately 3.2 billion of net sales. Moving to slide 20, trial use performance also strengthens our confidence in achieving milestones in 2025 and 2026. Relative to an annual run rate of approximately $3 billion based on Q1 net sales, we need only minimal growth to achieve the lower end of the milestones, shown on the slide in orange, and modest growth to achieve the higher end of the milestones, shown on the slide in green.

Speaker Change: This quarter's results reinforce our belief that we are well positioned to achieve at least one milestone in 2024.

Speaker Change: With run rate now trending above the <unk> $25 million milestone threshold of approximately $2 9 billion of net sales.

Speaker Change: And run rate approaching the second $25 million milestone threshold of approximately $3 2 billion of net sales.

Speaker Change: Moving to slide 20, <unk> performance also strengthens our confidence in achieving milestones in 2025 and 2026.

Speaker Change: Relative to annual run rate of approximately $3 billion based on Q1 net sales.

Speaker Change: We need only minimal growth to achieve the lower end of the milestones shown on the slide in Orange and modest growth to achieve the higher end of the milestones shown on the slide in green growth rates. The trilogy is currently exceed it.

Aziz Sawaf: Growth rates the trilogy is currently exceeding. As a reminder, we have 50 million potential milestones in 2024 and 2025, which will increase to 100 million potential milestones in 2026, for a total of 200 million potential milestones. Lastly, turning to financial guidance on slide 20, we are reiterating all financial guidance methods. With that, I'll pass it back to Rick to conclude. Rick.

Speaker Change: As a reminder, we have $50 million of potential milestones in 2024 and 2025.

Speaker Change: Which increased to $100 million of potential milestones in 2026 for a total of $200 million of potential milestones.

Speaker Change: Lastly, turning to financial guidance on Slide 20, we are reiterating all financial guidance metrics.

Speaker Change: I'll pass it back to Rick to conclude Bret.

Rick: Thanks disease, I'll wrap up our comments on slide 21, and simply remind you of the Companys current strategic focus we continue to identify and capitalize on <unk> growth opportunities in partnership with via trust, while remaining disciplined with our expense base in order to maximize its value in the.

Rick E. Winningham: Thanks, Aziz. I'll wrap up our comments on slide 21 and simply remind you of the company's current strategic focus. We continue to identify and capitalize on Upelri's growth opportunities in partnership with Vietras while remaining disciplined with our expense base in order to maximize its value. In the U.S., we look forward to continuing to make a significant contribution to our hospital-based commercial organization. While outside the U.S., our model is to rely on Vietra's infrastructure, and we are particularly excited for UPowery's potential filing and approval in China at our May 23rd investor event, as well as in the coming months. We look forward to sharing much more about this investigational therapy. Amber Lockstein and its progress.

Rick: We look forward to continue continuing to make a significant contribution through our hospital based commercial organization, while outside the U S. Our model is to rely on <unk> infrastructure, and we are particularly excited for <unk> potential filing and approval in China.

At our May 23rd Investor event, as well as in the coming months, we look forward to sharing much more about this investigational therapy.

And for <unk> and its progress.

Operator: Finally, we have the resources to deliver. With 100 million in cash, no debt, significant near-term milestones, and modest cash demands, we believe Theravance is positioned for success. With that, I'll thank you for your time and turn the call back to the operator. Operator. Thank you, sir. Once again, if you would like to ask a question, you may do so by pressing star- followed by the digit one, digit one, on your touchtone phone, listening via web, Please mute audio on your webcast, or asking a question over the phone. If you're using a speaker, please make sure that your mute function is turned off to allow your signal to be transmitted.

Rick: Finally, we have the resources to deliver with a $100 million in cash no debt significant near term milestones and modest cash demands. We believe <unk> is positioned for success.

Speaker Change: With that I'll. Thank you for your time.

Speaker Change: The call back to the operator operator.

Thank you Sir.

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

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

Speaker Change: Youre using a speakerphone for todays call. Please make sure you meet your function.

Speaker Change: Is turned off.

Speaker Change: To allow your signal to reach our equipment again star one one if you'd like to ask a question and we'll pause for a moment to assemble our roster.

Operator: 1-1-1 if you'd like to ask. Pause for a moment to assemble. And our first question comes from the line of Douglas Tsao. H.C. Wainwright.

Speaker Change: And our first question comes from the line of Douglas Tsao with H C. Wainwright.

Douglas Dylan Tsao: Hi, Good afternoon can you hear me.

Douglas Dylan Tsao: Hi, good afternoon. Can you hear me? Yes, Doug, we can hear you. I guess I'll start, Rhonda, with you in terms of retail and what you saw in the retail channel. You know, it's not uncommon to see some sort of sequential headwinds. Now that I think ChangeHealth is sort of back online, or I'm just sort of looking for to understand, I mean, from your perspective and your Pelri, is ChangeHealth sort of back online, and are all the claims being adjudicated? And do you think there were scripts that were sort of lost permanently?

Douglas Dylan Tsao: Yes, Doug we can hear you.

Rhonda F. Farnum: Or do you think that there might be some catch-up now that ChangeHealth is sort of back? Thanks, Doug. Excellent question. And certainly one we've been very focused on trying to understand. I think an aspect of the phenomenon of what was associated with change health is that we are quite aware that some of our specialty pharmacies determined that they needed to make a switch, and make a switch quickly from change to relay health as their processor.

Douglas Dylan Tsao: So.

Douglas Dylan Tsao: I guess, maybe starting Rhonda.

Douglas Dylan Tsao: With you in terms of your calorie and what you saw in the retail channel.

Douglas Dylan Tsao: <unk>.

Rhonda: It's not uncommon to see some sort of sequential headwinds.

Rhonda: Now that I think change health is sort of back on line or I'm, just sort of looking for to understand I mean from your perspective, and your calories Shanghai sort of back on line and all of the claims being.

Rhonda: Adjudicated and do you think there were scripts that were sort of lost permanently or do you think there might be some catch up at now that change out there sort of backup.

Speaker Change: Thanks, Doug excellent question and certainly one we've been very focused on trying to understand I think an aspect of the phenomenon of what was associated with change. How is we we are quite aware that some of our.

Rhonda F. Farnum: So we need to allow for more time for the view into those data to give us a better informed answer on your exact question. Did we lose those patients, or are they there? And it's just an artifact of the data capture right now, which could be highly likely. You might also comment, Rhonda, just on April. Sorry, Doug.

Speaker Change: The specialty pharmacies.

Doug: Herman do they needed to make a switch and make a switch quickly from change to relay health as their processor. So we need to allow for more time for the view into those data to give us a better informed.

Doug: Answer on your exact question did we lose those patients or are they there and it's just an artifact of the data capture right now which could be highly likely.

Speaker Change: And you might also call that Rhonda just off April sorry, Doug.

Rhonda F. Farnum: Yeah, and if you're tracking along with this, which I think is highly likely, knowing you, Doug, if you look at the April numbers, you definitely can see a rebound in the TRX and new starts for upell rates. And obviously, we'll continue to monitor that extremely closely. Okay, and again, in that rebound, you're not sure, or at this point, it's not clear to you whether that is just sort of the underlying momentum that the product has enjoyed, or whether there might be some catch-up, or maybe it's a little bit of both.

Speaker Change: Yeah.

Speaker Change: <unk>, along with us which I.

Speaker Change: <unk> is highly likely no need as.

Doug: If you look at the April numbers, you definitely can see a rebound.

Doug: The <unk> and new starts are you tolerate.

Doug: Obviously, we will continue to monitor that extremely closely.

Speaker Change: Okay, and again too in that rebound youre not sure or at this point, it's not clear to you whether that is just sort of the underlying momentum, but the product has enjoyed or whether there might be some catch up or maybe it's a little bit of balls.

Rhonda F. Farnum: It's just unfortunately a little too early to give that exact answer, which is what we want to be able to give you confidence in. Okay. Great. Thank you very much. I think that's it for me right now.

Speaker Change: It's just unfortunately, a little too early to give that exact answer which is what we want to be able to give you that confidence.

Speaker Change: Okay great.

Speaker Change: Great. Thank you very much I think thats it for me right now.

Speaker Change: Thank you one moment please for our next question.

Douglas Dylan Tsao: Thank you. One moment. And our next question comes from the line of Julian Harrison with BTI. Hi, good afternoon; congratulations on the progress and thank you for taking my questions. It's great to see the year-over-year utility growth and sequential growth on key metrics. I guess thinking about the rest of the year, you know, if utility revenue is going to continue trending upwards, you know, how soon can we expect operating margins to expand from here? Thank you. Aziz, do you want to comment on that, just on what we've seen thus far? Yeah, Hey Julian,

Speaker Change: And our next question comes from the line of Julian Harrison with BP.

Julian Harrison: Hi, good afternoon, and congrats on the progress and thank you for taking my questions and great to see the year over year, your calorie growth and sequential growth on key metrics.

Julian Harrison: I guess thinking about the rest of the year.

Julian Harrison: Yeah.

Julian Harrison: <unk> revenue.

Julian Harrison: To continue trending upwards, how soon can we expect operating margins to expand from here. Thank you.

Speaker Change: <unk> you want to comment on that just on what we've seen thus far.

Yeah, Hey, Julien.

Julian Reed Harrison: Thanks for the question. As we discussed during the last earnings call, as we set the stage, with respect to guidance for the year, we knew that we were going to hit kind of non-gap losses in the first half, which is what we saw in Q1. So, Q1 was in line with expectations.

Julien: Thanks for the question so.

Discussed during the last earnings call as we set the stage with respect to guidance for the year.

Speaker Change: We knew that we were going to hit kind of non-GAAP losses in the first time, which is what we saw in Q1. So Q1 was in line with expectations as.

Aziz Sawaf: As we think about the rest of the year, what we've guided to is that we would basically approach breakeven in the second half, so we would get close to breakeven in the second half, and that's going to be driven by a couple of things. On the expense side, as I talked about on the call, we're probably going to increase a little bit in the next couple of quarters, driven by the increased enrollment for Cypress, and then as we start to spend a little bit, not much, but a little bit in the second half around the Amperlox team prelaunch commercialization spending.

Speaker Change: As we think about the rest of the year, what we've guided to is that we would we would basically approach breakeven in the second half so get close to breakeven in the second half and thats going to be driven by a couple of things on the expense side as I had talked about on the call, we're going to probably going to increase a little bit.

Speaker Change: The next couple of quarters, driven by the increased enrollment for Cypress and then as we start to spend a little bit not much but a little bit in the second half around the <unk> team prelaunch commercialization spending so but that will be offset largely by the increased we're.

Aziz Sawaf: So, but that will be offset largely by the increase we're expecting for upellery net sales, which will increase our collaboration revenue. So we do think that the increase in collaboration revenue will offset the increase in expenses so that the non-gap loss improves throughout the rest of the year. Is that helpful, Julian?

Speaker Change: <unk> net sales, which will increase our collaboration revenue. So we do think that the increase in collaboration revenue will offset the increase to the expense so that the non-GAAP loss improves throughout the rest of the year.

Julian Reed Harrison: That's very helpful. Thank you. And then I had a quick question about Cypress.

Is that helpful Julien.

Julien: That's very helpful. Thank you and then I had a quick question on Cypress I'm wondering if there's any possibility for a data disclosure from the open label segment that could proceed randomized controlled data or are you waiting for the second phase to disclose data. Thank you very much.

Rick E. Winningham: I'm wondering if there's any possibility for data disclosure from the open label segment that could proceed, you know, randomized controlled data, or, you know, are you waiting for the second phase to disclose data? Thank you very much. Now we'll, this is Rick. We'll wait until we have the data from the randomized withdrawal period, at the conclusion of that period, to disclose the data because, you know, the primary endpoint is data in the OHSA questionnaire at the end of the randomized withdrawal. Thanks for the question. One moment, please, for our next question- And our next question comes from the line of David Rees. Leering Park, Yes, thanks very much.

Julien: Yes will this is Rick.

Wait until we have.

Rick: Data from the randomized withdrawal period.

Rick: The conclusion of that period to disclose the data because.

Rick: The primary endpoint is us data.

Rick: Oh HSA.

Rick: A question here at the end of the randomized withdrawal. Thanks for the question.

Speaker Change: Thank you one moment please for our next question.

Speaker Change: And our next question comes from the line of David Risinger with Leerink partners.

Speaker Change: Okay.

David Reed Risinger: Yes, thanks very much.

David Reed Risinger: And thank you for the various updates. So maybe sort of ignoring the incremental, Ampiloxetine, Spen, I'm hoping that Rick or Aziz could sort of paint a picture for how you see Upelri's prospects, right, assuming that it plays out on the trajectory that you're expecting, how you see its prospects for driving, you know, operating leverage for the company. And then if you could just remind us about the big milestones in the coming years, the optionality, that would be helpful as well. But, you know, I'm particularly interested in, you know, how much operating leverage Uplery can drive. Obviously, you can't quantify it, but I'm just hoping that you can paint that picture.

David Reed Risinger: And thank you for the various updates so.

David Reed Risinger: Maybe sort of ignoring the incremental.

David Reed Risinger: <unk> spend.

Speaker Change: I'm, hoping.

Speaker Change: That.

Speaker Change: Rick or Aziz that you could sort of paint a picture for.

Speaker Change: How you see you power east prospects right, assuming that it plays out on the trajectory that you're expecting how you see its prospects for driving operating leverage for the company.

Speaker Change: And then if you could just remind us about.

Speaker Change: The big milestones in coming years the Optionality.

Speaker Change: That would be helpful as well, but.

Speaker Change: I'm, particularly interested in.

Speaker Change: How much operating leverage you power it can drive.

Speaker Change: Obviously, you can't quantify it but I'm just hoping that you can paint that picture. Thank you.

Rick E. Winningham: Thank you. Yeah, thanks for the question, Dave. I'll take a brief, make a brief comment, and then turn it over to Aziz.

Speaker Change: Yes, thanks for the question, Dave ill take a brief.

Speaker Change: Make a brief comment and then turn it over to disease I mean clearly.

Rick E. Winningham: I mean, clearly, you know, with you, Pelri, we see a significant amount of operating leverage going forward in working with Vietras. You know, there are various aspects of continuing to tighten and sharpen execution sort of across the board from hospital to community, which should drive, which should drive incremental sales at off of a, you know, off of a similar expense base. So, and the fact that, as Rhonda mentioned, the concomitant therapy message is, in fact, is, in fact, taking hold, and that particular promotion is quite effective relative to resources employed. So, you know, we do expect to pick up operating leverage over time and continue to see Pelri grow from where it is. Aziz.

Speaker Change: With your Perl rate, but we see <unk>.

Speaker Change: Difficult amount of operating leverage.

Speaker Change: Going forward as well.

Speaker Change: <unk> with via trusts.

There are various.

Speaker Change: Aspects of <unk>.

Speaker Change: Continuing to tighten and sharpened.

Speaker Change: Execution sort of across the board to hospital that community.

Speaker Change: Which should drive which should drive incremental sales.

Speaker Change: Off of.

Speaker Change: Also a similar expense base so.

The fact that as Rob has mentioned.

Speaker Change: The Cogs.

Speaker Change: Therapy message is in fact.

Speaker Change: Is in fact.

Speaker Change: Taking hold.

Speaker Change: That particular promotion is quite effective.

Speaker Change: Relative to resources employed so we do expect to pick up operating leverage over time.

Speaker Change: And continue to see your Perl re grow from where it is a disease.

Aziz Sawaf: Yeah, and you can actually see that in this quarter, David, the collaboration revenue grew 39% when the net sales growth increased 18%. So that of the collaboration revenue year over year was up about 4.1 million. 2.9 million of that was due to the net sales growing 8%, and the balance, the 1.2, was due to efficiencies on the expense line, which improved the overall margin for Upellory. So you're already seeing it.

Speaker Change: Yes.

Speaker Change: You can actually see that in this quarter David.

Speaker Change: The collaboration revenue grew 39%.

Speaker Change: Net sales growth increased 18% so.

Speaker Change: The collaboration.

Speaker Change: <unk> revenue year over year was up about $4 1 million to $9 million of that was due to the net sales growing 8%.

Speaker Change: And the balance to one 2% was due to efficiencies on the expense line, which improved the overall margin for your tolerance, so you're already seeing it.

Speaker Change: I don't know if youll see that.

Speaker Change: The Delta being this high in the future, meaning that the 39% collaboration revenue versus the net sales, but we should continue to see some efficiencies on.

Speaker Change: On the expense side relative to prior years, so that the overall margin continues to improve not just for not just from a sales growth expectations, but the expense line a little bit as well.

Speaker Change: Second question you had I think was related to remind you of the near term milestones so let's start with <unk>.

Aziz Sawaf: I don't know if you'll see this kind of delta being this high in the future, meaning the 39% collaboration revenue versus the net sale, but we should continue to see some efficiencies on the expense side relative to prior years, so that the overall margin continues to improve, not just from the sales growth expectations but the expense line a little bit as well. The second question you had, I think, was related to reminding you of the near-term milestone. So let's start with the upellory.

Speaker Change: <unk>, obviously, we have.

Aziz Sawaf: Obviously, we have $25 million for achieving $250 million in net sales, and then we have the $7.5 million milestone for the approval of the Chinese equivalent of an NDA. So Rick mentioned earlier, Viatris will be submitting the application mid-year this year, hopefully pretty soon. And then whenever that gets approved in the next couple of years or so after that, we'll get $7.5 million. And then I commented on all the Trilogy milestones. Over the next three years, we have 50 potential customers for this year, and 50 potential customers for 2025. And then that number increases to $100 million in 2026.

Speaker Change: $25 million for achieving $250 million of net sales.

Speaker Change: And then we have the.

Speaker Change: The $75 million milestone for the approval of the China.

Speaker Change: And the equivalent of an NDA, So Rick mentioned earlier.

Speaker Change: <unk> will be submitting the application mid this year hopefully pretty soon and then whenever that gets approved in the next.

Speaker Change: A couple of years or so after that we will get $705 million and then.

Speaker Change: Commented on all of the trilogy milestones.

Speaker Change: Over the next three years, we have 50 potential for this year 50 potential for.

Speaker Change: For 2025, and then that increases to $100 million.

Speaker Change: And in 2026 and as I noted on the call. We had another excellent quarter close to $3 billion run rate.

Aziz Sawaf: And as I noted on the call, we had another excellent quarter, close to $3 billion in run rates. And so we're really excited about Trilogy's progress and expectations for achieving those milestones for Trilogy. Great. Thank you very much. One moment, please, for our next.

Speaker Change: So we're really excited about <unk> progress and our expectations of achieving those milestones petrology.

Speaker Change: Great. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Please for our next question.

Speaker Change: And our next question comes from the line of Marc Frahm with TV Cowen.

Marc Alan Frahm: And our next question comes from Marc Frahm with TD Cowell. Thanks for taking my questions. Just following on some of those milestone comments that you just made, Aziz, just one from a housekeeping perspective, can you remind me just the guidance around approaching non-GAAP break-even? That excludes all milestones, right, that you might be getting from EPELRI or Trilogy.

Thanks for taking my questions. Following on some of those milestone payments that you just made.

Marc Frahm: Just one from a housekeeping perspective.

Marc Frahm: The guidance around it.

Marc Frahm: <unk> non-GAAP breakeven that excludes all milestones that you might be getting from recovery or trilogy.

Aziz Sawaf: And then maybe more for Rick, just how are you approaching capital allocation as potentially some of these milestones start coming in? Should we expect more things like you did in the past to return cash to shareholders? Can that be made before you have amperloxacine data or do you really need to wait for the amperloxacine data to kind of figure out, put the whole picture together? Yeah, the answer to your first question is yes, that's correct.

Marc Frahm: And then maybe for Rick just how are you approaching kind of capital allocation as potentially some of these milestone start coming in.

Marc Frahm: Should we expect.

Rick: More things like you did in the past to return cash to shareholders.

Rick: Does that can that be made before you have there for vaccine data or do you really need to wait for your products can data that kind of figure out put the whole picture together.

Rick: Yes, the answer to your first question is yes, that's correct when we talk about the non-GAAP getting approaching breakeven that excludes any.

Rick E. Winningham: When we talk about the non-gap, getting approaching break even, that excludes any impact from potential milestones. So obviously, if we hit those, it would be significantly over, you know, it would be profitable if we hit any of them. Go ahead, Rick. Yeah, so we look at, you know, look at the total, total capital picture of the company. And I think that, you know, clearly, we've got, we're excited about where we are with upillary and continued growth, excited about, you know, the ampyloxetine data from Cyprus. And should the Cyprus data be positive?

Rick: Any impact for potential milestone. So obviously, if we hit those it will be significantly over who would be profitable. If we had any of those go ahead Rick.

Rick: Yes, so the we look at look at the total.

Rick: Total capital picture of the company I think.

Rick: Clearly we've got we're excited about where we are.

Rick: <unk> continued growth excited about the ample occitane.

Rick E. Winningham: Obviously, this is a rare drug to treat a rare neurological condition. And we'll talk more about this, you know, on the 23rd. But obviously, we think the financial dynamics, you know, of ampyloxetine are quite favorable. As you and the board continue to look at, you know, as we approach these milestones, the capital that we're going to need for the business versus the capital we have. And we made a comment earlier that we would we would return, Douglas Tsao, Julian Harrison, Richard Graham, Rhonda Farnum, Aziz Sawaf, Eva Privitera, Jingming Chen, Aine Miller, Theravance Biopharma Inc. Okay, thanks.

Rick: Data from Cypress that should should the Cypress day to be positive. Obviously this is a rare draws.

Rick: Drug to treat a rare neurological condition that we'll talk more about this.

Rick: Of the 23rd but obviously, we think the financial dynamics.

Rick: <unk> are quite favorable.

As you and the <unk>.

Rick: Board continues to look at.

Rick: As we approach these milestones.

Capital that we're going to going to need for the business versus the capital we have and we've made are.

Rick: You made a comment.

Rick: Earlier that we would we would return.

Rick: Instead of all excess capital.

Rick: Two to shareholders of I think the good.

Rick: Business doesn't need so that we have.

Rick: Done that before obviously marquee remember.

Rick: One point, we were at I think two.

Rick: $2 50, a share repurchase program, but we looked at our business. We thought we had an additional $75 billion that we could add to the repurchase program and we did that it ended up.

Rick: Doing a total of 325 billion of the repurchase program and the board looks at this.

Rick: The forecast of where we're going to be from a cash perspective at.

Rick: It was the cash demands are going to be and should should the excess capital will be there then we'll return that to shareholders.

Speaker Change: Okay. Thanks very helpful.

Speaker Change: Yes.

Speaker Change: Thank you one moment please for our next question.

Marc Alan Frahm: Very helpful. Yes, thank you. One moment, please, for our next question. And our next question comes from the line of Lisa Bacow. [inaudible] Hi, this is Jamie. I'm for Lisa.

And our next question comes from the line of Lisa <unk> with Evercore ISI.

Speaker Change: Hi, This is Jamie on for Lisa Thanks for taking our questions.

Lisa Bacow: Thanks for taking our questions. So could you please give us an update on what percentage of your account has implemented the full NAB strategy and what percentage of accounts are therapeutic interchange accounts? Thank you. Rhonda

Jamie: Could you please give us an update on what percentage of your account have implemented on that strategy and what percentage of account or a therapeutic need for cleaner pounds. Thank you.

Speaker Change: Rhonda, yes, well as we continue to grow our base of.

Rhonda F. Farnum: Yes, well, as we continue to grow our base of accounts purchasing within that larger base, we're still roughly around 35% have therapeutic interchanges in place. For those that do have therapeutic interchanges, predominantly, those are all nebulization accounts because that's what they drive their decision making off of.

Rhonda: Accounts purchasing within that larger base are still roughly around 35%.

Rhonda: Have therapeutic interchanges in place for those that do have therapeutic interchanges predominantly are all night utilization accounts, because that's what they drive their decision making process.

Speaker Change: Got it thanks.

Speaker Change: Thank you.

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

Rhonda F. Farnum: Thanks. Thank you. Well, it appears we have no further questions on the phone. I would now like to turn the conference back to Mr. Winningham.

Rick E. Winningham: Please go ahead. Yeah, I'd like to thank everyone for joining us today. We look forward to the Amproloxetine Investor Event on May 23rd, and I encourage everyone to join us for that event.

Winningham: Yes, I'd like to thank everyone for joining us today, we look we look forward to the <unk> investor event.

Winningham: All of the May 23rd.

Rick E. Winningham: I think it'll be an exciting day to review all the data on MSA and NOH and Amproloxetine, as well as the idea of really projecting the opportunity that's out there for Theravance and the opportunity for this medicine to make a significant difference in patients' lives. So until then, thank you for dialing in today, and thank you for sharing in the first quarter update. We look forward to talking to you in the future and hope to see you at the virtual event on May 23rd. Thank you.

Winningham: I encourage everyone to join us for that it then I think it'll be a b and exciting day to review all the data on the MSA and NIH and the <unk> team.

Winningham: As well as the idea of really projecting the opportunity.

Winningham: Thats out there.

Speaker Change: Sure for <unk>.

Speaker Change: The opportunity for this medicine.

Speaker Change: To make a significant difference in patients' lives so.

Speaker Change: Until then thank you for dialogue today. Thank you for sharing in the first quarter update and we look forward to talking to you in the future and hope to see you.

Speaker Change: For the virtual event on May 23, Thank you.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect, a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a Douglas Tsao, Julian Harrison, Rhonda Farnum, Aziz Sawaf, Eva Privitera, Jingming Chen, Aine Miller, Theravance Biopharma Inc, ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? [inaudible] Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Ladies and gentlemen, good afternoon.

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

Operator: I'd like to welcome everyone to Theravance Biopharma and the 2024 conference. During the presentation... All participants will be in a listen-only mode. This question and answer session will follow the company's formal remarks. To ask a question, press start, followed by the digit 1-1 on your phone.

That's Star 1-1 to ask a question. Please mute the audio on your webcast or ask a question over the phone. Please repeat the instructions after the management completes their prepared remarks. Today's conference... And now, I would like to turn the floor over to Rick Winningham. Good afternoon, and welcome to Theravance Biopharma's first quarter 2024 earnings results conference call. On slide two, you'll find our Safe Harbor language. And I'd remind everyone that what we call today will include forward-looking statements involving risks and uncertainties pertaining to our development pipeline, expected benefits of our product candidate, 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. Now, please turn to slide three.

Speaker Change: Okay.

Because joining me today on the call today are Anya Miller, our Head of Development, Rhonda Farnum, Theravance's Chief Business Officer, and Aziz Sawaf, our Chief Financial Officer. Next, on slide four, I'll begin with a recap of our first quarter highlights before turning the call over to the rest of the team. As you can see on the left side of the slide, we made good commercial progress with Upelri during the quarter, achieving $55.2 million in net sales in partnership with Viatrix. This translates into 18% year-on-year growth.

Speaker Change: [music].

Our team at Theravance got off to a terrific start this year in the hospital setting, again achieving another all-time high in terms of hospital doses sold in the quarter, up 31% from the prior year. In addition, we continue to expect our partners at Viatris to complete a regulatory filing for upholery in China by mid-year, based on the strong Phase III results announced last November. Turning to Amproloxetine, in the middle of the slide, we're very excited to be hosting a dedicated virtual investor event on May 23 at 10am Eastern. We are two thought leaders in the field of autonomic dysfunction, and our team at Theravance will discuss the compelling science behind Amber Lockstein's opportunity to address the unmet need in NOH and MSA patients.

We continue to work diligently to complete the Registrational Phase III Cypress Study, with the last patient planned to be enrolled in the second half of this year, as well as put in place the regulatory and commercial framework that will enable Theravance to make amproloxetine available quickly and broadly should Cypress be successful. Finally, we delivered another strong order of financial performance driven in equal parts by good upell regrowth and expense management. Despite experiencing some seasonal transitioning from quarter four to quarter one, which is typical of the pharmaceutical business, we realized a limited cash burn, ending the period with 100 million in cash and no debt.

As Aziz will discuss later, Trelogy turned in a fantastic performance, which makes us increasingly optimistic about the value that that product stands to deliver to Theravance shareholders in the future. Turning to slide five, I'll briefly touch on how our strategic imperatives position Theravance to deliver compelling value to shareholders over both the near and the long term. We have a detailed plan in place to continue Upellry's growth for the foreseeable future while still delivering on expanded profitability and cash returns to the company. Over the past 12 months, US upholstery sales have increased 12% to $229 million, while the collaboration revenues we recognize from Beatrice have increased 27%.

We are expecting top-line data from the CIPHR study in 2025, and if successful, we'll act decisively with our regulatory and pre-commercialization strategies in order to bring about Amprolox Team's successful filing and launch. As Aziz will also discuss, we will execute this strategy while deploying our capital in a way that maintains the company's strong financial position throughout. We believe we're well-positioned to achieve significant milestones in the coming years, as well as meaningful royalties on upellery and trellogy in the future. With that, I'd like to turn the call over to our Head of Development, Anya Miller, who will provide some brief comments on Amproloxetine. Anya?

Thanks, Rick. As Rick indicated, I'm going to keep my comments brief this afternoon, recognizing that in a short 10 days, we'll be providing an extensive overview of the Amperloxidine program, including our ongoing registrational study, Cypress, and how we are seeking to address the unmet need for MSA patients with symptomatic NOH. In Cyprus, we continue to activate sites and progress enrollment.

We are closely engaged with these sites in order to enroll the right patients and ensure data quality. We continue to be pleased with our progress and maintain the expectation of completing enrollment in the open-label portion of the study during the second half of the year. Also, we continue to prepare for our possible NDA filing shortly on the heels of learning the Cypress results. As we have discussed in the past, we have generated much of the data required for other elements of this mission beyond the Cypress data and are already in the process of authoring the NDA.

Finally, given our decision to work directly with these investigators and sites who treat substantial numbers of MSA patients with symptomatic NOH, we are able to coordinate with our analytics and market access teams in order to begin positioning Ampriloxidine for broad availability should Cypress be positive. On slide 8, you'll see the details of the upcoming investor event on May 23rd to discuss the role Amproloxidine stands to play in addressing the unmet need in MSA patients with NOH. It's a virtual event, and it begins at 10am Eastern.

We have prepared remarks for roughly the first 60 minutes before opening it up to a question and answer session. I'd encourage those listening to sign up and participate in the session, and come prepared to ask questions of our key opinion leaders, Dr. Horacio Coffman and Dr. Italo Biagio, who have agreed to share their insights. We believe this will be an informative session that sets the stage for the countdown to Cypress Data in 2025. With that, I'll turn the call over to our Chief Business Officer, Rhonda Farnum, who will cover our Ukelele performance during the course. Rhonda

Thanks Anya. Beginning on slide 10, I'm pleased to report that the Theravance Beatrice Commercial Partnership finished the first quarter of 2024 with net sales reaching $55.2 million, having driven, you probably know, year over year, net sales growth of 18% and a continued increase in profitability. As Rick mentioned earlier, we have traditionally experienced seasonal dips in reporting net sales as we transition from the fourth quarter to the first quarter of the following year.

Based on the success we are delivering in the hospital channel and in view of early demand and retail data from April, we remain optimistic about Upelry's continued growth in 2024. Moving to slide 11, I'm also very pleased to share with you the exceptional finish to the quarter our hospital team was able to deliver. Hospital doses shipped in the first quarter increased 31% year over year.

This was yet another high-volume quarter for the hospital business. Our goal continues to be to increase the number of patients exposed to upillary during hospitalization who are then discharged on upillary as maintenance patients. This is achieved by continuing to gain support for formulary inclusion, implementing hospital protocols involving all nebulization strategies and therapeutic interchanges, and equally important, the HITOUCH Transition of Care Program. Our market research continues to demonstrate that the vast majority of patients who initiate upelry in the hospital setting also receive a prescription for upelry maintenance care when leaving the hospital.

It is with the execution of this strategy that our small, targeted, and focused commercial organization is able to make a considerable contribution to the overall capillary business, both directly and indirectly. Turning to slide 12, on the left side, you can see our efforts impact on the hospital market share. During the quarter, our share of the long-acting NEM market in the hospital segment was steady at 16.6%, and we are encouraged by the April data, which suggests further growth to roughly 18% share so far in Q2. On the right side of the slide, UPL maintained an approximately 31% share in the community.

As a reminder, the total community view has a three-month lag due to the MedB adjudication process, so we only have Q1 data through January of this year. We continue to gain traction with our concomitant therapy messaging, which taps into the significant number of COPD patients who remain symptomatic on LABA therapy and could benefit from the addition of a LAMA. Llama therapy is foundational in the treatment of COPD, and current gold report guidelines recommend dual lava llama treatment for category B and E patients.

Speaker Change: Yes.

Turn to the retail channel view on slide 13, where we have our most real-time and current demand view outside of the hospital channel. I will once again remind you that when we share our quarterly results, we do not have a completed data capture of the fulfillment in the DNA channel, which accounts for approximately 55% of our total community business. Because retail, which accounts for the other 45%, generally correlates with total community fulfillment over time, we have historically offered this view. So looking at the left side of the slide, retail prescriptions declined 9% during the quarter.

While we're still in the process of evaluating, we believe that the lower retail volume in Q1 was possibly exacerbated by a cyber incident at Change Healthcare, which is a subsidiary of United Health Group and a processor for nearly 50% of medical claims in the U.S. Looking to the right side of the slide, we saw a 3% dip in new product starts in Q1. In addition to some expected impact from the Change Healthcare cyber incident, it is not atypical for this metric to experience quarter-to-quarter variability.

Speaker Change: [music].

Similar for both total prescriptions and new product starts, we expect both metrics to return to growth in Q2. Finishing on slide 14, we think it is important to highlight the unique and compelling value proposition we offer patients and caregivers as the only once daily nebulized lung for maintenance treatment of COPD. Upelri has demonstrated consistently meaningful lung function benefits, is typically available at low out of pocket costs, and requires only a few minutes to administer once per day.

Lastly, in the U.S., where we are eligible to receive a one-time sales milestone of $25 million from Beatrice when net sales reach $250 million in any calendar year. In China, where Beatrice is planning to file for regulatory approval by the middle of this year, we are eligible to receive a $7.5 million milestone upon approval, as well as additional sales milestones and upwardly tiered royalties of between 14% and 20%. That brings us to the end of the Upelry update. So I will turn things over to Aziz to cover our financials. Aziz.

As such, we believe Upelri plays a key role in the COPD market, where there remains a substantial opportunity to reach patients who could benefit from Upelri. Our go-to-market strategy aligns with this profile, which we believe is why Upelri is only one of three branded COPD maintenance therapies in the U.S. delivering consistent growth. Looking ahead, we expect to achieve continued growth and value creation for upellery driven by continued penetration of the US maintenance COPD market and the potential launch of upellery in China.

Thanks, Rhonda. Starting off with the results for the quarter, slides 16 and 17 cover the detailed financials, and I'll briefly cover the highlights on slide 18.

Starting with collaboration revenue, we've reported $14.5 million, representing year-over-year growth of 39 percent, driven by upsellery net sales growth and improved operating margins. For the quarter, both our operating expense and non-gap loss metrics were in line with expectations, reflecting meaningful improvement compared with Q1 of 2023. Moving forward into the year, operating expenses will increase slightly over the next couple of quarters as Cypress enrollment continues to accelerate, and we begin to incur Amperloch's pre-launch commercialization costs in the second half of the year. We closed the period with 100 million in cash and approximately 48.6 million shares outstanding.

On slide 19, I'll provide an update on our potential to earn milestones from Trilogy, noting that GSK delivered another excellent quarter of growth, again beating consensus. Quarterly net sales reached $749 million, up 32% year over year. This quarter's results reinforce our belief that we are well positioned to achieve at least one milestone in 2024, with run rate now trending above the first 25 million milestone threshold of approximately 2.9 billion of net sales, and Run Rate approaching the second 25 million milestone threshold of approximately 3.2 billion of net sales.

Moving to slide 20, Trilogy's performance also strengthens our confidence in achieving the milestones in 2025 and 2026. Relative to an annual run rate of approximately $3 billion based on Q1 net sales, we need only minimal growth to achieve the lower end of the milestones, shown on the slide in orange, and modest growth to achieve the higher end of the milestones, shown on the slide in green. Growth rates the trilogy is currently exceeding. As a reminder, we have 50 million potential milestones in 2024 and 2025, which will increase to 100 million potential milestones in 2026, for a total of 200 million potential milestones. Lastly, turning to financial guidance on slide 20, we are reiterating all financial guidance methods. With that, I'll pass it back to Rick to conclude. Thanks, Aziz.

I'll wrap up our comments on slide 21 and simply remind you of the company's current strategic focus. We continue to identify and capitalize on Upelri's growth opportunities in partnership with Vietras while remaining disciplined with our expense base in order to maximize its value, in the U.S. We look forward to continuing to make a significant contribution to our hospital-based commercial organization while outside the U.S. Our model is to rely on V-Interest's infrastructure, and we are particularly excited for UPowery's potential filing and approval in China We look forward to sharing much more about this investigational therapy. Amber Lockstein and its progress.

Finally, we have the resources to deliver. With $100 million in cash, no debt, significant near-term milestones, and modest cash demands, we believe Theravance is positioned for success. With that, I'll thank you for your time and turn the call back to the operator. Operator. Thank you, sir. Once again, if you would like to ask a question, you may do so by pressing R2, followed by the digit one, digit one on your touchtone phone, listening via web, Mute audio on your webcast, or asking a question over the phone. If you're using a. Please make sure your microphone is turned off to allow your signal to be transmitted.

Call 1-1-1 if you'd like to ask questions. Pause for a moment to assemble, and our first question comes from the line of Douglas Tsao. H.C. Wayne

Hi, good afternoon. Can you hear me? Yes, Doug, we can hear you. I guess maybe starting Rhonda with you in terms of retail and what you saw in the retail channel. You know, it's not uncommon to see some sort of sequential headwinds. Now that I think ChangeHealth is sort of back online, or I'm just sort of looking for to understand, I mean, from your perspective and your Pelri, is ChangeHealth sort of back online, and are all the claims being adjudicated? And do you think there were scripts that were sort of lost permanently?

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Or do you think that there might be some catch-up now that ChangeHealth is sort of back? Thanks, Doug. Excellent question. And certainly one we've been very focused on trying to understand. I think an aspect of the phenomenon of what was associated with change health is that we are quite aware that some of our specialty pharmacies determined that they needed to make a switch, and make a switch quickly from change to relay health as their processor.

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So, we need to allow for more time for the view into those data to give us a better informed answer on your exact question. Did we lose those patients, or are they there? And it's just an artifact of the data capture right now, which could be highly likely. You might also comment, Rhonda, just on April. Sorry, Doug.

Yeah, and if you're tracking along with us, which I think is highly likely, knowing you, Doug, if you look at the April numbers, you definitely can see a rebound in the TRX and new starts for upell rates. And obviously, we'll continue to monitor that extremely closely. Okay, and again, in that rebound, you're not sure, or at this point, it's not clear to you whether that is just sort of the underlying momentum that the product has enjoyed or whether there might be some catch-up, or maybe it's a little bit of both.

It's just unfortunately a little too early to give that exact answer, which is what we want to be able to give you confidence in. Okay. Great. Thank you very much. I think that's it for me right now.

Thank you. And our next question comes from the line of Julian Harrison with BTI. Hi, good afternoon, congratulations on the progress.

And thank you for taking my questions. And it's great to see that year over year, you've held regrowth and sequential growth on key metrics. I guess thinking about the rest of the year, you know, if you tell me revenue is going to continue trending upwards, you know, how soon can we expect operating margins to expand from here? Thank you. Aziz, do you want to comment on that just on what we've seen thus far? Yeah. Hey Julian,

Thanks for the question. As we discussed during the last earnings call, as we set the stage, with respect to guidance for the year, we knew that we were going to hit kind of non-gap losses in the first half, which is what we saw in Q1. So, Q1 was in line with expectations.

As we think about the rest of the year, what we've guided to is that we would basically approach breakeven in the second half, so we would get close to breakeven in the second half, and that's going to be driven by a couple of things. On the expense side, as I talked about on the call, we're probably going to increase a little bit in the next couple quarters, driven by the increased enrollment for Cypress, and then as we start to spend a little bit, not much, but a little bit in the second half around the Amperlox team pre-launch commercialization spending.

So, but that will be offset largely by the increase we're expecting for upollery net sales, which will increase our collaboration revenue. So we do think that the increase in collaboration revenue will offset the increase in expenses so that the non-gap loss improves throughout the rest of the year. Is that helpful, Julian? It's very helpful, thank you. And then I had a quick question on Cypress. I'm wondering if there's any possibility for data disclosure from the open label segment that could proceed, you know, randomized controlled data.

Speaker Change: Yes.

Or, you know, are you waiting for the second phase to disclose the data? Thank you very much. Now, we'll, this is Rick. We'll wait until we have the data from the randomized withdrawal period, at the conclusion of that period, to disclose the data because, you know, the primary endpoint is data in the OHSA questionnaire at the end of the randomized withdrawal. Thanks for the question. One moment, please, for our next question- And our next question comes from the line of David Rees. Yes, thanks very much.

And thank you for the various updates. So, maybe sort of ignoring the incremental Ampiloxetine, Spen, Um, I'm hoping that, uh, Rick or Aziz, you could sort of paint a picture for how you see Upelri's prospects, right, assuming that it plays out on the trajectory that you're expecting, how you see its prospects for driving, you know, operating leverage for the company. And then if you could just remind us about the big milestones in the coming years, the optionality, that would be helpful as well. But, you know, I'm particularly interested in, you know, how much operating leverage Uplery can drive. Obviously, you can't quantify it, but I'm just hoping that you can paint that picture.

Thank you. Yeah, thanks for the question, Dave. I'll take a brief, make a brief comment, and then turn it over to Aziz.

I mean, clearly, you know, with you, Pelri, we see a significant amount of operating leverage going forward in working with Vietras. You know, there are various aspects of continuing to tighten and sharpen execution, sort of across the board from hospital to community, which should drive, which should drive incremental sales at off of a, you know, off of a similar expense base. So, and the fact that, as Rhonda mentioned, the concomitant therapy message is, in fact, is, in fact, taking hold.

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And that that particular promotion is quite effective relative to resources employed. So, you know, we do expect to pick up operating leverage over time and continue to see Pelri grow from where it is. Aziz.

Yeah, and you can actually see that in this quarter, David, the collaboration revenue grew 39% when the net sales growth increased 18%. So the collaboration revenue year over year was up about $4.1 million. $2.9 million of that was due to the net sales growing 8%, and the balance, the 1.2, was due to efficiencies on the expense line, which improved the overall margin for Upellory.

So you're already seeing it. I don't know if you'll see this kind of delta being this high in the future, meaning the 39% collaboration revenue versus net sales, but we should continue to see some efficiencies on the expense side relative to prior years, so that the overall margin continues to improve, not just from the sales growth expectations but the expense line a little bit as well. The second question you had, I think, was related to reminding you of the near-term milestone. So let's start with that.

Obviously, we have $25 million for achieving $250 million in net sales, and then we have the $7.5 million milestone for the approval of the Chinese equivalent of an NDA. So Rick mentioned earlier, Viatris will be submitting the application mid-year this year, hopefully pretty soon. And then whenever that gets approved in the next couple of years or so after that, we'll get $7.5 million. And then I commented on all the Trilogy milestones. Over the next three years, we have 50 potential customers for this year, and 50 potential customers for 2025. And then that number increases to $100 million in 2026.

And as I noted on the call, we had another excellent quarter, close to $3 billion in run rates. And so we're really excited about Trilogy's progress and expectations for achieving those milestones for Trilogy. Great. Thank you very much. One moment, please, for our next question. And our next question comes from the line of Marc Frahm with TV Cali. Thanks for taking my questions. Just following on some of those milestone comments that you just made, Aziz, just one from a housekeeping perspective, can you remind me, just the guidance around approaching non-gap breakeven, that excludes all milestones, right, that you might be getting from Utility or Trilogy?

And then maybe more for Rick, just how are you approaching capital allocation as potentially some of these milestones start coming in? You know, should we expect, you know, more things like you did in the past to return cash to shareholders? Does that, can that be made before you have Amperlox team data or do you really need to wait for Amperlox team data to kind of figure out, get the whole picture? Yeah, the answer to your first question is yes, that's correct.

Speaker Change: Sure.

When we talk about the non-gap getting approaching break even, that excludes any impact from potential milestones. So obviously, if we hit those, it would be significantly over, you know, it would be profitable if we hit any of them. Go ahead, Rick. Yeah, so the, you know, we look at, you know, look at the total, total capital picture of the company.

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And I think that, you know, clearly, we've got, we're excited about where we are, with upsell and continued growth, excited about, you know, the Amproloxetine data from Cypress and, should the Cypress data be positive. Obviously, this is a rare drug to treat a rare neurological condition. And we'll talk more about this, you know, on the 23rd. But obviously, we think the financial dynamics, you know, of Amproloxetine are quite favorable.

As you and the board continue to look at, you know, as we approach these milestones, the capital that we're going to need for the business versus the capital we have. And we made a comment earlier that we would return, Douglas Tsao, Julian Harrison, Richard Graham, Rhonda Farnum, Aziz Sawaf, Eva Privitera, Jingming Chen, Aine Miller, Theravance Biopharma Inc. Okay, thanks. Very helpful. Yep.

Thank you. One moment, please, for our next question. And our next question comes from the line of Lisa Bacow and Core ISI: Hi, this is Jamie. I'm on behalf of Lisa.

Thanks for taking our questions. So could you please give us an update on what percentage of your account has implemented the full NAB strategy and what percentage of accounts are therapeutic interchange accounts? Thank you. Rhonda

Yes, well, as we continue to grow our base of accounts purchasing within that larger base, we're still roughly around 35% have therapeutic interchanges in place. For those that do have therapeutic interchanges, predominantly, those are all nebulization accounts because that's what they drive their decision making off of. Got it. Thanks. Thank you. It appears we have no further questions on the phone. I would now like to turn the conference back to Mr. Winningham.

Speaker Change: So.

Please go ahead. Yeah, I'd like to thank everyone for joining us today. We look forward to the Amproloxetine Investor Event on May 23rd. I encourage everyone to join us for that event. I think it'll be an exciting day to review all the data on MSA and NOH and Amproloxetine, as well as the idea of really projecting the opportunity that's out there for Theravance and the opportunity for this medicine to make a significant difference in patients' lives.

So, until then, thank you for dialing in today, and thank you for sharing in the first quarter update. We look forward to talking to you in the future and hope to see you at the virtual event on May 23rd. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.

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Speaker Change: Ladies and gentlemen, good afternoon, I'd like to welcome everyone to the <unk> Biopharma first quarter 2024 conference call during.

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

Speaker Change: A question and answer session will follow the Companys formal remarks to ask a question press the star key followed by the digit one one on your phone.

Speaker Change: Again, Thats star one to ask a question.

Speaker Change: If listening via webcast. Please mute audio on your webcast device before asking a question over the phone.

Speaker Change: I will repeat the instructions after the 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.

Rick E. Winningham: Good afternoon welcome.

Rick E. Winningham: Welcome to <unk> <unk> first quarter 2024 earnings results conference call on slide two you'll find our safe Harbor language.

Rick E. Winningham: And I would remind everyone that our call. Today will include forward looking statements involving risks and uncertainties pertaining to our development pipeline expected benefits of our product candidate anticipated timing of clinical trials regulatory filings and expected financial results.

Formation concerning factors that could cause results to differ materially from our forward looking statements.

Rick E. Winningham: As described further in our filings with the SEC now please turn to slide three.

Because joining me today are today joining me on the call today are audio Miller, our head of development.

Aine Miller: Rob The Farnham survey, it's as Chief business Officer, and Z swap, our Chief Financial Officer.

Aine Miller: Next on slide four I'll begin with a recap of our first quarter highlights before turning the call over to the rest of the team.

Aine Miller: As you can see on the left side of the slide we've made good commercial progress with <unk> during the quarter, achieving $55 2 billion of debt sales in partnership with via trusts. This translates at the 18% year on year growth.

Aine Miller: Our team at their events got off to a terrific start this year in the hospital setting again, achieving another all time high in terms of hospital doses sold in the quarter up 31% from the prior year.

Aine Miller: In addition, we continue to expect our partners via trusts to complete our regulatory filings for you Pal, Oregon, China by mid year based on the strong phase III results of day helps last November.

Aine Miller: Turning to <unk> in the middle of the slide we're very excited to be hosting a dedicated virtual investor Torbay 23rd at 10, a M. Eastern were to thought leaders in the field of automobile dysfunction as.

Aine Miller: As well as our team, but their events will discuss the compelling science behind the <unk> needs opportunity to address the unmet.

Aine Miller: And in a way should MSA patients.

We continue to work diligently to complete the Registrational phase III Cypress study with the last patient planned to be enrolled in the second half of this year as well as put in place the regulatory and commercial framework that will enable fair events to make <unk> available available quickly and broadly you should see.

Aine Miller: For us be successful.

Aine Miller: Finally, we delivered another strong quarter of financial performance driven in equal parts by good <unk> growth and expense management.

Aine Miller: Despite experiencing some seasonal transitioning from quarter four to quarter wallet, which is typical of the pharmaceutical business, we realized a limited cash burn and I think the period with $100 billion in cash and no debt.

Aine Miller: As as these will discuss later trilogy targeted a fantastic performance, which makes us increasingly optimistic for the value that that product stands to deliver the therapy its shareholders of the future.

Aine Miller: Turning to slide five I'll briefly touch on how our strategic imperatives position their advanced to deliver compelling value to shareholders over both the deere and the long term.

Aine Miller: We have a detailed plan in place to continue your <unk> growth for the foreseeable future, while still delivering on expanded profitability and cash returns to the company over the past 12 months Usu calorie sales have increased 12% to 229 billion, while the collaboration revenues we recognized from via Trust.

It increased 27%.

Aine Miller: We are expecting top line data from the Cypress study at 2025, if successful we will act decisively with a regulatory and pre commercialization strategies in order to bring about <unk> successful filing and launch.

Aine Miller: Is this these will also discuss we will execute this strategy, while deploying our capital in a way that maintains the company's strong financial position throughout.

Aine Miller: We believe we are well positioned to achieve significant milestones in the coming years as well as meaningful royalties.

Aine Miller: <unk> and trilogy of the future.

Aine Miller: With that I'd like to turn the call over to our head of development on the Miller, who will provide some brief comments on <unk>.

Miller: Thanks, Rick.

Rick indicated I'm going to keep my comments brief this afternoon, recognizing that in a short 10 days, we'll be providing an extensive overview of beyond productivity program, including our ongoing Registrational study Cyprus and how we are seeking to address the unmet needs for MFA patients with symptomatic <unk>.

Miller: And vibrant we continue to activate sites in progress enrollment we are closely engaged with the sites in order to enroll the right patients uninsured data quality, we continue to be pleased with our progress and maintain the expectation of completing enrollment of the open label portion of the study during the second half of the year.

Miller: Also we continue to prepare for a possible NDA filing shortly on the heels of learning the Cypress results.

Miller: As we have discussed in the past we have generated much of the data required for other elements of information beyond the Cypress data on are already in the process of author in the NDA.

Miller: Finally, given our decision to work directly with these investigators and sites to treat substantial numbers of MSA patients with symptomatic <unk>, we are able to coordinate with our analytics and market access teams in order to begin positioning umbrella sitting for broad availability sub cypress be positives.

Miller: On slide eight you'll see the details of the upcoming Investor event on May 20, <unk> to the spoke is the rollout of <unk> to play in addressing the unmet need in MFA patients within a range. It's a virtual events and it begins at 10 a M. Eastern we have prepared remarks, roughly the first 60 minutes before opening it up to a question and answer session.

Miller: I encourage those listening to sign up and to participate in the session and come prepared to ask questions of our key opinion leaders, Dr. Horacio Kaufman and Dr. Angelo Biagio, who have agreed to share their insights.

Miller: We believe this will be an informative session, but subsequent phase for the kinds of Cypress data in 2025.

Miller: With that I will turn the call over to our Chief business Officer, Rhonda Barnum, who will cover our your salary performance during the fourth Rhonda. Thanks.

Rhonda F. Farnum: Thanks Tanya.

Rhonda F. Farnum: Beginning on slide 10, I am pleased to report that there has to be interest commercial partnership finished the first quarter of 2024 with net sales, reaching $55 2 million, having driven empower year over year net sales growth of 18% and a continued increase in profitability.

Rhonda F. Farnum: As Rick mentioned earlier, we have traditionally experienced seasonal dips in reported net sales as we transition from the fourth quarter to the first quarter of the following year.

Rhonda F. Farnum: Based on the success, we are delivering in the hospital channel.

Rhonda F. Farnum: And the view of early demand and retail data from April we remain optimistic for <unk> continued growth in 2024.

Speaker Change: Moving to slide 11, I'm also very pleased to share with you the exceptional finish to the quarter. Our hospital team was able to deliver.

Speaker Change: Hospital doses shipped in the first quarter increased 31% year over year.

Speaker Change: This was yet another month to date high volume quarter for the hospital business. Our goal continues to be to increase the number of patients exposed to your Calgary during hospitalization, who are then discharged on <unk> as maintenance patients.

Speaker Change: This is achieved by continuing to gain support for formulary inclusion implementing hospital protocols involving all know realization strategies and therapeutic interchanges and equally important.

Speaker Change: Our high touch transition of care program.

Speaker Change: Our market research continues to demonstrate that the vast majority of patients to initiate yukari in the hospital setting also receive a prescription for <unk> maintenance chairman, leaving the hospital.

Speaker Change: It is with the execution of this strategy that are small targeted and focused commercial organization is able to make a considerable contribution to the overall <unk> business, both directly and indirectly.

Speaker Change: Turning to slide 12 on the left side you can see our efforts impact on the hospital market share.

Speaker Change: During the quarter, our share of the long acting <unk> market in the hospital segment with a steady at 16, 6% and we are encouraged by the April data, which suggests further growth to roughly 18% share so far in Q2.

Speaker Change: On the right side of the slide.

<unk> maintained an approximately 31% share in the community as a reminder, the total community view has a three month lag due to the messy adjudication process. So we only have Q1 data through January of this year.

Speaker Change: We continue to gain traction with our concomitant therapy messaging, which taps into the significant number of COPD patients who remain symptomatic on LABA therapy and could benefit from the addition of a llama.

Speaker Change: Llama therapy is foundational in the treatment of COPD and current gold report guidelines recommend dual llama llama treatment for category B and <unk> patients.

Speaker Change: Turning to the retail channel view on slide 13.

Where we have our most real time and correct demand view outside of the hospital channel I will once again remind you that when we share our quarterly results. We did not have a completed data capture for fulfillment and the DNA channel, which accounts for approximately 55% of our total community business.

Speaker Change: Because retail which accounts for the other 45% generally correlates with total community fulfillment overtime, we have historically offered this year.

Speaker Change: So looking at the left side of the slide retail prescriptions declined 9% during the quarter.

Speaker Change: While we're still in the process of evaluating.

Speaker Change: We believe that the lower retail volume in Q1, with possibly exacerbated by a cyber incident at change healthcare, which is a subsidiary of United Health Group and a processor for nearly 50% of medical claims in the U S.

Speaker Change: Looking to the right side of the slide we saw a 3% dip in new product starting in Q1.

Speaker Change: In addition to some expected impact from the change healthcare cyber incident. It is not atypical for this metric can experience quarter to quarter variability.

Speaker Change: Similar for both total prescriptions and new product starts we expect both metrics to return to growth in Q2.

Speaker Change: Finishing on slide 14, we think it is important to highlight the unique and compelling value proposition, we offer patients and caregivers as the only once daily nebulizer AMA for maintenance treatment of COPD <unk> has demonstrated consistently meaningful lung function benefits is typically available at low out of.

Speaker Change: Pocket cost and requires only a few minutes to administer once per day.

Speaker Change: As such we believe <unk> plays a key role in the COPD market, where there remains a substantial opportunity to reach patients who could benefit from <unk>.

Speaker Change: Our go to market strategy aligns with this profile, which we believe is Y E. Salary is only one of three branded COPD maintenance therapies in the U S delivering consistent growth.

Speaker Change: Looking ahead, we expect to achieve continued growth and value creation for <unk> driven by continued penetration of the U S maintenance COPD market and the potential launch of new tolerate in China.

Speaker Change: Lastly in the U S, where we are eligible to receive a one time sales milestone of $25 million from the address <unk> net sales reached $250 million in any calendar year.

Speaker Change: In China, we are Beatrice is planning to file for regulatory approval by the middle of this year, we are eligible to receive a $7 5 million milestone upon approval as well as additional sales milestones and I'll quickly tiered royalties of between 14 and 22%.

Speaker Change: That brings us to the end of the pillory update so I will turn things over to <unk> to cover our financials.

Speaker Change: Thanks, Rhonda starting off with the results for the quarter Slide 16, and 17 cover the detailed financials I'll.

Speaker Change: Briefly cover the highlights on slide 18.

Speaker Change: Starting with collaboration revenue, we reported $14 5 million representing year over year growth of 39% driven by <unk> net sales growth and improved operating margins for.

Speaker Change: For the quarter, both our operating expense and non-GAAP loss metrics were in line with expectations, reflecting meaningful improvement compared with Q1 of 2023.

Speaker Change: Moving forward into the year operating expenses will increase slightly over the next couple of quarters.

Speaker Change: Cypress enrollment continues to accelerate and we begin to incur ampere lock screen prelaunch commercialization costs in the second half of the year.

Speaker Change: We closed the period with $100 million of cash and approximately $48 6 million shares outstanding.

Speaker Change: On slide 19, I will provide an update on a potential third milestones from trilogy by.

Speaker Change: But GSK delivered another excellent quarter of growth again, beating consensus estimates.

Speaker Change: Quarterly net sales reached $749 million up 32% year over year.

Speaker Change: This quarter's results reinforce our belief that we are well positioned to achieve at least one milestone in 2024.

Speaker Change: With run rate now trending above the <unk> $25 million milestone threshold of approximately $2 9 billion of net sales.

Speaker Change: And run rate approaching the second $25 million milestone threshold of approximately $3 2 billion of net sales.

Speaker Change: Moving to slide 20, <unk> performance also strengthens our confidence in achieving milestones in 2025 and 2026.

Speaker Change: Relative to annual run rate of approximately $3 billion based on Q1 net sales, we need only minimal growth to achieve the lower end of the milestones shown on the slide in Orange and modest growth to achieve the higher end of the milestones shown on the slide in green growth rates. The trilogy is currently exceeded.

Speaker Change: As a reminder, we have $50 million of potential milestones in 2024 and 2025.

Which increased to $100 million of potential milestones in 2026 for a total of $200 million of potential milestones.

Speaker Change: Lastly, turning to financial guidance on Slide 20, we are reiterating all financial guidance metrics.

Speaker Change: I'll pass it back to Rick to conclude Bret.

Rick: Thanks disease I'll wrap up our comments on slide 21, simply remind you of the Companys current strategic focus we continue to identify and capitalize on <unk> growth opportunities in partnership with via trust, while remaining disciplined with our expense base in order to maximize its value in the.

Rick: We look forward to continue continuing to make a significant contribution through our hospital based commercial organization, while outside the U S. Our model is to rely on <unk> infrastructure, and we are particularly excited for <unk> potential filing and approval in China.

Rick: At our may 23rd Investor of that as well as in the coming months, we look forward to sharing much more about this investigational therapy.

Rick: <unk> and its progress.

Rick: Finally, we have the resources to deliver with $100 million in cash no debt significant near term milestones and modest cash demands. We believe <unk> is positioned for success.

Speaker Change: With that I'll. Thank you for your time and turn the call back to the operator operator.

Speaker Change: Thank you Sir.

Speaker Change: Again, if you would like to ask a question you may do so by pressing darcie followed by the digit one digit one.

Operator: You touched on phone.

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

Operator: Youre using a speakerphone for todays call. Please make sure you meet your function.

Operator: Is turned off.

Allow your signal to reach our equipment again star one one if you'd like to ask a question and we'll pause for a moment to assemble our roster.

Operator: And our first question comes from the line of Douglas Tsao with H C. Wainwright.

Operator: Okay.

Hi, Good afternoon can you hear me.

Douglas Dylan Tsao: Yes, Doug we can hear you.

Douglas Dylan Tsao: So.

Speaker Change: I guess, maybe starting Rhonda.

Rhonda F. Farnum: With you in terms of your calorie and what you saw in the retail channel.

Rhonda F. Farnum: Sure.

Rhonda F. Farnum: It's not uncommon to see some sort of sequential headwinds.

Rhonda F. Farnum: Now that I think change health is sort of back on line or I'm, just sort of looking for to understand I mean from your perspective, and your calories Shanghai sort of back on line and all the claims.

Rhonda F. Farnum: Adjudicated and do you think there were scripts that were sort of lost permanently or do you think there might be some catch up at now that change out there sort of backup.

Speaker Change: Thanks, Doug excellent question and certainly one we've been very focused on trying to understand I think an aspect of the phenomenon of what was associated with change. Hal is we we are quite aware that some of our.

Speaker Change: The specialty pharmacies.

Doug: German do they needed to make a switch and make a switch quickly from change to relay health as their processor. So we need to allow for more time for the view into those data to give us a better informed.

Doug: Answer on your exact question did we lose those patients or are they there and it's just an artifact of the data capture right now which could be highly likely.

Speaker Change: And you might also comment Rob that just saw April sorry, Doug.

Speaker Change: Yes.

Rocking along with us.

Speaker Change: I think it's highly likely no need as you look at the April numbers, you definitely can see a rebound.

The <unk> and new starts for you tolerate.

Speaker Change: And obviously, we'll continue to monitor that extremely closely.

Speaker Change: And again too in that rebound youre not sure or at this point, it's not clear to you whether that is just sort of the underlying momentum, but the product has enjoyed.

Speaker Change: Whether there might be some catch up or maybe it's a little bit of balls.

Speaker Change: It's just unfortunately, a little too early to give that exact answer which is what we want to be able to give you that confidence.

Speaker Change: Okay.

Speaker Change: Great. Thank you very much I think thats it for me right now.

Speaker Change: Thank you one moment please for our next question.

Speaker Change: And our next question comes from the line of Julian Harrison with BP.

Julian Reed Harrison: Hi, good afternoon, and congrats on the progress and thank you for taking my questions and great to see the year over year, your calorie growth and sequential growth on key metrics.

Julian Reed Harrison: I guess thinking about the rest of the year.

Yeah.

Speaker Change: Hillary revenue.

Julian Reed Harrison: To continue trending upwards, how soon can we expect operating margins to expand from here. Thank you.

Speaker Change: <unk> you want to comment on that just on what we've seen thus far.

Speaker Change: Hey, Julien.

Julien: Thanks for the question so.

Speaker Change: Discussed during the last earnings call as we set the stage with respect to guidance for the year.

Speaker Change: We knew that we were going to hit kind of non-GAAP losses in the first time, which is what we saw in Q1. So Q1 was in line with expectations as.

Speaker Change: As we think about the rest of the year, what we've guided to is that we would we would basically approach breakeven in the second half so get close to breakeven in the second half and thats going to be driven by a couple of things on the expense side as I had talked about on the call, we're going to probably going to increase a little bit.

Speaker Change: The next couple of quarters, driven by the increased enrolment for Cypress and then as we start to spend a little bit not much but a little bit in the second half around the <unk> team prelaunch commercialization spending so but that will be offset largely by the increased we're.

Speaker Change: <unk> net sales, which will increase our collaboration revenue. So we do think that the increase in collaboration revenue will offset the increase to be expense. So that the non-GAAP loss improves throughout the rest of the year.

Is that helpful Julien.

Julien: That's very helpful. Thank you and then I had a quick question on Cypress I'm wondering if there's any possibility for data disclosure from the open label segment that could proceed randomized controlled data or are you waiting for the second phase.

Speaker Change: Disclosed David Thank you very much.

Speaker Change: Yeah.

Speaker Change: Yes will this is Rick.

Speaker Change: We'll wait until we have.

Rick: The data from the randomized withdrawal.

Rick: <unk>.

Rick: And that conclusion to that period to disclose the data because.

Rick: The primary endpoint is.

Rick: David.

Rick: Oh HSA.

Rick: A question here at the end of the randomized withdrawal. Thanks for the question.

Speaker Change: Thank you one moment please for our next question.

Speaker Change: And our next question comes from the line of David Risinger with Leerink partners.

Speaker Change: Okay.

David Reed Risinger: Yes, thanks very much.

Thank you for the various updates so.

Maybe sort of ignoring the incremental.

David Reed Risinger: <unk> spend.

David Reed Risinger: I'm, hoping.

David Reed Risinger: That.

Rick or Aziz that you could sort of paint a picture for.

David Reed Risinger: How you see you power east prospects right, assuming that it plays out on the trajectory that you're expecting how you see its prospects for driving operating leverage for the company.

David Reed Risinger: And then if you could just remind us about.

David Reed Risinger: The big milestones in coming years the Optionality.

Speaker Change: That would be helpful as well, but.

Speaker Change: I'm, particularly interested in.

Speaker Change: How much operating leverage you power it can drive.

Speaker Change: Obviously, you can't quantify it but I'm just hoping that you can paint that picture. Thank you.

Speaker Change: Yes, thanks for the question, Dave ill take a brief.

Speaker Change: Make a brief comment and then turn it over to disease I mean clearly.

Speaker Change: With your Perl rate.

Speaker Change: We see.

Speaker Change: Significant amount of operating leverage.

Speaker Change: Going forward.

Speaker Change: Working with via trusts.

There are various.

Speaker Change: Aspects of <unk>.

Speaker Change: Continuing to tighten and sharpened.

Speaker Change: Execution sort of across the board to hospital that community.

Speaker Change: Which should drive which should drive incremental sales.

Speaker Change: Off of.

Speaker Change: Off of a similar expense base so.

The fact that as Rob has mentioned.

Speaker Change: The code.

Speaker Change: Therapy message is in fact.

Speaker Change: Is in fact.

Taking hold.

Speaker Change: That particular promotion is quite effective.

Speaker Change: Relative to resources employed so we do expect to pick up operating leverage over time.

Speaker Change: And continue to see you Pal re grow from where it is a disease.

Speaker Change: Yes.

Speaker Change: You can actually see that in this quarter David.

Speaker Change: The collaboration revenue grew 39%.

Speaker Change: Net sales growth increased 18% so.

Speaker Change: The collaboration revenue year over year was up about $4 1 million to $9 million of that was due to the net sales growing 8%.

Speaker Change: The balance to $1. Two was was due to efficiencies on the expense line, which improved the overall margin for your tolerance, so you're already seeing it.

Speaker Change: I don't know if youll see that.

The Delta being this high in the future, meaning that the 39% collaboration revenue versus the net sales, but we should continue to see some efficiencies on the expense side relative to prior years.

Speaker Change: The overall margin continues to improve not just for not just from the sales growth expectations, but the expense line a little bit as well.

Speaker Change: Second question you had I think was related to remind you of the near term milestones so let's start with <unk>.

Speaker Change: <unk>, obviously, we have.

$25 million for achieving $250 million of net sales.

Speaker Change: And then we have the.

Speaker Change: The $75 million milestone for the approval of the China.

Speaker Change: And the equivalent of an NDA, So Rick mentioned earlier.

Speaker Change: <unk> will be submitting the application mid this year hopefully pretty soon and then whenever that gets approved in the next.

Speaker Change: A couple of years or so after that we will get $705 million and then.

Speaker Change: <unk> an arbitrage milestones.

Speaker Change: Over the next three years, we have 50 potential for this year at 50 potential for for.

Speaker Change: For 2025, and then that increases to $100 million.

Speaker Change: In 2026.

Speaker Change: On the call we had another excellent quarter close to $3 billion run rate.

Speaker Change: So we're really excited about <unk> progress and our expectations of achieving those milestones petrology.

Speaker Change: Okay great.

Speaker Change: Thank you very much.

Speaker Change: Yeah.

Speaker Change: Thank you one moment please for our next question.

Speaker Change: And our next question comes from the line of Marc Frahm with TV Cowen.

Marc Alan Frahm: Thanks for taking my questions.

Marc Alan Frahm: Following on some of those milestones that you just made.

Marc Alan Frahm: Just one from a housekeeping perspective.

I mean, the guidance around approaching non-GAAP breakeven that excludes all milestones that you might be getting from recovery or trilogy.

And then maybe for Rick just how are you approaching kind of capital allocation as potentially some of these milestone start coming in.

Marc Alan Frahm: Should we expect more things like you did in the past to return cash to shareholders.

Marc Alan Frahm: Does that can that be made before you had <unk> seen data or do you really need to wait for April accessing data that kind of figure out put the whole picture together.

Yes, the answer to your first question is yes, that's correct when we talk about the non-GAAP getting approaching breakeven that excludes any.

Marc Alan Frahm: Any impact for potential milestone. So obviously, if we hit those it will be significantly over who would be profitable. If we had any of those go ahead Rick.

Rick: Yes, so the look.

Rick: Look at the total total.

Total capital picture of the company and I think.

Rick: Clearly we've got we're excited about where we are with <unk> and continued growth.

Rick: Excited about the ample occitane.

Rick: Data from Cypress.

Should the Cypress day to be positive. Obviously this is a rare draws.

Rick: Drug to treat a rare neurological condition that we'll talk more about this.

Rick: Of the 23rd but obviously, we think the financial dynamics.

Rick: The <unk> are quite favorable.

Rick: As you.

Rick: Board continues to look at.

Rick: As we approach these milestones.

Rick: Capital that we're going to going to need for the business versus the capital we have and we've made are.

Rick: You made a comment.

Rick: Earlier that we would we would return.

Rick: Instead of all excess capital.

Rick: Two to shareholders of I think the.

Business doesn't need so that we have.

Done that before obviously marquee remember we.

Rick: At one point, we were at I think two.

Rick: $2 50, a share repurchase program, but we looked at our business. We thought we had an additional $75 billion that we could add to the repurchase program and we did that it ended up.

Doing a total of $325 billion on the repurchase program and the board looks at this.

Rick: The forecast of where we're going to be from a cash perspective, and what the cash demands are going to be and should should the excess capital will be there then we'll return that to shareholders.

Speaker Change #101: Okay. Thanks very helpful.

Speaker Change #101: Yes.

Speaker Change #102: Thank you one moment please for our next question.

Speaker Change #102: And our next question comes from the line of Lisa <unk> with Evercore ISI.

Speaker Change #102: Hi, This is Jamie on for Lisa Thanks for taking our questions. So could you. Please give us an update on what percentage of your account have implemented on that strategy and what percentage of account Arthur you Diana <unk>, Inc.

Speaker Change #103: Thank you.

Rhonda, yes, well as we continue to grow our base of.

Rhonda F. Farnum: Accounts purchasing within that larger base, we're still roughly around 35%.

Rhonda F. Farnum: Have therapeutic interchanges in place for those that do have therapeutic interchanges predominantly those are all night utilization accounts, because that's what they drive their decision making process.

Rhonda F. Farnum: Got it thanks.

Speaker Change #104: Thank you.

Speaker Change #105: It appears we have no further questions on the phone.

Rick E. Winningham: Now I'd like to turn the conference back to Mr. Winningham. Please go ahead Sir.

Winningham: Yes, I'd like to thank everyone for joining us today, we look we look forward to the <unk> investor event on May 23rd.

Winningham: Encourage everyone to join US for that then I think it'll be an exciting day to review all of the data on the MSA and NIH and the <unk> team as well as the idea of really projecting the opportunity.

Thats out there.

Speaker Change #106: Sure for <unk>.

Speaker Change #106: The opportunity for this medicine.

Speaker Change #106: To make a significant difference.

Speaker Change #106: <unk> so.

Speaker Change #107: Well then thank you for dialogue.

Speaker Change #108: Thank you for sharing good first quarter.

Speaker Change #109: Update and we look forward to talking to you in the future and hope to see you.

Speaker Change #109: For the virtual event on May 20, <unk>. Thank you.

Speaker Change #110: This concludes today's conference call. We thank you for your participation you may now disconnect.