Rick Winningham - CEO Renee Gala - CFO Brett Haumann - Chief Medical Officer

Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to the Theravance Biopharma Conference Call. During the presentation, all participants will be in a listen-only mode. A question-and-answer session will follow the Company's formal remarks. [Operator Instructions] Today's conference call is being recorded. Now, I would like to turn the call over to Renee Gala, Senior Vice President and Chief Financial Officer. Ma'am, please go ahead.

Good afternoon everyone and thank you for joining our fourth quarter and full year 2015 financial results conference call and webcast. Following our prepared remarks, we will open the call for questions. Joining me on the call today are Rick Winningham, Chief Executive Officer and Dr. Brett Haumann, Chief Medical Officer. A copy of the press release can be downloaded from our Web site or you can call Investor Relations at 650-808-4045 and we will be happy to assist you. We would like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance Biopharma. Forward-looking statements include anticipated results and other statements regarding the Company's goals, expectations, strategies and beliefs. These statements are based upon the information available to the Company today and Theravance Biopharma assumes no obligation to update these statements as circumstances change. Future events and actual results could differ materially from those projected in the Company's forward-looking statements. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the Company's Form 10-Q and other filings with the Securities and Exchange Commission. And now, I would like to hand the call over to Rick Winningham. Rick?

Thanks, Renee. Good afternoon everyone and thank you for joining us. In the call today, we are going to focus on our priority programs TD-0714, our neprilysin inhibitor for the treatment of cardiovascular and renal diseases, TD-1473, our GI targeted pan-JAK inhibitor to treat ulcerative colitis and Revefenacin or TD-4208, our once daily nebulized long-acting muscarinic antagonist or LAMA in Phase III development of COPD. We'll also provide an update on VIBATIV, review our financial performance for the year and preview our upcoming milestones for 2016. Then we will open the call up for questions. 2015 was a great year for Theravance Biopharma, we made significant progress in advancing our priority programs to key inflection points and we set the stage for multiple value creating events in 2016. Today, we reported compelling data for the Phase I study of our NEP inhibitor 714 underscoring its potential therapeutic value as a novel treatment for cardiovascular and renal diseases. The Phase I study of 1473, our GI targeted pan-JAK inhibitor for ulcerative colitis is anticipated to be completed in the first half of 2016 which could pave the way to a Phase Ib study in patients later this year. The Phase III program for revefenacin is enrolling well, at its current pace we expect to report out two efficacy studies in the third quarter of 2016 followed by the long-term safety study in mid-2017, mid to late 2017 and a NDA filing in late 2017. In addition, we continue to make progress on our commercial strategy for VIBATIV, we're encouraged by the momentum being generated by our expanded sales force and we remain focused on pursuing strategies to expand the products label to drive further utilization, we're enthusiastic about the year ahead. We expect to achieve key clinical and regulatory milestones in 2016, including numerous data readouts, with the productive research organization fueling innovation and a solid financial foundation. We believe our company is poised to deliver significant value for both patients and shareholders in the near and long-term. Now I'd like to hand the call over to Brett to provide an update on our pipeline programs.

Thanks, Rick. I'll start with our Phase I clinical programs, 714, our neprilysin or NEP inhibitor for cardiovascular renal diseases and 1473, our Janus kinase or JAK inhibitor to ulcerative colitis. I'll begin with our NEP program. Our research team has been developing novel NEP inhibitors with the goal of identifying a product candidate that would be best in class and be combined with other complementary mechanisms for the treatment of chronic heart failure. And also potentially be first in class for other indications, including acute heart failure and chronic kidney disease, these diseases represent large market opportunities and currently poorly served by available therapies. Roughly 26 million American suffer from chronic kidney disease, including diabetic nephropathy. In the U.S. alone there were 6 million patients diagnosed with chronic heart failure and approximately 1 million hospitalizations annually for acute heart failure. The Phase I program for 714, our lead NEP inhibitor is progressing well. We've completed the Phase I single-ascending dose study in healthy volunteers, the results of which were announced in a press release earlier today. And we've recently initiated dosing in a Phase I multiple-ascending dose trial also in healthy volunteers. The single-ascending dose trial was designed to assist the safety, tolerability and pharmacokinetics of 714 as well as major biomarker evidence of target engagement and the amount of the drug that's eliminated by the kidneys. In the study, 714 demonstrated evidence of biological effect, as shown by dose-related increases in levels of cyclic GMP with maximal effect demonstrated within the lower end of the dose range. Result showed sustained target engagement for 24 hours after single dose, indicating 714’s potential for once-daily dosing. 714 was generally well tolerated across the dose ranges studied with no serious adverse events reported. There were also no clinically relevant changes noted…

Thanks Brad. VIBATIV is an important treatment for patients with life threatening gram positive infections particularly those infections caused by MRSA leading to complicated skin and skin structure infections as well as hospital acquired and ventilator associated pneumonia. VIBATIV is the basis for our acute care commercial strategy in the United States. In 2015, we focused on expanding and solidifying our commercial infrastructure. We started the year with six sales reps. By the beginning of the fourth quarter, we had a full complement of 50 sales reps in the field trained and active in their respective territories. We’re encouraged by the positive sales ramp we saw in November and December of 2015 and we remain optimistic about our prospects for VIBATIV in 2016. We continue to see strong growth and formulary additions in the hospital and outpatient setting. We’ve made important progress in implementing our commercial strategy for VIBATIV but we have more work to do. Additionally, we’re working on label expansion strategies for VIBATIV in an effort to optimize the product’s commercial potential as well as investing in our TOUR registry program to collect real world data for publication. We anticipate that the FDA will complete its review of our sNDA in the second quarter of 2016 which could support label expansion to include treatment of cases of concurrent bacteremia in both complicated skin and skin structure infections as well as hospital acquired pneumonia and ventilator associated bacterial pneumonia. Our Phase III registrational trial in primary bacteremia continues to enroll patients and we anticipate completion of this trial in 2017. Now I’d like to turn the call over to Renee to provide a financial update.

Thank you, Rick. Prior to reviewing the financial results I’d like to remind you that the financial statements of Theravance Biopharma for periods prior to our sent off into June 2014. We derived from the historical consolidated financial statements of Innoviva Inc. previously notes previously known as Theravance, Inc. I'll now cover the financials for the fourth quarter and full year of 2015 and provide 2016 financial guidance. Revenue for the fourth quarter of 2015 was $3.9 million including revenues from collaborative arrangements of 0.2 million and product sales of VIBATIV of 3.7 million. VIBATIV product sales consisted of U.S. net product sales of 3.1 and ex-U.S. sales of 0.6 million. Revenue of the full year of 2015 totaled 42.1 million and consisted of revenue from collaborative arrangements of 32.7 million and net product sales of VIBATIV of 9.4 million. Cost of goods sold for the first quarter of 2015 totaled 3.2 million which includes the charge of 1.9 million for write down of inventory due to dating of the product. Cost of goods sold for the full year totaled $4.7 million. R&D expenses for the fourth quarter of 2015 were $32.4 million representing a decrease of 9.8 million compared to the same period in 2014. The decrease was primarily due to non-recurring long-term retention and incentive awards and the decrease in program related expense due to the reimbursement of expenses associated with the Mylan collaboration for Revefenacin. Full year R&D expenses were 129.2 million or 103.4 million excluding share based compensation. SG&A expenses for the fourth quarter of 2015 were 24.1 million representing an increase of 2.3 million compared to the same period in 2014. The increase was primarily due to cost associated with VIBATIV commercialization. Full year SG&A expenses were 90.2 million or $61.9 million excluding share based…

Thanks, Renee. To recap we’re excited about the lineup of events for 2016. Including top line results from the two Phase III efficacy studies of Revefenacin and COPD, complete data for the ongoing Phase I studies 714 and 1473 as well as the upcoming PDUFA date for our Concurrent bacteremia indication for VIBATIV. Also included in our lineup of expected milestones in 2016 is the completion of the Phase III FULFIL study of the Closed Triple and COPD being conducted by GSK, with an expected regulatory filling in Europe before the end of the year. As a reminder we have an economic interest in the Closed Triple and mobile [ph] products of GSK and we’re entitled to receive 85% of future potential royalty or milestone payments on these products that maybe made by GSK pursuant to its agreement with Innoviva. As I said a few moments ago 2015 was a year of great progress for Theravance Biopharma. We’re equally confident about our prospects for 2016 and beyond highlighted by the following milestones. Data from three Phase III trials in 2016, data from three Phase III trials in 2017, further development in support of the non-renally cleared NEP inhibitor for patients with chronic kidney disease and chronic heart failure, and importantly advancement of a novel approach to treat ulcerative colitis through the creation of a pan-JAK inhibitor designed to target inflamed tissues of the gut without being released into the broader systemic circulation. We believe this approach has the potential to dramatically improve the therapeutic benefit for patients suffering from this debilitating disease. In closing we are very pleased with the progress that we've made and look forward to making additional progress across our pipeline and providing meaningful business updates throughout the course of the 2016. And now, I would like to turn the call over to the operator for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Brian Skorney of Robert W. Baird. Your line is open. Please go ahead.

Hi, this is Nina on for Brian. So I was just wondering if you could tell us a little bit more about the pathway for the NEP inhibitor. So assuming the multiple ascending dose study is positive in the second half of the year. Of the pathways that you outlined on your slides, what kind of the most likely pathway in terms of combination work and then what types of combinations are looking at for the IV?

So let me just touch on this and then I'll turn it over Brett. If you look at our slides there are three slides from IR, there are three potential pathways for our NEP inhibitor program acute heart failure, chronic heart failure and chronic kidney disease. Acute heart failure as an IV, would be an IV formulation of the NEP inhibitor alone and potentially combined at some point in time perhaps at discharge from the institution with ARB, then the patient would like be discharged at least in our view on some sort of NEP-ARB combination. The acute heart failure program is a program that's manageable, but the greatest impact that can probably be made on healthcare, we think are the chronic heart failure indications and chronic kidney disease indications. And Brett you want to take care of those?

Thanks very much Rick and Nina, great questions. As Rick has described, you could imagine a continuum of care where patients present through the hospital with a history of chronic heart failure, existing therapies possibly having failed them and then be placed onto acute therapy. It's quite usual for patients to have other therapy withdrawn when then end up in the hospital. We think that there is a perfect opportunity there for the introduction of a NEP inhibitor on its own as an intravenous formulation. As patients improve in the condition of their acute de-compensation it will be appropriate to switch them onto an acute therapy, but during that period they remain vulnerable particularly in terms of their renal function. So it's another idea to put them onto a therapy that might still be dependent on renal function, renal clearance for its elimination and again we think that our NEP inhibitor and the profile that we have would be particularly well suited and the patients coming out of that [indiscernible] of a heart failure. And then on an inter-chronic therapy, and as Rick has described there are several complementary mechanism that are of interest in the chronic heart failure space and trusted over [ph] the use of a NEP inhibitor with ARB, but there are other complementary mechanism which might be suitable there. And then in chronic kidney disease really the unmet need is quite profound, there are very few appropriate therapies well suited to chronic kidney disease. What's interesting in the medical arena is that the heart and the kidney are rarely directly coupled and it's quite common for somebody who's got a primary heart failure condition to have secondary renal dysfunction and failure, conversely we also see patients who have initially a renal disease and their heart fails secondarily. So this access of the heart and the kidney is a very important one for NEP inhibition and similar combinations might be effective in chronic kidney disease, so really the spectrum is large. We think as Rick has rightly said, acute heart failure with single agent NEP inhibition is a near term concrete program that we could certainly take on ourselves that we remain heavily invested in partnership discussions to explore other complementary therapies that could be used with this.

And the treatment of chronic kidney disease the use of NEP and ARB, irbesartan has been approved and there is data available that the combination of an ARB and NEP inhibitor would in fact improve the function of the kidney. So the other mechanisms that Brett alluded to potentially a PDE5, PDE9, a renal inhibitor, all these mechanisms to complement a NEP inhibitor are on the table I think for the long-term development program of 714. Does that answer your question?

Yes, great. Thank you.

Thank you. [Operator Instructions] I am showing no further questions and I would like to turn the conference back over to Mr. Rick Winningham for any further remarks.

Thank you very much operator and thanks everyone for participating in our year-end update as well as our look forwards into an exciting year of 2016. Have a great day.

This concludes today's conference call. Thank you all for your participation. You may all disconnection. Everyone have a great day.