Q4 2024 Theravance Biopharma Inc Earnings Call

February 26, 2025

The only way to do this is through amazing people.

Speaker Change: Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravans Biopharma fourth quarter and full year 2024 conference call. During the presentation, all participants will be in a listen-only mode. A question and answer session will follow the company's formal remarks. To ask a question, press star 1 1 on your phone. Again, that's star 1 1 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 these instructions after management completes their prepared remarks.

Speaker Change: Also, today's conference call is being recorded. And now I'd like to turn the call over to Rick Winningham, Chief Executive Officer. Please go ahead, sir.

Rick Winningham: Good afternoon and welcome to TheraVance Biopharma's fourth quarter 2024 earnings results conference call.

Rick Winningham: On slide two, you'll find our forward-looking statements disclaimer, which covers certain risk factors, which could cause actual results to differ materially from any forward-looking statements we might make in today's call, and which are further described in our filings with the SEC.

Speaker Change: Moving to slide three, I'm joined today by Rhonda Farnum, Chief Business Officer, Aine Miller, Head of Development, and Aziz Sawaf, Chief Financial Officer.

Speaker Change: On slide four, I'll begin by highlighting our fourth quarter results, which represent a strong close to the year.

Speaker Change: Fourth quarter upellery net sales increased 10% over the fourth quarter of 2023 reaching 66.7 million, an all-time high, and our hospital performance was excellent, with doses up 49% year-over-year.

Speaker Change: With Amproloxetine, we achieved solid enrollment in Cyprus throughout the quarter and remained on track with our development timelines. In December, we had a positive exchange with the FDA, which reaffirmed our expectations around filing should Cyprus be positive.

Speaker Change: We learned that two abstracts had been accepted for oral presentations at the upcoming American Academy of Neurology meeting in April.

Speaker Change: and we completed market research underscoring the potential for amproloxetine to address significant unmet needs of patients with MSA and symptomatic NOH.

Speaker Change: Finally, based on 2024 Trilogy net sales reported by GSK, we've earned a $50 million milestone payment from Royalty Pharma.

Speaker Change: We continue to manage our expenses carefully and deliver full year results which fell within our guidance ranges.

Speaker Change: I'll cover our strategic priorities on slide five. For UPellery, we continue to focus on growing revenue while increasing brand profitability.

Speaker Change: In addition, there is a potential for a near-term $25 million sales milestone in the U.S., as well as milestone in royalty income from China once approved.

Speaker Change: With Amproloxetine, we're moving towards completing enrollment in the Open Label portion of the Cypress Study while simultaneously preparing for an expedited NDA filing.

Speaker Change: We plan to request priority review in order to bring this much-needed potential treatment to patients as quickly as possible, and will continue to build awareness of NOH within the MSA community.

Speaker Change: Turning to Trelegy, where there's a potential of an additional $150 million of milestones in the coming 24 months, plus the considerable value of our retained interest in Trelegy royalties.

Speaker Change: We remain dedicated to maximizing the value of Trilogy and are committed to returning excess capital to our shareholders. We'll continue to build on our recent track record of strong expense management and capital discipline to deliver sustainable value to our investors.

Speaker Change: I'll now turn the presentation over to Rhonda to cover Upellry's performance in the quarter. Rhonda. Thanks, Rick.

Rhonda: Beginning on slide 7, I'm pleased to report that the TheraVance-Viatris Commercial Partnership delivered a strong finish to 2024.

Rhonda: having driven Upelri net sales growth of 10% in the quarter, reaching approximately $67 million and full year sales of $239 million, with Upelri recording its highest level of profitability since launch.

Rhonda: The growth in Q4 was primarily driven by a 9% increase in demand.

Rhonda: Additionally, pricing continued to be favorable compared to the first half of 2024, which is a reflection of Viatris' efforts in demonstrating effective pricing strategy execution, as well as an improved channel mix.

Rhonda: Meaning, stronger demand in the higher margin channels, aligning with our brand objectives.

Rhonda: While the record high net sales this quarter closely tracked with demand generation, I will remind you that we traditionally experience seasonal dips in reported net sales as we transition from the fourth quarter to the first quarter of the following year.

Rhonda: Turning to slide 8, we continue to experience considerable momentum in the hospital setting, which exemplifies the strength and effectiveness of the TheraVance hospital selling capability.

Rhonda: During the quarter, there were 285,000 upillary doses pulled through to hospital customers, up 49% year-over-year.

Rhonda: In addition, we continue to broaden our base of formulary wins and therapeutic interchange protocols, achieving the highest annual gain since pre-COVID and resulting in an increased long-acting net market share of nearly 20% by the end of the fourth quarter.

Rhonda: Strong hospital performance remains critical to our overall brand strategy, specifically in transitioning patients from the hospital to the community setting, where Upelri's long-acting NIM market share maintained roughly 32% through the end of the year.

Rhonda: To summarize on slide 9, UPowery delivered another strong year of net sales growth of 8% in 2024 and driven by an impressive full year 11% growth in demand.

Rhonda: Additionally, we're encouraged by the potential sales milestones in the U.S. along with the extended IP protection to 2039 and the opportunity for future milestones in royalties in China.

Rhonda: At this point, I'll turn things over to Aziz for an update on Trilogy. Aziz?

Aziz: Thanks, Rhonda. I'll start on slide 11, where I'll discuss our potential to earn milestones for Trelegy. In 2024, GSK reported full-year sales of $3.5 billion, up 26% year-over-year, which triggered a $50 million milestone payment to TheraVans, with cash receipt received this month.

Aziz: Going forward, given the grant's continued growth trajectory and consensus being well above the required thresholds, we believe there is a high probability of achieving the higher end of milestones in both 2025 and 2026, totaling an additional $150 million.

Aziz: On slide 12, I'll comment on our royalty interest in Trilogy.

Aziz: In mid-2029, we will start to receive royalties based on ex-U.S. sales, and in January 2031, start to receive royalties based on U.S. sales.

Aziz: As a reminder, these royalties expire on a country-by-country basis the later of 15 years after commercial launch or until expiration of the longest-lived patent.

Aziz: To give you a sense of the potential financial implications for TheraVance, we've outlined consensus net sales on the right-hand side of the slide.

Aziz: Based on these projections, we expect to receive several hundred million of cumulative royalties starting in 2029 and lasting through the duration of the royalty terms.

Aziz: Combining these royalties with 150 million of probable milestones over the next

Aziz: Two years represents a significant and durable source of value to the company.

Aziz: With that, I'll pass it to Anya to provide an antraloxetine update. Anya?

Anya: Thanks Aziz. I'll begin the development update on the top of slide 14.

Anya: We continue to focus on important academic institutions and affiliated MSA centres of excellence as we near the completion of enrolment in the Cypress Study.

Anya: We have observed a solid month-over-month enrollment rate over the last quarter. This progress keeps us on track to achieve our objective of enrolling the final patient in the open-label portion of Cypress by the middle of this year and disclosing top-line results of the study approximately six months later.

Anya: We are very pleased to announce that we have had two abstracts

Anya: accepted for oral presentation at the upcoming American Academy of Neurology annual meeting scheduled to take place this April in San Diego.

Anya: Our first oral presentation will focus on the analysis of supine blood pressure measured in a home with a 24-hour ambulatory blood pressure monitor, the gold standard method for detecting supine hypotension, allowing us to assess the impact of amyloctatine on supine blood pressure in the double-blind randomized controlled study 169.

Anya: The second oral presentation looks at orthostatic blood pressures and venous norepinephrine levels and allows for a detailed analysis of the mechanism of action of amperloxidine in the previous randomized withdrawal study 170.

Anya: Turning now to the bottom of the slide, I also want to provide an update on where we stand with preparations for the Ampriloxidine NDA.

Anya: We are very encouraged by a recent Type C interaction with the FDA in December of last year, where we reaffirmed alignment on key requirements for a full approval should the Pfeiffer study be positive.

Anya: In this interaction, we covered important pre-NDA topics, including content of the NDA and our data analysis lab.

Anya: This represents another important milestone on our journey to advance amperloxidine as a new treatment option for NOH in patients with MSA.

Anya: We are well positioned to complete key modules of the NDA in advance of the CIFRS readout, and then be poised for an expedited regulatory filing should CIFRS be positive.

Anya: We also intend to request a priority review at the time of filing.

Anya: Now I'll turn the call back to Rhonda to highlight some of the work we've been doing in support of our launch preparedness. Rhonda? Thanks, Aine.

Rhonda: Focusing on slide 15, as part of our launch preparation efforts supporting disease education and awareness and our work developing product positioning, we have been actively engaged with the MSA community.

Rhonda: Today, I'd like to share with you some of the early results of our market research, which supports the high unmet need for an improved NOH therapy.

Rhonda: In Q4, we conducted a blinded survey of 200 board-certified neurologists and cardiologists who are treating patients with MSA and are familiar with NOH symptoms.

Rhonda: As you see on the left-hand side of slide 15, the vast majority of those we surveyed agreed that there is a significant need for better NOH therapies, with over 70% of neurologists indicating that they strongly agreed.

Rhonda: On the right, we ask these physicians to rank different attributes that they consider to be most important in selecting a new treatment for NOH.

Effectiveness and Improving NOH Symptoms Ranked Highest

Rhonda: Followed closely by the ability to improve a patient's quality of life and durability in maintaining symptom improvement.

Rhonda: Finally, safety and tolerability including avoiding worsening of supine hypertension also ranked amongst the top five most important attributes.

Rhonda: Next, we turn to slide 16, which highlights Amphyloxetine's target product profile.

Rhonda: This profile is based on the results in the MSA subpopulation from the previous Phase 3 study and closely matches the market research respondents' ranked desired attributes.

Rhonda: Based on this assumption, and if FDA approved, Ampriloxetine could provide a differentiated new treatment option with a meaningful improvement in OHSA composite scores, positive impact on patients daily activities of living, and durable effectiveness.

Rhonda: Market research also suggests that amproloxetine small once daily pill without the need for dose titration is another point of differentiation.

Rhonda: As this could provide a better experience, especially for patients with MSA who often have difficulty swallowing.

Rhonda: Lastly, as shown in the graph on the right, Amproloxetine's target product profile has the potential to address the high-end MET need in the NOH population if FDA approved.

Rhonda: The majority of physicians had a favorable view of Amproloxetine's blinded target product profile, with 90% of neurologists and 80% of cardiologists signaling they are likely to prescribe such a product if available.

Rhonda: The results from our initial market research, coupled with discussions with neurologists and advocacy organizations, have reinforced our belief in the significant impact Ampraloxetine could have on the estimated 40,000 patients with MSA in the U.S. suffering with NOH symptoms.

Rhonda: Now I will turn the presentation back to Aziz to cover the financials. Aziz?

Aziz: Thanks, Rhonda. Let's begin with the quarterly results. Slides 18 and 19 cover the detailed financials. On slide 20, I'll highlight our quarterly performance, where we generally exceeded expectations and stayed within all financial guidance ranges for the full year.

Aziz: In the fourth quarter, collaboration revenue grew by 8% to approximately $19 million, and upellery brand-level cash profitability reached its highest level to date.

Aziz: Operating expenses, excluding share-based comp, increased to $22 million this quarter. This was due to incremental commercial and medical affairs spend on April Lockstein pre-launch activities and increased R&D expenses due to an uptick in Cypress patient enrollment.

Aziz: As mentioned, for the year, R&D, SG&A, and share-based comp expense were all within our full-year financial guidance ranges.

Aziz: We ended the year with $88 million of cash, which excludes the $50 million Trilogy Milestone cash receipt.

Thank you.

Aziz: This reflects the completion of the CIPR study, with clinical trial costs decreasing in the second half of the year, offset by one time incremental spent to facilitate the majority, to facilitate the completion of a majority of the NDA prior to data readout.

Aziz: Second, we expect slight growth to our SG&A expense driven by measured investments for Amperloxetine in areas such as market research, market access, and medical affairs in preparation for potential NDA filing.

Aziz: For the year, we expect total SG&A expense, excluding share-based comp, to be between $50 million and $60 million.

Aziz: Third, we expect ShareBase comp to decrease year over year to a range of 18 to 20 million driven by continued cost-cutting initiatives.

Aziz: And finally, we expect non-GAAP losses and cash burn to be similar to 2024 levels, where we had non-GAAP losses of $16 million and cash burn of $14 million.

Aziz: For both metrics, we anticipate higher levels in the first half of the year with improvements coming in the second half. And as Rhonda has mentioned, Q1 collaboration revenue will be impacted by typical utility seasonality we've experienced over the past several years.

Aziz: Lastly, our accounting treatment for the Trilogy Milestones has been updated to reflect recent changes to accounting guidelines.

Aziz: We will now only recognize other income if cumulative milestones exceed $194 million.

Aziz: For example, achieving the remaining $150 million of milestones would result in only $6 million of other income recognized in 2026, with no other income recognized in 2024 and 2025.

Aziz: As a reminder, this accounting treatment has no impact on cash receipt, which we expect in Q1 of each year.

Rick Winningham: With that, I'll pass it back to Rick to conclude. Rick?

Rick Winningham: Thanks, Aziz. To summarize on slide 22, we enter 2025 in a strong financial position with a compelling outlook for shareholders.

Rick Winningham: We ended the year with $88 million in cash, excluding the $50 million we just received from Royalty Pharma. No debt and up to another $150 million in Trelegy-related potential milestones in the near term.

Rick Winningham: We're also increasingly optimistic regarding the value that Trilogy Royalties may bring to the company and remain committed to ensuring our shareholders benefit directly from our financial success.

Rick Winningham: Thanks to the hard work of our employees and our partner Viatris, we're well positioned to continue driving upellery growth for the foreseeable future, with strong demand generation and a winning patient-centered strategy.

Rick Winningham: We're optimistic regarding the growing contributions to Theravants, which not only include our share of U.S. profits, but meaningful royalties in China and potential near-term milestones in both territories.

Finally, I'd highlight the transformation

Rick Winningham: continue to expect to complete enrollment in the open-labeled portion of Cyprus by mid-2025, with top-line data expected approximately six months later.

Rick Winningham: Based on the results we've generated to date, as well as feedback from the community and market research, we believe Ampriloxetine has the potential to deliver meaningful clinical benefits to many patients with MSA who suffer debilitating symptoms of NLH.

Rick Winningham: We thank you for your continued support. Ready to take your questions. Operator.

Thank you.

Speaker Change: Thank you, sir. Once again, if you would like to ask a question, you may do so by pressing the star key followed by the digit 1-1 on your touchtone phone.

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

Speaker Change: If you're using a speakerphone or on today's call, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's star 1 if you'd like to ask a question. And we'll pause for a moment to assemble our roster.

And our first question comes from the line.

of Douglas Tau from H.C. Wainwright. Your question please.

out.

Speaker Change: Hi, good afternoon. Thanks for taking the questions and congrats on the progress. Maybe...

Speaker Change: sort of a follow through on some of the execution for sort of some of the initiatives you've had ongoing or was there anything in particular that led to this real sort of step up in performance?

Thank you. Thank you. Thank you.

Speaker Change: Thanks Doug, really always appreciate your questions. On the hospital front the team is executing the strategy very clearly and to see the wins in larger systems and that these systems are now more frequently, not always, but more frequently coming with therapeutic interchange as part of the initial formulary approval that brings

additional volume as I think you already appreciate.

Speaker Change: you will see a doubling of market share in those accounts that have a therapeutic interchange versus a conventional formulary approval.

Speaker Change: So the team is executing, they know where to go, they have a strategy of not only ensuring that concomitant use becomes adopted in protocols, and then following on with that to ensure if there's

Speaker Change: opportunity for converting short-acting nebulized youth to long-acting that certainly follows through. So we're just very very pleased with what our small team of 14 have been able to accomplish particularly this last quarter.

Speaker Change: And Rhonda, I guess I'm going to throw it to the interchange side. I'm just curious.

Rhonda: Did you sort of anticipate seeing this improvement or just maybe not quite as early, you know, just because sort of the magnitude or sort of the sort of inflection is quite, you know, impressive?

Speaker Change: It starts with knowing who to focus on, and then it takes a full team effort, starting with national accounts and having C-suite discussions.

Speaker Change: with ensuring that when requested, that the medical team can provide the clinical information that's necessary for completing the dossier, submission for formulary review, and then once approved.

Speaker Change: That's when the sales team is certainly there to ensure the pull-through, or recognizing the clinicians, whether they're hospitalists, radiation therapy.

Speaker Change: and the discharge team understand the access, meaning formulary is approved, so product is available, and that everyone involved knows how to use it, and then ensuring that these patients are leaving the hospital.

Speaker Change: with what they were exposed to in the hospital with their upholstery script in hand so that they continue their maintenance care post. So, it's the execution again. It's knowing where to prioritize the effort.

Speaker Change: And then one final one for me, if I can. I know you talked a lot about sort of

Speaker Change: sort of improvement and a focus on the channel mix to improve the growth to that.

Speaker Change: And I think, you know, sort of some of that improvement seems to have happened maybe faster than you expected. And I guess I'm just curious, you know, sort of the trajectory we should expect to see on that front into 2025.

Thank you for watching!

So...

We certainly did comment that it would take

That's what's driving the improvement.

And we're very pleased about it, obviously.

Okay, great. Thank you.

Speaker Change: Thank you and our next question comes to the line of Julian Harrison from PTIG your question, please

Julian Harrison: Hi, good afternoon. Congrats on a very strong end to 2024 and for taking my questions. Thank you for taking my questions. It looks like 4Q was really a standout quarter on the hospital side, kind of related to the last questions asked. I'm wondering if you could comment on any follow through of that trajectory or trend you saw in 4Q into the first two months of 2025.

Julian Harrison: I think everyone's quite aware of what's happening, particularly on the hospital front, relative to RSV, flu, and census being high in the hospital. So I think the demonstrated need of ensuring that

Julian Harrison: having product access to you Pellery is paying off and that's also whether I would probably classify that as you know unfortunate giving patients are having difficulties there's a need so I do think that is a tailwind for us.

Speaker Change: Okay, great. Thank you. And then, can you remind us of the next steps for Upellery in China? Are you just waiting for a regulatory decision there with your partner, Beatrice? Do you have an approximate sense of the timing of next steps too?

Speaker Change: Definitely, it's the waiting for the regulatory commentary back to the VIATRIS team and for planning assumptions, as we've stated in the past, that two-year window is what we typically would expect from time of submission to approval, so that's still what we're operating under.

Speaker Change: And as a reminder that in June of 2024, so last year, so 2 years from then.

Speaker Change: would be, you know, middle of next year is kind of the baseline assumption for that. That obviously triggers a seven and a half million milestone and then, you know, very high 14 to 20 percent royalties on any potential sales in the market.

Speaker Change: Excellent, that's helpful. And then finally, I'm just curious if you could talk more about your recent feedback from the FDA on ampyloxetine. I'm wondering if you could share specifically what spurred that interaction and can you talk in any more detail about what you received clarity on?

Thank you for watching!

Andy, you want to take that?

Speaker Change: I don't know, we can't hear Anya, but this was a, you know, this was a type C meeting. We just wanted to make sure that we understood what the content

Speaker Change: of the of the filing should be make sure that we, you know, had everything documented in terms of FDA expectations.

for the, you know, for the filing.

Speaker Change: We could invest the money in 2025, you know, really developing and riding the NDA.

Speaker Change: such that it would provide for an expedited filing once we had Cypress results, hopefully that are positive.

Got it. Thank you. That makes sense.

Speaker Change: Thank you. And our next question comes from the line of David Reisinger from Lee Rink Partners. Your question please.

Yes, thanks very much and thanks for all of the...

Speaker Change: detailed today and congrats on the fourth quarter performance. So I just had some basic sort of financial questions. So first...

Speaker Change: Was there any channel stocking or any other anomalies that benefited the fourth quarter net revenue? Second, what percentage of upelry sales are non-hospital sales dollars?

Speaker Change: Just wanted to understand, you know, if hospital is like 90% of net sales of upelry or 60% of net sales of upelry, just wanted to understand that.

Speaker Change: And then third, could you just explain why the non-hospital sales dollars are trending down year over year? Thanks very much.

Speaker Change: I just in terms of the, and I'll turn this over to Rhonda, but just in terms of, you know, sort of year-end levels, I think

Speaker Change: That's correct, Rick. David, your second question, if I understand correctly, the percent of UPell rate that runs through the hospital channel and what proportion of that, of the total brand, is that correct?

Speaker Change: Yes, just trying to understand what percentage of Upelri sales dollars come from the non-hospital

Speaker Change: category, however you categorize it, and then why is that trending down year over year?

Thank you for watching!

Speaker Change: The hospital business accounts for, in pure volume, within the inpatient setting, is roughly 10% of the total brand. So you can see it's a smaller proportion, leaving 90% to the larger channels of the community setting.

which includes long-term care.

Speaker Change: So you'll have to orient me to what your question or where you're finding data of what the decline is because that's, you know, not in line with what we're seeing relative to the demand increase, which was 11% full year for last year.

Speaker Change: Oh, got it. Yeah, to orient you, so the slide only discusses the hospital growth and volume of something like 49 percent.

Speaker Change: and the company never discusses non-hospital volume or non-hospital sales dollars. So that's what drove the question. I was wondering, you know, what is happening in non-hospitals since

Speaker Change: You know, the slide this quarter and historical quarters only relate to hospital.

So, that's what was driving the question, but I misperceived.

Speaker Change: I thought that hospital was a larger percentage of the sales dollars, but obviously since you just...

Speaker Change: you know, disclosed that the hospital volume is only 10% of total upellary volume. Now I have better context and I understand that non-hospital is growing.

Speaker Change: That's right. Thank you, David. And I think a point of differentiation there

Speaker Change: and an average stay is roughly three and a half days for exacerbating patients, whereas obviously I think you appreciate in the community setting, it's a 30 day script. So that's a volume differentiator right there.

Speaker Change: You want to just touch on demand growth as well, just so that David's got that, Rhonda? Yes, I offered that up at the beginning, 11% full year.

Speaker Change: And so, yeah, David, the strategy here for us and Beatrice is, you know, we're in the hospital.

driving, you know, driving uses of use in the hospital.

Speaker Change: such that the patient can have a good experience with the product that obviously we're talking about the ability to breathe better.

good experience, and therefore...

Speaker Change: get a prescription as they leave the hospital for outpatient use.

Speaker Change: And we get about 80% between 80 and 90 depending on the quarter of patients leaving the hospital with the script and I think

Speaker Change: you know, for the future another source of growth for us.

Speaker Change: and Beatrice is just simply simply converting a higher and higher percentage of those scripts to the really true chronic therapy out in the outpatient setting.

Got it. Thanks again.

Speaker Change: Thank you and as a reminder ladies and gentlemen if you do have a question at this time please press star 1 1 on your telephone and our next question comes from the line of Mark from TD Cowan. Your question please.

Speaker Change: Hi, this is Alex. I'm for Mark. Congrats on the quarter, and thanks for taking my question. So, just a couple on ampulloxetine.

Speaker Change: First, what do you ultimately see as the bar for success for the Cypress readout, and then, you know, assuming Cypress is positive, what would kind of be the scale of the commercial organization you need to kind of assemble to market the drug and

Speaker Change: Will any of that build occur ahead of the data, or is the potential OPEX increase entirely a 2026 story? Thanks.

Speaker Change: I think that we've touched on this before, but a one-point change in the OHSA composite score is a clinically meaningful change, so seeing a one-point move in the OHSA composite

Speaker Change: in evaluating patients in the randomized withdrawal, and that being statistically significant, that would constitute success, both from a statistical as well as a clinical meaningfulness.

viewpoint.

Speaker Change: I'll let Rhonda touch on the other point, but really just on the spin, you know, we

Yes.

Speaker Change: It's an important question and work that we have underway for determining what is the optimal size and relates to specific

in-person promotion.

Speaker Change: But what I will say, given what we understand about the market today, and having a very close evaluation of claims to particularly understand what's being prescribed and where and by who.

Speaker Change: We believe we can be very efficient with how we assemble and deploy the sales effort. And when I say the sales effort, that would be any personnel, whether

Speaker Change: That's in person, or we have virtual reach, and then that's complemented by digital surround sound with omni-channel reach.

Speaker Change: So, appreciating that, the script view that we have today, it helps us to appreciate the concentration of the potential targets, with that being roughly 3,000 prescribers.

and then that being concentrated across

Speaker Change: I believe 250 centers that we, centers and clinics that we want to ensure we're highly focused on. So that concentration really allows us to be very efficient which I think we've set the example of how efficiently we can operate with our current sales team.

Speaker Change: Just to clarify the cost question, so yeah, as you mentioned, the SG&A is going up, but not by much, right? The midpoint of guidance is $55 million relative to actuals of $53 million in 2024. So you're going up a couple million bucks.

very measured investment in medical affairs, market access.

Speaker Change: et cetera, market research, et cetera. This is all external spend and basically no incremental FTEs prior to the Cypress data readout. So no incremental FTEs baked into the guidance in 2025 for SGNA.

Got it. Thanks again.

Speaker Change: Thank you, and it appears that we have no further questions on the phone. I'd now like to turn the conference back to Mr. Winningham. Please go ahead, sir.

Rick Winningham: I'd just like to thank everyone for joining us today and thank you for the questions. We look forward to an exciting 2025 and being able to deliver on the strategic priorities that we outlined in today's call. Have a great day. Thank you.

Speaker Change: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

[music]

Speaker Change: Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravans Biopharma fourth quarter and full year 2024 conference call. During the presentation, all participants will be in a listen only mode. A question and answer session will follow the company's formal remarks.

Speaker Change: To ask a question, press star 1-1 on your phone. Again, that's star 1-1 to ask a question. If listening via webcast, please mute audio on your webcast device before asking a question over the phone. I will repeat these instructions after management completes their prepared remarks.

Speaker Change: Also, today's conference call is being recorded. And now I'd like to turn the call over to Rick Winningham, Chief Executive Officer. Please go ahead, sir.

Rick Winningham: Good afternoon and welcome to TheraVance Biopharma's fourth quarter 2024 earnings results conference call.

Rick Winningham: Moving to slide three, I'm joined today by Rhonda Farnum, Chief Business Officer, Aine Miller, Head of Development, and Aziz Sawaf, Chief Financial Officer.

Rick Winningham: On slide four, I'll begin by highlighting our fourth quarter results, which represent a strong close to the year.

Rick Winningham: Fourth quarter upellery net sales increased 10% over the fourth quarter of 2023, reaching $66.7 million, an all-time high. And our hospital performance was excellent, with doses up 49% year-over-year.

Rick Winningham: With Amproloxetine, we achieved solid enrollment in Cyprus throughout the quarter and remained on track with our development timelines. In December, we had a positive exchange with the FDA, which reaffirmed our expectations around filing should Cyprus be positive.

Rick Winningham: We learned that two abstracts had been accepted for oral presentations at the upcoming American Academy of Neurology meeting in April, and we completed market research underscoring the potential for amproloxetine to address significant unmet needs of patients with MSA and symptomatic NOH.

Rick Winningham: Finally, based on 2024 Trilogy net sales reported by GSK, we've earned a $50 million milestone payment from Royalty Pharma.

Rick Winningham: We continue to manage our expenses carefully and deliver full year results which fell within our guidance ranges.

Rick Winningham: I'll cover our strategic priorities on slide 5. For UPellery, we continue to focus on growing revenue while increasing brand profitability.

Rick Winningham: In addition, there is a potential for a near-term $25 million sales milestone in the U.S., as well as milestone in royalty income from China once approved.

Rick Winningham: With Amproloxetine, we're moving towards completing enrollment in the Open Label portion of the Cypress Study while simultaneously preparing for an expedited NDA filing.

Rick Winningham: We plan to request priority review in order to bring this much needed potential treatment to patients as quickly as possible. And we'll continue to build awareness of NOH within the MSA community.

Rick Winningham: Turning to Trelegy, where there's a potential of an additional $150 million of milestones in the coming 24 months, plus the considerable value of our retained interest in Trelegy royalties.

Rick Winningham: We remain dedicated to maximizing the value of Trilogy and are committed to returning excess capital to our shareholders. We'll continue to build on our recent track record of strong expense management and capital discipline to deliver sustainable value to our investors.

Rick Winningham: I'll now turn the presentation over to Rhonda to cover Upelry's performance in the corridor. Rhonda. Thanks, Rick.

Rhonda: Beginning on slide 7, I'm pleased to report that the TheraVance-Beatrice Commercial Partnership delivered a strong finish to 2024.

Rick Winningham: having driven Upelri net sales growth of 10% in the quarter, reaching approximately $67 million and full year sales of $239 million, with Upelri recording its highest level of profitability since launch.

Rhonda: The growth in Q4 was primarily driven by a 9% increase in demand.

Rhonda: Meaning, stronger demand in the higher margin channels, aligning with our brand objectives.

Rhonda: Turning to slide eight, we continue to experience considerable momentum in the hospital setting, which exemplifies the strength and effectiveness of the TheraVance hospital selling capability.

Rhonda: During the quarter, there were 285,000 utelry doses pulled through to hospital customers, up 49% year-over-year.

Rhonda: Strong hospital performance remains critical to our overall brand strategy, specifically in transitioning patients from the hospital to the community setting, where UPelree's long-acting NIM market share maintained roughly 32% through the end of the year.

Rhonda: To summarize on slide 9, UPowery delivered another strong year of net sales growth of 8% in 2024 and driven by an impressive full year 11% growth in demand.

Rhonda: Additionally, we're encouraged by the potential sales milestones in the U.S. along with the extended IP protection to 2039 and the opportunity for future milestones in royalties in China.

Rhonda: At this point, I'll turn things over to Aziz for an update on Trilogy. Aziz?

Aziz: Thanks, Rhonda. I'll start on slide 11 where I'll discuss our potential to earn milestones for Trilogy.

Speaker Change: In 2024, GSK reported full-year sales of $3.5 billion, up 26% year-over-year, which triggered a $50 million milestone payment to TheraVance, with cash receipt received this month.

Speaker Change: Going forward, given the grant's continued growth trajectory and consensus being well above the required thresholds, we believe there is a high probability of achieving the higher end of milestones in both 2025 and 2026, totaling an additional $150 million.

Speaker Change: On slide 12, I'll comment on our royalty interest in Trilogy.

Speaker Change: In mid-2029, we will start to receive royalties based on ex-U.S. sales, and in January 2031, start to receive royalties based on U.S. sales.

Speaker Change: As a reminder, these royalties expire on a country-by-country basis the later of 15 years after commercial launch or until expiration of the longest-lived patent.

Speaker Change: To give you a sense of the potential financial implications for TheraVance, we've outlined consensus net sales on the right-hand side of the slide.

Speaker Change: Based on these projections, we expect to receive several hundred million of cumulative royalties starting in 2029 and lasting through the duration of the royalty terms.

Speaker Change: Combining these royalties with 150 million of probable milestones over the next

Speaker Change: Two years represents a significant and durable source of value to the company.

Anya: With that, I'll pass it to Anya to provide an anthrologist team update. Anya?

Anya: Thanks Aziz. I'll begin the development update on the top of slide 14.

Anya: We continue to focus on important academic institutions and affiliated MSA centres of excellence as we near the completion of enrolment in the Cypress Study.

Anya: We are very pleased to announce that we've had two abstracts accepted for oral presentations at the upcoming American Academy of Neurology Annual Meeting, scheduled to take place this April in San Diego.

Anya: Our first oral presentation will focus on the analysis of supine blood pressure measured in a home with a 24-hour ambulatory blood pressure monitor, the gold standard method for detecting supine hypotension, allowing us to assess the impact of amperloxidine on supine blood pressure in the double-blind randomized controlled study 169.

Anya: Turning now to the bottom of the slide, I also want to provide an update on where we stand with preparations for the Amperloctadine NDA.

Anya: In this interaction, we covered important pre-NDA topics, including content of the NDA and our data analysis lab.

Anya: This represents another important milestone on our journey to advance amperloxidine as a new treatment option for NOH in patients with MSA.

Anya: We are well positioned to complete key modules of the NDA in advance of the CIFRS readout, and then be poised for an expedited regulatory filing should CIFRS be positive.

Anya: We also intend to request a priority review at the time of filing.

Anya: Now I'll turn the call back to Rhonda to highlight some of the work we've been doing in support of our launch preparedness. Rhonda? Thanks, Aine.

Anya: Today, I'd like to share with you some of the early results of our market research, which supports the high unmet need for an improved NOH therapy.

Anya: In Q4, we conducted a blinded survey of 200 board-certified neurologists and cardiologists who are treating patients with MSA and are familiar with NOH symptoms.

Anya: As you see on the left-hand side of slide 15, the vast majority of those we surveyed agreed that there is a significant need for better NOH therapies, with over 70% of neurologists indicating that they strongly agreed.

Anya: On the right, we ask these physicians to rank different attributes that they consider to be most important in selecting a new treatment for NOH.

Effectiveness and Improving NOH Symptoms Ranked Highest

Anya: Followed closely by the ability to improve a patient's quality of life and durability in maintaining symptom improvement.

Anya: Finally, safety and tolerability including avoiding worsening of supine hypertension also ranked amongst the top five most important attributes.

Anya: Next, we turn to slide 16, which highlights Amphyloxetine's target product profile.

Anya: This profile is based on the results in the MSA subpopulation from the previous Phase 3 study and closely matches the market research respondents' ranked desired attributes.

Anya: Based on this assumption, and if FDA approved, Ampriloxetine could provide a differentiated new treatment option with a meaningful improvement in OHSA composite scores, positive impact on patients' daily activities of living, and durable effectiveness.

Anya: Market research also suggests that amproloxetine small once daily pill without the need for dose titration is another point of differentiation.

Anya: This could provide a better experience, especially for patients with MSA who often have difficulty swallowing.

Anya: Lastly, as shown in the graph on the right, Amproloxetine's target product profile has the potential to address the high-end MET need in the NOH population if FDA approved.

Anya: The majority of physicians had a favorable view of Amproloxetine's blinded target product profile, with 90% of neurologists and 80% of cardiologists signaling they are likely to prescribe such a product if available.

Anya: The results from our initial market research, coupled with discussions with neurologists and advocacy organizations, have reinforced our belief in the significant impact Ampraloxetine could have on the estimated 40,000 patients with MSA in the U.S. suffering with NOH symptoms.

Anya: Now I will return the presentation back to Aziz to cover the financials. Aziz?

Aziz: In the fourth quarter, collaboration revenue grew by 8% to approximately $19 million, and upellery brand-level cash profitability reached its highest level to date.

Aziz: Operating expenses excluding share-based comp increased to $22 million this quarter. This was due to incremental commercial and medical affairs spend on Amproloxetine pre-launch activities and increased R&D expenses due to an uptick in Cypress patient enrollment.

Aziz: As mentioned, for the year, R&D, SG&A, and share-based comp expense were all within our full year financial guidance ranges.

Aziz: We ended the year with $88 million of cash, which excludes the $50 million Trilogy Milestone cash receipt.

Aziz: On slide 21, I'll provide our 2025 financial guidance. First, we're guiding to R&D expense, excluding share-based comp, of between $32 and $38 million.

Aziz: For the year, we expect total SG&A expense, excluding share-based comp, to be between $50 and $60 million.

Aziz: Thanks, Aziz. To summarize on slide 22, we enter 2025 in a strong financial position with a compelling outlook for shareholders.

Speaker Change: We're optimistic regarding the growing contributions to Theravants, which not only include our share of U.S. profits, but meaningful royalties in China and potential near-term milestones in both territories.

Speaker Change: continue to expect to complete enrollment in the open-labeled portion of Cyprus by mid-2025, with top-line data expected approximately six months later.

Speaker Change: Thank you, sir. Once again, if you would like to ask a question, you may do so by pressing the star key followed by the digit 1-1 on your touchtone phone.

Speaker Change: If listening via webcast, please mute audio on your webcast device before asking a question over the phone. If you're using a speakerphone or on today's call, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's star 1 if you'd like to ask a question. And we'll pause for a moment to assemble our roster.

of Douglas Tau from H.C. Wainwright. Your question please.

Speaker Change: Hi, good afternoon. Thanks for taking the questions and congrats on the progress.

Speaker Change: As a starting point, I guess I would like to hear a little bit more from Rhonda about what really drove so much of the success of the hospital channel this particular quarter. I mean, was it just

Speaker Change: sort of a follow-through on some of the execution for sort of some of the initiatives you've had ongoing or was there anything in particular that led to this real sort of step up in performance.

Speaker Change: And Rhonda, I guess I'm going to throw it to the interchange side. I'm just curious.

or the pulmonologist.

Q4 2024 Theravance Biopharma Inc Earnings Call

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