On July 31, 2019 Theravance Biopharma, Inc. ("Theravance Biopharma" or the "Company") (NASDAQ: TBPH) reported financial results for the second quarter ended June 30, 2019 (Press release, Theravance, JUL 31, 2019, View Source [SID1234537974]). Revenue for the second quarter of 2019 was $26.2 million. Second quarter operating loss was $42.5 million or $31.2 million excluding share-based compensation expense. Cash, cash equivalents, and marketable securities totaled $396.1 million as of June 30, 2019.

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Rick E Winningham, Chief Executive Officer, commented: "2019 is a critical year of progress that sets the stage for what we believe will be an extraordinary year of data-driven, value-creating milestones in 2020.

"TD-1473, our gut-selective pan-JAK inhibitor, is moving forward in a Phase 2b/3 study in ulcerative colitis and a Phase 2 study in Crohn’s disease. Ampreloxetine, our norepinephrine reuptake inhibitor, is advancing in a Phase 3 registrational program in symptomatic nOH. New data from the Phase 2 study of ampreloxetine presented at recent scientific meetings demonstrated consistent and durable improvements in both symptom severity and daily activity performance in patients with nOH treated with ampreloxetine for 20 weeks. These data further support the potential of this therapy to provide patients with greater durability of effect. The Phase 1 study of TD-8236, our lung-selective inhaled pan-JAK inhibitor, in healthy volunteers and asthmatics is ongoing, and we anticipate results in September 2019.

"The YUPELRI U.S. launch is progressing well in partnership with Mylan and we are pleased by our progress against key performance metrics. Additionally, we were excited to announce the expansion of our development and commercialization agreement with Mylan for nebulized revefenacin to include China. Lastly, sales of GSK’s TRELEGY ELLIPTA for COPD continue to grow, supported by product approvals and launches in additional geographies. We expect GSK to submit regulatory submissions in support of an asthma indication in the second half of this year, following the completion of the Phase 3 CAPTAIN study of TRELEGY ELLIPTA in patients with asthma.

"We are well capitalized and enter the second half of the year in a strong position to continue to drive our key programs toward meaningful inflection points. We are proud of our ability to advance a rich pipeline of differentiated assets that can yield a broad line-up of important milestones and catalysts over the next 12 to 18 months as our later-stage trials mature, earlier-stage programs advance to the clinic, and our commercial efforts gain traction. We look forward to the near-term resolution of the dispute with Innoviva to ensure we retain our economics related to TRELEGY ELLIPTA," concluded Mr. Winningham.

Program Updates

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

Supplemental data from the four-week exploratory Phase 1b study of TD-1473 in patients with ulcerative colitis shared in an oral presentation at Digestive Disease Week (DDW) in May 2019
Study designed to measure signals of localized biologic activity, and with little to no systemic exposure or immunosuppression
Data were positive across a variety of measures, including disease activity, including rectal bleeding and endoscopic improvement, as well as biomarker changes confirming target engagement
Registrational Phase 2b/3 induction and maintenance study in ulcerative colitis (RHEA) and Phase 2 induction study in Crohn’s disease (DIONE) progressing
Data from the Phase 2b portion of the ulcerative colitis and Phase 2 Crohn’s disease studies planned late-2020
Ampreloxetine (TD-9855, norepinephrine reuptake inhibitor (NRI)):

New 20-week data from the Phase 2 study in patients with neurogenic orthostatic hypotension (nOH) presented at the International Association of Parkinsonism and Related Disorders (IAPRD) in June 2019 and in an oral presentation at the 32nd European Neurology Congress (ENC) in July 2019
Consistent and durable improvements in both symptom severity and daily activity performance in patients with nOH were sustained through 20 weeks of ampreloxetine therapy
Following withdrawal of ampreloxetine treatment, patients’ symptom severity and daily activity scores returned to pre-treatment baseline levels
Ongoing registrational program in symptomatic nOH comprised of two studies:
Phase 3 4-week treatment study (SEQUOIA), with data expected in 2H 2020
Phase 3 4-month open label study followed by a 6-week randomized withdrawal phase (REDWOOD) to demonstrate durability of response
TD-8236 (novel, lung-selective inhaled pan-JAK inhibitor for serious respiratory diseases):

Phase 1 data expected in September 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; continued strong customer acceptance and brand performance across key market metrics; combined sales infrastructures covering the hospital, hospital discharge, and home health settings
Development and commercialization agreement with Mylan for nebulized revefenacin expanded to include China and certain adjacent geographies
TRELEGY ELLIPTA (first once-daily single inhaler triple therapy for COPD)1:

Q2 2019 net sales of $151.4 million; Theravance Biopharma entitled to approximately 5.5% to 8.5% (tiered) of worldwide net sales of the product
Supplemental NDA submitted to FDA supporting revised labelling for TRELEGY ELLIPTA on reduction in risk of all-cause mortality compared with ANORO ELLIPTA in patients with COPD
Phase 3 CAPTAIN study in asthma met primary endpoint demonstrating statistically significant improvement in lung function compared with RELVAR/BREO; regulatory submissions planned for 2H 2019
Product now launched in 36 countries, including Japan; approval in China expected in Q4 2019
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, aclidinium, 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 (FF/VI). ANORO ELLIPTA (UMEC/VI).

Second Quarter Financial Results

Revenue

Total revenue for the second quarter of 2019 was $26.2 million compared to $23.5 million in the same period in 2018. The increase was primarily due to licensing revenue of $18.5 million recognized in the second quarter of 2019 related to the upfront from Mylan for rights to nebulized revefenacin in China and adjacent geographies. The increase was partially offset by a decrease in product sales which resulted from the sale of VIBATIV to Cumberland Pharmaceuticals in late-2018 and a one-time opt-in received from Alfasigma for velusetrag (TD-5108) in the second quarter of 2018.

Research and Development (R&D) Expenses

R&D expenses for the second quarter of 2019 were $46.4 million, compared to $48.6 million in the same period in 2018. The decrease was primarily due to lower employee-related costs associated with the reduction in force announced in the first quarter of 2019 as well as a decrease in share-based compensation which was partially offset by an increase in external expenses related to the progression of our key programs. Second quarter R&D expenses included non-cash share-based compensation of $5.7 million.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses for the second quarter of 2019 were $22.2 million, compared to $25.0 million in the same period in 2018. The decrease was primarily due to lower VIBATIV-related external expenses due to the sale of VIBATIV to Cumberland in late-2018 as well as a decrease in share-based compensation which was partially offset by higher collaboration expenses associated with the commercial launch of YUPELRI. Second quarter SG&A expenses included non-cash share-based compensation of $5.6 million.

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities, excluding restricted cash, totaled $396.1 million as of June 30, 2019. The quarter ending cash balance include proceeds from the upfront payment received from Mylan for rights to nebulized revefenacin in China and adjacent territories.

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 U.S. 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

In May 2019, the Company announced that it had initiated arbitration against Innoviva, Inc. ("Innoviva") in connection with Innoviva’s failure to disburse certain royalties to Theravance Biopharma. Innoviva had caused Theravance Respiratory Company, LLC ("TRC LLC") to not make any distributions to Theravance Biopharma with respect to Theravance Biopharma’s 85% economic interest in TRC LLC for the quarter ended December 31, 2018. Those distributions were due March 31, 2019. Additionally, Innoviva stated that it intended to cause TRC LLC to withhold making further cash distributions through calendar year 2019. The arbitration hearing commenced on July 23, 2019. Resolution of the arbitration should occur in the third quarter of 2019.

Conference Call and Live Webcast Today at 8:00 am ET

Theravance Biopharma will hold a conference call and live webcast accompanied by slides today at 8:00 am 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 2445969. 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 August 30, 2019. An audio replay will also be available through 11:00 am ET on August 7, 2019 by dialing (855) 859-2056 from the U.S., or (404) 537-3406 for international callers, and then entering confirmation code 2445969.