Theravance Biopharma, Inc. (TBPH) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. I'd like to welcome everyone to Theravance Biopharma conference call. [Operator Instructions] Today's conference is being recorded. And now I would like to turn the call over to Gail Cohen, Vice President, Corporate Communications. Please go ahead.

Good morning, everyone. And thank you for joining our conference call and webcast. Joining us are Rick Winningham, Chief Executive Officer; Brett Haumann; Chief Medical Officer; and Phillip Worboys, Senior Vice President, Research and Translational Science. Following some prepared remarks, we will open the call for questions. A copy of the press release and the slides accompanying this call can be downloaded from our website, or you can call Investor Relations at (650) 808-4045, and we'll be happy to assist you. As always, I remind you that this conference call will contain forward-looking statements, which involve certain risks and uncertainties, including statements about our product pipeline, expected benefits of our products and product candidates, and the anticipated timing of trial results and regulatory filings. Information concerning factors that could cause results to differ materially from our forward-looking statements is described further in the company's filings with the SEC. And now I would direct your attention to Slide 3 and hand the call to Rick.

Thanks, Gail. Good morning, everyone. And thank you for joining us. We issued a press release earlier today announcing that we're responding to the COVID-19 pandemic virus, advancing our investigational lung-selective nebulized JAK inhibitor, TD-0903, in to clinical development to assess its utility in suppressing the cytokine storm associated with acute lung injury in hospitalized patients with COVID-19. Obviously, this is an unprecedented time. Just a couple of months ago, we couldn't have anticipated phrases like social distancing and flatten the curve would be part of our vernacular, but while it's -- the humanitarian crisis is significant, a number of communities are coming together to begin to solve the challenges that we face. And because we're in the middle of a global crisis, the rate and intensity of learning is extreme, but it's not fast enough. We're still on a steep learning curve in understanding how to best tackle COVID-19. Obviously, from a public health perspective, we need scalable diagnostics, vaccines, antivirals and medicines to control the immune response. It requires a multifaceted approach as the numbers today continue to be staggering, and the virus is not going away. When looking back to an evaluation of the SARS-CoV-1 epidemic, Channapar (sic) [ Channappanavar ] and Perlman 2016 publication in seminars and immunopathology highlighted the immunopathology and consequences of a cytokine storm in human coronavirus. The Lancet publication on February 15, highlighting 41 hospitalized patients, all 41 patients developed pneumonia with abnormal findings on chest CT scan. Just a few weeks ago, Lancet showcased the accumulating evidence that a subgroup of patients with COVID-19 developed cytokine storm syndrome and recommended treating the hyperinflammation to address the immediate need and reduce the rising mortality, noting Janus Kinase inhibition or JAK inhibition is an important potential intervention in treating COVID-19. As a company that's got a long history of developing respiratory medicines, we felt compelled to react to the emerging crisis in a purposeful and meaningful way. And in response to the unprecedented health care challenge presented by the pandemic, we quickly combined our immunology and respiratory medicine expertise to accelerate the development of our nebulized pan-JAK inhibitor, TD-0903, which was already in late-stage preclinical development as a potential treatment to reduce the risk of lung transplant rejection. We now understand how critical it is to help those suffering from shortness of breath and low oxygen levels, including those who need intensive care and ventilation to address the effects of profound lung hyperinflammation without creating immunosuppression in other parts of the body in these particularly vulnerable patients. We believe that an inhaled pan-JAK inhibitor, they provide benefit to hospitalized patients by preventing the progression of lung hyperinflammation and reducing the requirement for, or the duration of assisted ventilation. It can also be a complement to antiviral therapy. Importantly, a medicine that treats lung hyperinflammation without suppressing, the systemic immune system could provide benefit to patients and improve utilization of limited hospital critical care resources. I'll pass the call to Brett, who will speak to the clinical course of the COVID-19 patient, and where we see TD-0903 may be a benefit in treating the acute lung injury, which appears to be one of the major drivers of morbidity and mortality in this disease. Brett?

Thanks, Rick. Turning to Slide 5. As Rick noted, our understanding of COVID-19 continues to evolve with the clinical presentation that was first reported in Wuhan in China appears to be playing out in other parts of the world. Most patients present with fever and cough as the initial clinical manifestation. Shortness of breath is described in approximately 1/3 of patients and appears about 5 days after the initial symptoms, although the onset of breathlessness can range from 1 to 10 days. By day 7 on average, patients present to hospital for admission with a range of symptoms, including hyperpyrexia and difficulty in breathing. The hallmark of underlying acute lung injury is evidence of low oxygen saturation in the blood, also referred to as hypoxia. It's important to note that in Wuhan, almost 60% of hospital admissions for COVID-19 came from patients in the community, but a further 29% erodes from health care workers and 12% of patients contracted COVID-19 whilst already in hospital for other reasons. Hospitalization marks a significant increase in serious morbidity, including the risk of acute respiratory distress syndrome or ARDS. More than 1 in 4 hospitalized patients progressed to ICU, and more than 60% of these patients have a diagnosis of ARDS on entry into the ICU. Even for the 3 quarters of hospitalized patients who are not moved into the ICU, a significant number remains short of breath and requires supplementary oxygen. In the ICU, the majority of patients require assisted ventilation for prolonged periods of time, resulting in ICUs filling too and beyond capacity as the number of cases grows exponentially in each hospital setting, as has been reported in China, Italy, Spain and now increasingly in parts of the U.S. Mortality rates in the ICU are high, ranging from almost 20% in China to more than 50% in the U.K., with elderly patients and those with underlying comorbidities being most at risk. It's evidenced that what is driving the clinical manifestations of COVID-19 in hospitalized patients is not related to viral load, but rather to a dysfunctional immune response to the virus in hospitalized patients. Our hypothesis is that the hyperimmune reaction results in acute lung injury, reducing the hypoxia that drives patients to the hospital and triggers their admission. Our aim is to intervene at the point of hospitalization by treating hypoxic COVID-19 patients with a nebulized lung-selective pan-JAK inhibitor to inhibit this abnormal immune reaction in an effort to reduce the requirement for prolonged hospitalization, reduce the need for, or duration of assisted ventilation in the ICU and ultimately to reduce the mortality associated with ARDS. Slide 6 shows the course of the disease in more detail to illustrate where we aim to intervene. Early in the course of the clinical disease, the virus demonstrates very effective and efficient replication in the airways. This phase referred to on the slide as the viral response phase, is characterized by high viral counts in the airways, a dry cough and fever. In most cases, this leads to minimal cellular disruption in the lungs, an appropriate immune response in the host, including early increases in interferon and effective clearance of the virus. However, in some patients, this mechanism becomes dysregulated. The interferon response is delayed. The virus infects and destroy cells in the deeper parts of the airway, including the cells that line the gaseous exchange surface of the lung. And there's excessive macrophage and neutrophil infiltration into these alveoli. This cellular disruption and inflammatory inflammation is associated with excessive production of cytokines and chemokines, producing the so-called cytokine storm. Clinically, this storm produces acute lung injury and results in shortness of breath and hypoxia in what's referred to on the slide as the pulmonary phase. As the host inflammatory response amplifies, patients are at increased risk of significant morbidity, including ARDS and even death. Our strategy will be to intervene during the pulmonary phase when patients present for the first time with hypoxia, as this marks the key point of intervention for key anti-inflammatory therapies, including JAK inhibitors, such as TD-0903. I'll now pass over to Phil, who will speak in more detail about the underlying immunology and about the characteristics that we believe may make TD-0903 well suited to treat these patients.

Thanks, Brett. If we turn to Slide 7. As Brett mentioned, in some patients, the immune response becomes dysregulated, and there is excessive macrophage and neutrophil infiltration associated with an excessive production of cytokines and chemokines, the so-called cytokine storm. There's increasing body of evidence linking the activation of a cytokine storm to the pathology of COVID-19. Our approach with our inhaled JAK inhibitor is to block the signaling of these cytokines, thereby arresting the hyperinflammation and the progression of the disease to acute lung injury. Moving to Slide 8. We've opened the presentation with a photo capture of this Lancet publication from just 3 weeks ago. Many of the cytokines noted in this paper that are implicated in the cytokine storm associated with COVID-19 signal through JAK enzymes. Further support for the potential of JAK inhibition in this disease is provided by a treatment that has received press and approval in China, the IL-6 antibody tocilizumab or Actemra as IL-6 signals through the JAK/STAT pathway. If we move to Slide 9 and consider the JAK enzymes themselves, cytokines induce various JAK subunits to associate, typically [indiscernible], triggering a series of phosphorylation events, ultimately activating the STAT transcription proteins. Different cytokines signal through different pairings. And given the multitude of JAK families that exist, a pan-JAK inhibitor plays the greatest opportunity to impact the largest number of JAK-signaling cytokines in the inflammatory cascade. Turning to Slide 10. We announced that we are advancing TD-0903 into the clinic. From the outset, the goal of the research program was to identify a lung-selective pan-JAK inhibitor, suitable for delivery -- inhaled delivery via nebulization that would achieve maximal anti-inflammatory activity while minimizing systemic exposure. If we consider the profile of the molecule, 0903 is a potent inhibitor of all 4 JAK enzymes, we have demonstrated that it potently inhibits cytokine-induced activation of JAK/STAT signaling in human epithelial and immune cells as well as mouse models of inflammation. As designed, 0903 is a long selective molecule with long concentration of several hundred fold above plasma concentrations. The figure on the right demonstrates the results in rat. It is worth noting that this is a logarithmic scale. And in the case of the rat, the lung-to-plasma ratio is approximately 200. Consistent with our organ-selective approach, 0903 was designed to have an extended duration of lung action and any drug entering the systemic circulation to be rapidly cleared. This is supported by our preclinical work and PK/PD modeling that suggests that the doses will be tested in the clinic will have good duration of action and low plasma concentrations, well below the levels needed to engage the JAK enzyme systemically. We have completed a robust nonclinical safety package, including 28-day inhalation GLP studies in both rats and dog. We have filed a CTA with the MHRA for review and received ethics committee approval for our first in-human study. Now I'll hand the presentation back to Rick.

Thanks, Phil. The Theravance Biopharma team has been working tirelessly over the past several weeks to finalize the development plan for TD-0903 and to expedite regulatory submissions to support the initial clinical studies. As Phil mentioned, we filed the CTA in the U.K. for the first study in man. This will be followed in short order by a second CTA to support the first patient study as well as an investigational new drug application IND in the U.S. We know that most coronavirus patients who end up on ventilators unfortunately don't survive. And in many patients who continue to live can't be taken off the mechanical breathing machine without great difficulty. The largest study so far to look at mortality among coronavirus patients on ventilator was done by the Intensive Care National Audit and Research Centre in London. It had found that 98 ventilated patients in the U.K., just 33 were discharged alive. Numbers from a study in Wuhan are even grimmer, only 3 of 22 ventilated patients survive. In a study of 18 ventilated patients in Washington state found that 9 were still alive when the study ended, but only 6 had recovered enough to breathe on their own. Early reports suggest once coronavirus patients are placed on a ventilator, they may need to stay on it for prolonged periods of time, and longer patients remain on assisted ventilation, the higher their risks for bad outcome, including dying. The emerging reports around the world are sobering with the ICUs quickly filling to capacity as more patients require assisted ventilation for prolonged periods of time. And again, mortality rate in the ICU is frightening. Ventilators, obviously, have been in the news, are in short supply, and there's an increasing shortage of hospital space to treat the patients. Such a dark time in history. We're grateful to be able to assign our expertise, experience and insight of the company to tackle this significant challenge. Our focus and dedication seeing 0903 into the clinic in healthy volunteers and shortly thereafter in patients won't waver. And thanks to the long-standing history and relationships in the respiratory community, we've got global external collaborators and science who are working seamlessly along with our teams. We're extremely grateful for their collaboration this past month. And they -- and know too, that they feel the pressured to find a way forward. Our core purpose at Theravance Biopharma is to create medicines that make a difference in people's lives. We believe that lung-selective medicines will be a part of the solution to the -- to changing the COVID-19 story for our global community and couldn't be prouder for doing our part. We thank those -- thank all of those working on the front line. And while we work together to find solutions, we hope everyone continues to adhere to all public health guidance. This is a pivotal time for the world and the company, and we collect -- as we collectively fight this coronavirus crisis, and we appreciate the opportunity to share our update with you. And now I'd like to hand the call back over to the operator for questions.

[Operator Instructions] And we have a question from Douglas Tsao with H.C. Wainwright.

Just quickly in terms of the use of 8903 (sic) [ 0903 ], just -- is there a protocol in terms of sort of the patient's clinical presentation, when it will be delivered? Is there going to be sort of a core pulse ox metric that will sort of indicate when a patient is advanced to a stage where the drug should be used?

Brett?

Thanks, Douglas. Yes, we've been working in collaboration with physicians on the ground who are treating patients. We've tried to make this protocol as practical as possible, so that it fits in with routine practice. But one of the key requirements is what you've just asked, actually all patients need to have a demonstration of low oxygen by oxygen saturation by pulse oximetry. And that's an inclusion criteria into the study. What we're seeing in clinical practice is that physicians really are using low oxygen levels, low saturation. Normally a threshold of around less than 90 is being used as a threshold to mark admission into the hospital because at that point, physicians believe that oxygen supplementation is going to be required. And so that's a trigger for admission. It's also the trigger for inclusion in our strategy.

Okay. And then just one follow-up. I mean, was there sort of -- what's the thought in terms of going with the nebulized therapy versus, say, 8283 -- 8236, which is obviously a little bit further along. Is it just that given the patient's state, they just wouldn't be able to do a DPI therapy?

Yes. Brett, you want to describe the nature of the distal lungs in these patients?

Yes, of course. So really, Douglas, it is exactly another great question. It is to treat as broad a spectrum of patients who are presenting in the hospital as possible. Dry powder inhalers are obviously suitable for patients who are requiring chronic medication and can aerosolize the drug, can draw in sufficient breath to be able to allow the drug to get into the lungs. What we're seeing with hospitalized patients, even those who are in the wards and able to breath spontaneously is that their effort of breathing is really increased. They're not able to draw in deep breaths. The air is effectively -- the airways are effectively filling both with inflammatory cells as well as mucus and fluid, edema, which is making their ability to move air much more difficult. We think that the key disruption is actually happening in the air sacs, in the alveoli. The virus in some patients appears to be penetrating right down into the alveolar space and destroying, what I call, pneumocytes, the cells that line the air sacs. They produce surfactants and surfactant is critical to maintain the surface tension in that wall, allowing those air sacs to remain open. And when the virus destroys those air sacs, they collapse. And so the oxygen exchange mechanism is disrupted. We really need a drug that's able to penetrate deep into the airways more efficiently than the dry powder would be able to. And for us, 0903 as a nebulized solution was ideal. It also allows us to continue to provide therapy to patients even if they move into the ICU and move on to a ventilator. Again, a dry powder can't be delivered to those patients, but a nebulized formulation can be put into the tracheal tubing circuits in both patients who are on noninvasive as well as invasive ventilation. So we think that this middle is half of 0903 really is a much more holistic treatment option for a full range of patients in hospital and allows for this deep penetration into the lung.

And Brett, just one follow-up, quick follow-up. I know you mentioned sort of having a broadest use as possible and the pulse ox of 90 being inclusion criteria. It seems though that some patients sort of onset of the cytokine storm is very quick and sort of somewhat unpredictable. Just curious if there's like a guideline for or sort of a road map that you're going to provide clinicians to sort of try to detect that so we can sort of try to get ahead of that and sort of time the dosing appropriately?

So it's a great question. And I do think that we are planning to learn a great deal as we evolve with testing. The early parts of our program, as Rick described, will allow for very rapid progression from healthy volunteers into a group of patients. We have a study which we'll describe in more detail once it starts in patients. But effectively, it's divided into 2 parts. And the first part will be testing a limited number of patients to ensure that we're intervening at the right points, that we're applying the right amount of drug into the lung. We're still doing a sort of a dose-rising assessment in that portion of the study. And I think it'll allow us to learn and to answer some of your questions in more detail. At this moment, we really are wanting to get to patients to be able to learn as much as we can. And then we'll finesse our approach, including the time of administration relative to the onset of symptoms. One key part to mention though, and I think it hopefully came through in our presentation, but it's really important. We don't believe that this will be a therapy that will be used by everyone. And certainly not in the community. We actually don't want to disrupt the body's normal natural immune response to the virus, which in the vast majority of patients is working to kill the virus, 70% to 80% of patients are not presenting to hospital, don't have underlying hypoxia, and their immune response is an appropriate one to the virus. Really what we're reserving this therapy for is those patients who have this abnormal immune switch, which seems to be manifested by underlying lung inflammation, and the clinical marker effect that we're using at the moment is a drop in oxygen saturation.

[Operator Instructions] It appears we have no further questions on the phone. I'd like to turn the call back to Mr. Winningham. Please go ahead, sir.

Thank you, operator. And I'd like to thank everyone for joining us today. We'll -- we look forward to keeping you updated on the progress of 0903 as well as more broadly the progress of the company. As I said in my remarks as well as mentioned by both Phil and Brett, we're very excited to be entering into this phase development with 0903 and potentially providing an intervention to patients who are struggling with COVID-19. Thank you very much, and have a great day.

This concludes today's conference call. We want to thank you for participating. You may now disconnect. Everyone, have a great day.