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Theravance, Inc. (NASDAQ:THRX)

Q4 2012 Earnings Conference Call

February 12, 2013 5:00 pm ET

Executives

Michael W. Aguiar – Senior Vice President and Chief Financial Officer

Rick E. Winningham – Chairman and Chief Executive Officer

Analysts

Steve Byrne – Bank of America

Stephen Willey – Stifel Nicolaus

Kyle Rasbach – Cowen & Company

Alan Sonnenfeld – Bernstein

Howard Liang – Leerink Swann

Operator

Ladies and gentlemen, good afternoon. At this time, I’d like to welcome everyone to the Theravance Conference Call to review results for the Quarter Ended December 31, 2012. 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)

I will repeat these instructions after management completes their prepared remarks. Today’s conference call is being recorded.

And now, I would like to introduce your host for today’s conference, Mike Aguiar, Senior Vice President and Chief Financial Officer. Please go ahead, sir.

Michael W. Aguiar

Good afternoon, everyone, and thank you for joining us. With me on the call today is Rick Winningham, our Chief Executive Officer. First, Rick will review highlights from the quarter and then I will review our financial results. Following our comments, we will open up the call for questions.

Earlier today Theravance issued a press release detailing third quarter 2012 financial results and recent corporate developments. A copy of the press release can be downloaded from our website or you can call Investor Relations at 650-808-4100 and we will be happy to assist you.

Before we get started, we’d like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance. Forward-looking statements include anticipated results and other statements regarding Theravance’s goals, expectations, strategies and beliefs. These statements are based upon the information available to the company today, and Theravance assumes no obligation to update these statements as circumstances change.

Future events and actual results could differ materially from those projected in the company’s forward-looking statements. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail on the company’s Form 10-Q and Theravance’s perspective supplement filed with the SEC.

I will now turn the call over to Rick Winningham, our Chief Executive Officer. Rick?

Rick E. Winningham

Thanks Mike. Good afternoon, everyone. 2012 was an important year for Theravance, during which we made significant progress across our key programs. As important as 2012 was, however, multiple potential regulatory events for our respiratory programs in 2013 make it even more significant in the evolution of the company.

2013 will be a transformative year for us. If our respiratory programs partnered with GSK are approved and launched, we expect the company to experience significant revenue growth over the next several years.

Let me begin my review of 2012 with our respiratory portfolio partnered with GSK. GSK and Theravance are developing a portfolio of inhaled medicines for the treatment of both asthma and Chronic Obstructive Pulmonary Disease or COPD.

The portfolio has the potential to be the most comprehensive in the industry. Our pipeline, includes single mechanism, dual mechanism and triple mechanism therapies, all delivered by a common inhaler. If we are successful these products will be able to treat a wide range of patients with COPD and asthma who have different needs and different severities of disease.

The respiratory markets we are targeting with our GSK collaboration represent a very significant commercial opportunity. In 2012, reported sales of twice a day medicines containing a long-acting beta agonist combined with an inhaled corticosteroid totaled over $11 billion worldwide. In addition, EvaluatePharma estimates that 2012 sales of the once-a-day long-acting Muscarinic Antagonist Tiotropium would be approximately $4.6 billion.

Looking forward, we expect these markets to continue to grow based on decision resources, the total number of patients treated for COPD and asthma is expected to be driven by growth in the COPD segment.

RELVAR or BREO, our lead respiratory program is a dual mechanism medicine that combines the anti-inflammatory activities of an inhaled corticosteroid and the bronchodilatory activities of a long-acting beta agonists. This investigational medicine is intended for the treatment of both COPD and asthma. The global registration process with RELVAR or BREO was well under way. In the U.S. the new drug application for BREO in COPD will be reviewed by the FDA’s pulmonary allergy drug advisory committee in less than a month from now on March the 7th.

The GSK Theravance team is diligently preparing for this important event, and we look forward to presenting the complete dataset. As a reminder, the Prescription Drug User Fee Act goal date was confirmed as May 12, 2013 for BREO in COPD. Outside the United States, marketing applications for RELVAR have been filed in the EU and a number of other countries. We’re also pleased with the progress of ANORO, our second respiratory program with GSK. ANORO is a dual mechanism medicine for the treatment of COPD that combines 2 bronchodilators, a long-acting muscarinic antagonist and a long-acting beta agonist.

In the fourth quarter of 2012, GSK and Theravance announced the submission of the NDA to the FDA, and last month GSK submitted the regulatory application to the European medicines agency. I’m pleased to report today that the marketing authorization application for ANORO was recently validated by the EMA. Regulatory submissions are planned in other countries during the course of 2013.

GSK and Theravance also have a goal of combining three mechanisms in a single inhaler, which maybe important for patients with severe COPD and asthma as was highlighted at the ERS 2012 meeting in Vienna.

Given the significant unmet medical need, we have two separate programs in this segment with the goal of increasing our overall probability of success; MABA combined with an inhaled corticosteroid and the combination of umeclidinium/vilanterol and fluticasone furoate. MABA is an investigational, single molecule bifunctional bronchodilator with both muscarinic antagonist and beta2 receptor agonist activity that, when combined with an inhaled corticosteroid would provide Triple Mechanism Therapy.

At ERS last year positive data from the Phase 2b program were presented, which demonstrated significant bronchodilation in COPD patients. We’ve recently announced that in 2013 GSK intends to move forward, MABA monotherapy into Phase 3, and to begin the Phase 3 enabling studies with the combination MABA and Fluticasone Furoate. We look forward to updating you, when the Phase 3 program is initiated with MABA monotherapy.

For [UM], the combination of UMEC/VI and FF, a combination of all three compounds in a single inhaler GSK, recently initiated a Phase 1 safety study, designed to establish the pharmacokinetics safety and tolerability of this new triple combination.

Overall, Theravance is very pleased with the respiratory data generated to-date, and we look forward to our 2013 respiratory events. In addition to these respiratory programs partnered with GSK, Theravance is also developing TD-4208. The internally discovered multivalent long-acting muscarinic antagonist or LAMA, delivered once a day in a nebulizer for COPD.

In the fourth quarter, we initiated a Phase 2b study in an aqueous nebulizer to evaluate the safety and efficacy of multiple doses of TD-4208.

The goal of the LAMA program is to develop a once-a-day inhaled medicine in a nebulizer that offers improved efficacy and tolerability relative to current therapies, and provides a basis for the combination of other nebulized products. We believe the opportunity for nebulized product is significant and complementary to that addressed by the GSK collaboration products.

Turning now to VIBATIV, in November 2012 the FDA's Anti-Infective Advisory Committee met to discuss the NDA for nosocomial pneumonia. We’re pleased with the favorable outcome of the meeting, and that the advisory committee believes there is a role for VIBATIV in the treatment of nosocomial pneumonia when other alternatives are not suitable.

Nosocomial pneumonia is a series disease that causes significant morbidity and mortality, particularly given the reduced susceptibility to existing therapies in recent years. We continue to work closely with the FDA, as it completes its review of the application and to reestablish a new source of product supply.

Now let me discuss our Peripheral Mu Opioid Receptor Antagonist or TD-1211 for Opioid induced constipation. The goal of this program is to develop a best-in-class medicine that normalizes bowel function in patients, without interfering with the opioids analgesic affect. During the third quarter we reported positive top-line results from the Phase 2b study of TD-1211 in OIC, these results support progression in the Phase 3 development.

We are enthusiastic about the potential best-in-class efficacy of TD-1211 and its excellent peripheral selectivity. We are currently evaluating our Phase 3 strategy due to potentially evolving FDA requirements for the Mu Opioid Receptor Antagonist and are in dialogue with the agency.

Turning to TD-9855, the lead compound in our Norepinephrine and Serotonin Reuptake inhibitor program for the treatment of central nervous system conditions such as chronic pain, and Attention-Deficit/Hyperactivity Disorder. TD-9855 is being evaluated in an ongoing Phase 2 study, looking at efficacy and safety in adults with ADHD. In addition, we initiated a Phase 2 study with TD-9855 in fibromyalgia in December. We believe that there is a significant opportunity in fibromyalgia for more efficacious treatment, and in ADHD for an efficacious treatment without the risk of abuse associated with stimulants.

Velusetrag, our once-daily oral investigational medicine that is highly selective – that is a highly selective agonist with high intrinsic activity at the human 5-HT4 receptor. In October of 2012, we entered into an exclusive development, commercialization agreement with Alfa Wassermann for velusetrag, our lead compound in the 5-HT4 program, covering the EU, Russia, China, Mexico and certain other countries.

I’m pleased to report that in January of 2013, Theravance and Alfa Wassermann announced the initiation of a Phase 2 proof-of-concept study to evaluate the efficacy and safety of velusetrag for the treatment of patients with diabetic or idiopathic gastroparesis. A serious condition of GI Motility dysfunction characterized by delayed gastric emptying for which there are few therapeutic alternatives today.

And finally, our new cardiovascular collaboration with Merck. In October 2012, we signed a collaboration agreement with Merck to discover, develop and commercialize novel small molecule therapeutics directed at a target being investigated for the treatment of hypertension and heart failure. This is an important collaboration for both patients and Theravance, because despite years of medical advances there remained significant unmet medical needs in the management of cardiovascular disease, a leading cause of death and disability in the world.

While we are in the early days the collaboration is off to a strong start and we are pleased to be working with Merck, an industry leader in the development of innovative cardiovascular medicines, and to bring new therapies to patients.

And now I turn the call over to Mike Aguiar, our Chief Financial Officer. Mike?

Michael W. Aguiar

Thanks, Rick. Today, I’ll discuss the results of the quarter ended December 31, 2012, and we will provide guidance for 2013. For the quarter ended December 31, 2012, Theravance had a net loss of $31.3 million or $0.33 per share.

Research and development plus general administrative expense, excluding stock-based compensation totaled $30 million for the fourth quarter and $125 million for the year-to-date, which was inline with our expectations and prior guidance.

For the full year 2012, in net change in cash, cash equivalent, and marketable securities was an increase of $102.8 million. Revenue totaled $5.8 million during the fourth quarter of 2012 compared with $5.4 million with the same period in 2011, an increase of $400,000. This increase was primarily due to the recognition of a portion of the upfront licensing fee from our collaboration with Merck, partially offset by lower royalty revenue from sales of VIBATIV as a result of the termination of our collaboration arrangement with Astellas in January last year.

As a reminder, we will not be recognizing any further revenues related to our terminated Astellas agreement. Total R&D expenses for the fourth quarter of 2012 were $28.1 million compared to $32.5 million for the same period the prior year. This decrease was primarily due to the completion of Phase 2 clinical activities related to TD-1211, partially offset by higher costs related to clinical activities for TD-9855.

Excluding stock-based compensation, non-GAAP R&D spending was $24.8 million during the fourth quarter of 2012 compared to $29.1 million for the same period in 2011. For the full year 2012, total R&D expenses were $117.9 million compared to $103.6 million for 2011.

General and administrative costs were $7.7 million during the fourth quarter of 2012 compared to $8.5 million in the same period the prior year. This decrease was primarily due to lower employee related and external expenses offset by higher facilities related costs. Excluding stock-based compensation, non-GAAP G&A expense was $5.3 million during the fourth quarter of 2012 compared to $5.7 million in the same period 2011.

Cash, cash equivalents and marketable securities totaled $343.7 million as of December 31, 2012, an increase of approximately $102.8 million from December 31, 2011. This increase was primarily due to net proceeds of $229.3 million received from our private placement of common stock to GSK, partially offset by cash used in operations.

In January of 2013, we announced the closing of public convertible notes offering with net proceeds of Theravance of approximately $244 million, which is not reflected in the December 31, 2012 cash balance. With this additional capital, we are in a very strong financial position that will enable us to make any milestone payments to GSK related to the approval and launch of RELVAR, BREO or ANORO.

Now turning to our guidance for 2013. For the full year, we expect non-GAAP operating expenses to be in the range of $125 million to $135 million. As a reminder, our guidance includes total research and development expense and total general and administrative expense that excludes stock-based compensation and any potential milestone payments due to GSK under the LABA collaboration.

In 2013, we have the potential to pay up to $140 million of approval and launch milestones to GSK under the terms of the LABA collaboration agreement. Products covered by this agreement that are currently in development include RELVAR, BREO, ANORO, vilanterol monotherapy, and the UMEC/VI, FF triple combination. Royalty for RELVAR, BREO and VI monotherapy are 15% for the first $3 billion in annual net revenues and 5% on annual net revenues exceeding $3 billion. Sales of single agent LABA medicines and combination medicines would be combined for the purposes of this royalty calculation.

For ANORO and UMEC/VI, FF which we currently expect to be launched after RELVAR, BREO. Royalties are calculated on a product-by-product basis and a rapporteuring ranging from 6.5% up to 10%.

Now, let me turn the call back to Rick for final closing comments. Rick?

Rick E. Winningham

Thank you, Mike. 2012 was a highly productive year, and 2013 is shaping up to be even more important for Theravance, with multiple regulatory filings under review for our GSK collaboration respiratory products, we have the potential to experience significant revenue growth over the next several years.

As a reminder, we have potential regulatory actions on BREO in the United States, RELVAR in Europe and ANORO in the U.S., as well as VIBATIV in the U.S. Our pipeline continues to progress in the late stage development with MABA monotherapy heading into Phase 3 with the ongoing Phase 2b study of TD-4208 COPD and a significant Phase 2 program with TD-9855 in ADHD and fibromyalgia. This is an extremely important phase of the company’s evolution and we’re in a very strong strategic as well as financial position.

And now, I’d like to turn the call over to the conference facilitator, and open the call for questions.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) Our first question comes from Steve Byrne of Bank of America. Your line is now open.

Steve Byrne – Bank of America

Hey Rick you mentioned this Phase 1 safety study is underway for the triple. I was curious, which of the bronchodilators is the FF being combined with, and presumably you have data that would support that combination more specifically the lack of any physical or chemical reaction and/or impact on particle distribution.

Rick E. Winningham

Yeah, I think that we do have that data. We haven’t made it public, but the ELLIPTA device, in which we’re using for the combination as a special device in which it has – as pointed out by Darrell Baker at ERS. Two strips in which to contain product, and I don’t know that we’ve made it public exactly how the products – I don’t think GSK has made it public how the products are combined, but rest assured that the CMC work necessary has gone in to the product development prior to advancing it into Phase 1.

In the Phase 1 study in this particular program is important, because it will allow us to make sure that what we expect to get out of the device relative to triple therapy is what we get out of the device in terms of product. But with this type of a program, if we are successful with the Phase 1 program we would expect it to progress relatively rapidly into late stage development in Phase 3. Mike, would you like to add to that?

Michael W. Aguiar

I think you hit all the right points there, Rick.

Steve Byrne – Bank of America

And just to follow-up on that. How much do you think you can leverage the Phase 3 programs with ANORO and BREO for this particular triple and/or conversely do you anticipate an onerous combinational rule requirement for such a product?

Rick E. Winningham

Well, I think that’s yet to be determined. There are discussions ongoing with regulatory authorities regarding the potential Phase 3 design and I think when those are resolved, we’ll provide an update to the market. I think importantly for us, yeah, we see in the slightly longer-term a critical role for triple therapy, Triple Mechanism therapy.

We believe along with GSK believe that it's so important that we have two shots that were really progressing towards achieving that goal, one of them being MABA ICS, and the other being the triple therapy of UMEC, FF and VI. So, we are very excited about this program, and we look forward to providing further updates on it as we progress through 2013.

Rick E. Winningham

Steve, just want to say that – I would just add quickly that we've learned a ton, obviously, from the Phase 3 program that are been done to date. There are going to be places where you’ll see a lot of similarities. For example, if we are able to move MABA ICS forward following the completion of the Phase 3 enabling study that you will probably see a Phase 3 program that would look pretty similar to say either UMEC/VI or the COPD portion of RELVAR, BREO.

As you get to the triple, I think you hit it on the head, the challenge here is going to be around the multiplicity side and how you compare the various arms and what are the arms and that’s a point we have, not completely agreed to yet, but certainly going to be the challenge here. As you know idea that Rick mentioned in his comments, with two shots on goal, two different programs, I think that does give you some sense of how important we see this, the segment going forward.

Steve Byrne – Bank of America

All right. Thanks Mike. And, just can you comment, would you fund the Phase 3 program for 1211 on your own?

Rick E. Winningham

So, our current plans with 1211 are to partner 1211. I’ve commented before that if we were able to reach an agreement, reasonable agreement with regulatory authorities we might initiate it, but clearly we would only initiate it with the light on a partnership. So, our primary goal with that program is in fact partner it.

Steve Byrne – Bank of America

Very good. Thank you.

Operator

Thank you. Our next question comes from Stephen Willey of Stifel Nicolaus. Your line is now open.

Stephen Willey – Stifel Nicolaus

Yeah. Thanks for taking the question. Just wondering if you guys could maybe provide a little bit of color around what you guys took away from the recent BI Panel. And I guess superficially some of the regulatory discussion that seemed to centered around dose selection for LABA. And then I guess, follow-on to that would be, if you guys know of any kind of regulatory feedback that GSK may have received regarding the conductance of additional dose-ranging studies within asthma per se?

Rick E. Winningham

Sure, Steve. Let me take a crack at this and then I'll pass it over to Rick here. With regard to the BI Panel that just happened here. We were quite encouraged by the overall results with that. On the Friday, prior to the panel when the briefing docs came out needless to say, I was pretty interested and dug into them right away, and I was quite pleased to see a second example now in the public documentation from the FDA about how they think about dosing that it is extremely similar to how we have been talking about our dose ranging.

So if you take a look at the briefing docs for that panel or if you go back to the aclidinium briefing documents where the FDA talks about the most appropriate and efficacious dose, which I’m going to draw a pretty stark contrast with certain places where down on the street, talked about the minimally effective dose which is just a very different philosophy. We really designed our program around the ideas that can be best articulated by these two briefing documents from the BI panel and the aclidinium one.

So I think overall, we took away the message on that that we were doing the right thing, we had done the right studies and are remaining quite confident in our overall dosing and dose selection. So, again, well, how much we’re taking forward and how frequently we’re taking it forward. So overall I think we were quite encouraged about that. Rick, do you have any comments you want to add on the specifics around the panel?

Rick E. Winningham

No, I think if you – I would just echo. I think relative to the briefing documents and the discussion of olodaterol, we were encouraged by the outcome of course. We're also encouraged by the recognized need for more convenient medicines for patients with the chronic obstructive pulmonary disease. If you look, you look at the program with vilanterol, 600 patient dose ranging study and COPD and 600 patients or so dose ranging study and asthma.

The combination of both of those studies gave us a pretty clear perspective to go to the FDA at the end of Phase 2 meeting with the dose of 25 micrograms of vilanterol as the dose that really met the criteria that we were looking for, we got patients, we are looking for to go into Phase 3 for an eventual marketed product that provided. The good benefit of being dose once a day, good FEV-1 at trough, good AUC of FEV-1 over 20, 24 hours. So I think we’ve with GSK have done the right thing with the extended dose ranging studies in Phase 2, and we feel pretty good about where we are right now.

Stephen Willey – Stifel Nicolaus

And do you have any kind of sense as to what kind of weight the agency places on something like onset of action, just given the fact that we usually just hear dose selection talked about as a function of trough for AUC and I know just in kind of looking at the VI data, there is a fairly I believe significant step-up in onset of action between the $12.5 and the $25, I’m just not sure if that’s something that the agency places a lot of weight on in the consideration of dose selection.

Rick E. Winningham

Steve, I think there's another interesting term that is not invented from Theravance, but really has been articulated by the FDA a number of times, I can certainly show you it's in the aclidinium briefing documents, which is totality of data. So I don’t know that I can give you the exact percentage the FDA is going to associate with onset of action or any of other measures, but they really look at the totality, I mean, how we’ve generically thought about things over here, and this is a really simplified view of efficacy if you will. If you are looking at efficacy obviously you would be very interested in your primary endpoint which is typically trough FEV-1, you wouldn’t want to miss that.

Now, you want to look at the AUC, so your area under the curve that can be quite of important looking at bronchodilation over time. You are going to want to look at your responder rate, what percentage of patients are getting an adequate or more than clinically relevant response, things like the use of rescue medication. Rescue medication as you know is principally used on patients feeling short of breath, which is some medication that, perhaps, some better bronchodilation would be appropriate to that patient. But also, of course, rescue medication gets twined up in FEV-1 calculations as well.

And then lastly, of course, safety, you don’t want to see anything on the safety side that would cause you pause. So, again if I go back to this totality of data, but there is a very simplistic framework to think about how we think about and try to articulate it over here.

Stephen Willey – Stifel Nicolaus

Okay. And then just lastly, can you just provide a little bit of color about maybe how active or inactive you guys are with respect to the regulatory review process, that’s occurring in Europe? And if you’re kind of simultaneously seeing some of the questions that are being sent back to the GSK by the agency? Thanks.

Rick E. Winningham

So, yeah, we won’t comment on the regulatory, specific regulatory interactions, GSK doesn't comment on that. But generally as far as we know, we are fairly involved and informed the regulatory interactions that take place, the nature of them and so forth and that happens really through the Joint Project Committee of GSK and Theravance.

Stephen Willey – Stifel Nicolaus

Thanks.

Michael W. Aguiar

Next question, yeah.

Operator

Thank you. Our next question comes from Kyle Rasbach of Cowen & Company. Your line is now open.

Kyle Rasbach – Cowen & Company

Great, thanks. I have a couple of questions. So the first is in relation, as it relates to RELVAR. I was just curious, I know you are conducting another Phase 3 asthma trial in the United States and maybe you could update us on the status of the asthma filing in the United States. How you thinking about the timing?

My second question is, it relates to the Salford Lung Study that’s being done in the U.K. using U.K. databases. I was just curious, how you think about that study? If it is a positive study, whether or not you believe those results may be reflected in the U.S. label, given the fact that it’s being conducted in the U.K. And the third and final question is on the MABA.

In the release it says, that you plan to begin Phase 3 studies for the MABA as monotherapy in 2013 and commence Phase 3 studies for the MABA in combination with FF shortly. I was just curious about maybe you plan on initiating combination studies before the monotherapy studies, and how we should think about timing for these starting? Thanks.

Michael W. Aguiar

Let me take a cut at the asthma one, and then I’ll turn it over to Rick to talk about the Salford and MABA questions that you had. So, with regard to asthma, the question is specifically limited to the United States. As I think everyone knows, for a period of time how we were going forward with our Phase 3 asthma program, absent any guidance from the FDA about how they might look at an asthma approval for a LABA ICS medicine.

Following our meeting with the FDA at the end of Phase 3, we did receive some feedback from them that resulted in the initiation of the current study that is underway. We do have a Phase 3 program right now in a roughly 900 patients that is underway you can see it out on Clin trials. There are three arms in the study. One arm which is the comparative arm is a 100 microgram dose of FF the steroid, and then compared against that are the two higher doses of the combination of BREO, so there’s the 100/25. So 100 micrograms of FF combined with 25 micrograms of VI, and then the 200/25 dose of BREO as well.

The primary endpoint on both of those is going to be FFV-1, so you are comparing the combination arms to the single agent steroid arm. Really, what the FDA was looking forward, believe was having all three of the likely doses or a potential doses in the U.S. in one particular study, so you could have them compared across the same patient population that if you take a look at the Phase 3 asthma program that we ran, you will find that that we did not have that particular comparator.

So the current, last patient, last visit date that is on Clin trials is October of this year. Obviously, there is plus or minus one or two months arrow bar around that. So we’ll have to see how we’re doing to get a little bit closer to that, but as of right now, I think we’re feeling pretty good about the overall progress of this. So overall, I think we’re feeling quite good about asthma, and keeping the process rolling towards the completion, again hopefully later this year or so. So that’s the kind of the status on asthma. Rick, could you talk about Salford and MABA.

Rick E. Winningham

Sure. So, the Salford studies on COPD are ongoing in the UK. Those are – they’re being conducted in the UK, they are being conducted hopefully to help us overall with the benefit of a once-a-day medicine versus twice-a-day medicines and that the increased convenience of a once-a-day medicine leads to better compliance which leads to better control of the disease which leads to better control and lower healthcare costs. This has been shown in a couple of smaller studies, but this is by far the largest program of its type that's ever been conducted.

Now, relative to whether those would be allowed in a U.S. label or not, I think we would have to see on the outcome just because they are being conducted in the UK that per se wouldn't prohibit them from being reflected in the U.S. label, but they are really look, that the primary reason to conduct the study is one based, is trying to get a improvement in healthcare resource utilization, which you generally do not find in a label of a drug in the United States.

So we will have to see, I would just say that we have – we’ve had a couple of head-to-head studies looking at efficacy of BREO or RELVAR versus Advair. And then one of those studies there was a statistically significant benefit, now you see over 24 hours for RELVAR, BREO versus Advair and as measured by FEV-1. In the other there was a benefit seen in the first 12 hours, but the bronchodilation in the second 12 hours was about the same as Advair. So we’ve got those head-to-head studies that we’ve done, likely there’ll be other head-to-head studies in the future, and those of course are designed more specifically for regulatory purposes and inclusion in the label.

Now, move on to MABA, MABA sometimes called 081 or 081 by GSK. This is a fascinating bifunctional bronchodilator efficacy looks very good for Phase 2 study. I think if you look at the peak of bronchodilation ACU or a trough FEV-1 regardless of what you look at, it’s sort of best-in-class even looking and comparing albeit different studies to LAMA/LABA.

So we are progressing now with GSK as a single agent in the Phase 3 monotherapy. What we’ve said is that we are initiating Phase 3 enabling studies of MABA and FF this year. The Phase 3 enabling studies likely will – would not be complete until late this year, early next year at what point then we would be ready to progress if they’re all successful into some sort of a Phase 3 program for the combination. So MABA monotherapy will go in first and assuming we are successful with all the Phase 3 enabling work, the combination of MABA and FF would follow that.

Kyle Rasbach – Cowen & Company

Great, thanks. Just a quick follow-up on the vilanterol monotherapy, can you remind us how you are thinking about that and maybe a timeline for when you would expect to have regulatory filings?

Rick E. Winningham

Sure. Our key focus right now of course is on BREO and RELVAR in the various jurisdictions and then following that ANORO.

I think the VI monotherapy, I would expect to follow – a filing to follow those applications and likely at least in the U.S. the completion of the ANORO application. I think we view and GSK views Vilanterol monotherapy and umeclidinium monotherapy as important components in the continuum of care from mild chronic obstructive pulmonary disease through severe and they are important in mild COPD because many times mild COPD patients are started on single agent therapy and that single agent therapy either being a beta2 agonist or a long-acting muscarinic antagonist. So that’s really the importance of VI monotherapy and where we would seek to have it approved as a single agent for COPD.

Kyle Rasbach – Cowen & Company

Great. Thank you.

Operator

Thank you. Our next question comes from Alan Sonnenfeld of Bernstein. Your line is now open.

Alan Sonnenfeld – Bernstein

Hi, guys, thanks for taking my call. And I had just a couple of questions, I wanted to, if you look at the Forest launch on the LAMA. Are you able to take anything away from how that as in being accepted in the market for how you might position your ANORO or RELVAR?

Rick E. Winningham

You know I think we're of course we’re paying attention to the Forest launch, that twice a day, twice-a-day long-acting muscarinic antagonist is quite different of a profile if you want to look at ANORO from a once-a-day LAMA/LABA. So I think well of course there is a learning that will take place I think what’s quite a bit more important than that, is in fact GSK is in this market day-in and day-out in the United States and is on the ground and they because of that have a traffic perspective on what it’s going to take for both RELVAR, BREO and ANORO to be successful in a launch into this market. And that’s I think primarily what the collaboration will capitalize on is the GSK inside into the market as exist today.

Michael W. Aguiar

Yes, Alan, it's Mike. I think it’s hard to compare kind of where they are versus where we might be looking forward here. You have a twice-a-day medicine, the single agent competing with a once-a-day medicine as the single agent, so that obviously is a difference versus where we are going, which is probably going to be a better medicine, I mean, better bronchodilation than what’s out there today delivery once-a-day.

So, I think we have very high expectations for ANORO, that clearly is, a medicine has the potentially better than what is available today just from a pure bronchodilation perspective. So I don’t want to get into any specifics around how big or how fast or anything else, I would just say, we are quite optimistic about this category and particularly in the U.S. where at least as of today, we have a substantially a better competitive position in some of the other once-a-day medicines from a timing perspective.

Alan Sonnenfeld – Bernstein

Okay. That makes a lot of sense. In terms of the RELVAR product, can you comment on the survival study, have you – where are you in planning that, thinking about starting that study or final study?

Rick E. Winningham

Well, it’s well underway right now, so the program if you actually went out to Clin Trials, again you’ll looking, you will see late 2014, early 2015 something like that I forget the exact last patient, last visit dates. Again, I will just throw the usual caveat out there, which is the dates that are out there are sort of subject to a fair degree of error bars at this point on the plus or minus side, but that is well underway today.

Alan Sonnenfeld – Bernstein

Are you seeing recruitment, or are you? Sorry to interrupt.

Rick E. Winningham

Yeah, yeah, yeah, they're recruiting patients and are well into it, but again, this is a big long study. So we have a little ways to go before we can start that, provide any guidance beyond what’s on Clin trials in terms of then date. But if we were to show a mortality benefit in this particular study, which is designed by the way to capitalize on some learnings that came out towards, specifically the patient population and some of the statistics around it, but having a mortality benefit as you would imagine would be very powerful on the label.

Alan Sonnenfeld – Bernstein

Great. Thank you very much for taking my questions.

Rick E. Winningham

Great. Thank you, Alan.

Operator

Thank you. (Operations Instructions) Our next question comes from Howard Liang of Leerink Swann. Your line is now open.

Howard Liang – Leerink Swann

Thanks very much. I apologize I think you already addressed this. So I don’t know if you already have the briefing documents for the panel on March 7, but can you talk about whether you see the same the key issues for BREO being the same as that you talk about before early in the year?

Rick E. Winningham

Howard, no we don’t have the briefing documents, when we get the briefing documents we will comment on them until they’re public, but right now based on what we know are the issues we anticipate or sort of the long lines that we’ve been talking about for the last year, I think we stand in pretty good stead to be able to defend the RELVAR/BREO Phase 3 program, the benefit it provides in COPD patients.

In terms of reduction and exacerbations, the benefit that you see from adding the steroid to the beta agonist alone and the benefit of exacerbations and pneumonia – overall pneumonia rate that is equal to or lass than what is seen with existing LABA/ICS combination therapy. So we got advisory camping up in the near or immediate future. So as I said in my remarks, we look forward to going to the advisory committee and presenting the data.

Howard Liang – Leerink Swann

Okay. Again, I’m sorry if you already talked about this. Is there any read through any takeaway that you have from the olodaterol panel, any implications for BREO?

Rick E. Winningham

Yeah, we talked about that a little bit earlier in the call, and of course, every one of these panels is going to be different in a variety of aspects. Olodaterol as you know as a single agent that will be going over the combination agent. So, that in and of itself presents some differences, the Olodaterol the bronchodilator, whereas we have a steroid along, so again you have the potential for different things of discussions.

There probably were some similarities around the way the FDA was describing dosing in there, which as I mentioned earlier, largely paralleled the way the FDA described dosing discussions and decisions for aclidinium as well, that would be my guess. Those are the last two documents that I’ve seen and they both have been using the same types of description from the FDA about how they look at this. So, that would be a reasonable guess that, that might be one parallel there, but beyond that, I would have to wait until actually see what’s in the documents and have a little better sense that way.

Howard Liang – Leerink Swann

Okay. Thanks, so much.

Operator

Thank you. It appears we have no further questions on the phone. I’d like to turn the call back to Mr. Winningham. Please go ahead, sir.

Rick E. Winningham

All right. Thank you very much, operator and thanks everyone for participating and we look forward to a very exciting and productive 2013. Have a great day.

Operator

This does conclude today’s conference call. We thank you for your participation. You may now disconnect.

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