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Theravance Inc (NASDAQ:THRX)

J.P. Morgan Global Healthcare Conference Transcript

January 9, 2013 1:30 PM ET

Executives

Rick Winningham - Chairman and CEO

Analysts

Jessica Fye - J.P. Morgan

Jessica Fye - J.P. Morgan

Good morning, everyone. My name is Jessica Fye on the pharmaceuticals team here at J.P. Morgan. Just quick housekeeping announcement, the breakout session immediately following this is going to be in Georgian Room, if you walk out to the right. We are very pleased to have Theravance presenting the conference and presenting for Theravance is their Chairman and CEO, Rick Winningham.

Rick Winningham

Thanks, Jessica, and thanks to J.P. Morgan for inviting us to present here again this year. As we look -- as we close 2012 and look into 2013 just has a potential this year to be a terrifically exciting year for the company. And I hope to describe and to share some of that potential excitement with you today.

During the course of the presentation, I'm likely to make a few forward-looking statement, there's our safe harbor please refer to our existing SEC documents for risk factors and everything else I'm not going to give time to read the - speed read the Safe Harbor statement.

So significant progress in 2013 or 2012 just taking a moment to look back with the RELVAR/BREO program under the GSK Theravance banner regulatory applications were submitted in the U.S. and the EU and the Japan and I'll explain more on what the expectations are in 2013 for the RELVAR/BREO program but clearly last year being a critical year for us and for GSK getting the Phase 3 programs complete and getting the applications in.

The second program the ANORO or UMEC/VI announced positive Phase 3 results in COPD, and really through a heroic amount of work by the GSK organization as well as complemented by the team of Theravance. We're able to get the NDA submitted before the end of the year in 2012 and as you might have read at a press release that we issued this morning, we're able to submit it in to the EU this morning so as a terrific amount of work by GSK and complemented by the Theravance team.

And finally with the GSK Theravance programs, the MABA Phase 2b data was presented at European Respiratory Society Meeting and the collaboration made the decision to advance a MABA is a monotherapy into a Phase 3 trials which will take place of this year the initiation. And to begin work on 081 the MABA compound combining it with fluticasone furoate to develop a once a day two product triple and take those that combination in the Phase 3 enabling studies through the course of 2013.

So with GSK Theravance a banner year really in 2012 setting up 2013. For the Theravance programs along again 2012 extraordinarily productive positive Phase 2b results for opioid-induced constipation program TD-1211.

VIBATIV very excited with the favorable outcome of the advisory committee nosocomial pneumonia in November, 4208 Long-Acting Muscarinic Antagonist that we are developing in a nebulizer for the treatment of COPD, a specific niche there that we think there's great opportunity and a complementary opportunity there is programs we're working on GSK, in COPD but it's a very complementary to all the dry powder work that we're doing with GSK.

That we've got that Phase 2b study off the ground TD-9855, we initiated a phase 2 study in Fibromyalgia meaning we now have with the 9855 a Phase 2 study underway with ADHD as well as Fibromyalgia, I'll spend a little bit more time on that program later in the presentation.

And importantly, entered into a series of important partnerships, Merck in cardiovascular disease, Alfa Wassermann and G.I. motility disorders and R-Pharm for the commercialization and development of VIBATIV, in Russia and Commonwealth of Independent states as well as the development of 1792, very important heterodimer antibiotic.

So this capital 2012 capitalizes, the capitalized really on what Theravance has been doing over the last decade, focusing on medicines that make a difference. Our discovery platform has yielded 20 over 20 development candidates. We've got filings and I talked about now, VIBATIV is approved in the United States, Europe and Canada.

And we have used partnering to propel simultaneous with the development of pipeline are high-value programs namely those programs with GSK, we've received significant funding over time from corporate partners and we have focused on building value in the company from discovery through commercialization, and now we're on the eve of commercialization with the respiratory programs and with the reintroduction of VIBATIV.

Looking at 2013 as I said 2012 was important, 2013 will be more significant for the company, with RELVAR/BREO, we have an advisory committee coming up in COPD on March 7. The PDUFA date for BREO the name of the product in the United States in COPD's in May 2013, and we have a potential EMA action on RELVAR and keep in mind with the BREO we filed for COPD in the United States, RELVAR we filed both asthma and COPD in Europe.

ANORO the program formally called UMEC/VI. We've submitted the global regulatory filings -- will submit global regulatory filings by GSK, outside the United States we begin with the European filing noted in the press release this morning. And we have the opportunity for FDA action on ANORO before the end of the year given that we were able to get to the NDA for ANORO in December.

And VIBATIV, we anticipate FDA action for nosocomial pneumonia and reintroduction into the US market in the first six months of the year. In addition to those regulatory events MABA as I noted in the opening slide will be advancing in the in the phase 3 and the MABA ICS combination at out of one a day level will be progressing and enabling studies. These are our key programs that we're to be focused on in 2013.

I will focus today's presentation on the respiratory programs as well as those programs for CNS at targeted central nervous system and pain.

Bacterial infections 7092, the heterodimer antibiotic, our partner R-Pharm will be making investment in the Phase 2 programs this year with 7092 and was noted in a press release earlier in the area G.I. motility study Alfa Wassermann and Theravance have started Phase 2 study in gastroparesis and that program will be ongoing through the course of the year. However my remarks today will be focused on respiratory as well as the central nervous system pain programs.

Beginning with respiratory, the respiratory opportunity that we have with GSK is significant. Looking at long-acting bronchodilators for the 12 months ending June 2012 it's almost a $20 billion market. If you look at the patients coming into the market through 2020, you see constant growth in chronic obstructive pulmonary disease this is patient growth in around projected to be in the 2.5% range, asthma-positive patient growth but lower patient growth in COPD. But the clearly very attractive commercial markets globally and really where our programs with GSK are focused.

If we step back for a moment looking at what the themes were coming out of the European Respiratory Society Meeting in 2012 there was a focus at the European Respiratory Society on data which highlighted the importance of managing exacerbations. Whether managing COPD exacerbations in the prevention of those exacerbations or the prevention of asthma exacerbations.

Some critical data really in COPD where once a patient has an exacerbation with there is a permanent decline in lung function in those patients and their rate of decline in lung function those down from a lower spot after that Exacerbation. And once a day medicines, with easy to use devices improved compliance. And patient comply – improved patient compliance, we believe based on some small studies will in fact lead to lower health care cost, we have two large programs with GSK targeted at demonstrating that.

Another theme coming from the European Respiratory Society Meeting with the increasing importance of long acting muscarinic antagonist or LAMA containing regiments in COPD and improving FEV1 V-N when combined with a LABA and of course that's targeted right with our ANORO program with GSK. And finally the importance of combination, LABA/LAMA, LABA/ICS and in today, and in the future importance of triple therapy.

Great piece of work presented by (inaudible) in adding tiotropium of a long acting muscarinic antagonist to LABA/ICS therapy in asthma showing a further reduction of asthma exacerbations with triple therapy versus dual therapy. Again a critical set of data for us going forward with GSK, in the respiratory programs and I'll bring that back in the focus in a couple of slides.

So this is our portfolio today. Starting with single agents with Vilanterol of long acting beta antagonist in partnership with GSK; TD-4208 a long acting muscarinic antagonist that we own solely. The dual mechanisms, the combination products RELVAR/BREO, which is the LABA ICS combination. ANORO, the LAMA/LABA combination and MABA which is the bifunctional molecule we have in partnership with GSK, that has a activity as a muscarinic antagonist and a beta agonist but those activities combined into one molecule.

The development of the dual mechanism therapy whether by two products combine in the same inhaler or by functional product with MABA allow for triple mechanism therapy, MABA ICS or what we would call a close triple UMEC, the LAMA V-I, or Vilanterol the long acting beta agonist and FF, the in once a day inhaled corticosteroid. So triple mechanism once a day therapy.

Patients generally move from single agent therapy be it bronchodialators or inhaled corticosteroid depending on their disease to dual mechanism therapy. And we see in the future those patients moving into triple mechanism therapy. And as I said a theme coming out of the VRS was the simplicity of the device that used to deliver these medicines into the lung.

And wiht GSK, our platform is around the ELLIPTA. A single device, dry powder inhaler that delivers ANORO, RELVAR/BREO, UMEC/VI and FF for the triple mechanism therapy, all in an ELLIPTA, with hopefully in the future the MABA and the FF product being delivered in the ELLIPTA device as well.

This will be a terrific benefit for patients, for physicians, for nurses, because as they began therapy either in COPD or asthma and their disease continues to progress they will now how to learn how to use a new device. They will be at least stay on the same device a convenient device ELLIPTA. So an extraordinary, I think strategic strength with the respiratory collaboration with GSK.

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Now let's get back out of the strategy and into the products a bit, RELVAR/BREO, our goal here since 2002 has been developed a once daily inhaled corticosteroid and long acting beta antagonist delivered in the dry powder inhaler for the treatment of COPD and asthma. Again this is delivered once a day in the ELLIPTA device.

Regulatory applications has been submitted in COPD in the U.S., in the EU and Japan. I've noted that the advisory committee is coming up for the COPD application in March 7th and the PADUFA date for the COPD application in United States will be March 12th.

In asthma, we filed in the EU and Japan two different streams the 100 dose of the steroid combined with 25 micrograms of Vilanterol as well as a higher steroid dose strength 200 micrograms of the steroid combined with 25 micrograms of Vilanterol for more serious asthma.

These applications have been filed in the EU and Japan, we have an additional study that's ongoing right now in Asthma, 900 patient study, that we think will wrap up, according to the clintrials.gov in the late third or early fourth quarter, this 900 patient asthma study looks to be the final step that we need to take to complete the U.S. package for asthma. So right now, GSK and Theravance are reviewing the filing strategy for a future U.S. filing in asthma.

Let's turn to ANORO, or UMEC/VI, the LAMA/LABA combination, again two investigational bronchodilator, significant unmet medical need. The current product that's serving a majority of this market is Spiriva or Tiotropium, about a $5 billion product, marketed by Boehringer-Ingelheim and Pfizer, a single agent long acting muscarinic antagonist or the single greatest complaint of patients on this product is, I still feel breathless.

There is still a need for additional bronchodialation and we believe that we can deliver that additional bronchodialation by combining the Umeclidinium long-acting muscarinic antagonist with Vilanterol and we've shown that in the phase III studies that were, top-line data announced last year.

Global, terrific global market opportunity to improve therapy, we've filed two different dosage strengths of the combination in the ELLIPTA device, 62.5 of Umeclidinium/VI combined with 25 micrograms of Vilanterol and then a higher dose of a 125 micrograms of Umeclidinium combined with 25 micrograms of Vilanterol and we've submitted as I said the application into the EU and issued a press release this morning.

So now I'm going to turn from the dual-mechanism really into the triple mechanism, therapy. The triple mechanism therapy strategy builds on MABA monotherapy which GSK and Theravance intend to take into Phase 3 in 2013. This is a very unique molecule, the Phase 2b data was presented at the European Respiratory Society Meeting in September of 2012, it's all – if you look at the data, it's a very fast onset of action and very solid once a day activity as measured by [SED-1] in patients with COPD.

We intend to build on the MABA monotherapy program with a triple mechanism program and we believe that this is so significant to the future treatment of patients with COPD and probably asthma, that we intend on having two shots on goal here, in order to satisfy this future segment. One will be the MABA ICS or 081 combined with the once-a-day inhaled corticosteroid.

And the second would be the LAMA/LABA, or ANORO combined with Fluticasone furoate, in the same device, we'll be doing the phase three enabling work for both MABA ICS or 081 and FF and UMEC/VI FF in 2013 so a very exciting year of setting up the future, generation of triple therapy for COPD initially and then potentially asthma.

If you look why is this important to Theravance shareholders? Well for us it's because of the royalty flow that can come in to Theravance from GSK. The royalties on an annual net sales of the RELVAR BREO product globally, or 15% on the first $3 billion and for annual sales of above $3 billion the royalty rate drops to 5%.

For ANORO there's upward tier in royalties beginning at 6.5%, moving to 10%. Those ANORO royalties will also apply to the triple therapy of Umeclidinium, VI and FF. We will owe GSK milestone payments in the event of approval, hopeful approval of RELVAR and BREO around the world and ANORO around the world.

The total of these milestone payments will be $220 million but they're divided up by product, by region between approval and launch and are actually divided up into more than 10 individual payments. We look forward to hopefully making the first of those milestone payments in 2013. The strategic alliance, the second project that we took on with GSK in 2004 that yielded the MABA program, in that program we get milestone in that are listed here on the slide in very attractive single-agent royalties of 10% to 20% up to $3.5 billion in annual sales and 7.5% thereafter.

For the MABA ICS product you take the single-agent royalties and multiply those by 70%. And I would like everyone to keep in mind that of the significance here of the opportunity in long-acting bronchodialators. This is a $20 billion market today, so a significant commercial opportunity, significant unmet need by better medicines with better compliance and Theravance has no ongoing R&D or commercial cost obligations related to this program.

So that will close off the respiratory programs. I'll now walk through quickly, the CNS and PAIN portfolio that we have. Really headlined by TD-1211 for Opioid-Induced Constipation, significant U.S. opportunity here 500 million treatment days, significant unmet medical need, because of the use of opiods to treat chronic pain in the United States and here we have an opportunity to alleviate constipation or return bowel function to normal in these patients without affecting analgesia.

Positive Phase 2b results for both released at last year in a press release as well as presented at a number of different medical meetings the product was well-tolerated, it achieved key primary and secondary endpoints and we're working with the FDA today on the design of a Phase 3 program to make sure that our Phase 3 program meets the evolving criteria in this particular product category.

This is just a very very brief summary of the primary endpoints and complete spontaneous bowel movements. You see both for 10 milligram and the 15 milligram dosage providing significant relief to these patients versus placebo, and importantly our data was collected from weeks two through five excluding week 1 in any of the class of agents of these week 1 tends to be a very active week for patients but weeks two through 5 are more representative of what you'll see in a 12-week efficacy endpoint which is a standard for phase 3. So we're very encouraged by the data.

We're also encouraged by the adverse event profile which was largely inline with placebo, the adverse event area of interest here obviously is the gastrointestinal tract and generally are adverse events were comparable to placebo.

I'll now turn from 1211 into 9855. 9855 is a balanced norepinephrine and serotonin reuptake inhibitor. We began a discovery program because we thought there was an improvement here several years ago to improve on duloxetine with a more balanced norepinephrine and serotonin reuptake inhibitor and I believe we have achieved that.

Not only because we've achieved the balance but importantly we've achieved a drug with a very long half life. 30 to 40 hours but supportive of once daily dosing without the potential peak and trough that you may see with other SNRIS. As I said we're in two Phase 2 studies this year and totaling about 650 patients looking at two different conditions, one an ADHD, one studying ADHD, one study in Fibromyalgia.

Theravance is focused on building value and a cash balance at the end of third quarter of $362 million and for 2012 expenses have come in within our guidance between $120 million and $130 million, this excludes of course, stock option expenses and I'd like to remind everyone that GSK pays for all the R&D cost and the commercialization cost for the respiratory programs and we have the opportunity in 2013 for MABA milestone payments coming in for GSK.

2013, in closing has a potential for a transformational year for the company. We intend to progress key pipeline programs the MABA monotherapy, TD-4208 Phase 2b study in COPD and a [nebulizer] to complement the rest of the portfolio that we're developing with GSK. And to progress 9855 and ADHD and Fibromyalgia.

But the important aspects of 2013 or the regulatory actions in the transition of the company and to a revenue producing commercial stage company, RELVAR, BREO with the action dates hopefully in both U.S. and Europe, ANORO with an action date probably late next year, that's the LAMA/LABA program in the United States, and then resolving the VIBATIV nosocomial pneumonia indication and reintroducing VIBATIV into the U.S. market.

So for that I'd like to thank everybody for their attention, we look forward at Theravance to a great 2013 and we wish you the same. We have a breakout session, I'd look forward to seeing some of you in that, thank you.

Question-and-Answer Session

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