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

Good afternoon, everybody. Thanks so much for joining us at the Bank of America Healthcare Conference. It's my pleasure to have our next presenting company with me Theravance Biopharma. I have a long history with Theravance. You guys are one of the longest-running coverage companies that I've had going back over a decade, I think. So Rick, it's good to see you always. Rick Winningham, of course, CEO of Theravance Biopharma.

Great to see you, Tazeen, and thanks so much for the invitation.

Rick, you have a couple of colleagues with you on this call. I'll let you introduce them.

Sure. Joining me today are Andrew Hindman, our CFO; and Rick Graham, who's our Senior Vice President of Development and is responsible for the development projects that we've got underway today.

Okay. Excellent. So for those who may not have yet familiar with Theravance and your platform, Rick, I'm hoping that you can just give a 2-minute or less overview of the company, and then we can go into some specifics, if that works.

Absolutely glad to do it. Yes. So Theravance Biopharma, we're an innovative commercial-stage biopharma company with a strong record development success. We -- if you look at our pipeline, we've got both wholly owned and partnered assets that we believe are differentiated and really targeting large commercial opportunities. Our pipeline is driven by our own research. And specifically, the organ-selective nature of our research engine and that research engine is in place today and provides ample opportunity, I think, for new chances, new programs over time. Now looking near term, we've got multiple near-term events that we believe provide an opportunity for value inflection as we work to deliver products to patients. If you look at our portfolio overall, we've got a growing base of cash flows, really anchored by our commercial product, YUPELRI and our economic interest in TRELEGY. And so as we look forward, really coming out of pandemic, we're looking forward to strong pipeline growth and strong top line growth, poised for potential acceleration on both sides, but driven by YUPELRI on the commercial side and driven by the multiple clinical events that we've got coming up in the near future. So those are the highlights.

Yes. So there's a lot to talk about. We'll try to squeeze it in, in 26 minutes. So that will be hard to do.

So let's start with YUPELRI and talk about how this launch is relative to the -- each group and how much of an impact of COVID is having on your commercial plans in general?

Sure. So Andrew, and I'll tag team a little bit on this, but if you look at our -- if you look at 2020, I mean, COVID obviously had a significant impact on our base business with YUPELRI, really coming from 2 different places. One of them was just the patient flow of COPD patients into pulmonologists. If you follow visits by specialty, pulmonologists visits went down fairly significantly through the course of 2020 and then also patients going into the hospital for either for COPD exacerbations or going into the hospital for other reasons being treated for COPD, those admissions fell fairly dramatically. Now even in light of that, we were able to gain share in both the hospital and the community with the community being driven by really our partner Viatris in commercialization and the hospital really being our responsibility, but we gained share just about every month. We put formularies on in hospitals, added to the formulary count throughout the course of the year, really with virtual details and virtual interactions with our customers. But now coming out, hopefully, of the pandemic in the United States, we look forward to getting back to more face-to-face detail supplemented by virtual detailing capability that we've developed in conjunction with Viatris and getting YUPELRI with patient visits back to key specialists really underway and driving growth. Because we think YUPELRI probably has an opportunity of $500 million plus in the United States, just given the number of patients that are on nebulized therapy today for COPD and maintenance treatment. So Andrew, anything to add there?

Yes. The only -- a couple of other comments I'd make are one on life cycle management and another on financial disclosures. On life cycle management, Viatris and Theravance have recently agreed to invest considerably in some new clinical studies that will help us hopefully expand the label to include patients of low PIFR, or peak inspiratory flow rate. We've done some exploratory Phase II trials in this segment, and we are now going to be initiating label-enabling expansion studies there. So more to come as those data are generated. And then on the financial side, we're also pleased to say that as of this week on Viatris' first quarter earnings call, they began to showcase greater transparency around the actual revenue performance on a net sales basis for YUPELRI. In the first quarter, Viatris reported $37 million in sales in the U.S. And so that was the first time that Viatris or legacy Mylan broke out sales. So we're happy to be able to provide greater transparency to The Street to track that. And presently on a historical basis and potentially in the future, we might be providing joint revenue guidance going forward.

Okay. That's good to know. So let's go into some details on some upcoming data. You have several studies that are late stage. Maybe let's start with nOH.

Sure.

Market opportunity there? And when are we expecting to see top line data?

Sure, I will do this.

Go ahead, Rick.

Sure. Why don't I do this? Why don't I start with regard to the competitive landscape. And then I'll hand over to Andrew to talk about market opportunity. Top line data for the first of 2 pivotal studies for ampreloxetine will be in the third quarter of this year. And I just wanted to just make one quick note, Tazeen, I'm relatively new to the IR team. So I wanted to let you know that I'm trained as a clinical pharmacologist, but I had the luxury of being the project team leader for both Izencitinib when it was in the preclinical stage all the way through the Janssen deal as well as a project team leader for ampreloxetine. So with regard to your question about generics, of which now there are several for droxidopa. We believe ampreloxetine really has a potential for substantial differentiation in a number of ways, safety and efficacy in particular. Right now, there's no approved therapy available for the chronic treatment of patients that have symptomatic nOH that has durable effect. The available therapies that do exist have safety concerns like supine hypertension, there's complex dosing regimens, like titration to effect and then suboptical -- sorry, suboptimal clinical benefits. So they're just not supportive by long-term clinical data. So because of these limitations, there's still a big unmet need for an efficacious and durable therapy. And we think ampreloxetine can be positioned as a first-line therapy for these patients. So Andrew, do you want to comment on the market opportunity?

Sure. Thanks, Rick. As I think most observers of the nOH space know droxidopa, the brand name was Northera, commercialized by Lundbeck, did reach peak sales of about a $400 million annual run rate in the U.S. market. And recently, in February of this year, given that, that product had only orphan drug exclusivity, there were several generic entrants of generic droxidopa. So that's potentially a headwind, but some might seem to think is in front of us. We actually are -- actually looking forward to being able to differentiate based on clinical efficacy, safety and a full FDA approval, which is what our development program is designed to accomplish that actually Northera never got anything more than a conditional approval from FDA. So we look at the market. It is approximately 350,000 patients in the U.S. that's broken down between Parkinson's patients who experience symptomatic neurogenic orthostatic hypotension and then MSA, or multiple system atrophy, patients. And there are about 300,000 of them, of the 350,000, that are PD-related nOH, where it's about 50,000 MSA-related patients. So we're looking forward to being able to provide a once-daily treatment option that significantly improves with durable efficacy and a cleaner safety profile that should allow us to penetrate a more significant portion of the market than Northera was able to given some of the limitations of Northera. So we're not really in a position where we're going to quantify a peak sales estimate, which we have put out there for YUPELRI. But as we get closer to launch, we will get more granular in what we believe the data set that's coming out of the Phase III program will support.

Okay. As far as the studies go, you're going to have the first of 2 studies readout. What is the difference, if any, between the 2 studies?

So the first study we call SEQUOIA. This is a 4-week randomized, placebo-controlled study, placebo against 10-milligram, once-daily ampreloxetine. And the primary endpoint in that study is what's called question one on the orthostatic hypotension symptom assessment scale. So there's a number of questions on this patient-reported outcome. The question one is the regulatory approval -- approvable question. So that's the primary endpoint for that one. Now patients from that first study, Tazeen, can roll into the second study that we call REDWOOD. And this is a study that we work through carefully with the FDA to really demonstrate durability of effect. So once they roll from the first study into the second, that second study has 16 weeks of open label. So everybody gets active drug 10-milligram once a day, and then there's a randomized withdrawal period on the back end. So there, we're looking for patients worsening when they come off of drug.

Okay. So with regard to these patient-reported outcomes, how do you account for, I guess, subjectivity among the patients?

Yes. So Rick, do you want to take it? Or do you like me to?

No, go ahead, Rick.

So we're looking at a number of different patient-reported outcomes, and that's always an issue, right, with regard to subjectivity. But all these assessments that we're doing have validation associated with them. And we have a number of different ones. So we talk about OHSA 1, but we also look at the OHDAS, which is the daily activity score. We have a symptom assessment for -- specific for Parkinson's patients, another one specific for MSA patients. We actually have a wearable device that we're using in the trial as well, which monitors -- has a gyroscope, and it monitors patients whether they're in the vertical or in the horizontal position. We also collect fall diaries. So we're understanding how often or how frequently are patients having near falls or actual falls. So we're collecting as much data as we can to supplement for some of that subjectivity that comes with PROs.

Just one more point, which I think on the -- in the entry criteria, we do use a tilt table too, in fact, upon entry for the patients. The investigator puts them on a table. It tilts up to 62 degrees to give sort of an anchoring baseline assessment of dizziness for that patient, so that they have sort of a semi-hard endpoint relative to, in their mind, the level of dizziness that they were experiencing prior to therapy.

Okay. Okay. So when the top line data does come out, what level of detail should we expect to see?

Yes. So with regard to the top line, again, I mentioned that the primary endpoint is the OHSA 1 -- OHSA question 1, so that's certainly going to be the big focus. But again, we -- as I mentioned, we're looking at a lot of other key secondary endpoints as well around really the clinical meaningfulness to the patients and what the impact is on their daily life. Now we haven't mapped out exactly what the top line is going to be. But certainly, we're going to have a focus on OHSA question 1.

And then safety, obviously.

Yes. And so what should we assume for readthrough to REDWOOD based on what we see from SEQUOIA?

Well, I think that's a good question. I think the -- what we believe we will see. And in fact, the SEQUOIA study is a drop in dizziness that's, in fact, sustained versus placebo out to 4 weeks. We've had a lot of patients that were randomized into the 169 study immediately roll over to the 170 study, knowing that they're going to get 4 weeks of therapy. The endpoint on 170 is different than 169. But I think if we're able to achieve the 169 endpoint with a placebo adjusted difference of 1 or greater, that's a clinically meaningful endpoint based on what opinion leaders and physicians who treat dysautonomia C. So that's going to be a pretty big event for us.

Okay. And so would you need to have both studies read out before filing for approval?

Yes. So we've -- again, I mentioned that I was project team leader for ampreloxetine. So I've had the benefit of being deep in the project for some time. And one of the things that's been really helpful was our engagement with the FDA throughout the design of both programs -- of both trials. Now what we've agreed to and what FDA does expect is the results from the 4-week efficacy study, but also to look at the durability from the second study. However, we will be approaching the FDA upon positive results to discuss expedited mechanisms that are in place, like breakthrough therapy designation that offers priority review and rolling review as benefits.So our current thinking is that it will require both studies for a final approvable package. But in terms of how we submit that package, we're going to be in conversation with the FDA.

Okay. So let's move on to one of your other programs. Let's go to one of the JAKs. FDA seemingly has become a little bit more particular about how it's looking at the JAK class in general. And I know this is probably not a new question for you, but in your interactions with the agency over the last several months, has there been any kind of dialogue or query that would indicate that what's going on with other companies and other drugs in the JAK space might have overflow impacts to your program?

Maybe I'll...

Go ahead, Rick, and then I'll follow up.

Yes. Let me just start, if you don't mind, and then jump in, Rick. But Tazeen, we've not had any special requests from FDA or been asked to generate any additional data about license, set number or any of our other JAK inhibitors. The safety concerns that are raised by the systemic JAKs, in our opinion, really underscores the need for a new generation of therapy, like a gut-selective JAK inhibitor, which is why we really started this program in the first place 6 years ago to maximize efficacy and minimize safety. Sorry, Rick, I cut you off.

No. That said, I think when one looked at the tofacitinib development program, one could see that there wasn't a significant separation between the doses that caused safety concerns and doses that drove efficacy. So the only way we believe that you could get maximum value out of the JAK mechanism was, in fact, to design the drug to be organ selective, such that you -- we're able to drive the tissue concentrations at a given organ above sort of the EC50 and, in fact, minimize in the case of the gut-selected program, minimize systemic concentrations by engineering clearance through the liver -- through the portal vein and the liver. So -- and that's what we did. But the whole -- really, the entire basis for our organ-selected program and JAK inhibitors is based on a concern that we could see coming up with systemic JAK inhibitors.

Okay. So as we think about the readouts that are upcoming, can you talk about Crohn's, ulcerative colitis, the timetables for each of those studies to read out? And it does seem like COVID has impacted several of our companies that are [Technical Difficulty]. At this particular program [Technical Difficulty] have been or hit by COVID? And how are you thinking about the time lines that you've now given?

Go ahead, Rick.

Yes. So what we reported on our Q1 call is that we've completed enrollment to the UC Phase IIb study, and we're on track to deliver top line results in the third quarter. So really happy with the progress there. We're working with an extreme sense of urgency on Crohn's disease. Crohn's is a tough indication, a tough therapeutic area to enroll. So what we talked about was we've now moved out the completion of that study with regard to top line results to late Q4 this year or early Q1 2022. It's just such a challenging therapeutic area. This is not just something Theravance Biopharma struggling with. But we're -- we have our study teams on this every minute of every day, and we're working as expeditiously as possible to get this done. I think one of the things that we've been thinking about is, does this environment change throughout the year because things are changing with COVID. We really don't think so. I mean this is really a challenge for the therapeutic area. But now that we're starting to see the light at the end of the tunnel, it's every minute of every day is what we're doing to get that study done.

Okay. Now can we just talk for a couple of minutes on a particular profile of Izencitinib and how it differentiates from other drugs that might be being used to look at UC as well as other mechanisms of action?

Sure. So the way the drug was designed -- drug is an oral tablet goes into the stomach, goes into solution in the stomach, that really is not absorbed in the top of the stomach or the bottom of the stomach. It goes into the small and large intestine and begins to be absorbed in the walls, the small and large intestine. And Rick, as he said, he was the project leader through the end of the Phase Ib program, the partnership with Janssen. We were able to do biopsies on ulcerative colitis patients in the Phase Ib so that we could really understand the level of concentration of the JAK inhibitor in the wall of the colon. And in fact, 2 of the doses, 80 and 270, we saw concentrations of the JAK inhibitor that work well in excess of the EC50. So -- and then as I said, when the drug has been absorbed and it is absorbed through the intestine into the bloodstream and it goes immediately is cleared through the liver, leaving, as Rick noted in the presentation at the Q1 call, we've got absolute final availability now 2% of the drug. So there's very, very little of the drug that gets into the systemic circulation. Rick?

Yes. Just a couple of other things, Tazeen. And back to your question around differentiating from other JAKs. I mean the key here is gut selectivity versus systemic administration. Remember the other JAKs that are out there with black box warnings were developed for RA. And the whole point was to get throughout the body to be able to reach the distal joints. We're not developing Izencitinib for RA. We're developing it for IBD to stay within the GI tract. And we've -- who knows it's too early at this stage to say where the FDA is going to land with their position on JAK inhibitors. But what we're pretty confident about is the body of work that we've generated to date. So Rick mentioned the absolute bioavailability. When you give an oral dose and an IV dose to somebody, same person, only 2% of that dose is bioavailable, exactly what you would expect for a gut-selective drug. We have low dose efficacy in animal models. We have very high safety margins in our toxicology studies and low systemic exposures in healthy volunteers in patients. So we're really looking forward to seeing the outcome from the later stage trials with a larger sample size.

Okay. So my question whether giving an oral compound to treat a condition that GI might end up causing more agitation for patients in terms of site of that profile. Is that something of concern?

Well, we really didn't see that in the Phase Ib study. The reason why we got into patients so quickly, our strategy was to get into patients very quickly in a Phase Ib setting was really to understand how this novel approach work with JAK inhibitors, were we were going to see greater systemic concentrations? The answer to that was no. Were we were going to see a greater level of GI upset? The answer was no. So -- and we really -- we're pretty confident, at least in the tolerability profile of Izencitinib in patients with IBD. And Rick?

Yes. Not much to add. I would reference people who are interested to our recent publication in Journal of Crohn's and Colitis, where we looked at all -- I mean, it was a 4-week study. But we looked at all kind of safety parameters, including changes in lipids, creatinine phosphokinase, NK cells and we actually saw a very clean safety profile in that study.

Okay. So what should we look for ulcerative colitis as clinically meaningful data?

Rick?

Yes. I think with regard to ulcerative colitis, what we're looking for are changes relative to what you see with some of the other JAKs, and we hope to be superior to things like tofacitinib and upadacitinib.

So what particular end point should we pay attention to?

Yes, especially in our Phase IIb portion of the study, we're looking at the total Mayo score, so pretty common assessment in ulcerative colitis. We'll move that in the Phase III part to the Adaptive Mayo score, and that's really just dropping one component of the total Mayo, which is the physician's assessment. And that's been shown to be pretty, I would say, less sensitive over the years. So total Mayo score and Adaptive Mayo score are the key things to be looking for.

Okay. And what point improvement do you think is reasonable placebo adjusted?

Yes. Again, I would just reference to some of the latest data that's come out with regard to upadacitinib in particular, that's really what we're looking toward to benchmark for.

Okay. So what would be the plans of filing for UC? After this study comes out, what else needs to happen?

Sure. So the -- and it's important that the phase -- ongoing Phase IIb study, those patients that respond are entered into a Phase III maintenance study. And that Phase III maintenance study is obviously already underway with patients coming out of the IIb program into that Phase III program. We'll -- when we get to UC data, we'll approach the regulators. And as Rick said, this was designed really hand in glove with Janssen, our partner, and we worked with both U.S. regulators and the European regulators at the time to design a seamless study. And by seamless, I mean what we get the Phase IIb data and the Phase III maintenance sort of continues. We go and reach agreement with the regulators on dose and then we immediately go into a Phase III induction study. And that induction -- Phase III induction study feeds into the same Phase III maintenance study that's ongoing today. So that's really the path for progression, right? We're doing -- we're executing the Phase IIb study now. We're executing the Phase III maintenance study now. Janssen has a decision to make after we deliver them ulcerative colitis and Crohn's data, an opt-in decision. Crohn's has been delayed a little bit, Q4, Q1 data now, we're expecting and that's a Phase II study in Crohn's. So in Crohn's, we're really looking for proof-of-concept in Crohn's. But I think the ulcerative colitis is we're looking to move that based on good data into a Phase III induction ASAP so that we can both fill up that bucket and fill up the longer-term maintenance study.

Okay. So let's say that for whatever reason, J&J chooses not to opt in, given that these are both large indications, what would your preference be? Would you want to then find another partner? Or would you feel comfortable commercializing this on your own?

Well, I think eventually, it's likely that we would find another partner. One of the important aspects of the collaboration with J&J was that we were executing on the Phase IIb study and the Phase III maintenance study for UC. So that there -- if, in fact, Janssen chose not to opt in, there would not be any sort of disruption to this ongoing development program in ulcerative colitis, we could keep going. And I think that certainly, we chose Janssen for a reason. They're a global leader in IBD. But if they chose not to opt in, we'd look to progress the program by ourselves and then I think look for partners to help us out in specific geographic areas. Andrew, you want to comment on that?

Yes. I think the whole strategy will be a function of data that we see from these 2 studies. And yes, I know it looks like we might be running out of time, but I agree that we believe that we might be able to build out our commercial team to commercialize Izencitinib in the U.S. alone. And partner ex-U.S., that's a common strategy. But again, the determination will be made after we see the data and understand the Janssen point of view.

Okay. Excellent. With that, we're out of time this afternoon. There's much more for us to talk about. We'll take another time and have a longer discussion. But it's good always to see you guys. Thanks so much for participating in our conference this year.

Tazeen, thanks so much. Take care.

Bye.

Good luck for the upcoming event. We'll be looking forward to it. Have a good rest of the day.

Yes. Bye-bye. Take care. Bye.