Ladies and gentlemen, good afternoon. At this time, I'd 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. And now, I'd like to turn the call over to Mr. Alex Dobbin, Head of Investor Relations. Please go ahead.

Great. Thank you. Thank you all for joining us for our fourth quarter and full year 2016 financial results conference call. With me today are Rick Winningham, Chief Executive Officer; Renee Gala, Chief Financial Officer; Brett Haumann, Chief Medical Officer. Following prepared remarks, we will open the call for questions. A copy of the press release and the accompanying slides are available on our Web site or you can call Investor Relations at 650-808-4045, and we'll be happy to assist. I will 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, the anticipated timing of trial results and regulatory filings, and expected financial results. Information concerning factors that could cause results to differ materially from our forward-looking statements are described further in the company's filings which are made with the Securities and Exchange Commission. I'll now hand the call over to Rick Winningham.

Thanks, Alex. Good afternoon, everyone and thank you for joining us. 2016 was a year of significant progress for Theravance Biopharma. We made important clinical gains in multiple programs which represent differentiated therapeutic options for patients with unmet needs and we significantly strengthened our cash reserves, positioning us to drive key programs through important value inflection points. On your call today, we will review our achievements in 2016 and discuss our key 2017 milestone. Brett will share more color in a moment, but first I would like to highlight recent progress in some of our key programs. The Revefenacin Phase 3 program in COPD has continued to progress according to plan. We announced in October, positive readouts from the pivotal three months efficacy studies. The 12 months safety study which enrolled more than 1000 patients is ongoing and on schedule to readout in mid-2017. The efficacy studies and long-term safety study will support our NDA submission plan for later this year. We are also working diligently with our partner, Mylan, on our commercial plan and the launch strategy for Revefenacin. As part of our strategy, we will conduct a Phase 3b study with Revefenacin in 2017 to assess the effects of Revefenacin in COPD patients with low peak inspiratory flow rate or PIFR. These patients are not able to breathe in inspire with enough force to use handheld products effectively and have been shown to have poor outcomes when discharged from hospital with handheld COPD medicines following a COPD exacerbation. A once a day nebulized muscarinic antagonist may provide a unique benefit to these patients because significant inspiratory effort is not required for a nebulized product to be effective. The PIFR study will not be required for the NDA submission later this year but it will be completed by early…

Thanks, Rick. I will start with TD-1473, a novel, potent, orally administered JAK inhibitor designed to be intestinally restricted. Our vision with the JAK inhibitor program is to develop a highly differentiated treatment option for inflammatory bowel diseases, including ulcerative colitis, Crohn's disease and immune checkpoint inhibitor-induced colitis. Our goal is to develop JAK inhibitors that remain localized and only act within the gut wall, maximizing local anti-inflammatory efficacy and minimizing systemic exposure that would otherwise lead to immuno suppression. We believe there is a strong rationale for our locally restrictive approach in IBD. First, the JAK mechanism is precedented. Tofacitinib has demonstrated in Phase 2 and Phase 3 studies that JAK inhibition works in ulcerative colitis. Importantly, however, tofacitinib was always designed to pass readily from the gut into the systemic circulation to treat systemic inflammation, including the joint inflammation seen in rheumatoid arthritis. An unfortunate consequence of this systemic exposure is that tofacitinib suppresses the immune system, increasing the risk of opportunistic infections like shingles and tuberculosis, and increasing the risk of some tumors including lymphoma. The important difference with our program is that we are designing our JAK inhibitors specifically to treat the inflammation in the intestine without getting into the systemic circulation. We have designed our compounds to limit JAK inhibition to the gut wall. This has the potential to increase the therapeutic index in two ways. First, by improving the safety profile for a given level of JAK inhibition and, second, by increasing the potential to go to higher doses than could be achieved with a systemic JAK inhibitor to achieve even greater efficacy. We have confidence that this approach should work. Based on our preclinical models, including a critically important study that compared the effects of oral tofacitinib versus tofacitinib given intracecaly, that is…

Thank you, Brett. I will now cover the financial results for the fourth quarter and full-year of 2016 and provide 2017 financial guidance. Revenue for the fourth quarter of 2016 was $5.7 million primarily related to U.S. net product sales of VIBATIV of $5 million. Revenue for the full year of 2016 totaled $48.6 million and consisted of revenue from collaborative arrangements of $31 million and net product sales of VIBATIV of $17.6 million. R&D expenses for the fourth quarter of 2016 were $42 million, representing an increase of $9.6 million compared to the same period of 2015. The increase was primarily attributed to costs associated with the progression of our priority program. Full-year R&D expenses were $141.7 million or $121.5 million excluding share-based compensation. SG&A expenses for the fourth quarter of 2016 were $20.4 million, representing a decrease of $3.7 million compared to the same period in 2015. The decrease is driven by lower costs associated with share-based compensation and lower external sales and marketing expenses. Full-year SG&A expenses were $84.5 million or $63.5 million excluding share-based compensation. In the fourth quarter of 2016, we completed concurrent public offerings of ordinary shares and convertible senior notes resulting in total net proceeds to the company of approximately $330 million. As a result of our financing activity, we ended the year in a well-capitalized position with just over $600 million in liquid assets, consisting of cash, cash equivalents and marketable securities totaling $592.7 million and receivables from collaborative arrangements of $9.1 million. As we have noted previously, the objective of completing our fundraising activities in 2016 was to enable the company to fund multiple, potential pipeline advancements in 2017 and 2018. Now I will move on to our financial guidance. In 2016, we provided guidance of approximately $140 million, an operating…

Thanks, Renee. We are very pleased with the accomplishments across our pipeline in 2016 and believe that our programs represent valuable and differentiated product opportunities with the potential to have a meaningful impact on patients lives and change how serious diseases are treated. These programs are expected to reach potentially transformative milestones in 2017 and 2018, strengthening our ability to generate value for patients and shareholders. Turning your attention again to Slide 3. For 2017, we expect readouts in every phase of clinical development. The Phase 1a multiple ascending dose study for our second NEP inhibitor TD-1439. In our intestinally restricted JAK program, our Phase 1b study of TD-1473 in ulcerative colitis. In Velusetrag, the Phase 1b study in gastroparesis. For Revefenacin, the Phase 3 12-month safety study followed by the planned NDA filing before the end of the year. And TD-9855, the Phase 2a study in neurogenic orthostatic hypotension. In VIBATIV, the publication of data from the TOUR study, and in the Closed triple, the Phase 3b IMPACT study and potential regulatory approval in the U.S. and the EU for COPD. In 2018, the Phase 3b study of Revefenacin in patients with low peak inspiratory flow rate or PIFR, intended to support commercialization. Our Phase 3 registrational study of VIBATIV in bacteremia. Our planned sNDA submission in the U.S. for VIBATIV in bacteremia. The potential regulatory approval of Revefenacin in the U.S. for COPD. And finally in the Closed Triple, the Phase 3a CAPTAIN study in asthma patients and the potential for a supplementary regulatory submission for asthma. We believe that these milestones comprise an impressive lineup of potential value creating events. We are very proud of our entire Theravance Biopharma team for their achievements this past year and we look forward to keeping you updated on our progress and continued success across our business in the future. Now I would like to turn the call over to the operator for questions.

[Operator Instructions] We will have our first question from Geoffrey Porges of Leerink. Your line is now open.

Congratulations on all the progress and look forward to those milestones. Brett, could you talk, first of all, about the PD1 induced colitis indication. First, what's the basis for your confidence in that as an opportunity and then secondly, when might we see you being able to treat some patients with one of the locally active JAKs. And then, Renee, I just wanted to ask about the guidance, and perhaps Rick as well. Looking at the portfolio, you have a lot of programs that are advancing to kind of Phase 1b all the way through Phase 2, that are un-partnered. Rick, what's your thinking about the right time to partner some of these assets that might have multiple indications that would be expensive to develop and pursue independently that is.

Brett, you want to cover the ICI?

Yes. Of course. Thanks, Geoff. Thanks for your question. I think perhaps just to briefly summarize the background to this. We are aware of course that both PD1 but also [CTLA4] [ph] inhibitors are used for the treatment of malignant melanoma and increasingly for other tumor types including non-small cell tumors in the lung and are likely to see use in head and neck tumors in the future. It's a remarkable advance in immunotherapy, obviously in the treatment of patients with oncology. But unfortunately up to one third of patients, 30% of patients suffer from debilitating diarrhea. In fact, often it progresses to such a permanent form of colitis that patients interrupt their therapy. And effectively then withdraw from a life-saving therapy for their tumor. There are alternative therapies available right now that could be given systemically in order to suppress that colitis. Unfortunately, by using systemic agents including anti-TNF agents, effectively you suppress the immune system which is supposed to be augmented by these immune checkpoint inhibitors. So it's completely counter to the [exertion] [ph] of [the therapy] [ph]. What would be ideal is the introduction of a therapy that deals with the colitis topically but doesn't alter any of the body's immune responses in fighting the tumor. And really in doing so allows these immune checkpoint inhibitors to remain effective. So we believe that there is an opportunity here for a locally restricted therapy to be effective. You asked about the timing, and certainly part of our strategy is to pursue a development program that looks at immune checkpoint inhibitor induced colitis. And that's part of our ongoing strategy and our development plan.

Sorry, Brett. Can I just follow up though. Do you know -- what do you know about the actual biology of that colitis and what's going on in the gut? Where is it occurring and do you have any sense yet that it would be amenable to local JAK inhibition?

So I think we certainly do know that it's restricted to the lower part of the small intestine and to the colon itself. So it does look a lot like manifestations of either ulcerative colitis or in some cases Crohn's. It's an inflammation of the mucosa are opposed to a pan-colitis. So it does look as if it would be amenable as we have seen with IBD. But of course a clinical program would evaluate that more thoroughly and that is our intent to move forward and indeed to enter into the study in the early part of next year.

Thank you, very much. And Rick?

Thanks, Geoff. It's a great question. So you look across our pipeline, Revefenacin, Mylan has supported the Phase 3 program with Revefenacin and then the commercialization. 65%, 35% expenses and income. So Revefenacin, essentially we sorted the partnership there. VIBATIV, we have got VIBATIV in the United States and then have a series of partnerships outside the United States. Velusetrag, Alfa Wassermann is our partner. Alfa Wassermann has European rights plus a few others and in exchange for that they paid for most of the Phase 2a and Phase 2b program. But we have the U.S. right. So I think one of the potential opportunities for us down the line is to partner Velusetrag potentially in the United States. Of course us maintaining a sizable amount of the economics but certainly partnering for that for payment of the Phase 3 development program. The NEP program, we have said for quite some time that when looking at it for large, either renal or chronic heart failure program, we would partner that program and as Brett said, we are getting ready to finish of the Phase 1 study in the second program fairly soon and some of those discussions are all ongoing now. The JAK program, I think we believe that it's quite meaningful for us and we really have got the capability of carrying JAK forward together with you look at our existing cash position. Plus the financial coming in, we would anticipate from the Closed Triple. So I will ask Renee to comment but we look at partnerships all the time and try and look at which programs would benefit from helping us manage the financial risk or potentially through the partner acquiring some sort of technical capability or geographic reach that we might not have entering into partnerships there. And then finally, I will close and the turn it over to Renee. You know 9855 is a pretty exciting program. We like what we are seeing thus far in the Phase 2a study and that’s really a program that’s an orphan like program. We certainly could take that ourselves all the way through development and commercialization. So Renee?

Sure. Thanks, Rick. So I would just add to that because I think you have covered it quite nicely. I would just add to that that when we did the fundraising that we completed in 2016, we had multiple objectives. First, we wanted to be in a position where we could finance all of these key program milestones readouts across 2017 and 2018. And second, we also wanted to be in a position where we wouldn’t need to do a partnership unless we felt strategically it was quite important to improving the overall financial outcome for the program. So if we had an opportunity to meaningfully accelerate and meaningfully enhance a program through a partnership, we would do that. But the financing was very important to our overall strategic objective and led us to be in a position to be able to lay out the set of milestones we have in 2017 and 2018, which of course leads us to a higher guidance number in 2017.

Thank you. And our next question comes from the line of Umer Raffat of Evercore ISI. Your line is now open.

If you would allow me to have a few today in no particular order. So perhaps the first one on the JAK inhibitor can you help us understand where you stand with the dose escalation. And specifically, my understanding was that the design of the trial would enable you have flexibility in how you chose the doses. So where we do stand and what have we learned so far? Perhaps that's the first one and I have a couple of follow ups.

Sorry, if you could repeat that. You broke up mid comment there. If you could just repeat your question?

Sure. My question really was, what we have learned to far with the dose escalation based on the choice of doses used beyond the first one. Because my understanding was, the flexibility in the trial design was basically enabling you to select the second and third dose depending on what you saw in the first one. So what we have learned so far.

Thanks, Umer, that’s a great question. As you know, it's an adaptive design. So we have sequential cohorts. We are actually not commenting on where we are in the clinical conduct of that but it is our intent to disclose data from the study by the middle of this year.

Okay. No worry. Moving on to the other ones then. On Revefenacin, my understanding was that you could file based on the long term safety trial later this year. And so I am trying to understand the requirements for the low PIFR trial. Is that something FDA asked for and what's the timelines on that?

No. The PIFR study is not required for filing. That’s really a study that we are executing to facilitate commercialization and positioning the product post-approval in patients with low peak inspiratory flow rates where we think a nebulized product, if you look at the data that’s been published to date, where nebulized product is going to provide the greatest benefit. Brett?

Agree. And just to reiterate, Umer, it's not required for the regulatory filing. So your original comment is exactly accurate. The safety study is going to be combined with the efficacies studies, so they have already been readout. And that forms the basis of our NDA submission later this year.

Got it. And then my last one on the 9855. So I want to zoom in on the trial design a little better. So when I look at clin trials, it says both arms can take multiple doses and based on the press release just now I am learning that it was limited to a single dose and only the responders could move on. So if you could just clarify what the trial design was? Whether patients were or weren't able to take more than one doses as it stands today. And then secondly also, how do you define response? So the press release, you can now take more than one doses if you have response. How is that response defined? Is that defined -- just that. Thank you.

That’s fine. Thanks, Umer. So, again with reference to the clinicaltrials.gov registry or note, I think in reading it ourselves we recognized that what we were trying to describe was that those were multiple single dose in dose ascending fashion. So that’s a single ascending dose type study where patients are evaluated at a low and then higher and higher dose. That’s what we had meant to describe in terms of multiple doses, but to be clear they are all discreet, single doses looking to titrate to a clinical response. What we are now signaling is that in those patients who respond, we would like to take that dose and continue to treat those patients for more than one does. So that just to clarify. You had asked to about how that assessment is made. Again, we don’t go into too much detail but this is a study that’s conducted by experts in the field who are highly specialized in treating patients with NOH and the use a number of parameters, both in terms of blood pressure and symptoms to assess whether the patients have had a clinical response or not. So that is stipulated in the protocol and it's only on the basis of meeting those criteria that patients are deemed to be responders or not.

Got it. But just to clear, the way the symptoms are being defined, is that consistent with the indication on Northera label?

It is. In fact, it's helpful to refer to even more recent guidance document. I think when droxidopa was initially filed in 2012 and then approved in 2014, there was a recognition that there was some variability in the definition of endpoints. We have been working with the experts in the field who in fact define recommendations for the treatment and diagnosis of NOH. And I would refer you to a general article from January of this year in the Journal of Neurology which speaks to the updated guidelines on the diagnosis and treatment of NOH. Those are the parameters that we are testing in our current study.

Thank you, so much, Brett. And if I may, and I really appreciate this. What would be the timeline of the pivotal study on this program?

An excellent question, Umer. I think what we want to do is to conduct this study, completed the existing study. Obviously, next steps will be informed by what we see in this clinical program but you could envisage a step with, obviously interactions with the agency trying to move towards a pivotal program as the next step. Because this is an orphan designation, our intent here is to seek confidence from both single and repeat dose administration and to use that to support motivating for a pivotal study as the next step in 2018.

Brett, you might talk for just a moment about the decision to continue dosing in the patients that had the response.

Yes, I think again we had appreciated and I think a number of people have asked us whether it would be possible to gauge fairly early in a program of this nature where the patients might respond or not. Now bear in mind, the study was initially designed to see whether there would be any treatment affect when patients went through two phases of this study. Our sense, again early, because patients continue to be dosed in the study, but based on early encouraging data we have observed that patients appear to have an effect after single dose. The purpose of this extension of course is to see whether that response is durable and whether repeat dose administration continues to demonstrate benefit. That is a prerequisite for our opportunities to progress and that's a focus of this next stage of the study.

Got it. Rick, since you said, since you sort of took the conversation in the direction, if I may, do you think the responses could be better than Northera? The response rate?

Well, I think we are early on but I think we do believe that we have the potential because of the mechanism that they have the gold standard, to have a gold standard therapy here. I think we are excited by what we have seen to date with the caveat that Brett mentioned is we need to see that the responses are in fact durable based on repeat dosing. But we didn’t chose the words in the presentation today, gold standard, lightly. I think we are encouraged by what we see but we need to makes sure that it's durable.

Thank you. And our next question comes from the line of Josh Schimmer of Piper Jaffray. Your line is now open.

Just a couple on Revefenacin and the new Phase 3 trial. First, what percent of the COPD population to d you estimate have low peak inspiratory flow and given that these patients probably can't generate enough inhalational force to use the metered dose inhaler, I guess intuitively I would have expected this is the target or at least part of the target population for Revefenacin. So what is that you are really trying to show incrementally in the Phase 3b trial that can further drive adoption in the patients, what would the comparator be and how do you envision it helping the message and positioning for those patients. Thanks.

Thanks, Josh. Great question. I think what may surprise you is that regardless of the severity of COPD there are patients with poor inspiratory flow in every disease severity, including patients with moderate disease as well as those with very severe disease. I think what we recognize is that there may be a prejudice and assumption that nebulized therapy is only reserved for those patients who are very severe and have had frequent hospitalizations for exacerbations. Our focus on looking at the patients with low PIFR is to identify that there may be patients with more moderate disease who have low PIFR, who would actually deserve and warrant treatment with a nebulized therapy. There is some recent data which has been published to show that regardless of severity patients who discharged after a COPD exacerbation, discharged from hospital and given a handheld product when they had low PIFR, or twice as likely to be readmitted and the frequency with which they are readmitted is much worse than those who are discharged on nebulized therapy. Average is just over 40 days for patients discharged with a handheld product versus more than 100 days for patients discharged with nebulized therapy. So it's actually fairly important to describe this patients population. It is a larger segment than maybe appreciated and again to reiterate, it's not just the most severe patients who have these low PIFR rates. Rick?

Yes. I would just add that there is a new, relatively new diagnostic tool that facilitates the diagnosis of these patients that have inspiratory issues. Brett, you want to expand on that?

So the device that Rick is referring to is freely available, it's called the in-check device. It effectively measures the resistance that handheld products have and then physicians in general practice are able to ask their patients to breath in through this device and it will give a sense of how effectively they are able to use handheld products. Through that our expectation is that it would be easy to discern, easy to discriminate between those patients for whom the handheld product may suit the individual versus those who would be suitable for nebulized therapy. And that could include people who are currently on handheld products but are just not benefitted from these.

Can you elaborate then on the design of the Phase 3b? What the comparators maybe?

Josh, we are not going into the details of that at the moment. We will put up at clinicaltrials.gov posting when the study starts to enroll but for now we are obviously pointing to the initiation. More details will follow as the study gets underway.

Thank you. And our next question comes from the line of Alan Carr of Needham. Your line is now open.

A couple of things around your commercial observation. One, can you comment more about some of the changes that you have made around the sales force. Remind us how big it was before and now and then also what sort of role you have in terms of commercializing Revefenacin. Where do you stand in getting ready for that? Thanks.

Sure, Alan. Thanks for the question. We just sort of trimmed the sales force, I would say more or less a bit around the edges in territories that we found both were not that promotionally responsive and those that were being substantially affected I would say by generic [indiscernible] and given the concentration of outpatient therapy in a given territory. We have still got between, if you look at mangers, medical liaisons and sales reps, between 50 and 60 people in the field. And that provides us with a very good base by which when we get to both the bacteremia data and filing and the Revefenacin filing, to be able to take that footprint and then scale up to support those launch. I think what we see is a role for that sales force relative to Revefenacin is again about 800,000 patients a year in the United States are admitted to a hospital because of a sudden worsening of their COPD or an exacerbation. And today without gold standard therapy available to them and that being a long acting muscarinic antagonist, today about half of those patients are discharged on nebulized therapy which is not gold standard. So we think with the availability Revefenacin the ability to have those patients discharged on gold standard long-acting muscarinic antagonist nebulized therapy, is a significant opportunity. As is the opportunity to start those patients on therapy in the hospital because right now most of those patients are receiving three or four times a day ipratropium and the ability for those patients to receive once day product like Revefenacin, well that should save respiratory therapy time in the hospital as well as providing patients with optimal therapy. I should add just a couple of other points about Revefenacin is that unlike ipratropium, Revefenacin is not renally cleared and therefore many of these COPD patients have co morbid conditions, may have some sort of impaired renal function. Therefore a medicine like Revefenacin would be quite appropriate for those patients given its non-renal clearance when they are in the hospital. So we see the institution as a critical point in the launch and maintenance of the commercial presence of Revefenacin and that’s what we see our ability as -- really leveraging our ability in the institution combined with Mylan's capability outside the institution for a successful launch of Revefenacin.

Your thinking around when you will be developing [indiscernible] sales force getting that ready for that launch?

Yes. So we will have to sort of look at that but we anticipate a filing of Revefenacin later this year. Second half of this year. Likely in the fourth quarter. So we will take a look and then begin to build back the sales force sometime after that. We will also of course be paying attention to what the outpatient, how the outpatient market changes and make any changes with regard to the sales force, given any changes in the outpatient market for antibiotics. So those relate to the two near-term market dynamics that would cause us to change capital allocation in terms of adding sales reps back into the field.

Thank you. And our next question comes from the line of Louise Chen of Guggenheim. Your line is now open.

It's Brandon Folkes on for Louise there. I wondered if you could help us perhaps and give us more color on the bacteremia opportunity for VIBATIV. And then just following on an earlier question. How do you think about commercializing outside the U.S.? Do you have rights to them outside the U.S.?

Yes. So I will take bacteremia. I think the bacteremia opportunity for VIBATIV is quite substantial. I think the opportunity is really driven by the type of drug that VIBATIV is due to mechanism of action, being able to treat patients without the emergence of resistance for relatively long periods of time and that’s the -- one element is that the number of treatment days for a bacteremic patient is greater or greater than the number of treatment days that you see for either [indiscernible] or complicated skin. And the fact that VIBATIV is a once a day product, facilitating it's use both in home health and infusion centers, facilitates the treatment of bacteremia in an outpatient setting away from the institution. Now relative to non-U.S. commercial presence, today with VIBATIV we have got sort of a network of partners we would anticipate in the future that the partnering strategy that we would employ with an individual product would be based on what the capabilities of the partner would be and then what we would need. Some programs that could require simply a partner in Europe and perhaps another one in the far east or there might be other products that we would do strictly a non-U.S. partnership deal. It just depends on the product and the capabilities of the individual partner. Renee?

Yes. I would agree with what you have just said. If you look at Revefenacin, Mylan has the worldwide rights for Revefenacin excluding China, in nebulized form, and of course we will co-promote that in the U.S. With respect to handheld therapies related to Revefenacin, we have hundred percent of the rights there. For Velusetrag our partner Alfa Wassermann has the right to Europe and a few other geographies outside the U.S. And 9855 is currently wholly-owned. So as Rick stated, sitting there today we don’t have a plan of setting up a commercial organization outside the U.S. So we will be looking at each program on a program by program basis to determine what is the best way to commercialize those products outside the U.S.

Thank you. And I am showing no further questions at this time. I would now like to turn the conference back over to Mr. Winningham. Please go ahead, sir.

Thank you very much, operator. Thanks, everyone for joining us today and for participating in our call. We look forward to a very eventful and exciting 2017 and 2018. And I would like to wish you all the best of day. Have a great day. Thank you.

This concludes today's conference call. We thank you for your participation. You may now disconnect.