U.S. markets closed
  • S&P 500

    +8.70 (+0.24%)
  • Dow 30

    +37.90 (+0.13%)
  • Nasdaq

    +111.44 (+0.92%)
  • Russell 2000

    +10.25 (+0.56%)
  • Crude Oil

    -0.18 (-0.39%)
  • Gold

    -23.60 (-1.31%)
  • Silver

    -0.81 (-3.44%)

    +0.0057 (+0.48%)
  • 10-Yr Bond

    -0.0360 (-4.10%)

    -0.0042 (-0.32%)

    -0.1650 (-0.16%)

    -69.79 (-0.41%)
  • CMC Crypto 200

    -4.23 (-1.25%)
  • FTSE 100

    +4.65 (+0.07%)
  • Nikkei 225

    +107.40 (+0.40%)

Edited Transcript of TBPH.OQ earnings conference call or presentation 5-Nov-20 10:00pm GMT

·35 min read

Q3 2020 Theravance Biopharma Inc Earnings Call GEORGE TOWN Nov 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Theravance Biopharma Inc earnings conference call or presentation Thursday, November 5, 2020 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrew Asa Hindman Theravance Biopharma, Inc. - Senior VP & CFO * Brett K. Haumann Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer * Frank Pasqualone Theravance Biopharma, Inc. - Senior VP & Chief Commercial Operations Officer * Gail B. Cohen Theravance Biopharma, Inc. - VP of Corporate Communications & IR * Rick E. Winningham Theravance Biopharma, Inc. - Chairman & CEO ================================================================================ Conference Call Participants ================================================================================ * Alan Carr Needham & Company, LLC, Research Division - Senior Analyst * Douglas Dylan Tsao H.C. Wainwright & Co, LLC, Research Division - MD & Senior Healthcare Analyst * Marc Alan Frahm Cowen and Company, LLC, Research Division - Director * Matthew Alexander Bannon JPMorgan Chase & Co, Research Division - Analyst * Vikram Purohit Morgan Stanley, Research Division - Equity Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravance Biopharma Conference Call. (Operator Instructions) Today's conference call is being recorded. And now I would like to turn the call over to Gail Cohen, Vice President, Corporate Communications and Investor Relations. Thank you. Please go ahead. -------------------------------------------------------------------------------- Gail B. Cohen, Theravance Biopharma, Inc. - VP of Corporate Communications & IR [2] -------------------------------------------------------------------------------- Good day, good afternoon, and thank you for joining the Theravance Biopharma quarterly conference call to discuss our business. As always, I remind you that this call will contain forward-looking statements, which involve risks and uncertainties, including statements about our development pipeline, expected benefits of our products, the 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 I would direct your attention to Slide 3. Joining us are Rick Winningham, Chief Executive Officer; followed by Frank Pasqualone; Chief Commercial Operations Officer; Brett Haumann, Chief Medical Officer; and Andrew Hindman, Chief Financial Officer. Following our prepared remarks, we will open the call to questions. Now I will hand the call to Rick for opening remarks. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [3] -------------------------------------------------------------------------------- Thanks, Gail. Good afternoon, and thank you for joining us. To begin, we're pleased to report Theravance Biopharma has reached an important milestone that will drive us forward in the years to come. During this quarter, our commercial product, YUPELRI achieved stand-alone brand profitability. This measurement is based on accounting for consolidation of our 35% profit split with Mylan, then factoring in additional YUPELRI expenses by Theravance that are not shared with Mylan. The Mylan and Theravance commercial teams accomplished this during an ongoing respiratory pandemic. And while always remaining mindful of the health and safety of our teams and the communities we serve. Frank will share the details on our continued progress with YUPELRI. Regarding our clinical development pipeline, we're updating 2021 time lines for readouts of top line results. Specifically, we expect Ampreloxetine's Phase III results for symptomatic neurogenic orthostatic hypotension, or NOH; and TD-1473's Phase II results for ulcerative colitis and Crohn's disease will read out during the third quarter 2021, likely in 3 separate press releases. Brett will share more context on these critical milestones. We completed Part C of the ongoing Phase I study for TD-8236 at moderate-to-severe asthmatics as well as the Phase IIa Lung Allergen challenge study in mild asthmatics. The Phase I Part C study demonstrated significant reductions in FeNO, pSTAT1, pSTAT6, biomarker, even though these patients were already on inhaled corticosteroids. However, the lung allergen challenge study, 8236 did not meet primary endpoint. Given the very recent receipt of these top line results as well as ongoing analysis of the merging data from Part C including gene expression and cytokine data, we are still consolidating the overall data set to inform the future direction of 8236 development program. Brett will walk through these initial results in more detail. We continue to work as expeditiously as possible to complete the Phase II program for TD-0903 as a potential treatment for COVID-associated lung hyperinflammation. And Brett will provide a status update on this program as well. And finally, Andrew will walk through the financial update at the end of our presentation. So let's get started with Frank for a commercial update. Frank? -------------------------------------------------------------------------------- Frank Pasqualone, Theravance Biopharma, Inc. - Senior VP & Chief Commercial Operations Officer [4] -------------------------------------------------------------------------------- Thanks, Rick. Let's begin with Slide 5. Remember, YUPELRI has indicated for the maintenance treatment of patients with COPD. It's the first and only once daily nebulized, long-acting muscarinic antagonist that provides a full 24 hours of control for patients. While COVID-19 continues to affect the health care landscape, our business began to recover from the effects of the pandemic this quarter. In response to the new environment, our promotional strategy quickly pivoted to increased digital marketing investments, leveraging a hybrid selling model with virtual and in-person interactions. This evolution in our commercial model was on target with YUPELRI returning to growth this quarter. Despite the COVID-19 impact on COPD patients and prescribers, increasing numbers of hospitals are purchasing YUPELRI, prescribers are becoming more familiar with the brand, and YUPELRI is seeing increasing use in key patient types. The Theravance Biopharma and Mylan commercial teams were able to generate quarter-over-quarter net sales growth of 22%, making YUPELRI profitable on a brand basis this quarter for Theravance Biopharma. The team has risen to every challenge presented by COVID-19 with innovation and safety always at the forefront for themselves, the health care professional and the patient. Let's move to Slide 6. Theravance Biopharma's implied 35% share of net sales for YUPELRI during quarter 3 of 2020 was $13 million, up from $5.8 million in quarter 3 of 2019. Going forward, we will report this metric of our implied 35% share of net sales for YUPELRI. We continue to track key performance metrics, including formulary reviews and wins, patient uptake and market access. Since launch, a total of 560 formulary and non-formulary accounts have order YUPELRI, and more than 2/3 of these accounts have reordered at least once. Launched to date, formulary wins totaled 191, covering over 360 of these accounts with a formulary win rate of 90%. 78% of these formulary accounts have purchased to date. The team remains on track to deliver on both strategic imperatives, expanding the formulary access base through the remainder of the year, and prioritizing patient demand pull-through efforts in the accounts with YUPELRI already on formulary. We continue to provide exceptional medical information support to our customer base, fulfilling 100% of health care provider requests in under 30 days since launch. We estimate that through third quarter of 2020, approximately 50,000 patients have been prescribed YUPELRI since the U.S. launch in February 2019. Now turning to our marketing efforts and the impact on brand perceptions of prescribing behaviors. Data as of July 2020 remain positive, including IQVIA Retail Data and the durable medical equipment market segment, YUPELRI achieved a 17.4% share of the long-acting nebulized market, up from 16% in April 2020. Daily long-acting nebulized tracking data through the week of October 30, 2020, shows YUPELRI approaching 1,000 retail prescriptions on a 7-day moving average. As the retail segment only accounts for a minority portion of the total patients treated with YUPELRI, this is another milestone metric for the quarter. While we have been successful to date, we believe we're only beginning to realize the opportunity to provide value to patients with COPD. And because it's critical that patients have access to YUPELRI, we continue to work to expand coverage for the medicine. We're pleased to announce that YUPELRI's commercial coverage has increased to 74%. This improving picture for access plays an integral role in the strategic outlook for YUPELRI for the balance of 2020 and beyond. Before COVID-19-related restrictions on our field-based activities, institutional volume was strong and growing in our targeted accounts. Our representatives have returned to site-specific in-person HCP engagements during the quarter with appropriate mandatory safety measures in place. Our focus in the fourth quarter is to accelerate our growth that was reignited in the third quarter. As our careful and selective reentry continues, we will monitor our environment and our investments closely, and we're poised to react quickly. And now I'll turn the call over to Brett for an update on our clinical development programs. -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [5] -------------------------------------------------------------------------------- Thanks, Frank. Moving to Slide 7. I'll provide a brief update on our pipeline. Like the commercial team that Frank spoke about, the clinical development teams have adopted innovative approaches in response to the pandemic. As an example, for ampreloxetine, our once-daily norepinephrine reuptake inhibitor in development for the treatment of patients with symptomatic NOH, we worked with the U.S. FDA to decentralize our ongoing trials to allow this fragile patient population to participate in the program without traveling to the clinic. The decentralized approach is now being rolled out across the Phase III program in the U.S. and globally in an effort to overcome the challenges that patients face regarding travel, health care access and participation in clinical trials. We continue to see high rates of screen -- of site activity, screening and randomization into the program, and we expect to report results from the 4-week SEQUOIA study in the third quarter of 2021. Turning to TD-1473, our gut-selective pan-JAK inhibitor for the treatment of inflammatory bowel disease in partnership with Janssen, we have 2 studies in progress. RHEA is a Phase IIb/III study or 1473 in patients with moderately to severely active ulcerative colitis and DIONE is a Phase II study in patients with Crohn's disease. We expect the ulcerative colitis study and the Crohn's study to read out in the third quarter of 2021. Turning to Slide 8. TD-8236, our lung-selective inhaled pan-JAK inhibitor in development for the treatment of inflammatory lung diseases including steroid resistant asthma. We completed Part C of the study, enrolling the asthma patients that we believe will benefit most from 8236, namely patients with moderate-to-severe asthma who remain poorly controlled despite being treated with inhaled steroids. We deliberately enrolled patients with allergic called T2-dominant as well as non-allergic or non-T2-dominant asthma, knowing that patients with non T2-dominant disease did not respond to inhaled steroids or to current biological treatments. As reflected on Slide 9, we're pleased to report that 8236 performed well in Part C. Not only did we see a favorable safety and tolerability profile and very low levels of 8236 in the blood after dosing 1,500 micrograms by inhaler for 7 days. But significantly, we also demonstrated target engagements on key biomarkers of lung inflammation including exhaled nitric oxide and inhibition of the phosphorylation of the JAK STAT pathway, as measured by pSTAT1 and pSTAT6 levels in inflammatory cells in the lung. The biomarker effect on pSTAT was consistent in patients with both T2-dominant and non-T2-dominant asthma. The full data set of Phase I from Part A, B and C for 8336 tells a positive story. In parallel with Part C, we conducted a Phase IIa Lung Allergen challenge study. This is an experimental methodology study carried out in patients with mild allergic or T2-dominant asthma, who are not on inhaled steroids as steroids will impact the results of the study. Whilst this is not the population of asthma patients we would ultimately seek to treat with TD-8236, the study offered a short duration, cost-effective means of assessing the potential for 8236 to protect patients against an allergen that would provoke a worsening of their asthma. No JAK inhibitors have previously been tested in this clinical model, but our preclinical data suggested that 8236 should reduce the risk of worsening in a lung allergen challenge study. Our hypothesis based on previous nitric oxide data in mild asthmatics that we should see a dose-dependent effect with 150 micrograms showing no response, but 1,500 micrograms improving the latest medic response compared to placebo in patients who were dosed for 14 days prior to the allergen challenge. Moving to Slide 11. As expected, we did not see a response for the 150-microgram dose. However, we also did not see an impact on the latest medic response with the 1,500-microgram dose, as shown on the left panel, despite showing significant reductions in nitric oxide with the same dose in the same patients, as shown on the right panel. This was not at all in keeping with our expectations. The study design itself was robust, and the patients responded as expected to the allergen challenge. So we're confident this is not a failure of study design. It seems that we are not able to impede this allergic mechanism despite good pan-JAK potency and appropriate target engagement, as evidenced by the changes in FeNO shown in the right-hand panel. Moving to Slide 12. Whilst this is clearly an unexpected result, it's worth noting that we have seen consistent evidence of nitric oxide reduction with the 1,500-microgram dose across 3 separate groups of asthmatics. Including the moderate-to-severe asthmatics in part C, who were already on a background of inhaled steroids. It's also important to note that there are other therapies that have failed to show an effect in a lung allergen challenge study that went on to gain approval producing exacerbations in moderate-to-severe asthmatics, including the anti-IL-5 therapy, mepolizumab, branded as NUCALA. With this in mind, we're continuing to evaluate all the data that's emerging from these studies including gene expression data and cytokine data from Part C in moderate-to-severe asthmatics to help inform our conclusions and next steps for 8236. Moving to Slide 14. TD-0903, a lung-selective nebulized JAK inhibitor is currently in development for the treatment of hospitalized COVID-19 patients. 0903 has the potential to inhibit the cytokine storm associated with acute lung injury in an effort to reduce the number of patients who require admission to ICU for assisted ventilation and to reduce the risk of death. Turning to Slide 15. 0903 has been evaluated across a range of nebulized doses after single and multiple doses in a Phase I study in healthy volunteers. This allowed us to initiate a Phase II multiple-ascending dose study, evaluating the same range of nebulized doses in hospitalized patients with COVID 19, that is now completed dosing. Additionally, the data supported the filing and authorization of an IND in the U.S. and Phase II clinical trial approvals in other countries around the world. As you see in the summary of Phase I data on Slide 16, 0903 was well tolerated, and the PK profile was consistent with lung-selective exposure, produce consistent, dose-dependent but very low levels of drug in the systemic circulation, well below those are anticipated to have systemic effects. Having also completed the dose escalation portion of the Phase II study, we're now entering the second part of the study, testing 1 dose of 0903 added to standard of care against a control arm of usual standard of care in approximately 200 patients. We expect to report results in the Phase II study in the second quarter of 2021. We also see an opportunity to develop 0903 in additional settings where hyper inflammation of the lung is present, including acute lung injury from other sources and the treatment of acute and chronic lung allograft rejection. We look forward to updating you on our progress with 0903 in early 2021. I'll now turn the call over to Andrew for the financial update. -------------------------------------------------------------------------------- Andrew Asa Hindman, Theravance Biopharma, Inc. - Senior VP & CFO [6] -------------------------------------------------------------------------------- Thanks, Brett. And before moving into our financials, let's start with an update on GSK's TRELEGY. As a reminder, TRELEGY is the first and only once-daily single inhaler triple combination therapy approved for the treatment of COPD and recently approved for the treatment of asthma. After the September 9 FDA approval, GSK immediately initiated commercial activities to support the U.S. launch of this additional indication. Also, as a reminder, that Theravance Biopharma received an upward tiering royalties on global net sales of TRELEGY. At present, 75% of the income from our economic interest is pledged to service principal and interest payments on our outstanding nonrecourse notes, and the remaining 25% of income is retained by us. During GSK's recent earnings call, they noted that TRELEGY continued to grow nicely. Net sales -- quarterly net sales up 45% year-over-year, generating global quarterly net sales of USD 252 million. GSK also noted it received a CRL from the FDA for their separate supplemental NDA filing that had sought to secure and all-cause mortality benefit claim in COPD. Moving to Slide 19. I'll begin with the financial highlights for the third quarter and then close with our updated 2020 financial guidance. Total revenue for the third quarter 2020 was $18.3 million as compared to $12.4 million for Q3 2019. And operating loss was $76.6 million or $61.1 million, excluding share-based compensation expense. This compares to $65.2 million and $52.2 million for the same respective figures during Q3 2019. We ended the quarter with cash, cash equivalents and marketable securities of $358.3 million. And regarding updated 2020 financial guidance, we are modifying our full year 2020 operating loss, excluding share-based compensation, to a range of $225 million to $235 million compared to our previous range of $205 million to $225 million. This increase in the top end of the range is due predominantly to the acceleration of TD-0903 into the clinic. And as a reminder, our operating loss guidance does not include royalty income for TRELEGY, which we recognize in our statement of operations as income from investment in TRC LLC, nor does our guidance include benefits from potential future business development activities. Finally, our guidance could change due to factors such as the timing and cost of clinical development programs, ongoing COVID-19 risks and challenges or other operating factors that could impact our full year 2020 financial results. With that, I'll turn the call back to Rick for closing remarks. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [7] -------------------------------------------------------------------------------- Thanks, Andrew. I'm I sincerely appreciate the work of Theravance Biopharma team and what they've been able to deliver for their passion, dedication, their commitment. Our teams focused on execution across all disciplines, continuing to make progress, carrying momentum forward through these last few months of the year and onto and into 2021. With YUPELRI now profitable on a brand basis and TRELEGY continuing to lead the market as a single inhaler triple therapy, growing market share and the potential to increase growth with the new asthma indication, our financial complexion is changing. Adding to the financial dynamic is a clear pathway that we've now laid out for our late-stage clinical program readouts, advancing our pioneering science that may lead to transformative medicines that have the potential to impact the lives of patients significantly. With data coming in NOH, ulcerative colitis, Crohn's disease and lung hyperinflammation due to COVID-19, over the next few quarters, with Janssen's potential opt-in expected in late 2021 for TD-1473, and then Janssen covering the next phase of trial expenditures. The financial outlook is increasingly appealing. Theravance Biopharma is an attractive combination of future revenue, pioneering science and rare disease and IBD catalysts in 2021 with a research development engine that harnesses our deep knowledge of chemistry and biology to develop organ-selective treatments that target where the disease is active. I couldn't be more optimistic and excited about 2021 and beyond. And I'll now hand the call back to the operator for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We have our first question from the line of Marc Frahm with Cowen. -------------------------------------------------------------------------------- Marc Alan Frahm, Cowen and Company, LLC, Research Division - Director [2] -------------------------------------------------------------------------------- First, just to start off with the TD-1473 and refinement of when that data would come. Can you just talk about what assumptions are kind of built into that Q3 data release? And has there been increased COVID impact in the last few months since the last earnings call when you thought things have recovered? -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [3] -------------------------------------------------------------------------------- Mark, I'll make a couple of comments. And shift it over to Brett. I think that over the last few months, we've seen significant sort of continuation of an uptick in the UC study as well as Crohn's study. We've -- our teams have gotten much more agile, I believe, in handling challenges that COVID may pose in any given site around the world. And I think it's the combination of the progress to date that -- plus the ability to handle the challenges that COVID provides on a site-by-site basis that gave rise to the guidance of the third quarter. And again, we'd expect those to be 2 separate releases. But Brett, do you want to add to that? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [4] -------------------------------------------------------------------------------- Thanks, Rick. And Mark, thanks for the question. Just to add to what Rick was describing, you're right, certainly in the first wave of the pandemic, we did experience a disruption from COVID. And you may recall that we took a conscious decision ourselves to suspend screening for new patients coming in. That lasted about 4 weeks. But as we were able to open individual sites, we did see a reemergence of activity. Now that didn't occur over mates. We saw a sort of a ramping up of productivity through the remainder of the summer. I think it's fair to say that now we're seeing levels of activity that resemble those that we saw pre-pandemic. But we are conscious that the upcoming winter may present challenges in isolated pockets around the world. We are seeing lockdowns, for example, in parts of Europe. We've compensated for that on a number of fronts. Obviously, I think the sites are more prepared this time to deal with the challenges. PPE and so on, it's much more freely available. Testing is not freely available. We also have a large network of sites in more than 20 countries around the world on the 1473 program. So we think even if there are isolated pockets. We should still be able to compensate for that with productivity in other parts of the world. The remaining parts of the time line though that you were asking to that lead to the third quarter relate to the lead times. Once we enroll the last patient, it takes 2 months for us to follow the last patient through the UC study and 3 months to follow the last patient through the Crohn's study because that's the duration of treatment. And then the last activity that we have really focuses on cleaning the data and on analyzing it. And there are some challenges that have been presented with COVID or by COVID in terms of getting the appropriate people to the sites to monitor the studies. We are dealing with that. But certainly, we want to make sure that we're emphasizing the quality of the data as we clean those final patients. And so that's also incorporated into those time lines that lead to the third quarter predictions. -------------------------------------------------------------------------------- Marc Alan Frahm, Cowen and Company, LLC, Research Division - Director [5] -------------------------------------------------------------------------------- Okay. Great. And then maybe on 8236, you studied some other doses, I believe, in trials tonight as well. Did you see a dose response on FeNO across those other doses? And then maybe can you speak to the kind of weight of evidence that of longer-term success on longer term trials on things like exacerbations for FeNO versus the LAR within this drug? -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [6] -------------------------------------------------------------------------------- Brett, do you want to take that? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [7] -------------------------------------------------------------------------------- Thanks, Rick. So Mark, you asked about other doses. You may recall that in the Part B of the study, we looked at a range of doses from 150 micrograms all the way up to 4,000 micrograms in mild asthmatics. These are not patients with hugely elevated levels to begin with, but we did see evidence of some dose dependency. The 150-microgram dose did not produce much aberration in nitric oxide. Those levels remained high in those patients. But as we push to doses above 150 micrograms, we began to see improvements. And there were actually very little difference between the 1,500 and the 4,000 micrograms, led us to the selection of doses that we took. So we have seen some dose dependency. And in fact, you see again in the LAR study in the lung allergen challenge that the 150-microgram dose doesn't produce any changes in nitric oxide, where is the 1,500 microgram dose does. So I think that reproducibility gives us some confidence that we are engaging in biology. We're just not having the effect on the latest medic response. In terms of weighted evidence, it is dependent on the mechanism as to whether nitric oxide or LAR is predictive of protecting against exacerbations in the long term. As I mentioned, NUCALA, as an example, doesn't modify expression of the LAR that actually has been approved for reducing exacerbations in moderate-to-severe asthmatics. And there are other therapies like inhaled corticosteroids that do both. They suppress nitric oxide and improve on LAR. So it isn't -- it's mechanism dependent. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- Our next question comes from the line of Anupam Rama with JPMorgan. -------------------------------------------------------------------------------- Matthew Alexander Bannon, JPMorgan Chase & Co, Research Division - Analyst [9] -------------------------------------------------------------------------------- This is Matt Bannon on for Anupam. Just following up on your response there, Brett, you mentioned that dose responses kind of taper out between 1,500 and 4,000 micrograms in terms of FeNO response. But is there any reason to believe that there might be some threshold to overcome in terms of the late asthmatic response? In which case you could use one of those higher doses in another follow-on study. I know that some drugs like NUCALA have been improved in the absence of this type of data, but that might be interesting. And secondly, we noticed that GSK received a complete response letter from the FDA for including all-cause mortality on TRELEGY COPD label. So just wondering if GSK has informed you of the nature of the CRL and if they plan on resubmitting. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [10] -------------------------------------------------------------------------------- Yes, I'll take the GSK question. No, they haven't informed us on the nature of the CRL. Brett can comment on dose dependency of LAR. Just before Brett does, I'd say that this is the first JAK inhibitor, inhaled JAK inhibitor that's been in this type of a study. And when you look across the range of mechanisms that have been evaluated in this type of study, you see the -- relative to LAC, you see a range of outcomes, something like an anti-TSLP antibody not showing much of an effect at 42 days in lung allergen challenge study. But at 84 days, showing a significant effect. So there's a number of different things probably going on here. Part of it might be dosed, but I think there's other parameters. Brett? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [11] -------------------------------------------------------------------------------- Thanks, Rick. And absolutely. I agree. The lack of precedents in this space was something that we were aware of coming into the lung allergen challenge. The threshold idea is a very interesting one matter. And obviously, that's something that we're considering. I think it would be premature for us to speculate on exactly what the root cause is right now because we're continuing to assimilate the data. We've got additional data coming through particularly from our moderate-to-severe asthmatics, the cytokine data, the gene expression data, and I think that will give us a sense of modulation across a range of other parameters. So we're certainly going to be diving into that. So we do expect to report on that data. We haven't given exact timing for that, but we certainly do want to put this out in the public domain, probably through a scientific congress in the course of next year. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- Your next question comes from the line of Vikram Purohit with Morgan Stanley. -------------------------------------------------------------------------------- Vikram Purohit, Morgan Stanley, Research Division - Equity Analyst [13] -------------------------------------------------------------------------------- I had a question on the royalty dispute on TRELEGY elite royalties with Innoviva. Could you just walk us through the nature of the current dispute? And also talk about what might be the central issue to be discussed during the arbitration proceeding that your release mentioned is scheduled for the first quarter of '21? -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [14] -------------------------------------------------------------------------------- Sure. Yes, thanks for the question. The dispute, as we outlined it in, I think, at June, early June 8-K, had to do with plan to invest in 2 private companies with funds from the LLC. We said at that time in June that we -- based on the plans that were laid out, we might dispute that, and the dispute mechanism in the LLC really is arbitration. Now also in the LLC agreement, there's high levels of confidentiality with regard to, sort of, the process of arbitration, but what we can say is what we did say, which is that we would expect the arbitration to be concluded in the first quarter of the year. And beyond that, I would point people to the LLC agreement, which is filed unredacted as part of the 2014 separation papers between Theravance Biopharma and the company that's now Innoviva. So that's about what I can say. We're going to obviously protect our rights to the royalty stream to the utmost. -------------------------------------------------------------------------------- Vikram Purohit, Morgan Stanley, Research Division - Equity Analyst [15] -------------------------------------------------------------------------------- Okay. Understood. And as a follow-up on a separate topic. On the ampreloxetine Phase III study, could you talk a bit about the effect that you might be seeing already from the protocol adjustment that you announced last quarter? And that's been a positive for the study so far. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [16] -------------------------------------------------------------------------------- Yes. I think the protocol adjustments we announced last quarter are just beginning to take shape. But clearly, the performance of the study in the third quarter and particularly in the late third quarter, showed significant improvement. I think this is both because of sort of just the underlying dynamics of the study and the maturation of the study in the clinical sites and also the ongoing work, both decentralization and other work that we're doing with the sites. Brett, any other comments on that? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [17] -------------------------------------------------------------------------------- Just to expand on that, we've been really thoroughly pleased with the response of our investigators. So we thought initially might be, sort of, resistance to ideas of taking those patients out of the clinics, but the opposite has been true. We've actually had investigators really embrace this. The protocols now are flexible in how they can choose to see their patients at the clinic or at home. What we've also realized is that they're able to access a type of patient who probably was not previously willing to come into the clinic to participate in technical trials. So we think it's actually improving not only the ability of the sites to perform, but it's also increasing our ability to access patients that we would not otherwise have been recruiting. So we do think that this is really value-added, and we've been very pleased with the response of our clinical trial units. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Our next question comes from the line of Douglas Tsao with H.C. Wainwright. -------------------------------------------------------------------------------- Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division - MD & Senior Healthcare Analyst [19] -------------------------------------------------------------------------------- Just maybe on 8236, it seems sounds like disappointing that we didn't see an effect in the LAR study. But obviously, the effect on FeNO has been pretty consistent and pretty strong. So just maybe help clarify, sort of, how you're thinking about the path forward in terms of the milestones or sort of additional work that we can do because, obviously, I don't think the LAR is necessarily a getting item for approval, right? It certainly seems like there's potentially a path for the asset. And so just clarity on that would be helpful. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [20] -------------------------------------------------------------------------------- Yes, Doug, thanks. I think we've got -- as Brett had mentioned, we've got a lot of data left to analyze, particularly out of the Phase Ic patient, moderate-to-severe patient cohort, which is a target -- primary target of course of the medicine. So we'll be doing that over the next couple of months. And I think it's important to understand that we've got 8036 that we've just finished up with the I-c in the LAR. And on the other hand, we've got a large study that's ongoing with a nebulized back inhibitor in a hyperinflammatory state in the lung. And I think both sets of data are going to provide, really, a rich set of information on the use of JAK inhibitors in inflammatory states because, of course, we'll -- in something like 903, we'll be looking at blood cytokine levels, biomarkers for inflammation that contribute to lung injury. And we know today that the hyperinflammatory state associated with COVID is associated with elevated serum markers of interferon as well as a cascade or interleukins in chemokines that drive ALI. So I think when you look at the very large set of information from the Ic to the LAR to the hyperinflammation state that we're treating in COVID, there's going to be a rich set of data to evaluate that will guide us on the next steps for 8236 and then also, obviously, for 903. -------------------------------------------------------------------------------- Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division - MD & Senior Healthcare Analyst [21] -------------------------------------------------------------------------------- And so Rick, would it be fair to say that perhaps by the time you report 1Q earnings next year, you might have a little bit more of a road map for 8036 as well as 0903? -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [22] -------------------------------------------------------------------------------- Yes, I think we said that we would be reporting the Phase II data of 0903 in the second quarter. And depending on the timing of the earnings call, we will have -- we should have finished all of the evaluation of the other biomarkers in the study Phase Ic study as well as the gene expression data. So I think we'll have a much better understanding of this -- how the effects of the JAK inhibitors in the lung. Brett, do you want to add anything? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [23] -------------------------------------------------------------------------------- Just that we're going to be really drawing on external expertise as well. We've got a panel of experts externally who can help us interpret other mechanisms as well as this one, and it's our plan to incorporate their thinking into our planning as well. So not much else here beyond that. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [24] -------------------------------------------------------------------------------- Yes. I think this is just a very exciting time for us because we're -- this is -- an inhale JAK inhibitor hasn't been in humans -- administered to humans to treat inflammation. And the information that we're gaining is really the first set of information that people have been able to attain. And therefore, I think it really puts us on the cutting-edge of how to use a tool like a JAK inhibitor in inflammatory states of the lung. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- Our next question comes from the line of Alan Carr with Needham & Corporate -- Company. -------------------------------------------------------------------------------- Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [26] -------------------------------------------------------------------------------- Just a follow-on this a little bit more, Brett. What do you think you'd need to see out of the biomarker data and gene expression data that has convinced you that more work -- that another Phase II would be appropriate here? -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [27] -------------------------------------------------------------------------------- Brett, do you want to take that? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [28] -------------------------------------------------------------------------------- Thanks, Rick. And Alan, I think for me, the cytokine data will be particularly important. We have expected to see down-regulation of key cytokines that might be implicated in the inflammatory cascade, the (inaudible) that these moderate-to-severe asthmatics have. The limitation with the allergen challenge study is that it's not in that population. It's in a milder population. And what we're effectively trying to do is to blunt a very abnormal insult in the lung. These patients inhaled huge amounts of align and suddenly get the insult in the lung. It's -- although it's experimental, it's not quite how it works in the real-world with moderate to severe. So we do want to look at the -- both the gene expression data and particularly the cytokines in these moderate to severes to see whether we are down regulating the expression of those mediators. Bear in mind, we're treating for slightly longer 14 days in the allergen challenge, but still the insult is much harder. I think even after 7 days in the moderate to severe group in Part C, we should be able to untangle some of these pathways with a bit more detail. -------------------------------------------------------------------------------- Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [29] -------------------------------------------------------------------------------- And then what -- with respect to your COVID trial, I guess, maybe a similar question there. What are you hoping to see from that in the second quarter that would justify more development there? And thinking in the context of other program -- competitive programs. -------------------------------------------------------------------------------- Rick E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [30] -------------------------------------------------------------------------------- Well, again, I'd say the COVID study is a proxy for an acute hype -- treating an acute hyperinflammatory state of the lung. And while this is -- we're using the SARS-CoV-2 infection to effectively identify the patients with the acute in hyperinflammatory state, the similar states occur in a number of different acute diseases. So I think our ability to really improve things like -- improving oxygen, reduction in hospital stay, prevention of progression into mechanical ventilation, and then the exploratory data set of blood cytokine levels and biomarkers of inflammation and lung injury will also be very important in providing us a picture of what this -- what 903 can do in this sort of a condition. Brett? -------------------------------------------------------------------------------- Brett K. Haumann, Theravance Biopharma, Inc. - Senior VP & Chief Medical Officer [31] -------------------------------------------------------------------------------- Just to add to what Rick was saying, Alan, with we're encouraged by the signals that have already been reported with baricitinib, for example, as a JAK inhibitor that's been used in COVID-19. The NIAID study that recently reported one of the ACT studies show the additional improvements in terms of time to recovery and discharge from hospital when baricitinib was added to remdesivir. So over and above the benefits that remdesivir was demonstrating, baricitinib seems to have done more. And that's encouraging for the mechanism. We actually think that with 903, we'll get much higher concentrations of drug in the lung relative to an oral dose of baricitinib. So we think that the opportunity to dampen that cytokine storm in its source of origin, the pulmonary lining is effectively where the cytokine storm is triggered. We think that, that should bode well for 903's efficacy. And then recognizing that baricitinib is an oral therapy with systemic effects, we don't believe that we'll run that risk with 0903. We don't think we'll see the risk of opportunistic infections that baricitinib would have or indeed the predisposition to thrombosis, which we know systemic JAK inhibitors have. That's particularly important in COVID-19 because the disease itself appears to increase coagulation states. So being able to target the lung with an organ-selective approach with a lung-selective approach is something we're really quite enthusiastic about. We think that this has got real potential in COVID-19. -------------------------------------------------------------------------------- Operator [32] -------------------------------------------------------------------------------- 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 E. Winningham, Theravance Biopharma, Inc. - Chairman & CEO [33] -------------------------------------------------------------------------------- Okay. Thank you, operator. Thanks, everyone, for participating, stay safe and stay healthy, and have a great day. -------------------------------------------------------------------------------- Operator [34] -------------------------------------------------------------------------------- This concludes today's conference call. We thank you for your participation. You may now disconnect.