Theravance's CEO Discusses Q3 2012 Results - Earnings Call Transcript

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by: SA Transcripts

Theravance, Inc. (THRX) Q3 2012 Earnings Call October 30, 2012 5:00 PM ET


Ladies and gentlemen, good afternoon. At this time I’d like to welcome everyone to the Theravance conference call to review the results for the third quarter ended September 30, 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).

And now, I would like to turn the call over to Mike Aguiar, Senior Vice President and Chief Financial Officer. Please go ahead sir.

Mike Aguiar

Good afternoon everyone. With me on the call today is Rick Winningham, our Chief Executive Officer. Before we review results for the quarter, we would like to thank everyone for joining us on what is a tough day for those on the east cost. Rick and I would like to send our thoughts to everyone impacted by the hurricane and hope that you and your families safely weather the storm.

Now, we’ll move to our review of the quarter. Earlier today Theravance issued a press release detailing third quarter 2012 financial results and recent corporate development. A copy of the press release can be downloaded from our website or you could 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 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 filed with the SEC.

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

Rick Winningham

Thanks Mike and good afternoon everyone. There have been many positive developments in Theravance during the third quarter. In our respiratory collaboration with GSK, presentations of FF/VI Phase 3 data were made, European Respiratory Society Annual Congress and review of the regulatory filings was commenced in the U.S. and Europe.

In addition the Phase 3 program with UMEC/VI and Chronic Obstructive Pulmonary Disease or COPD was completed and we remain on track to commence global regulatory filings for COPD from the end of this year.

For our non-respiratory programs, it’s a positive results from the TD-1211 Phase 2b study. In addition, Theravance recently entered into partnership agreements for velusetrag with Alfa Wassermann and cardio vascular research development commercialization with Merck.

I’m also pleased to announce today that Theravance entered into two partnership agreements with R-Pharm, a major Russian pharmaceutical company covering TD-1792 and telavancin. These collaborations are strategically important to Theravance and that they progress the programs, leverage the individual company’s infrastructure and competencies and optimize our deployment of financial resources.

Let me describe the progress in the respiratory programs in some more detail. The major respiratory event for the third quarter was the European Respiratory Society Annual Congress in Vienna, which included a number of presentations by GSK, Theravance and others. We believe there were several key scientific themes emerging from the conference as a whole that are worth noting.

First, was the importance of reducing the overall rate of exacerbations. COPD exacerbations not only lead to an acute and harmful event for the patient, but also may lead to a permanent loss of lung function. Second, there was increased importance of therapy, containing a Long-Acting Muscarinic Antagonist or LAMA in the treatment of COPD.

Third was the appreciation of the potential utility of combining three pharmacologys, LAMA, LABA and an inhaled corticosteroid or ICS, also known as triple therapy for treating severe COPD and asthma. We believe our respiratory programs with GSK are particularly well positioned to meet these evolving treatment needs. Our collaboration is evaluating potential strategies to develop a triple therapy, including a closed triple of UMEC/VI and FF in a single device, as well as MABA combined with an inhaled corticosteroid.

Turning to FF/VI, the proposed brand name Relvar in the European Union and Japan and Breo in the United States, FF/VI is an investigational, once a day inhaled combination medicine comprised fluticsone furoate an inhaled corticosteroid and vilanterol or LABA for the maintenance treatment of COPD and asthma. For both indications FF/VI would be administered using a new dry powder inhaler with the proposed brand name, Ellipta.

The global registration process with FF/VI is well under way. GSK has now submitted FF/VI for approval in the U.S., E.U., Australia, Canada, Japan, New Zealand, Philippines and Switzerland, with further submissions planned in Brazil, Taiwan, Turkey, Russia and Korea over the next few months. In total, GSK plans to submit the FF/VI for approval in over 100 countries over the next several years.

Now turning to our second respiratory program with GSK, which is UMEC/VI. UMEC/VI is a once a day investigational medicine, combining a long-acting muscarinic antagonist umeclidinium bromide or UMEC and a LABA, VI, for the maintenance treatment of patients with COPD; UMEC/VI is also administered by the new Ellipta inhaler.

In August 2012, GSK and Theravance announced the completion of the Phase 3 program involving approximately 6,000 patients with COPD. The registrational package for UMEC/VI and COPD consists of five pivotal studies and two non-pivotal studies. These studies support GSK's plans to commence global regulatory submissions for UMEC/VI from the end of 2012.

Turning to the third respiratory program with GSK, the MABA program, 081 the lead asset is an investigational single molecule bifunctional bronchodilator with muscarinic antagonist and beta2 receptor agonist activities. GSK presented data from the Phase 2b study at ERS in September. These results demonstrated the potential for 081 for further development as these are a once a day or a twice a day treatment for COPD. We are currently in discussions with GSK regarding the next tests for 081 and look forward to updating you before the end of 2012.

In addition to these respiratory programs partnered with GSK, Theravance presented data at ERS on a single dose Phase 2 proof of concept study, and that its internally discovered long acting muscarinic antagonist TD-4208, delivered once a day in a nebulizer for COPD. In the next few months we plan to start a phase 2 study and an aqueous (ph) nebulizer to evaluate the safety and efficacy of multiple doses of TD-4208.

The goal of Theravance’s LAMA program is to develop a once a day inhaled medicine and a nebulizer that offers improved efficacy and tolerability relative to current therapy and provides the basis for the combination, nebulized products with other medicines.

Now let me discuss our Peripheral Mu Opioid Receptor Antagonist-TD-1211. For the treatment of Opiod induced constipation or OIC. The goal of this program was to develop a best in class medicine that normalizes bowel function in patients, without interfering with the Opiod’s analgesic effect. At the beginning of the third quarter we reported positive top line results from the Phase 2b study, up to the 1211 in OIC and these results support progression in to Phase 3 development.

The Phase 2b consists of three studies, 74, 76 and 84 designed to evaluate doses and dosing regiments for Phase 3. During the third quarter of 2012, Theravance presented data from Phase 2b study 084 at several medical conferences. We are preparing for discussions with global regulatory authorities before the end of the year.

Lastly in terms of program updates, I’ll turn to TD-9855, the lead compound in our norepinephrine 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 safety and efficacy study in adults with ADHD.

An additional Phase 2 study with TD-9855 in patients with fibromyalgia is expected to begin in the next few months. We believe that there’s significant opportunity in fibromyalgia for more efficacious treatment and in ADHD for an efficacious treatment without the risk of abuse associated with stimulants.

Before I turn the call over to Mike, I’d like to briefly discuss some recent corporate developments. During this month Theravance entered into four partnership agreements. First, Theravance entered into a development commercialization agreement with Alfa Wassermann for velusetrag on TD-5108; Theravance’s investigational 5-HT4 agonist in development for gastrointestinal motility disorders.

Alfa Wassermann is a private pharmacutical company with headquarters in Bologna, Italy, with its own research development manufacturing facilities, as well as a growing affiliate network. Under the agreement the companies will collaborate in the execution of a two-part Phase 2 program, address the efficacy, safety and tolerability of velusetrag in the treatment of patients with gastroparesis.

Alfa Wassermann has an exclusive option to develop and commercialize velusetrahg in the E.U., Russia, China, Mexico and certain other countries. While Theravance retains full rights to velusetrag in the U.S., Canada, Japan and certain other countries. Theravance is entitled bundling for the phase 2 program and if the option is exercised, the $10 million option fee, potential development, regulatory and sales milestones totaling up to $53.5 million and royalties on net sales by Alfa Wassermann ranging from the low teens to the 20s.

Second, Theravance signed a collaboration agreement with Merck to discover, develop and commercialize small molecule theraputics directed towards the target being investigated for the treatment of hypertension and heart failure. Theravance will be responsible for discovery and Merck will be responsible for and fund all development and commercialization activities.

In exchange for granting Merck a worldwide exclusive license, Theravance will receive a $5 million upfront payment, funding for research and be eligible for milestone payments totaling up to $148 million for the first indication and royalties on a worldwide annual net sales of any products derived from the collaboration.

Finally, Theravance entered into two agreements with R-Pharm for the development and commercialization of TD-1792 and telavancin, our antibiotics for the treatment of resistant Gram-positive infections. R-Pharm is a Russian pharmaceutical company founded in 2001 in Moscow. The company is involved in R&D, manufacturing, marketing and distribution of pharmaceuticals with a special focus on products for hospital and specialty care. R-Pharm has over 2500 employees, recorded 2011 sales of $1.6 billion and was the top Russian hospital specialty market distributor by volume in 2011.

Under the R-Pharm agreements, Theravance granted R-Pharm exclusive development and commercialization rights for TD-1792 and telavancin in the Russian Federation, Ukraine, other member countries of the common wealth of independent states in Georgia. From these two agreements, Theravance is entitled to receive up to $2 million in near term licensing fees, $4 million in development milestones, $6 million in sales milestones. Theravance is also entitled to receive a 15% royalty on net sales of TD-1792 and a 25% royalty on net sales of telavancin.

R-Pharm plans to conduct two registrational programs in Russia for complicated skin and soft tissue infections and nosocomial pneumonia and we have the right to use the data generated by R-Pharm to support further development of TD-1792 outside the license territory. As for televancin, R-Pharm plans to apply for a Russian MAA for complicated skin and skin structure infections and nosocomial pneumonia in the near future.

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

Mike Aguiar

Thank you, Rick. Today I will discuss the results of the quarter ended September 30, 2012 and will review guidance for the full year 2012 expenses.

For the quarter ended September 30, 2012, Theravance had a net loss of $34.7 million or $0.37 per share. Research and development, plus general and administrative expense, excluding stock based compensation totaled $29 million for the third quarter, which was generally in line with our expectations and prior guidance.

Revenue totaled $1.4 million during the third quarter of 2012 compared to $6.4 million for the same period in 2011, a decrease of $5 million. This decrease was primarily due to the termination of our collaboration arrangement with Astellas for VIBATIV in January. As a reminder, we will not be recognizing any further revenues related to our terminated Astellas agreement.

Total R&D expenses for the third quarter were $27 million compared with $27.8 million for the same period last year. This decrease was primarily due to the completion of Phase 2 clinical activities related to TD-1211, partially offset by an increase in consulting cost related to TD-9855 phase 2 study and preparation for the anti infective drug advisory committee meeting for VIBATIV in nosocomial pneumonia. Excluding stock based compensation, non-GAAP R&D spending was $23.8 million during the third quarter of 2012 compared with $24.3 million for the same period last year.

General and administrative costs were $7.8 million during the third quarter of 2012, merely the same as third quarter of 2011. Including stock based compensation, non-GAAP G&A expense was $5.2 million during the third quarter, compared to $4.4 million in the same period last year.

Cash, cash equivalent and marketable securities totaled $352.4 million as of September 30, 2012, a decrease of approximately $15.3 million during Q3. This decrease was primarily due to cash used in operations, partially offset by $8.9 million received from GSK for its purchase of our common stock in August 2012.

Now turning to our guidance for non-GAAP expenses for 2012. For the full year we are reiterating our previous guidance for operating expenses to be in the range of $120 million to $130 million, and we currently expect to be at the higher end of that range. As a reminder, our guidance includes total research and development expense and total general and administrative expense, but excludes stock based compensation.

Now I’m going to turn the call back to Rick for our final closing comments. Rick.

Rick Winningham

Thanks Mike. It’s been a highly productive third quarter and I’m pleased with the progress of our programs and the performance of the team at Theravance. We are inspired in advancing and growing our diverse product pipeline to address certain areas of unmet medical need and improve the lives of patients. These are very exciting times for the company and we look forward to updating you in our next quarterly call.

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

Question-and-Answer Session


Thank you sir. (Operator Instructions). We’ll have our first question from Ian Somaiya from Piper Jaffray.

Rick Winningham



Ian, your line is open. Please check your mute button. Shall we move onto the next question sir?

Rick Winningham

Yes, lets move onto the next question.


The next question comes from Steve Byrne from BofA.

Steve Byrne - BofA

I wanted to drill into a little bit on this, on the partnered LAMA that you have. Is it your intention that this could be developed as a monotherapy drug going after say spiriva market or is it your preference to partner this into some type of LABA/LAMA or some kind of a combo drug?

Rick Winningham

Yes, thanks for the question Steve. I think right now we are fairly early in the development cycle for TD-4208, where the next study is extended dosing Phase 2 study in COPD using a nebulizer. So clearly we believe that there is a specific segment in COPD that could be satisfied with a nebulizer, a once a day nebulizer therapy.

The physical characteristics for 4208 should allow for it to be coformulated in either a nebulizer for a delivery of combination products or in a meter dose inhaler for combination products, but we haven’t got to that particular decision point clinically at this time. Right now our focus is on the development of the product in a nebulizer for that segment of the market that is the most comfortable in terms of patients with nebulizer treatment.

Steve Byrne - Bank of America

Okay, that’s helpful, thanks. And this next generation Gram-positive antibiotic that you have 1792, is it sort of a dimmer. What does it offer that the other Gram-positive antibiotics that are out there, there’s several in development and is it that there is some bifunctionality in this molecule that offers something unique.

Rick Winningham

Yes, this is a Heterodimer, so this is a molecule that really attacks Gram-positive organisms through two distinct mechanisms and its extremely potent, extremely potent product against MRSA. These are HVs etcetera.

The pharmacokinetics support the does of the drug being delivered once a day. It would support a program we believe, and eventually nosocomial pneumonian. In fact our thinking really has been for this program and other products that we have like it in the pipeline, that it’s really for the development of very serious infections.

We were encouraged by the agreement that we were able to execute with our pharm and that they are committed to the development of this unique molecule in Russia, where MRSA is a significant issue and in fact that we were able to negotiate a good agreement for them, a good agreement for us and that we would be able to use data that they would generate under ICH guidelines, for potential use outside the territories that our firm currently operates.

So we are talking about 1792. That has a very portent, at least very effective efficacious, at least thus far in the Phase 2 skin study that has been done and it looks like a very good margin safety versus a number of other compounds. So early on in the development that we look forward to update you on the progress of the compound as our pharm gets it further into the clinical development.

Steve Byrne - Bank of America

And then just lastly for your agreement with Merck, is there a specific target that is in mind for hypertension that is the focus of this collaboration or any specific molecules in development that are involved in this collaboration?

Rick Winningham

Yes, there’s a specific target in mind and at this point in time just we are not going to disclose the specific target. It’s a very competitive environment and I think it will service both Merck’s needs and Theravance’s needs to keep the target confidential at this time.

Steve Byrne - Bank of America

Okay, thank you.


The next question comes from David Friedman from Morgan Stanley.

David Friedman - Morgan Stanley

Hi, thanks for taking the question. Just on the LAMA/LABA, given that GSK seems to be potentially exploring a LAMA/LABA ICS combo; number one, if you can just discuss is there a change to your royalty rate for a triple combo drug versus just the LAMA/LABA tiered royalty. And then second, if that is the case, can you may be just describe what the MABA would be bringing, that would not be achieved with the LAMA/LABA program, given that one of the potential benefits of the MABA program was this triple combination. Thanks.

Mike Aguiar

So David, this is Mike. I think the really important piece to take away from this is what Rick started off the conversation with, is one of those key messages coming out of the ERS team, the importance of triple therapy in both area of COPD and potentially in asthma. And in recognition of that, we are actually looking at a multiple different path to come up with a triple.

Over hear Theravance thinks that MABA is an incredibly interesting compound in combination with a steroid, but we are looking at as you currently pointed out, the possibility of putting three separate chemical entitles into a single inhaler. And really this is to have multiple shots on goal, towards what we think could be a pretty substantial market.

So this really has not been a royalty management profit wise, but rather having a highest probability of bringing success. So I think today what we know, the MABA certainly would look very interesting if we were able to successfully combine that with a steroid and move that forward.

The triple in the single device, which we kind of call the closed triple, I think would be quite interesting. The challenge around that would be more of a regulatory and clinical issue, clinically due to the challenges around putting three separate entities into a single inhaler. All that being said again, the goal really is come up with best medicine to treat patients in, like I said, hopefully both COPD and asthma.

Rick Winningham

I would say that we do view and have viewed since back in 2002 to 2004 timeframe, as triple therapy being a very attractive benefit for patients and opportunity for collaboration with GSK and have a really strong data being presented with MABA, at ERS, whether you look at the peak bronchodilation activity of 400 micrograms once a day, whether you look at the serial measurements taken over 24 hours or the trough, all of which are encouraging.

And I think Mike characterized that correctly, as the MABA path forward at least from a development perspective and a combinational perspective is a little bit simpler, but we clearly want to win and there will be a potential for I think multiple products, given the products individual characteristics to when in this particular triple therapy category.

David Friedman - Morgan Stanley

Okay, thanks. Are the growth rates, is that something you can’t disclose or can you just also just describe what would happen with the LAMA/LABA royalty rates?

Rick Winningham

Yes, this doesn’t go off of the LAMA. LABA, it actually falls underneath the other agreement, under the collaboration. So it would be underneath the Relvar, Breo collaborations, so it defiantly has a different royalty structure than what LAMA/LAMB is. I don’t believe we’ve had any close out of this, no. But I think definitely a MABA as well.

So we have the MABA collaboration, the MABA royalty rates are off of the 2004 collaboration that have been disclosed. Triple therapy really calls underneath the LABA collaboration agreement and our consistent with the second product developed in that particular collaboration, which right now is going to be the LAMA/LAMB product, so…

David Friedman - Morgan Stanley

Okay, great. Thank you so much. I appreciate that.


The next question comes from Ronny Gal from Bernstein.

Ronny Gal – Bernstein

Good morning, good afternoon, thank you for taking my question. I’m trying to understand the timing for the second wave of products after the LAMA/LAMB and Relvar. Can you just give us like here about that three points first, what can we expect, when to expect GSK and yourself to make a decision about which product will report in to Phase 3 and for the triple therapy and roughly when should it take place and when should it go into Phase 3.

And then as on follow on, I guess the similar question around the disquantification drug with the timeline that you currently have, when would it be ready to face GMO that you never thought on before and the same question for the AVHD (inaudible).

Rick Winningham

Okay, thanks Ronny. So first to start out with MABA, I said in my remarks we look forward to giving you an update before the end of the year on the progression of that. I think if the MABA were to go into Phase 3, once we got the program started, it would take a similar timeframe of sort of a Relvar, Breo, LAMA/LABA program in terms of duration. After all we are developing a Physio PD, so I just look at the duration of trials there and it would be roughly in the same interesting vein.

The 1211, the product, we got to have a meeting with the regulatory authorities in the United States. The product is ready to go into Phase 3. We’ve done all the necessary work ready to start the Phase 3 program. Once I think we reach some sort of understanding with the regulatory authorities in the United States over the design of the Phase 3 program, we’ll be prepared to initiate, at least initiate the Phase 3 program relatively quickly.

I said before that we have partnership discussions that are currently underway with 1211. We would necessarily wait for those to finish before we started Phase 3, at lease in some form or fashion.

Now ADHD, we will have soon two programs under way; one in ADHD and one for fibromyalgia with TD-9855. We would expect data from both of those programs to be available at the end of 2013 and then depending on what those data look like, we would make our decision then. Mike, anything to add?

Mike Aguiar

I’m great.

Ronny Gal – Bernstein

Great, thank you.


The next question comes from Anant Padmanabhan from Cowen & Company.

Anant Padmanabhan - Cowen & Company

Hey, thanks for taking my question. I have a couple; first on, the UMEC, minimum effect dose issue. Besides the intergraded analysis that you recently presented, could you talk about any additional dosing studies or analysis that you might present in the coming few months and then I have a follow up.

Rick Winningham

Sure. So with regard to additional data coming out, the data really has been presented from the Phase 2 studies, so the net data, the way it will be coming is when we present the Phase 3 data. There is no additional dose ranging studies if you will, that are coming down the pipe here.

I do want to comment on a description I used there, just to make sure we are clear. You use the term minimally affected dose and I know that’s certainly a term that has gathered a fair amount of following at times and I’m not sure if its an accurate description of what we believe the FDA is actually looking for in this.

We think the FDAs view is more along the lines of the most appropriate efficacious dose and that really is language you can find and the description you can find in the aclidinium briefing document, which is essentially the FDA trying to find a dose that provides a clinically relevant response, not statistically significant, but a clinically relevant response and has adequate safety.

So again, just to draw that distinction there, which I think is quite important, because again our view there is a slight miss-interpretation of potentially how the FDA will be looking at this category. So again, with regard to the next data, I would say stay tuned. When we do have acceptances for the Phase 3 data, we will announce that and that’s likely to be at an upcoming conference.

Anant Padmanabhan - Cowen & Company

Okay, thank you and then on the velusetrag, does the Phase 2 program include a Q key study and then could you maybe remind us regarding any discussions you’ve had in the past with the FDA regarding the Q key issue and how this drug might be differentiated from Zelnorm.

Rick Winningham

Sure. Well, we’ve down a thorough QT with TD 5108 with no findings. So that particular box has already being checked. The distinction from Zelnorm was pretty well described in the November 2011 advisory committee at the FDA that looked at 5-HT4 agonist and the conclusion on the advisory committee in November 2011 was in fact that the new 5-HT4 agonist were quite different from older 5-HT4 agonist.

I mean the primary difference from our compounds, whether you look at TD-5018 or TD-8954, are the degree of selectivity which that they have for the 5-HT4 receptor as apposed to other 5-HT receptors. The other clear difference is metabolism and understanding metabolism that we have with 5108, 8954, both of which have shown to be relatively clean compounds.

The Alfa Wassermann agreement is very important for us, because this is a program that we’ve had more or less sitting on the shelf for some time due to the regulatory uncertainty and now this provides us with an avenue to get it moving forward in a patient population where there really are no alternatives.

Metoclopramide is used for gastroparesis, but of course that’s associated with severe CNS toxicity in some patients and I think we are very excited to be working with Alfa Wassermann to execute this phase 2 program and that’s successful bringing an important medicine forward.

Anant Padmanabhan - Cowen & Company

Okay, great, thank you.


The next question comes from Stephen Willey from Stifel Nicolaus.

Unidentified Participant

Hi there. It’s actually (inaudible) in for Steve today and thanks for taking the questions. The question on the batters panel which is coming up next month, can you just give us an idea of what sort of changed in the past few years, especially on the regulatory front or legislative front and why you decided to move this program ahead in pneumonia patients. Thanks.

Rick Winningham

Sure, that’s a great question. I think on the regulatory front there has been a considerable amount of discussion about appropriate end points in nosocomial pneumonia that our studies were conducted using clinical cure as the primary efficacy end point. We achieved non-inferiority on both studies in clinical cure.

The FDA began to discuss the appropriateness of some mortality end point as the best endpoint to use in the evaluation of medicines to treat 0x08 graphic

nosocomial pneumonia, based on that discussion and prior to any guidance being issued or being any guidance being issued at all. We went out and collected data that allowed us to create 28-day capital market survival curves and specifically in the population that the FDA seems to be interested in, which was the ATS IDSA population.

We presented that data, in fact showed non-inferiority in the 28-day, based on the 28-day capital mark curves and the ATS IDSA population. But I think this has been an ongoing discussion, public policy discussion within the FDA and I think our application at least provides evidence and quite a bit of information on this population on both the 28-day survival data as well as the clinical cure data. So I think it’s just a part of an ongoing evolution and what the FDA might call regulatory sciences that has led us now to the advisory committee on November 29.

From a legislative perspective, of course attached the PEDUFA reauthorization bill was the gain act, generate antibiotic incidence now, which was very, I would say pro clinical development piece of legislation really that was drafted to address the lack of antibiotics in the pipeline, to address resistant infections, which are a terrific public health threat today. So I think that’s one thing that has changed over the last few months. It has been in the passage of the gain act.

Unidentified Participant

And just so I have it clear, so is this meeting coming up at the end of next month, more this is what approval its going to be based upon or is this more do you feel of a discussion point of what’s in the new legislative and regulatory environment, the FDA would be looking for in future trials for this indication, thanks.

Rick Winningham

No, the advisory committee that we’ve been invited to attend is to review Theravance for the treatment of nosocomial pneumonia.

Unidentified Participant

Okay, great. Thanks very much.


(Operator Instructions) The next question comes from Ian Somaiya from Piper Jaffray.

Ian Somaiya - Piper Jaffray

I just wanted to follow-up on maybe a few questions that were asked previously. First on the FDA, Mike is there a forum left in 2012, the efficacy data or are we looking at 2013 now for the Phase 3 results.

Mike Aguiar

Now, we haven’t detailed any specifically, but there is no forum that I’m aware of that would be a proper stature if you will for that. So I think you are definitely out of 2012 into 2013. And then historically they are two big conferences of course, our ATS and ERS, so those feel like a potential venue, both. I would say stay tuned.

Ian Somaiya - Piper Jaffray

Okay. And then a question; I’ve gotten quite a bit, I would love to get your take on just when you think about the Phase 3 outcome, the Phase 3 UMEC/VI data. What in the data will the regulatory bodies need to see to get comfortable on the doses? I know it’s obviously been an investor concern and obviously we’ll pull that up to the regulatory concerns and the Phase 3 trial, that it seems like would be the ultimate answer. Maybe if you could just guide us in terms of what the data actually needs to show to get the regulatory body comfortable?

Mike Aguiar

Well, let me just start on kind of where we got the dosing decisions and the discussions we had to-date and then I’ll turn over to Rick to talk maybe a little bit about what he expects on the look in Phase 3. But I would like to point out that the dose and the dosing, so the amount of the medicine and the dosing schedule really came out the phase 2 of the program.

So that’s where we develop our dose ranging and are once a day, twice a day studies and then following up on those studies with that data in hand, as we went to the relent regulatory agencies and had discussions with them about what our Phase 3 program would like coming in.

So in our view, we largely have done the dose ranging and the dosing studies at this point and have had the right conversation. So we think that the basis of the data here for the support of 52.5 and 125 is quite solid in terms of the process we went through and the discussion we’ve had at that point in time and then I think the results of the Phase 3, largely geared that out as both of them quite good, so Rick and I are getting comments on how the FDA may look at the Phase 3 data.

Rick Winningham

No, I think that we’ve got a significant about of data, both 62.5 and 125. Both of those does are supported by the Phase 2 dose ranging, depending on which will pace through the Phase 3. What it looks at? One might think one or the others of those doses in combination with VI.

Its better but they both provide to pick up I’m afraid that Mike used earlier as single agents, 62.5 and 125, both provide clinically relevant changes and bronco dilations. So I think we are pretty optimistic about where we stand right now, with the selection of the 62.5 and the 125 and together with GSK we look forward to getting the applications submitted, beginning from the end of 2012.

Ian Somaiya - Piper Jaffray

The one we think about, the optician does, defining an optimal dose. Are we simply looking at (inaudible) or can you maybe kind of speak to the secondary endpoints that might guide us or help us get comfortable with the dose selection.

Rick Winningham

Well, I think you are looking in going to back to the aclidinium briefing document. What the FDA is looking for is really looking at the totality of the data. So clearly you want a does where you get a majority of patients that are responding with the clinical relevant responses measured by FF/VI.

There within FF/VI you will look at the trough FF/VI. One will look at the serial measures of FF/VI over 24 hours. You will also look at the adverse event, profile. I think clearly not only in the four efficacy studies that were described in the middle of the summer, but with the completion of the 12 months safety study of 125 UMEC and then 125 UMEC inline with 12 micrograms of VI. The safety was clearly supportive of both 62.5 and 125 in those studies.

So I think really whether you look at percent responders, whether you look at total, sort of serial FF/VI over 24 hours, trough FF/VI and use of rescue inhalers and clearly in the first very large dose ranging study the, GSK ran and was presented at Chest 2011; you did see less rescue inhaler use at the 125 dose.

So I think all those will be important. I think again, I don’t know that we would feel much better about the doses that we’ve put into and completed Phase 3 than what we do where we are really payable to – we believe we will be able to treat a significant percent of the population with COPD and provide a significant percent of that population with the clinically relevant response, 65.5 or 125. Mike, anything else to add?

Mike Aguiar


Ian Somaiya - Piper Jaffray

Okay, so just one last question then on Breo, just around it we add more filing. Would you be able to have discussions with the FDL, have you have discussion with the FDA regarding a potential outlook filing.

Rick Winningham

Yes, I think we had changed the language. You might have seen recently here in terms of what the outlook for that one was and then when we got to ERS, Daryl Baker from GSK actually mentioned that we are going to be stating an additional study where we have both doses, the steroid in the same study.

I think we feel pretty confident right now that we know what the FDA wants and what it will take to get the products approved. So we are working on getting the study underway and completed right now and we’ll update a folks little further down the line in terms of the actual filing strategies etcetera.

But I would say one thing, which is with a level of noise at one point in time how the FDA was not going to approve a new LABA ICA medicine in the U.S. absent a very large pre-approval safety study and we have had no indication whatsoever that that would be required. So I think we are feeling quite good about that path forward here, that there is a path here and that when we are done with this study that we will have a very solid package.

Ian Somaiya - Piper Jaffray

And how long is the follow up in this one study?

Rick Winningham

This is not a one-year study, it’s going to be a three months, a treatment study, so it’s a smaller study. We will have to wait till we get a little further into the program before we can give specific timing of expected completion. But again, its not a long term study or a long term safety study or something. Its just going to be a shorter end point.

Ian Somaiya - Piper Jaffray

Thank you very much.

Rick Winningham

Thanks Ian.


Thank you. It appears that we have no further questions on the phone. I would now like to turn the conference back to Mr. Winningham. Please go ahead sir.

Rick Winningham

All right, thank you very much operator and thank you all for joining us today and participating. We are extremely pleased with the progress of Theravance over the last quarter. In a much broader term, I certainly hope that all of the participants from the east coast are well and their families are well, and wish everyone a speedy recovery from this disaster. So, thank you very much.


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

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