On February 26, 2019 Theravance Biopharma, Inc. ("Theravance Biopharma" or the "Company") (NASDAQ: TBPH) reported financial results for the fourth quarter and full year ended December 31, 2018 (Press release, Theravance, FEB 26, 2019, View Source [SID1234533700]). Revenue for the fourth quarter and full year 2018 was $15.7 million and $60.4 million, respectively. Full year operating loss was $238.8 million or $187.4 million excluding share-based compensation expense, in line with the Company’s previously stated financial guidance. Cash, cash equivalents, and marketable securities totaled $517.1 million as of December 31, 2018.

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Rick E Winningham, chairman and chief executive officer, commented: "Following a highly productive 2018, we begin the year with great momentum and continue to make meaningful progress towards our goal of designing more effective and safer medicines to address unmet patient needs. Early in 2018, we entered into a global collaboration with Janssen for TD-1473, our gut-selective pan-JAK inhibitor for inflammatory intestinal diseases, for which we are beginning late-stage clinical trials. In the middle of the year, we showed positive four-week results for ampreloxetine in neurogenic orthostatic hypotension, providing us with the confidence to advance into a registrational Phase 3 program which is now underway. In the latter part of 2018, we and our partner Mylan achieved product approval for YUPELRI in COPD, and formal launch efforts are now underway. We closed out the year with R&D Day where we described our innovative research and development strategy of organ-selective medicines designed to expand the therapeutic index beyond that of conventional therapy and introduced several new research programs. Underpinning the progress of our own business, GSK’s TRELEGY ELLIPTA for COPD continues its impressive sales trajectory, and we await the results of the Phase 3 CAPTAIN study in asthma in the first half of 2019.

"We anticipate multiple clinical readouts and milestones over the next several months, including supplemental data presentations at upcoming scientific meetings for TD-1473 in ulcerative colitis and ampreloxetine in nOH, as well as Phase 1 data for TD-8236, and initial commercial metrics for YUPELRI. Following our recently completed note financing tied to our economic interest in TRELEGY ELLIPTA, we enter 2019 with a strong cash balance and are well-positioned to execute against our milestones and continue to deliver value to stakeholders."

Program and Corporate Updates

YUPELRITM (revefenacin) inhalation solution (lung-selective nebulized long-acting muscarinic antagonist (LAMA)):

First and only once-daily, nebulized bronchodilator approved in the US for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD)
Formal launch activities underway with partner Mylan; combined sales infrastructures covering the hospital, hospital discharge, and home health settings
TD-1473 (gut-selective pan-Janus kinase (JAK) inhibitor):

First patients dosed in Phase 2 DIONE induction study in Crohn’s disease
Sites initiated in registrational Phase 2b/3 RHEA induction and maintenance study in ulcerative colitis
Results from the Phase 1b study of TD-1473 in patients with ulcerative colitis accepted as an oral presentation at Digestive Disease Week (DDW) in May 2019
Ampreloxetine (TD-9855, norepinephrine reuptake inhibitor (NRI)):

Recently announced initiation of dosing in registrational Phase 3 program in symptomatic neurogenic orthostatic hypotension (nOH)
Phase 2 study in patients with nOH complete; 5-month data further support previously-announced clinical observations after four weeks of treatment. Detailed study data to be submitted for presentation at mid-year scientific meeting
TD-8236 (novel, lung-selective inhaled pan-JAK inhibitor for serious respiratory diseases):

Discovery leverages organizational expertise in respiratory diseases and JAK inhibition
Phase 1 clinical study underway; designed to evaluate safety and provide biomarker data of TD-8236 in healthy volunteers and asthma patients; completion expected in mid-2019
Multiple JAK-dependent pathways clinically validated in asthma and COPD
Potentially broad activity with JAK inhibition across a range of respiratory indications and phenotypes
TD-8236 shown to potently inhibit targeted mediators of Th2-high and Th2-low asthma in human cells in preclinical studies
R&D Day in December 2018:

Highlighted our innovative research and development strategy of organ-selective medicines and introduced several new research programs that we plan to advance towards clinical development, each specifically tailored to the organ of interest
TRELEGY ELLIPTA (first once-daily single inhaler triple therapy for COPD)1:

GSK reported fourth quarter 2018 net sales of $100 million and $207 million for the full year 2018; Theravance Biopharma entitled to approximately 5.5% to 8.5% (tiered) of worldwide net sales of the product
Currently available in 26 countries, with additional countries expected over the course of 2019; recent regulatory filings include Japan and China
Expanded COPD indication in Europe for patients not adequately treated with dual bronchodilation, making it the first single inhaler triple therapy indicated for patients with moderate to severe COPD
Completion of Phase 3 CAPTAIN study in asthma patients expected in 1H 2019; if positive, submission of supplemental New Drug Application (sNDA) for TRELEGY ELLIPTA in asthma anticipated in 2H 2019
Completed a non-dilutive private placement of $250.0 million in aggregate principal amount of non-recourse notes secured by a portion of the future payments the Company expects to receive related to royalties due on net sales1 of TRELEGY ELLIPTA
75% share of the payments will be used to satisfy the debt obligations until notes repaid
Remaining 25% of the payments will be directed to benefit the Company on an ongoing basis
Proceeds were approximately $229.0 million net of debt issuance costs and a 5% retention of the notes by the Company
Strategic infusion of cash in late 2018 with retained economics over TRELEGY ELLIPTA’s commercial lifespan; proceeds to support key strategic priorities
VIBATIV (telavancin): Sale of VIBATIV to Cumberland Pharmaceuticals Inc. completed in November 2018

Notes:
1 As reported by Glaxo Group Limited or one of its affiliates (GSK); reported sales converted to USD; economic interest related to TRELEGY ELLIPTA (the combination of fluticasone furoate, umeclidinium, and vilanterol, (FF/UMEC/VI), jointly developed by GSK and Innoviva, Inc.) entitles Company to upward tiering payments equal to approximately 5.5% to 8.5% on worldwide net sales of the product (net of TRC LLC expenses paid and the amount of cash, if any, expected to be used by TRC pursuant to the TRC LLC Agreement over the next four fiscal quarters)

Fourth Quarter and Full Year Financial Results

Revenue

Revenue for the fourth quarter of 2018 was $15.7 million, comprised of collaboration revenue primarily related to our global collaboration with Janssen for TD-1473 of $10.0 million, profit sharing revenue related to YUPELRI of $3.3 million, and product sales of VIBATIV (telavancin) of $2.4 million. Revenue in the fourth quarter represents an increase of approximately $11.2 million over the same period in 2017. The increase was primarily related to revenue recognized from the upfront payment associated with the global collaboration agreement with Janssen for TD-1473. The increase was partially offset as a full quarter of Product Sales was not recognized due to the sale of VIBATIV to Cumberland Pharmaceuticals in November 2018. Full year 2018 revenue was $60.4 million, comprised of collaboration revenue of $41.8 million primarily associated with the upfront payment from Janssen for TD-1473, product sales of VIBATIV of $15.3 million and profit sharing revenue related to YUPELRI of $3.3 million.

Research and Development (R&D) Expenses

R&D expenses for the fourth quarter of 2018 were $52.3 million, compared to $51.1 million in the same period in 2017. The increase was primarily due to higher external expenses to support our key programs and was partially offset by lower employee-related and share-based compensation expenses. Full year 2018 R&D expenses were $201.3 million, or $175.8 million excluding non-cash share-based compensation.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses for the fourth quarter of 2018 were $25.5 million, compared to $29.5 million in the same period in 2017. The decrease was primarily due to lower expenses related to share-based compensation. Full year 2018 SG&A expenses were $97.1 million, or $71.3 million excluding non-cash share-based compensation.

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities totaled $517.1 million as of December 31, 2018, which includes net proceeds of $229.4 million resulting from the private placement of notes secured by a portion of the future payments related to royalties due on net sales of TRELEGY ELLIPTA.

2019 Financial Guidance

The Company expects full-year 2019 operating loss, excluding share-based compensation, of $210 million to $230 million. Operating loss guidance does not include royalty income for TRELEGY ELLIPTA which we recognize in our statement of operations as "income from investment in TRC, LLC." Our share of US profits and losses related to the commercialization of YUPELRI, potential future business development collaborations as well as the timing and cost of clinical studies associated with our key programs, among other factors, could impact our financial guidance.

Conference Call and Live Webcast Today at 5:00 pm ET

Theravance Biopharma will hold a conference call and live webcast accompanied by slides today at 5:00 pm ET. To participate in the live call by telephone, please dial (855) 296-9648 from the US, or (920) 663-6266 for international callers, and use the confirmation code 8086288. Those interested in listening to the conference call live via the internet may do so by visiting Theravance Biopharma’s website at www.theravance.com, under the Investor Relations section, Presentations and Events. Please go to the website 15 minutes prior to the start of the call to register, download, and install any necessary audio software.

A replay of the conference call will be available on Theravance Biopharma’s website for 30 days through March 28, 2019. An audio replay will also be available through 8:00 pm ET on March 5, 2019 by dialing (855) 859-2056 from the U.S., or (404) 537-3406 for international callers, and then entering confirmation code 8086288.