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Theravance Inc. (NASDAQ:THRX)

Q3 2010 Earnings Call

October 21, 2010 5:00 pm ET

Executives

Rick Winningham - CEO

Mike Aguiar - SVP and CFO

Mathai Mammen - SVP, Research and Early Clinical Development.

Analysts

Ian Somaiya - Piper Jaffray

John Stephenson - Summer Street

Brian Skorney - ThinkEquity

Ryan Martins - Barclays Capital

Howard Liang - Leerink Swann

Tom Russo - Baird

Operator

At this time, I would like to welcome everyone to the Theravance Conference Call to review results for the quarter ended September 30, 2010 and top line results from the Phase 2 clinical study with TD-1211 for the opioid-induced constipation (NYSE:OIC). (Operator Instructions). Today's conference call is being recorded.

Now, I would like to turn the call over to Mike Aguiar, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Mike Aguiar

With me on the call today are Rick Winningham, our Chief Executive Officer and Dr. Mathai Mammen, Senior Vice President of Research and Early Clinical Development. The primary focus of today’s call will be Mathai’s discussion of the positive proof-of-concept results from the Phase 2 study with TD-1211 the lead compound in our PUMA program.

Before turning the call over to Mathai, I will provide a very brief update of our financial results and after Mathai has done, Rick will close the call reviewing the highlights for the quarter and then finally we will open up the call for questions.

This afternoon Theravance issued two press releases, first detailing the results of our proof-of-concept Phase 2 study with our PUMA compound for the treatment opioid induced constipation and the second detailing third quarter 2010 financial results and recent corporate developments. Copies of these press releases and the slide presentation 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 would 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 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 in the company's form 10-Q filed with the SEC.

I will now briefly discuss results of the quarter ended September 30, 2010 and review guidance for the full year 2010 expenses.

For the quarter September 30, 2010, Theravance had a net loss of $21.2 million or $0.29 per share. Revenues totaled $5.3 million during the third quarter 2010 and consisted primarily of the amortization of deferred revenues from the company's partnerships with GSK and Astellas partially offset by write-off of $820,000 VIBATIV inventory that is no longer realizable.

Included in revenue was royalty income of $422,000 based upon net VIBATIV sales of $2.3 million in to the wholesale channel. Total operating expenses excluding stock-based compensation were $20.7 million for the quarter and $63.4 million for the year-to-date.

Cash, cash equivalent and marketable securities totaled $192.5 million as of September 30, 2010. This decrease of approximately $18.2 million during the third quarter of 2010 was primarily due to cash used in operations.

We are reiterating our previous 2010 expense guidance of total expenses being at the upper end of the range of $80 million to $85 million. As a reminder, our guidance includes total research and development expense and total general and administrative expense, but excludes stock-based compensation.

With that I will turn the call over to Mathai Mammen, who will discuss results of the Phase 2 study with TD-1211.

Mathai Mammen

I’m very excited to review the top line results from our Phase 1 and Phase 2 clinical studies of TD-1211. Before I discuss the study, design and results, I would like to make a few key points about Opioids and TD-1211.

As many of you know, Opioids are the one of the largest and most effective class of medicine used for managing various pain conditions. Opioids primarily exert their analgesic effect by acting on regions of the brain and spinal cord inside the central nervous system or CNS. However, Opioids also circulate outside the CNS compartment, which result in a wide range of side effect including constipation, nausea and pruritus.

For many patients on opioid therapy, Opioid Induced Constipation or OIC is a significant problem as they are currently no orally observed medicines approved in the US to help alleviate the side effects. TD-1211 was selected as our lead compound for development based on preclinical data that demonstrated excellent peripheral restriction. That is TD-1211 is a highly selected antagonist opioid receptor that is largely excluded from the CNS compartment.

We previously reported positive results from a Phase I single-ascending dose study in healthy volunteers. We said that our plan was to move TD-1211 into and through an efficient program that combined a Phase I multiple-ascending dose study in healthy volunteers and a Phase II dose escalation study in patients suffering from opioid induced constipation. We have completed this combined program on schedule and are now reporting the data here.

I remind you that the slide presentation can be accessed from our website and the slide number referenced during the discussion can be located at the lower left corner of each slide.

Let us now start with slide 3 showing the results of the Phase I multiple ascending dose study in healthy volunteers. We explored doses ranging from 2 to 30mg. At the think aside, we just issued a press release incorrectly stating that our dose range is 20 to 30mg. that is a typo and it should read 2 to 30mg.

TD-1211 was well tolerated and we noted no significant changes in any laboratory parameter or physical exam. Although the maximum tolerated dose was not reached we stopped at 30mg because we believed that this significantly exceeded that which we predicted would be required for an efficacy.

We were also pleased with the well behaved pharmacokinetics of TD-1211 consistent with it being a well-absorbed and soluble typical small molecule. The absorption was gradual with a peak concentration occurring three hours after dosing and a half life of 17 hours and subsequently a favorable ratio of peak concentration to trough concentration. The exposures also appear to be independent of food intake with some favorable reduction in the variability in the peak concentration.

Finally, the Phase I included a cohort designed to verify that TD-1211 remained outside of the CNF. This experiment involved dosing morphine which penetrates the brain and thereby causes constriction of the pupil. Reported studies in this area use a similar experiment but with a single dose. We conducted a repeat dose study to more definitely rule out CNF attracts of our punitively peripherally restricted compound.

We are pleased to report that after seven days of dosing 20mg of TD-1211 once a day, there was no apparent interference with morphine’s effect on people having constriction.

Let us please now turn to Slide 4. Slide 4 describes the design and purpose of our dose escalation study in patients suffering from OIC. The Proof-of-Concept Phase II study was a randomized placebo controlled double blind multiple-ascending dose study designed to evaluate constipation relieving effects, safety and tolerability in 70 non-cancer patients experiencing constipation while receiving their chronic opioid therapy. These patients were randomized to TD-1211 and placebo while being maintained on their existing opioid therapy. In this study, five increasing doses of TD-1211 0.25mg, 0.75mg, 2, 5 and 10mg were administered once daily in patients with OIC.

The patients had fewer than five spontaneous bowel movements or Sims during the two week baseline period and at least one additional symptom of constipation such as abdominal pain. Study treatment was administered orally once daily for a two-week treatment period followed by a one-week follow up.

The patients were kept in the clinic unit for the first three days and monitored closely. On the first day the patients took both their opioids and TD-1211 on an empty stomach in order to collect blood samples for pharmacokinetics. The patients were then sent home with an electronic patient report outcome also know as ePRO diaried to collect bowel moments symptoms, quality of life metrics.

The electronic diaries allowed us to collect a particularly rich set of data and avoided under-reporting of adverse events that is possible with paper diaries. The primary efficacy of this study was a change of baseline in the average number of SBMs per week. We predefined in the protocol what we mean by proof of concept. We want to see the lower bound of the 95% confidence interval in change from baseline to be greater than one SBM per week.

Slide 5 covers patient demographic. Overall, the patients in our study represented the range of patients that one would typically encounter in the real world with respect to age, body mass index, tightened dose of opioid use, and underlying chronic pain conditions other than cancer pain.

Let's now turn to Slide 6. Slide 6 covers the primary efficacy endpoint in the study, which I remind you is the change from baseline in the average number of spontaneous bowel movements or SBMs per week. We are pleased to tell you that both a 5 and 10 milligram doses demonstrated significant change from baseline with the mean increase of 3.2 SBMs per week and 4.9 SBMs per week respectively.

In addition, the dose is also showed a clinically meaningful number of total SBMs during the treatment period, 4.3 SBMs per week at 5 milligram and 6.2 SBMs per week at 10 milligram. Importantly, the benefit seen at 5 and 10 milligrams were maintained for both weeks of treatment. The two lowest doses did not exhibit any activity. In the placebo group, the lower bound of the 95% confidence interval was below one and therefore did not meaningfully impact SBM frequency.

The next slide, Slide 7 shows you the secondary efficacy endpoint, the times to the first bowel movement following the first dose. Our patients were quite constipated with only 1.1 to 1.4 SBMs per week and correspondingly long interval between bowel movements. The time to the first SBM ranged from 30 to 70 hours for placebo in the lower dose groups, consistent with a degree of constipation prior to receiving therapy. In contrast, both the 5 and 10 milligrams dose allowed spontaneous bowel movements significantly more quickly with medium times at 8.6 and 3.6 hours respectively.

The next slide, Slide 8 shows a third measure of efficacy that was pre-classified in our protocol, but not a primary and secondary endpoint. We repeated the analysis of our primary endpoint, but increased the bar from spontaneous bowel movements to complete spontaneous bowel movements or CSBMs.

The CSBM is defined as a bowel movement in which the patient feels he or she has had a complete and satisfying bowel movement. As you can see in the table, both 5 and 10 milligrams were clinically active.

The next slide, Slide 9 summarizes the safety findings for our Phase II study. Overall, we are pleased with the tolerability profile of TD-1211 in patients. There were no serious adverse events in the study and most adverse events were either mild or moderate. The most common adverse events were GI related.

The most common GI adverse event was abdominal pain, which was also reported by many patients prior to receiving therapy. The abdominal pain was often seen on the first day of dosing, when I remind you TD-1211 was taken on an empty stomach. The majority of gastrointestinal adverse events lasted fewer than 48 hours after onset.

Importantly, a sensitive measure of CNS penetration of mu-opioid antagonist in patient, its signs and symptoms of CNS withdrawal. We are pleased to report that there were no signs of even mild CNS withdrawal at any dose in our study. Finally, there were no significant changes in any of the standard laboratory tests, ECGs, vital signs or physical exam.

Slide 10 further breaks out the GI adverse events by dose and by severity. Once again the majority of GI adverse events were mild to moderate, occurred after the first dose and resolved within 48 hours.

Let's now turn to our last slide, Slide 11. We are pleased to report that TD-1211 achieved proof-of-concept. The multiple ascending-dose study in healthy volunteers, show that the compound was very well tolerated with predictable exposures.

A gradual rise to peak concentration and then a gradual decline in concentration with half-life of approximately 17 hours. The exposure appears to be independent of foods, so future studies should permit the patient to take doses of TD-1211 irrespective of food.

There is no functional evidence of CNS penetration and doses required for efficacy, even after multiple days of dosing in both healthy volunteers and patients. TD-1211 was generally well tolerated in patients suffering from OIC, with no serious adverse events and most adverse events being short-lived and occurring after the first dose.

We are excited about taking the next step clinically with TD-1211 and are now answering a planning stage for when and how we will do so.

I will now turn the conference call to Rick.

Rick Winningham

As Mathai noted we are excited by the positive results of the Phase II study with TD-1211. As many of you know GSK has the right to in-license TD-1211 under a predetermined terms and part of a strategic alliance agreement. We will be providing the full dataset to GSK shortly. After we have delivered the data to GSK, they have approximately two months to make a decision of whether or not to license the program. I would like to note that while we believe that TD-1211 data are compelling in 2008 GSK announced, they were focusing around eight research areas that don’t include GI disorders or pain.

Now turning to other developments during the quarter, let we start with the RELOVAIR program. This year, a significant quantity of new data has been released. Approximately 25 posters and oral presentations were given between the American Thoracic Society Conference in New Orleans in May and recently at the European Respiratory Society Annual Congress in Barcelona, Spain. The presentations at ERS focused on Phase II results in more than 3,000 patients and included data on the long-acting beta agonist, vilanterol, the inhaled corticosteroid, fluticasone furoate and RELOVAIR or the combination of the two.

In the Phase II COPD study, RELOVAIR was generally well tolerated, had no adverse impact on heart rate, blood pressure, acuity interval. RELOVAIR demonstrated a rapid onset of action with 65% of patients achieving an improvement in FEV1 of at least a 100 mls within five minutes of treatment.

Other significant presentations and included key results on the components of RELOVAIR in both COPD and asthma. These studies demonstrated a prolonged duration of action for both the LABA and the ICS, a rapid onset of action for vilanterol, the LABA and the fluticasone furoate, the ICS is effective with low doses.

Favorable trends were seen in other secondary endpoints including improvements in peak expiratory flow both in the morning and the evening, and reduced frequency of rescue medication in the studies of fluticasone furoate. As a reminder, the key posters and presentations from these meetings were filed with 8-Ks.

The ongoing Phase 3 programs in COPD and asthma are progressing well with enrolment rates generally in line with our expectation. All the registrational studies in both indications are now under way.

Eight of the 13 studies including the exacerbation studies in both COPD and asthma as well as the six-month, efficacy and safety studies in COPD have now completed enrolment with the last patient first visit. As Andrew Witty from GSK noted this morning, more than 8,000 patients have now been enrolled in these studies. Both COPD and asthma are serious debilitating diseases were at unmet need remains for better more convenient medicines. We believe RELOVAIR has the potential to be a next-generation treatment for patients suffering from these serious diseases.

Now turning to other program updates. VIBATIV revenues were modest during the third quarter of 2010 and below are beginning of the your expectations, which is assumed US approval for nosocomial pneumonia. We remain in dialogue with the FDA on nosocomial pneumonia and have no new developments to report.

In Europe the marketing authorization application is under review for the treatment of nosocomial pneumonia and complicated skin and soft tissue infections that [adopts] by the European Medicines Agency. We anticipate completion of that process during the first half of 2011. Finally, the Phase 3 attained nosocomial pneumonia studies have been accepted for publication in the Peer Review Journal and should appear before the end of the year or early next year.

Now let's turn to our MARIN program for the treatment of pain. We have progressed our lead compound TD-9855 into a multiple ascending dose study designed to further access safety, tolerability and pharmacokinetics and healthy subjects.

Our goal in this program is to make a best-in-class norepinephrine-serotonin reuptake inhibitor optimized for the treatment of chronic pain associated with conditions such as neuropathic pain or osteoarthritis. We are on track to complete the study by the end of the year and we will provide an update in our next quarterly call.

In summary, I am pleased with the progress we have made this quarter in particular the positive results of the proof-of-concept Phase II study with TD- 1211 and the enrolment status in the RELOVAIR program.

We remain highly focused in advancing our pipeline targeting a best-in-class medicine in a number of therapeutic areas. We are driven by the opportunity to improve life for patients with serious medical conditions and we will continue to build our pipeline through applying our expertise in multivalency in areas, where there is unmet medical need and significant market opportunity.

We look forward to a productive fourth-quarter and a New Year with a number of milestones, most importantly completing the RELOVAIR Phase 3 registrational studies, and now I would like to turn the call over to the conference facilitator and open the call for questions.

Question-and-Answer Session

Operator

(Operator instructions). Our first question comes from Ian Somaiya from Piper Jaffray.

Ian Somaiya - Piper Jaffray

Congratulations on the positive data. Maybe we could start there Mathai, if you could just give a sense of what the regulatory path forward is. You mentioned that considerations are underway in terms of future development path. Maybe you can give us or walk us through a couple of options.

Mathai Mammen

Right now, we're in that planning stage as I mentioned, and the ordinary path would look to graduate this compound into a dose ranging study and that into a Phase 3 study, but we are considering all our options right now.

Rick Winningham

I just add to that. These are topline results, and they are relatively new. The 5 and 10 milligram, that range of between 5 and 10 milligrams looks very attractive to us and that's really what we have to refine our understanding of both through analysis of this study and then the future study that we would design to progress towards an approval.

Mike Aguiar

The last time I’d just add Ian is, this is pretty exciting information and it is very new, but we said a number of times that this is one area, where we are in a fairly tight course rates with some other folks, who are out there and we're going to continue progressing the compound. Pretty aggressively should the data look good and we're quite pleased with the data today. We're in the process of creating these plans right now because again it is brand-new, but this is something we are going to continue to push fairly aggressively.

Ian Somaiya - Piper Jaffray

Just a question on the RELOVAIR program. I’m sure you are aware of the news out of Novartis this morning decision to move with the Concept 1 device because dealing the program by about a year. You give us a sense of what the implication of you Glaxo and maybe help us compare the two devices of Concept 1 and the device you are using for the RELOVAIR Phase 3 studies?

Rick Winningham

The device that we are using in the RELOVAIR Phase 3 studies has been the device that we've been using for quite some time in the large Phase 2b studies. I am not terribly up to speed with all the events other than with Novartis other than the press release.

I just sort of echo some of the comments that Andrew Witty made. We got a great combination of product because of the strong components of both the beta agonist and the steroid and we've got a device that engenders great patient satisfaction and it's quite durable. So, the race is always on. We are competing with Novartis, they are very good company. Our challenge with GSK is to get to the market as quickly as we can with the best product that we can and we are in a good position to do so.

Mathai Mammen

We were a little bit ahead of them prior to this announcement with regard to the combination beta agonist and inhaled corticosteroid to the RELOVAIR piece of this. Tom, at the end of the day what's really going to matter is data and the quality of data, but the data we showed at ERS was as quite solid, and if that data would repeat in Phase 3, we would be extremely pleased and very comfortable with our competitive position out there.

The one of the things, and really the one I can add about the device in addition to what Rick said, that it is used for quite a while. We did receive very favorable feedback from the patients. They really like this device quite a bit. So, we have some pretty significant opportunity just on the chemicals themselves, which are quite impressive as well the device that is going to be extremely well-accepted among patients.

With regard to the timing, this push Novartis is out a little bit, butt we were a little ahead of them on the well on the RELOVAIR portion to already thanks to great efforts of the team over GSK and Theravance are pushing that forward.

Operator

Our next question comes from John Stephenson from Summer Street.

John Stephenson - Summer Street

I was wondering if you might be able to comment on any progress in licensing front with 5108?

Rick Winningham

Sure, John. We continue to be in discussions with a number of different companies on progressing this into the next stage of development. We are going to keep working on that. We'll look forward to updating you sometime in the future on it.

John Stephenson - Summer Street

Is this something that's fairly near-term, or is this kind of it’s always a work in progress?

Rick Winningham

I never like to comment on business development deals, because we've been relatively successful historically with business development transactions that we've undertaken. Sometimes, should they take longer time than what one may expect sometimes they take a shorter time than what one may expect, and that's why we don't give specific guidance, but we're optimistic about the quality of the product, so.

John Stephenson - Summer Street

Actually, I'd like to follow-up on the new compound TD-1211. Could you give us little background on the discontinuations and whether or not they were focused on any one dose?

Mathai Mammen

Sure, John. This is Mathai speaking, John. So, there were five discontinuations. Three of them happened very early on for GI adverse events and one of them happened because that person withdrew contempt from the study for no particular adverse event reason, and with another person, there was EKG before the study was ever started. Person probably shouldn't have been on study was we noticed it and then took about.

John Stephenson - Summer Street

What doses were those?

Mathai Mammen

They were distributed among the doses. One of them was in fact the lowest dose.

John Stephenson - Summer Street

I was curious about is I mean there are two drugs available for opioid induced constipation. I was wondering if you can kind of highlight where the biggest advantages of this compound could be relative to those dose?

Mathai Mammen

As Rick said upfront, this is top line data. There is a very large dataset, thanks to our ePRO diary collection is very large dataset that we are digging through right now. So, we are very happy with how the 10 milligram doses performed, and we are sure that we have a really good product in here.

Exactly, how they compare to other products, we can't say right now. I mean the absence of head-to-head comparison obviously that would be difficult, but we are looking for what the features are then we're going to emphasize in the next clinical step.

Mathai Mammen

Just some very simple comparisons that one might make. One of them is on the PK. This is clearly once-a-day molecule. It's got 17 hour half life. What conveys the activity is in fact the active, it does not rely on the metabolite for its activity, and that's one of the things that gives us some confidence and the results we've got today: good PK a little very ability, once-a-day product and for a program that really had a fairly small sample size, some pretty robust efficacy. So, pretty optimistic about this compound and it's path going forward.

John Stephenson - Summer Street

If I might just kind of elaborate, may I ask you elaborate a little bit more though. The current drugs haven't really sold much, so why do you think those haven't sold much?

Mathai Mammen

One of the drugs that you maybe referring to is Alvimopan, it's not approved for opioid-induced constipation. It's approved for post-operative ileus. Our target here is opioid-induced constipation. The other product is probably subcutaneous methylnaltrexone you are referring to, of course that's an injectable product and our target all along has been well-behaved once-a-day small molecule that's orally absorbed and reproducible pharmacokinetics and that's one of the challenges that of course Alvimopan given the activity of both the parent and the metabolite of the product.

Operator

Our next question comes from Brian Skorney from ThinkEquity.

Brian Skorney - ThinkEquity

How do you actually view this market size? There were larger numbers for (inaudible) before their approval. Do you have any metrics on what size you might actually be targeting for a market? Do you think that way that store is close to that market size or they're just totally underperforming what the potential market is?

Rick Winningham

Number one, to be successful in this market you have to have a good drug. You have to have a drug that performs will and consistently. I don't believe that their product has been launched yet in this market. If you look at the number of people on opioids, Mathai referred to, it's about the largest class of pain medicines for people with chronic pain. We see a substantial opportunity here for a good product and that's the market has not been delivered oral product today. That's where we see the opportunity with 1211.

In addition, as that's been discussed by others, it clearly they are on the development path. There is opportunity for combining this product with the most frequently used opioids, because this was a pretty well-behaved small molecule. I'd just ask Mathai to add on to what I'm saying.

Mathai Mammen

No, that's exactly right. We see in our study and we understand the whole collection of key opinion leaders that we have spoken with in this area that this is a profoundly difficult program for some patients. We see in our own study there are patients that probably aren't taking as much pain medicine as they need, because they are limited by this extremely bothersome, uncomfortable side effect of constipation.

So, I completely agree with what Rick just said. There is no option available in the market today. That subcutaneously dosed compound, that' s just not going to apply. That’s not going to be something people use for opioid-induced constipation on a regular basis.

With Alvimopan they try to go forward, but the problem they had was just this profoundly poorly pharmacokinetics, which we think contributed to just them not being able to find a dose that worked. So, we are pretty pleased right now that not only do we have a typical small molecule that works the way we want, reliable exposure [etcetera], but we see that there is still a clearly unmet medical need in this space to be met. Good compound with a clearly defined population that needs it.

Brian Skorney - ThinkEquity

The focus is on the (inaudible), I just wondered if you have any updates on either the LAMA/LABA combo potential and also potential [model] study.

Mathai Mammen

We don't have any update on that we've been talking about for those two compounds that the data or the completion of these current process will come out around the end of the year. So, we're not quite there yet, but the two just the kind of equipment prospective we've been saying about the LABA/LAMA is if it turned out that we find if they want to be LAMA. This will be a big product, but once a day LAMA is a pretty high hurdle. We'd mentioned you before that we've had three or so LAMAs that we have run through to date in the collaboration and none of them yet have been once a day.

The good news is we’re farther along with this particular LAMA that we have with the others, but that is a big hurdle there. So, we're not really talking about that much just because of the rest around once a day compound, but certainly if it turned out, but it (inaudible) activity here fair amount out that.

With regard to MABA, we are opened to have all of the final things completed here and have a decision made whether it progressed that into Phase IIb again around the end of the year. So, I would expect more information on both begin toward the end of the year.

Operator

Our next question comes from Ryan Martins from Barclays Capital.

Ryan Martins - Barclays Capital

May be Mathai just focusing on the data. Firstly, it seem like let will be just wanted to get your thoughts, whether that the lower dose patient did not fare as well as the placebo patients just wanted to get your thoughts on that?

Mathai Mammen

Yeah, that actually an issue more with placebo than the lower dose patients. This is the small study and one of the features we were looking for in the data set taken together is a solid dose response. So, if you look at the spread of active doses from 0.25 to 10 actually a beautiful dose response curve and that's not often seen in studies of the size. The placebo did outperform would appear the low doses by little bit, but all of those we say we're recent, I mean they're all in active doses.

Ryan Martins - Barclays Capital

Looking at it from the safety standpoint, clearly the ECGs are seem like they were inline, but if you look relatively across the doses, I mean whether ECGs relatively comparable for the patients?

Mathai Mammen

Yeah, so from our analysis of the ECG data, first there was a very intensive collection of ECG data in the study we still feel that's an important hurdle and important safety parameter. Yeah, overall there was no dose dependence to - there was no observation and changes in any of the ECG parameters. That all said there is lot of data in front of your we were continuing to they get, but we're confident by what we see.

Ryan Martins - Barclays Capital

As you mentioned in your prepared remarks, GSK does have an opt into the program, but in the event that as you stated may be it's doesn't fall into a focus area in the case that GSK does not go ahead and opt in would Theravance look to potentially develop this on it's own or still look to partner it out? That leads into little production question of you have a few earlier stage programs are you - if do you plan on eventually developing lot of these programs and developing the own pipeline.

Rick Winningham

The strategy of the company as we've been reclining and to take products through proof of concept and perhaps on an exception basis further, but the while generally on partners or commercialization. TD-1211 although like Mike Aguiar said we're going to keep this program moving clearly because of the market opportunity here there is a number of people that are interested, other companies that are interested in products for this category. This is a great opportunity for us with the data that we have, but clearly at some point in some, we will have a partner with TD-1211.

Operator

Our next question comes from Howard Liang from Leerink Swann.

Howard Liang - Leerink Swann

Just on the data. Just regarding the 1211 study, was there any measure of the analgesic effect? I know that you said there is no evidence of analgesic interference, but did you actually measure an analgesic respect?

Mathai Mammen

Yes, these patients we monitored their Opioid use and one measure of interference with the analgesic effect if their Opioid levels they required, their Opioids they go up and there is no evidence of that whatsoever. Probably a more sensitive measure of CNS penetration was what I mentioned in the earlier remarks and that is even small amount of antagonism can trigger some amounts of feelings of Opioid withdrawal and like I said, we were pleased that even mild CNS withdrawal was not seen in the study even at the higher doses.

Howard Liang - Leerink Swann

Turning to the abdominal pain and that are seem to be pretty obvious dose response that I know that you said that the more severe abdominal pain was generally recorded with bowel movements. Can you just elaborate on that and how comfortable with that the pain is not due to the drug per se?

Mathai Mammen

Yes, we can say a couple of things right now from the top line data and that is that the abdominal pain, Tom would often in the vast majority cases came in really early so on that first day of dosing and seem to resolve reasonably quickly afterwards within the next two to three days. Yes, we are confident that a lot of the abdominal pain was associated with bowel movement itself. These patients this is a reminder, are pretty constipated they’re having like a complete spontaneous bowel movement per week. The movement physiologically of their bowels at least early on it’s not unreasonable at all, but they be associated with some discomfort or pain. The good news is this resolved and during the two weeks of study certainly we see that.

Howard Liang - Leerink Swann

Rick, the question is for either Rick or Michael. We had more salts on the timeline, but data will be released in more than tranche.

Mike Aguiar

No, we haven’t really crossed that bridge yet with GSK is exactly how we are going to release that data. I’d just say we are largely in line in terms timing of the study what you would see on clinical trials so at the last day you will see last patient, last visit numbers ranging from say, April or so of next year to kin of in the October, November time of next year most of data within plus or minus and month of what without there so.

We are generally in line with that. With regard to the specific round how we are going to release data that just something we haven’t discussed really with GSK. I will probably deal with that in Q1 next year is my guess, but given that just the guess right now. As of today no updates on timing of data, but the studies are generally aligned with what you would see on clinical trials.

Howard Liang - Leerink Swann

The last question on the background of the write-off or write bad of inventory, you said something like its not realized (inaudible). Can you just give us a background on that?

Rick Winningham

Yes, we manufactured the initial launch inventory and ahead of the responsibility for providing to Astellas as part of our agreement them. We mentioned a number times, the initial launch plans were number one that it would have been approved a little bit earlier and obviously they once moved some of the delay we had at the FDA again the skin indication there. We also assumed there is going to be relatively some temporariness launch that happened in skin and pneumonia and so at the time we are expecting a little bit higher ramp.

The portion just related dating on this and that we probably manufacture a little bit more than what we need today is the biggest component of that. Really it was writing off what we felt who would not be able to transfer to Astellas and have sold before dating expire. Again I really drive from two things, one is reasonable delay on both the skin and (half) approval portion of that. So, that’s really what it was today.

Operator

Our next question comes from Tom Russo from Baird.

Tom Russo - Baird

Continuing on price that as you mentioned the publication of the (half) data and I know in the past the thought perhaps reach the half labels pneumonia. What is your current expectation on that and how does the single data (inaudible) superiority in pneumonia. How does that maybe factor in to your current thinking on that?

Rick Winningham

Well, the drug today is indicated for the treatment of complicated skins, skin structure infections, the other publication of the Phase 3 result in pneumonia is important, just overall to get the data out, the product won’t be promoted for nosocomial Pneumonia without the indication, but nonetheless its important to get the data out relative to the (inaudible) superiority, haven’t seen the final data yet on that so I really can’t comment on that.

Tom Russo - Baird

I apologize with this was asked already. I was disconnected some part of the call, but that the latest on the SCA front with regard to asthma and whether you could currently still be in position to file concurrently with asthma in Europe.

Mathai Mammen

We don’t have any update today on the FDA in asthma. One thing I would add, there’s a lot going through the FDA with regard to asthma they are probably focusing today on how to deal with the largest safety studies that were discussed at the Advisory Committee for currently market products.

Our guess is that secondary importance of priority to them right now is what they would do for new products. I don’t have any updates other than what we have discussed today, which is there were no (inaudible) was approved not too long ago, which is the combination beta agonist and inhaled corticosteroid. It continues support our belief that good data and compounds will still have a very good shot of getting approved in the United States for the treatment of asthma.

Rick Winningham

Our plans relative to filling in both the United States and Europe remain unchanged.

Tom Russo - Baird

Lastly, I don’t know this came up as part of an earlier question, but do you remind us the current thinking and plans for Phase 3b and Phase 4 for RELOVAIR (inaudible) how you are going to decision to the pharmacoeconomic argument to bolster pricing and reimbursement in those session?

Rick Winningham

One of the things that we said as we turn the page in 2011. We should be able to provide a little bit more little bit more guidance on you know the phase 3B program behind RELOVAIR and it some thing that both GSK and Theravance believe its quiet important. However, the importantly the you know the movement just compliance alone of going for twice a day to once a day is really gonna be a key component of the value of the product. I really direct every body to look at the 8-Ks that were around the RS. Because you see a very attractive profile of RELOVAIR and its components in those 8-K, relative to existing market and products.

Tom Russo - Baird

Are you collecting compliance data as part of Phase III or Phase IIIb programs specifically?

Rick Winningham

We would expect in a regular client trial for compliance to be extremely high. That certainly would be our objective. You have got ranges around current Advair compliance, even the 40% plus range. So, there is clearly opportunity for additional complaints with the once a day product that you’re your just almost automatically going to pick up. Now, you are not going to go if there was any product to 100% compliance in a patient population, but you’re going to see improve compliance for the one today versus the twice to day products.

Okay, all right, thank you very much for participating, thank you operator and everyone have great day.

Operator

Please, ladies and gentlemen, thank you for participating in today's conference. It concludes our program. You may all disconnect and have a wonderful day.

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