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Rigel Announces First Quarter 2019 Financial Results and Provides Company Update

On May 7, 2019 Rigel Pharmaceuticals, Inc. (Nasdaq:RIGL), reported financial results for the first quarter ended March 31, 2019, including sales of TAVALISSE (fostamatinib disodium hexahydrate), for the treatment of thrombocytopenia in adults with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment (Press release, Rigel, MAY 7, 2019, View Source [SID1234535865]).

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"Since the U.S. launch of TAVALISSE one year ago, a growing number of physicians are utilizing our product in earlier lines of therapy and with an increasing number of their chronic ITP patients," stated Raul Rodriguez, president and CEO. "Internationally, the recent collaboration with Grifols in Europe enhances our potential access to a majority of the ex-U.S. ITP market. Meanwhile, our pipeline is expanding with the initiation of our Phase 3 trial in warm autoimmune hemolytic anemia and additional ongoing clinical and research projects."

Financial Update

For the first quarter of 2019, Rigel reported a net loss of $17.6 million, or $0.11 per share, compared to a net loss of $24.4 million, or $0.17 per share, in the same period of 2018.

For the first quarter of 2019, Rigel reported total revenues of $12.6 million, consisting of $8.1 million in net product sales of TAVALISSE and $4.6 million in contract revenues from collaborations. The increase in net product sales of TAVALISSE reflects the continuing growth of its business since commercial launch in May 2018. There were no net product sales nor contract revenues from collaborations in the first quarter of 2018.

Contract revenues from collaborations of $4.6 million during the three months ended March 31, 2019 primarily related to a portion of the $30.0 million upfront fee recognized as revenue upon delivery of license rights to Grifols, S.A. and Rigel’s performance of certain research and development services. There were no contract revenues from collaborations during the three months ended March 31, 2018.

Rigel reported total costs and expenses of $31.0 million in the first quarter of 2019, compared to $24.7 million for the same period in 2018. The increase in costs and expense was primarily due to the increases in personnel costs, including its customer-facing and medical affairs teams, and third-party costs to support Rigel’s commercialization of TAVALISSE.

As of March 31, 2019, Rigel had cash, cash equivalents and short-term investments of $127.9 million, compared to $128.5 million as of December 31, 2018.

Business Update

Rigel’s launch of TAVALISSE in the U.S. continued to build upon its early success with growth driven by expansion of the prescriber base, steady use of the product as an early treatment option in steroid refractory patients, physicians prescribing to an increased number of patients, and strong reimbursement from the payer community.
Rigel advanced the regulatory review of fostamatinib in chronic ITP by responding to day-120 questions from the European Medicines Agency (EMA) and remains on track for potential approval in the EU by the end of 2019.
In January, Rigel entered into a collaboration with Grifols, S.A. for the rights to fostamatinib in all indications in Europe and Turkey enabling a commercial launch preparation well ahead of the anticipated approval date.
Kissei Pharmaceuticals, Rigel’s collaborator in Japan, has initiated discussions with the Pharmaceuticals and Medical Devices Agency (PMDA) to define a path towards fostamatinib approval in Japan.
In warm AIHA, Rigel opened clinical trial sites for its pivotal Phase 3 clinical study of fostamatinib. The clinical trial protocol calls for approximately 80 patients in a 24-week study with enrollment of the first patient expected this month. Topline trial results are projected in early 2021, positioning fostamatinib to potentially be the first FDA-approved treatment for this indication.
The company’s research and development team continues to investigate potential molecules that modulate the immune system, including R835, Rigel’s IRAK 1/4 inhibitor currently in Phase 1 development. In addition, Rigel has four partnered programs that are in Phase 1 and 2 of their clinical development and continue to advance.
About ITP
In patients with ITP, the immune system attacks and destroys the body’s own blood platelets, which play an active role in blood clotting and healing. Common symptoms of ITP are excessive bruising and bleeding. People suffering with chronic ITP may live with an increased risk of severe bleeding events that can result in serious medical complications or even death. Current therapies for ITP include steroids, blood platelet production boosters (TPOs) and splenectomy. However, not all patients are adequately treated with existing therapies. As a result, there remains a significant medical need for additional treatment options for patients with ITP.

About AIHA
AIHA is a rare, serious blood disorder in which the immune system produces antibodies that result in the destruction of the body’s own red blood cells. AIHA affects approximately 40,000 adult patients in the U.S. and can be a severe, debilitating disease. To date, there are no disease-targeted therapies approved for AIHA, despite the unmet medical need that exists for these patients.

About R8351
The investigational candidate, R835, is an orally available, potent and selective inhibitor of IRAK1 and IRAK4 that has been shown preclinically to block inflammatory cytokine production in response to toll-like receptor (TLR) and the interleukin-1 (IL-1R) family receptor signaling. TLRs and IL-1Rs play a critical role in the innate immune response and dysregulation of these pathways can lead to a variety of inflammatory conditions. R835 is active in multiple rodent models of inflammatory disease including psoriasis, arthritis, lupus, multiple sclerosis and gout. The safety and efficacy of R835 has not been established by the FDA or any healthcare authority.

Conference Call and Webcast with Slides Today at 4:30PM Eastern Time
Rigel will hold a live conference call and webcast today at 4:30pm Eastern Time (1:30pm Pacific Time).

Participants can access the live conference call by dialing 855-892-1489 (domestic) or 720-634-2939 (international) and using the Conference ID number 3999559. The webcast, with slide presentation, can be accessed from Rigel’s website at www.rigel.com. The webcast will be archived and available for replay after the call via the Rigel website.

About TAVALISSE
Indication
TAVALISSE (fostamatinib disodium hexahydrate) tablets is indicated for the treatment of thrombocytopenia in adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment.

Important Safety Information
Warnings and Precautions

Hypertension can occur with TAVALISSE treatment. Patients with pre-existing hypertension may be more susceptible to the hypertensive effects. Monitor blood pressure every 2 weeks until stable, then monthly, and adjust or initiate antihypertensive therapy for blood pressure control maintenance during therapy. If increased blood pressure persists, TAVALISSE interruption, reduction, or discontinuation may be required.
Elevated liver function tests (LFTs), mainly ALT and AST, can occur with TAVALISSE. Monitor LFTs monthly during treatment. If ALT or AST increase to >3 x upper limit of normal, manage hepatotoxicity using TAVALISSE interruption, reduction, or discontinuation.
Diarrhea occurred in 31% of patients and severe diarrhea occurred in 1% of patients treated with TAVALISSE. Monitor patients for the development of diarrhea and manage using supportive care measures early after the onset of symptoms. If diarrhea becomes severe (≥Grade 3), interrupt, reduce dose or discontinue TAVALISSE.
Neutropenia occurred in 6% of patients treated with TAVALISSE; febrile neutropenia occurred in 1% of patients. Monitor the ANC monthly and for infection during treatment. Manage toxicity with TAVALISSE interruption, reduction, or discontinuation.
TAVALISSE can cause fetal harm when administered to pregnant women. Advise pregnant women the potential risk to a fetus. Advise females of reproductive potential to use effective contraception during treatment and for at least 1 month after the last dose. Verify pregnancy status prior to initiating TAVALISSE. It is unknown if TAVALISSE or its metabolite is present in human milk. Because of the potential for serious adverse reactions in a breastfed child, advise a lactating woman not to breastfeed during TAVALISSE treatment and for at least 1 month after the last dose.
Drug Interactions

Concomitant use of TAVALISSE with strong CYP3A4 inhibitors increases exposure to the major active metabolite of TAVALISSE (R406), which may increase the risk of adverse reactions. Monitor for toxicities that may require a reduction in TAVALISSE dose.
It is not recommended to use TAVALISSE with strong CYP3A4 inducers, as concomitant use reduces exposure to R406.
Concomitant use of TAVALISSE may increase concentrations of some CYP3A4 substrate drugs and may require a dose reduction of the CYP3A4 substrate drug.
Concomitant use of TAVALISSE may increase concentrations of BCRP substrate drugs (e.g., rosuvastatin) and P-Glycoprotein (P-gp) substrate drugs (e.g., digoxin), which may require a dose reduction of the BCRP and P-gp substrate drug.
Adverse Reactions

Serious adverse drug reactions in the ITP double-blind studies were febrile neutropenia, diarrhea, pneumonia, and hypertensive crisis, which occurred in 1% of TAVALISSE patients. In addition, severe adverse reactions occurred including dyspnea and hypertension (both 2%), neutropenia, arthralgia, chest pain, diarrhea, dizziness, nephrolithiasis, pain in extremity, toothache, syncope, and hypoxia (all 1%).
Common adverse reactions (≥5% and more common than placebo) from FIT-1 and FIT-2 included: diarrhea, hypertension, nausea, dizziness, ALT and AST increased, respiratory infection, rash, abdominal pain, fatigue, chest pain, and neutropenia.
Please see www.TAVALISSE.com for full Prescribing Information.

To report side effects of prescription drugs to the FDA, visit www.fda.gov/medwatch or call 1-800-FDA-1088 (800-332-1088).

Genomic Health Reports First Quarter 2019 Financial Results and Recent Business Progress

On May 7, 2019 Genomic Health, Inc. (NASDAQ: GHDX) reported financial results and business progress for the quarter ended March 31, 2019 (Press release, Genomic Health, MAY 7, 2019, View Source [SID1234535864]).

"In the first quarter of 2019, we delivered more than 17 percent overall revenue growth and $13.0 million in profit driven by significant growth across all key product areas," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "Our first quarter performance was very strong, based in part on the impact of the landmark TAILORx trial results, which are continuing to drive increased Oncotype DX Breast Recurrence Score test usage both in the United States and globally. We expect to achieve double-digit revenue growth for the year with continued growth across key products and look forward to the national reimbursement decision in Germany for the Oncotype DX breast cancer test."

First Quarter Financial Results

Total revenue for the first quarter of 2019 was $108.8 million, compared with $92.6 million for the first quarter of 2018, an increase of 17.4 percent, and an increase of 18.0 percent on a non-GAAP constant currency basis. U.S. product revenue was $91.0 million for the first quarter of 2019, compared with $78.9 million for the first quarter of 2018, an increase of 15.4 percent.

Revenue delivered across key product areas was as follows:

U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score tests was $79.8 million for the first quarter of 2019, compared with $71.0 million for the first quarter of 2018, an increase of 12.5 percent.
U.S. prostate test revenue from Oncotype DX Genomic Prostate Score (GPS) tests was $8.5 million for the first quarter of 2019, compared with $5.8 million for the first quarter of 2018, an increase of 46.6 percent.
International product revenue for the first quarter of 2019 was $17.8 million, compared with $13.8 million for the first quarter of 2018, an increase of 29.0 percent, and an increase of 32.9 percent on a non-GAAP constant currency basis.
Net income was $13.0 million, or $0.35 and $0.34 per share on a basic and diluted basis, respectively, for the first quarter of 2019, an improvement of $16.8 million, compared with a net loss of $3.8 million, or $0.11 per share on a basic and diluted basis, for the first quarter of 2018. Operating income was $11.5 million for the first quarter of 2019, an improvement of $15.9 million, compared with an operating loss of $4.4 million for the first quarter of 2018.

More than 37,580 Oncotype test results were delivered in the first quarter of 2019, an increase of 15.9 percent, compared with more than 32,440 test results delivered in the same period in 2018. Tests delivered across key product areas was as follows:

Oncotype DX Breast Recurrence Score tests delivered in the U.S. grew 9.4 percent in the first quarter of 2019, compared with the same period in 2018.
Oncotype DX Genomic Prostate Score tests delivered in the U.S. grew 24.5 percent in the first quarter of 2019, compared with the same period in 2018.
Oncotype DX international tests delivered grew 28.1 percent in the first quarter of 2019, compared with the same period in 2018 and represented approximately 25 percent of total test volume in the first quarter of 2019.
Recent Business Highlights

Presented results from five studies at the 16th St. Gallen International Breast Cancer Conference, including real-world evidence that reinforces the treatment paradigm established by the TAILORx trial. Additionally, two decision impact studies from the UK and the Czech Republic highlighted the value of Oncotype DX in personalizing and improving the quality of clinical decisions in patients with early-stage breast cancer, including those with node positive disease .
Multiple private insurers established new coverage for the Oncotype DX Genomic Prostate Score test, bringing the total number of U.S. covered lives to more than 114 million, including Medicare.
First private insurer established reimbursement for the Oncotype DX AR-V7 Nucleus Detect test, bringing the total number of U.S. covered lives to more than 61 million, including Medicare.
The National Comprehensive Cancer Network (NCCN) strengthened its prostate cancer guidelines, recommending the consideration of AR-V7 testing in metastatic castrate resistant prostate cancer (mCRPC) patients following abiraterone/enzalutamide to help guide the selection of further therapy.
Conference Call Details
To access the live conference call today, May 7, 2019, at 4:30 p.m. Eastern Time via phone, please dial (877) 303-7208 from the United States and Canada, or +1 (224) 357-2389 internationally. The conference call ID is 6535029. Please dial in approximately 10 minutes prior to the start of the call. To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of the company’s website at View Source Please connect to the website at least 15 minutes prior to the presentation to allow for any software download that may be necessary.

Penumbra, Inc. Reports First Quarter 2019 Financial Results

On May 7, 2019 Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, reported financial results for the first quarter ended March 31, 2019 (Press release, Penumbra, MAY 7, 2019, View Source [SID1234535863]).

Revenue of $128.4 million in the first quarter of 2019, an increase of 25.1%, or 27.2% in constant currency1, over the first quarter of 2018.
First Quarter 2019 Financial Results
Total revenue grew to $128.4 million for the first quarter of 2019 compared to $102.7 million for the first quarter of 2018, an increase of 25.1%, or 27.2% on a constant currency basis. The United States represented 64% of total revenue and international represented 36% of total revenue for the first quarter of 2019. Revenue from sales of neuro products grew to $81.5 million for the first quarter of 2019, an increase of 14.1%, or 16.5% on a constant currency basis. Revenue from sales of vascular products grew to $47.0 million for the first quarter of 2019, an increase of 50.2%, or 51.8% on a constant currency basis.

Gross profit was $83.9 million, or 65.3% of total revenue, for the first quarter of 2019, compared to $66.6 million, or 64.8% of total revenue, for the first quarter of 2018.

Total operating expenses for the first quarter of 2019 were $72.8 million, or 56.6% of total revenue. This compares to total operating expenses of $62.5 million, or 60.9% of total revenue, for the first quarter of 2018. R&D expenses were $11.7 million for the first quarter of 2019, compared to $8.0 million for the first quarter of 2018. SG&A expenses were $61.1 million for the first quarter of 2019, compared to $54.5 million for the first quarter of 2018.

Operating income for the first quarter of 2019 was $11.2 million, compared to operating income of $4.0 million for the first quarter of 2018.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the first quarter 2019 financial results after market close on Tuesday, May 7, 2019 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (866) 393-4306 for domestic callers or (734) 385-2616 for international callers (conference id: 6096838), or the webcast can be accessed on the "Events" section under the "Investors" tab of the Company’s website at: www.penumbrainc.com. The webcast will be available on the Company’s website for at least two weeks following the completion of the call.

Jazz Pharmaceuticals Announces First Quarter 2019 Financial Results

On May 7, 2019 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the first quarter of 2019 and reaffirmed 2019 financial guidance (Press release, Jazz Pharmaceuticals, MAY 7, 2019, Jazz Pharmaceuticals Announces First Quarter 2019 Financial Results [SID1234535862]).

"In the first quarter of 2019, we delivered strong top- and bottom-line growth and continued our efforts to bring innovative and life-changing medicines to patients, with FDA approval of Sunosi for EDS associated with narcolepsy or OSA, launch of Xyrem in pediatric narcolepsy and announcement of positive top-line results from our Phase 3 study of JZP-258," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "As the year progresses, we are continuing to invest in our business to support the successful launch of Sunosi in the U.S. and pre-launch activities in the EU, to generate data for our existing products and to fuel further advancement and diversification of our pipeline."

Financial Highlights

GAAP net income for the first quarter of 2019 was $85.2 million, or $1.47 per diluted share, compared to $46.0 million, or $0.75 per diluted share, for the first quarter of 2018.

Adjusted net income for the first quarter of 2019 was $213.2 million, or $3.67 per diluted share, compared to $182.4 million, or $2.98 per diluted share, for the first quarter of 2018. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Key Regulatory/R&D Updates

In March 2019, the company announced that the U.S. Food and Drug Administration (FDA) approved Sunosi (solriamfetol) to improve wakefulness in adult patients with EDS associated with narcolepsy or OSA. Sunosi is the first and only dual-acting dopamine and norepinephrine reuptake inhibitor approved by the FDA for this indication and was approved with strengths of 75 mg and 150 mg for patients with narcolepsy and 37.5 mg, 75 mg, and 150 mg for patients with OSA.

In March 2019, the company announced positive top-line results from the global, double-blind, placebo-controlled, randomized-withdrawal, multi-center Phase 3 study evaluating the efficacy and safety of JZP-258 for the treatment of cataplexy and EDS in adult patients with narcolepsy. JZP-258 is a novel oxybate product candidate with a 92% reduction in sodium content compared to Xyrem.

In March 2019, positive results from DEFIFrance, an observational, multi-center, post-marketing study in adult and pediatric patients treated with defibrotide at hematopoietic stem cell transplant centers in France, were presented at the European Society for Blood and Marrow Transplant (EBMT) meeting.

Select 2019 Milestones

Programs

2019 Milestones*

Xyrem (sodium oxybate) oral solution

Launched in March for the treatment of cataplexy or EDS in pediatric narcolepsy

JZP-258

Announced positive top-line results in March from the Phase 3 narcolepsy study

Expect to submit top-line results from the Phase 3 narcolepsy study to a fall medical meeting

Pre-New Drug Application (NDA) meeting with FDA

Goal to submit NDA as early as year-end

Sunosi (solriamfetol)

FDA approval on March 20 for EDS in narcolepsy or OSA

Drug Enforcement Administration (DEA) scheduling decision by late second quarter

Initiate Sunosi launch following DEA scheduling decision

Announce new Phase 3 development program mid-year

Obtain EU approval for EDS in narcolepsy or OSA as early as year-end

Vyxeos (daunorubicin and cytarabine) liposome for injection

Presentation by Children’s Oncology Group at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) (relapsed/refractory pediatric acute myeloid leukemia (AML) study data)

Potential interim combination data results from MD Anderson collaboration

Finalized protocol for Phase 1/2 study (low-dose Vyxeos in combination with venetoclax); patient enrollment is expected to begin in the second half of the year

Defitelio (defibrotide sodium) / defibrotide

Presentation of positive results from DEFIFrance study at EBMT in March

Conduct interim analysis of the Phase 3 study for prevention of hepatic veno-occlusive disease (VOD)

Complete enrollment in prevention of acute graft-vs-host disease Phase 2 study

Initiate exploratory Phase 2 study in chimeric antigen receptor t-cell therapy associated neurotoxicity

Initiate Phase 2 study in transplant-associated thrombotic microangiopathy

Asparaginase

Provide informational update on early-stage recombinant crisantaspase program later this year

CombiPlex

Continue Investigational New Drug enabling activities for one solid tumor combination and progress exploratory activities for other hematology/oncology candidates

* Milestones denoted as • have been completed; all other milestones are planned or expected in 2019.

Other Developments

In March 2019, the company launched Xyrem to treat cataplexy and EDS in pediatric narcolepsy patients following receipt of FDA approval in October 2018 after completing implementation of the Risk Evaluation and Mitigation Strategy to include pediatric patients and their caregivers.

In April 2019, the company announced the finalization of the settlement agreement with the U.S. Department of Justice (DOJ) related to the company’s support of charitable organizations that provide financial assistance to Medicare patients. In 2018, the company had announced an agreement in principle and recorded a total expense of $58.2 million related to this matter, including related interest. Under the settlement agreement, in April 2019, the company paid $57.0 million plus interest and entered into a five-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.

Total revenues increased 14% in the first quarter of 2019 compared to the same period in 2018.

Xyrem net product sales increased 16% in the first quarter of 2019 compared to the same period in 2018.

Erwinaze/Erwinase net product sales increased 20% in the first quarter of 2019 due to an increase in product availability compared to the same period in 2018. The company continues to expect supply disruptions throughout 2019 which will cause inter-quarter variability in Erwinaze net sales.

Defitelio/defibrotide net product sales increased 18% in the first quarter of 2019 compared to the same period in 2018 due to increased use by transplant centers that treat adult and pediatric patients. VOD is an ultra-rare disease and, as a result, the company continues to expect inter-quarter variability in Defitelio net sales.

Vyxeos net product sales increased 10% in the first quarter of 2019 compared to the same period in 2018 primarily due to the rolling launch in the EU initiated in September 2018. The company continues its education and outreach initiatives and its efforts to generate data to support Vyxeos’ potential use across broader patient populations in AML and other hematological malignancies.

Operating expenses changed over the prior year period primarily due to the following:

Selling, general and administrative (SG&A) expenses on a GAAP basis decreased in the first quarter of 2019 compared to the same period in 2018 primarily due to a $57.0 million loss contingency recorded in 2018 related to the DOJ matter described above. SG&A expenses on a GAAP basis, excluding the impact of the loss contingency, and on a non-GAAP adjusted basis increased in the first quarter of 2019 compared to the same period in 2018 primarily due to higher expenses related to the planned launch of Sunosi in the U.S. and an increase in headcount and compensation-related expenses to support expansion of the business.
Research and development (R&D) expenses on a GAAP basis decreased in the first quarter of 2019 compared to the same period in 2018 primarily due to milestone payments of $11.0 million related to FDA acceptance for filing of the company’s solriamfetol NDA recorded in 2018. R&D expenses on a GAAP basis, excluding the impact of milestone payments, and on a non-GAAP adjusted basis increased in the first quarter of 2019 compared to the same period in 2018 primarily due to expenses related to the company’s pre-clinical and clinical development programs, including partner programs, regulatory activities and related headcount increases to support these efforts.
Cash Flow and Balance Sheet

As of March 31, 2019, cash, cash equivalents and investments were $832.5 million and the outstanding principal balance of the company’s long-term debt was $1.8 billion. During the first quarter of 2019, the company generated $202.3 million of cash from operations, made an upfront payment of $56.0 million to Codiak BioSciences, Inc. under a collaboration agreement and used $111.2 million to repurchase shares.

In the first quarter of 2019, the company repurchased approximately 858,000 ordinary shares under the company’s share repurchase program at an average cost of $129.66 per ordinary share. As of March 31, 2019, the remaining amount authorized for share repurchases was $267.9 million.

2019 Financial Guidance

Includes minimal net sales contribution from Sunosi in the U.S., assuming launch in mid-2019.

Excludes $6-$8 million of share-based compensation expense from estimated GAAP gross margin.

Excludes $82-$90 million of share-based compensation expense from estimated GAAP SG&A expenses.

Excludes $0-$34 million of milestone payments and $22-$27 million of share-based compensation expense from estimated GAAP R&D expenses.

Excludes the income tax effect of adjustments between GAAP reported and non-GAAP adjusted net income.

See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2019 Net Income Guidance" at the end of this press release.

Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EDT (9:30 p.m. IST) to provide a business and financial update and discuss its 2019 first quarter results. The live webcast may be accessed from the Investors section of the company’s website at www.jazzpharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. Investors may participate in the conference call by dialing +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 6667859.

A replay of the conference call will be available through May 14, 2019 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 6667859. An archived version of the webcast will be available for at least one week in the Investors section of the company’s website at www.jazzpharmaceuticals.com.

Theravance Biopharma, Inc. Reports First Quarter 2019 Financial Results and Provides Business Update

On May 7, 2019 Theravance Biopharma, Inc. ("Theravance Biopharma" or the "Company") (NASDAQ: TBPH) reported financial results for the first quarter ended March 31, 2019 (Press release, Theravance, MAY 7, 2019, View Source [SID1234535861]). Revenue for the first quarter of 2019 was $5.3 million. First quarter operating loss was $73.7 million or $61.4 million excluding share-based compensation expense. Cash, cash equivalents, and marketable securities totaled $434.1 million as of March 31, 2019.

Rick E Winningham, Chief Executive Officer, commented: "As we continue to make progress in 2019, we remain highly focused on implementing our strategy to discover, develop and commercialize transformational medicines with the potential to address important unmet patient, payor and caregiver needs.

"The Phase 2 Crohn’s disease and Phase 2b/3 ulcerative colitis studies of TD-1473, our gut-selective pan-JAK inhibitor, are actively enrolling patients. Our registrational Phase 3 clinical program of ampreloxetine in symptomatic nOH is also underway, and we plan to present supportive five-month data from the completed Phase 2 study at scientific meetings in mid-2019. The Phase 1 study of TD-8236, our lung-selective JAK inhibitor, in healthy volunteers and asthmatic patients is ongoing and we expect to report results from the study in the third quarter of 2019.

"The YUPELRI launch is progressing following the commencement of formal sales and marketing efforts earlier this year in partnership with Mylan. In addition, sales of GSK’s TRELEGY ELLIPTA for COPD continue to accelerate supported by product approvals and launches in additional geographies, including the recent approval in Japan. We were pleased to see GSK’s recent announcement that the Phase 3 CAPTAIN study of TRELEGY ELLIPTA in patients with asthma met its primary endpoint, and GSK plans to submit the full dataset for regulatory review.

"Our strong cash position enables us to drive forward key programs in TD-1473, ampreloxetine, TD-8236, and YUPELRI, and to advance novel, organ-selective research programs toward the clinic. We intend to continue to build momentum throughout the year with a line-up of important milestones leading toward additional catalysts over the next 12 to 18 months as our late-stage trials mature, earlier-stage programs advance, and our commercial efforts gain traction," concluded Mr. Winningham.

Program Updates

TD-1473 (gut-selective pan-Janus kinase (JAK) inhibitor):

Supplemental data from the Phase 1b study of TD-1473 in patients with ulcerative colitis to be shared in an oral presentation at Digestive Disease Week (DDW) in May 2019
Phase 2 DIONE induction study in Crohn’s disease and registrational Phase 2b/3 RHEA induction and maintenance study in ulcerative colitis underway
Ampreloxetine (TD-9855, norepinephrine reuptake inhibitor (NRI)):

5-month data from the Phase 2 study in patients with neurogenic orthostatic hypotension (nOH) to be presented at the International Association of Parkinsonism and Related Disorders (IAPRD) in June 2019 and selected for oral presentation at the 32nd European Neurology Congress (ENC) in July 2019
Ongoing registrational Phase 3 program in symptomatic nOH comprised of two studies:
4-week treatment study; and
4-month open label study followed by a 6-week randomized withdrawal phase to demonstrate durability of response
TD-8236 (novel, lung-selective inhaled pan-JAK inhibitor for serious respiratory diseases):

Phase 1 data expected in the third quarter of 2019; study designed to evaluate safety and provide biomarker data of TD-8236 in healthy volunteers and asthmatic patients
Program goal in asthma is the prevention of exacerbations and the improvement of symptoms in patients uncontrolled by steroids despite compliance
TD-8236 shown to potently inhibit targeted mediators of Th2-high and Th2-low asthma in human cells in preclinical studies
YUPELRI (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 COPD
Launch underway with partner Mylan; combined sales infrastructures covering the hospital, hospital discharge, and home health settings
TRELEGY ELLIPTA (first once-daily single inhaler triple therapy for COPD)1:

First quarter 2019 net sales of $112.7 million; Theravance Biopharma entitled to approximately 5.5% to 8.5% (tiered) of worldwide net sales of the product
Phase 3 CAPTAIN study in patients with asthma met primary endpoint:
TRELEGY demonstrated statistically significant 110mL improvement in lung function compared with RELVAR/BREO
GSK plans to submit data for regulatory review once full dataset is available
Marketing authorization granted in Japan for the treatment for COPD; product now launched in 30 markets with the potential for an approval in China later this year
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 in TRC over the next four fiscal quarters). RELVAR/BREO ELLIPTA (the combination of fluticasone furoate and vilanterol)

First Quarter Financial Results

Revenue

Revenue from collaborative arrangements for the first quarter of 2019 was $5.3 million compared to $4.6 million in the same period in 2018. Total revenue decreased by approximately $3.0 million as compared to the first quarter of 2018. The decrease in total revenue resulted primarily from no product sales being recognized in the first quarter of 2019 following the sale of VIBATIV to Cumberland Pharmaceuticals in late 2018.

Research and Development (R&D) Expenses

R&D expenses for the first quarter of 2019 were $53.8 million, compared to $47.8 million in the same period in 2018. The increase was primarily due to an increase in external and employee-related expenses. The increase in employee-related expenses includes the impact of the reduction in force announced in the first quarter of 2019. First quarter R&D expenses included non-cash share-based compensation of $6.2 million.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses for the first quarter of 2019 were $25.2 million, compared to $24.7 million in the same period in 2018. The increase was primarily due to higher collaboration and employee-related expenses. The increase in employee-related expenses includes the impact of the reduction in force announced in the first quarter of 2019. First quarter SG&A expenses included non-cash share-based compensation of $6.1 million.

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities, excluding restricted cash, totaled $434.1 million as of March 31, 2019.

2019 Financial Guidance

The Company’s guidance on operating loss excluding non-cash share-based compensation for the full year of 2019 remains unchanged at $210.0 million to $230.0 million. Operating loss guidance does not include royalty income for TRELEGY ELLIPTA which the Company recognizes as non-operating income. The Company’s 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 its key programs, among other factors, could impact the Company’s financial guidance.

Arbitration Against Innoviva

As noted in the Innoviva, Inc. ("Innoviva") Quarterly Report on Form 10-Q for the three months ended March 31, 20192 filed with the Securities and Exchange Commission on May 1, 2019, no distributions were made to Theravance Biopharma with respect to its 85% economic interest in Theravance Respiratory Company, LLC ("TRC LLC") for the quarter ended December 31, 2018. As a result of this unjustified withholding of cash and Innoviva’s statement to Theravance Biopharma that it intends to cause TRC LLC to withhold making further cash distributions through calendar 2019, the Company has initiated an arbitration against Innoviva and TRC LLC regarding Innoviva’s material breach of its obligations to cause TRC LLC to make contractually-required distributions to the Company from royalties paid to TRC LLC by GlaxoSmithKline and its affiliates (collectively, "GSK") related to GSK’s net sales of TRELEGY ELLIPTA.

Rick E Winningham, chairman and chief executive officer of Theravance Biopharma, commented: "Theravance Biopharma intends to aggressively enforce all aspects of its agreement with Innoviva and TRC LLC to ensure we continue receiving our stipulated 85% share of royalties linked to TRELEGY ELLIPTA net sales. We firmly believe there is no justification or legal basis for Innoviva to cause TRC LLC to withhold the Q4 2018 distributions, the 2019 distributions or any material amount of cash. We are confident that Theravance Biopharma will prevail in this dispute and retain all rights to its full portion of the TRELEGY ELLIPTA royalties paid to TRC LLC by GSK."

In connection with Theravance Biopharma’s spin-off from Innoviva in 2014, the two companies (collectively, and including Theravance Biopharma affiliates who became members, the "Members") entered into a limited liability company agreement (the "TRC LLC Agreement") that established TRC LLC. TRC LLC is jointly owned by the two companies despite being managed by Innoviva, and its purpose is to collect and disburse royalties from GSK’s sales of certain products, including TRELEGY ELLIPTA, to the Members. The terms of the Agreement plainly state that Member interests owned by Theravance Biopharma entitle it to 85% of the royalties paid to TRC LLC by GSK as a result of GSK’s net sales of TRELEGY ELLIPTA (net of TRC LLC expenses paid and the amount of cash, if any, expected to be used in TRC LLC over the next four fiscal quarters). The TRC LLC Agreement imposes express fiduciary duties on Innoviva equal to those of directors of a for-profit corporation and those of a controlling shareholder. To ensure that Innoviva causes TRC LLC to fulfill its contractual duties to distribute royalties, and to discharge its own fiduciary duties, the TRC LLC Agreement imposes significant limitations on Innoviva’s authority as manager, including requiring Theravance Biopharma’s consent before taking actions or omitting to take actions that would reasonably be expected to have a direct or indirect material and adverse effect on the Company’s economic interest in TRC LLC or its rights, preferences, privileges or obligations.

On November 30, 2018, an affiliate of Theravance Biopharma named Triple Royalty Sub LLC (the "Issuer") closed a private placement of $250 million aggregate principal amount of non-recourse Triple PhaRMAsm 9% Fixed Rate Term notes due on or before April 15, 2033 (the "Notes"). The Notes are secured by, and the primary source of funds to make payments on the Notes is, the Issuer’s 63.75% economic interest in any future payments made by GSK to TRC LLC (net of TRC LLC expenses paid and the amount of cash, if any, expected to be used in TRC LLC over the next four fiscal quarters).

The Notes bear an annual interest rate of 9%, with interest and principal payable quarterly beginning April 15, 2019. Through October 15, 2020, the terms of the Notes provide that to the extent there are insufficient funds to satisfy the Issuer’s scheduled quarterly interest obligations, the shortfall shall be added to the principal amount of the Notes without a default or event of default occurring. The terms of the Notes also provide that, at Theravance Biopharma’s option, the quarterly interest payment obligations can be satisfied by making a capital contribution to the Issuer, but not for more than four (4) consecutive quarterly interest payment dates or for more than six (6) quarterly interest payment dates during the term of the Notes. For the April 15, 2019 interest payment date, Theravance Biopharma R&D, Inc. (parent entity of Issuer) made a capital contribution to satisfy the interest payment obligations for that scheduled payment. If necessary, interest may be paid in-kind or Theravance Biopharma may exercise its capital contribution option in the near future while we arbitrate this dispute with Innoviva.

Rick E Winningham concluded:

"As we work to resolve this dispute in our favor, we will continue to execute on our go-forward strategy. Again, we firmly believe there is no justification or legal basis for Innoviva to cause TRC LLC to withhold any material amount of cash. We are confident that Theravance Biopharma will prevail in this dispute and retain all rights to its full portion of the TRELEGY ELLIPTA royalties paid to TRC LLC by GSK. We believe the arbitration process provided for under the Agreement will enable us to pursue and achieve a favorable resolution in a relatively timely manner."

Quinn Emanuel Urquhart & Sullivan, LLP is serving as external counsel to Theravance Biopharma in this matter.

Notes
2 As disclosed in Innoviva’s Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated Statements of Stockholders’ Equity in the Form 10-Q for the three months ended March 31, 2019.

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 9890346. 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 June 7, 2019. An audio replay will also be available through 8:00 pm ET on May 14, 2019 by dialing (855) 859-2056 from the U.S., or (404) 537-3406 for international callers, and then entering confirmation code 9890346.