On August 6, 2020 Theravance Biopharma, Inc. ("Theravance Biopharma" or the "Company") (NASDAQ: TBPH) reported financial results for the second quarter ending June 30, 2020 (Press release, Theravance, AUG 6, 2020, View Source [SID1234563195]). Revenue for the second quarter 2020 was $15.0 million. Operating loss was $72.2 million, or $55.6 million excluding share-based compensation expense. Cash, cash equivalents and marketable securities totaled $438.3 million as of June 30, 2020.

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"This quarter was the first quarter for Theravance Biopharma working completely remotely, with the exception of our essential lab workers, and I could not be more proud and grateful of the work the team has been able to deliver. We will continue to incorporate the key learnings into our processes and will work to ensure that we become an even stronger company post-pandemic," said Rick E Winningham, Chief Executive Officer.

"Our commercial team continued to find ways to sustain market share momentum with YUPELRI, coordinating meaningful interactions with their accounts by leveraging digital and virtual selling tools. Given the challenges in a market which was and continues to be negatively affected by COVID-19, we were able to improve YUPELRI market share. Moving into the third quarter, we are tailoring our sales model to a hybrid model – in-person and remote call options – that can be modified depending on state and local restrictions, as well as customer preference. This allows our field teams to customize their approach based on what’s right for them and their customers, always keeping health and safety the priority. We continue to forecast YUPELRI becoming a cash-flow positive brand in the United States (US) by the end of 2020."

"We continue to move our clinical programs forward despite ongoing challenges from the global pandemic. These challenges have resulted in delays in our late stage clinical programs for ampreloxetine, a norepinephrine reuptake inhibitor (NRI) under evaluation for the treatment of symptomatic neurogenic orthostatic hypotension (nOH), and TD-1473, a gut-selective oral JAKi in development for inflammatory intestinal disease in Crohn’s and ulcerative colitis. We continue to expect both programs to readout in 2021. Regarding TD-8236, our lung-selective dry powder inhaled pan-JAK inhibitor in development for inflammatory lung disease, we expect to report data from the asthma Phase 2 program in fourth quarter 2020."

"During the second quarter, the team leaned into our organizational expertise in respiratory disease and moved our pre-clinical candidate TD-0903 into the clinic at an accelerated pace in response to the COVID-19 pandemic. We designed TD-0903 to be a lung-selective nebulized JAKi with the intent of addressing lung hyperinflammation in both the acute and chronic setting. In June, we completed Phase 1 and entered a Phase 2 study in the United Kingdom (UK) exploring the potential of TD-0903 to treat hospitalized patients with Acute Lung Injury (ALI) caused by COVID-19 to prevent progression to Acute Respiratory Distress Syndrome (ARDS) and the need for assisted ventilation. We are now opening additional sites in other countries to accelerate TD-0903’s progression in the clinic."

Corporate Highlights

YUPELRI (revefenacin) inhalation solution (lung-selective nebulized long-acting muscarinic antagonist (LAMA)):

First and only once-daily, nebulized bronchodilator approved in the US for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD), reimbursed by Part B Medicare program
COVID-19 resulted in decreased overall market demand, yet YUPELRI increased market share; trajectory could continue to be affected by COVID-19 in third quarter
Data as of April 2020 show that YUPELRI achieved a 91.8% share (up from 87% in Q1 2020) of the nebulized LAMA market and a 16% share (up from 13.7% in Q1 2020) of the long-acting nebulized market; market data reflects IQVIA Retail Data and the Durable Medical Equipment (DME) market segment
Key Pipeline Progress

The COVID-19 pandemic continues to be a threat to public health throughout the world, however Theravance Biopharma is encouraged by the ability to initiate the reopening of clinical sites for new patient screenings for ampreloxetine and TD-1473. The health and safety of the community Theravance Biopharma serves is the Company’s utmost priority; therefore, the Company is continuing to work closely with investigator sites and vendors to help ensure their safety and that of the study participants as they contribute to our clinical programs. In mid-March, both programs paused new patient screenings for four weeks to allow sites to focus on supporting patients who were already in screening or already randomized and preserve data collection during this period. Screening of new patients resumed in mid-April, and Theravance Biopharma has seen a significant percentage of sites reopen to new patients globally.

By design, both ampreloxetine and TD-1473 clinical programs employ geographical diversity, which has allowed the Company to continue assessing where to reopen sites based on where the pandemic is waning. That said, the pandemic shows no signs of stopping, and Theravance Biopharma expects ongoing challenges as new "hot spots" emerge. We continue to expect both programs to readout in 2021.

Ampreloxetine (TD-9855, norepinephrine reuptake inhibitor (NRI) for symptomatic nOH):

Ongoing registrational program in symptomatic neurogenic orthostatic hypertension (nOH) comprised of two studies:
Phase 3 four-week treatment study (SEQUOIA) to demonstrate efficacy, with data expected in 2021
Phase 3 four-month open label study followed by a six-week randomized withdrawal phase (REDWOOD) to demonstrate durability of response
Given the ongoing pandemic and the fragility of the patient population, the Company, with input from the Food and Drug Administration (FDA) and other regulatory agencies and ethics committees, is working to adjust the protocol for these clinical trials to accommodate a decentralized approach in which patients can participate in the studies from home without needing to attend clinic visits
TD-1473 (gut-selective oral pan-Janus kinase (JAK) inhibitor for inflammatory intestinal diseases):

Phase 2b/3 induction and maintenance study in ulcerative colitis (RHEA) and Phase 2 induction study in Crohn’s disease (DIONE) progressing
Enrollment continues in both studies, and data from the Phase 2b portion of the ulcerative colitis and Phase 2 Crohn’s disease studies is expected in 2021
TD-5202 (gut-selective irreversible JAK3 inhibitor for inflammatory intestinal diseases):

TD-5202 was generally well tolerated as a single oral dose up to 2000 milligrams and as a twice-daily oral dose up to 2000 milligrams total per day given for 10 consecutive days in healthy subjects
TD-8236 (lung-selective inhaled pan-JAK inhibitor for inflammatory lung diseases):

Part C extension portion of the Phase 1 trial assessing additional biomarkers in moderate to severe asthmatics underway with results expected in 4Q 2020
Phase 2 lung allergen challenge study initiated in 4Q 2019; data expected 4Q 2020
TD-0903 (lung-selective nebulized pan-JAK inhibitor for treatment of Acute Lung Injury caused by COVID-19)

Completed Phase 1 study to assess the safety, tolerability and pharmacokinetics of single-and multiple-ascending doses (SAD/MAD) in healthy volunteers; data expected 4Q 2020
Phase 2 study was initiated in the UK on June 25, 2020; to expedite enrollment in the study, we are opening additional sites in other regions including Europe and the US, pending approval by the relevant regulatory agencies and ethics committees
Economic Interest

TRELEGY (first once-daily single inhaler triple therapy for COPD)1:

2Q 2020 net sales of $241 million; Theravance Biopharma is entitled to approximately 5.5% to 8.5% (tiered) of worldwide net sales of the product
GSK sNDA approval for asthma expected 2H 2020; The European Medicines Agency accepted the regulatory submission for the treatment of asthma in adults supported by the Phase III CAPTAIN study
GSK sNDA for survival benefit claim over ANORO is under review; FDA postponed the Advisory Committee Meeting originally scheduled to review this sNDA on April 21, 2020; rescheduled Advisory Committee has not been publicly updated by FDA
Notes:
1 As reported by Glaxo Group Limited or one of its affiliates (GSK); reported sales converted to USD; economic interest related to TRELEGY (the combination of fluticasone furoate, umeclidinium, and vilanterol, (FF/UMEC/VI), jointly developed by GSK and Innoviva, Inc.) entitles Company to upward tiering payments equal to approximately 5.5% to 8.5% on worldwide net sales of the product (net of Theravance Respiratory Company, LLC (TRC) expenses paid and the amount of cash, if any, expected to be used in TRC over the next four fiscal quarters). 75% of the income from Company’s investment in TRC is pledged to service outstanding notes, 25% of income from Company’s investment in TRC is retained by Company.

Innoviva and Theravance Respiratory Company

On June 10, 2020, we disclosed in a Form 8-K our objections to Theravance Respiratory Company, LLC ("TRC") and Innoviva, as the manager of TRC, regarding TRC’s proposed use of funds to invest in certain privately-held companies. On July 16, Innoviva and TRC filed a complaint in Delaware Chancery Court seeking an order establishing that the arbitration award from the parties’ 2019 dispute conclusively established that (a) Innoviva possesses the authority as Manager of TRC to cause TRC to make such investments and (b) Innoviva possesses the authority as Manager of TRC to cause TRC to reserve cash to make such investments. The Court directed the parties to refer certain relevant questions raised by the complaint to the arbitrator in the 2019 dispute, who in turn determined that the 2019 proceedings did not resolve the issues currently in dispute. On August 5, Innoviva and TRC voluntarily dismissed the complaint, without prejudice. We are pursuing and intend to continue to pursue the protection of the interests of the Company in this matter consistent with the dispute resolution procedures of the TRC LLC Agreement, including, if necessary, the initiation of a new arbitration proceeding.

Second Quarter Financial Results

Revenue: Total revenue for the second quarter of 2020 was $15.0 million, comprised of collaboration revenue of $5.5 million primarily attributed to the Janssen collaboration agreement for TD-1473 and $9.5 million in Mylan collaboration revenue related to net sales of YUPELRI. Total revenue for the second quarter represents a $11.1 million decrease over the same period in 2019. The decrease was primarily due to a $2.0 million decrease in Janssen collaboration revenue and a $18.5 million decrease in licensing revenue. The decrease in Janssen collaboration revenue was due to a smaller portion of revenue recognized in the second quarter 2020 related to the $100.0 million upfront payment from the Janssen collaboration agreement that was entered into in February 2018. The decrease in licensing revenue was due to an $18.5 million upfront payment received from Mylan associated with an amendment signed in June 2019 for the commercialization and development rights to nebulized revefenacin in China and adjacent territories. The overall decrease in revenue was partially offset by a $9.4 million increase in the Mylan collaboration revenue related to YUPELRI.
Research and Development (R&D) Expenses: R&D expenses for the second quarter of 2020 were $62.4 million, compared to $46.4 million in the same period in 2019. The $16.0 million increase was primarily due to a $12.8 million increase in external-related expenses related to the advancement of our priority programs, notably the continued progression of ampreloxetine and TD-8236, and the initiation of TD-0903 for COVID-19 and a $2.4 million increase in share-based compensation expense. Second quarter R&D expenses included non-cash share-based compensation of $8.1 million.
Selling, General and Administrative (SG&A) Expenses: SG&A expenses for the second quarter of 2020 were $24.8 million, compared to $22.2 million in the same period in 2019. The $2.6 million increase was primarily attributed to a $2.9 million increase in share-based compensation expense, a $0.3 million increase in employee-related expenses, and a $0.3 million increase in facilities and other expenses. These increases were partially offset by a $0.8 million decrease in external-related expenses related to consulting services. Second quarter SG&A expenses included non-cash share-based compensation of $8.5 million.
Cash, Cash Equivalents and Marketable Securities Cash, cash equivalents and marketable securities totaled $438.3 million as of June 30, 2020.
2020 Financial Guidance

Operating Loss (excluding share-based compensation): The Company is not changing financial guidance and expects full-year 2020 operating loss, excluding share-based compensation, of $205 million to $225 million. Operating loss guidance does not include:
Royalty income for TRELEGY which the Company recognizes in its statement of operations as "income from investment in TRC, LLC;" or
Potential future business development collaborations
On June 22, 2020, GlaxoSmithKline plc (GSK) completed an offering of $300 million of exchangeable senior notes due 2023; $280.3 million of which are exchangeable into existing ordinary shares of Theravance Biopharma held by GSK. The notes are guaranteed by GSK and will be exchangeable at the option of noteholders on any business day on or after September 1, 2020, under certain terms and conditions outlined in the offering documents. The Company will not be issuing any new shares in connection with this offering, and the Company did not receive any proceeds from the GSK offering.

Conference Call and Live Webcast Today at 5 pm ET

Theravance Biopharma will hold a conference call and live webcast accompanied by slides today at 2 pm PT / 9 pm GMT. To participate in the live call by telephone, please dial (855) 296-9648 from the US or (920) 663-6266 for international callers, using the confirmation code 8098314. Those interested in listening to the conference call live via the internet may do so by visiting Theravance Biopharma’s website at www.theravance.com, under the Investor Relations section, Presentations and Events.

A replay of the conference call will be available on Theravance Biopharma’s website for 30 days through September 5, 2020. An audio replay will also be available through 8:00 pm ET on August 13, 2020 by dialing (855) 859-2056 from the US, or (404) 537-3406 for international callers, and then entering confirmation code 8098314.