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 (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.

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.

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…

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…

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

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.

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.

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.

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?

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.

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.

Our next question comes from John Stephenson from Summer Street.

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

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.

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

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.

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?

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.

What doses were those?

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

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?

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.

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.

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?

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.

Our next question comes from Brian Skorney from 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?

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.

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.

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.

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.

Our next question comes from Ryan Martins from 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?

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.

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?

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.

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.

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.

Our next question comes from Howard Liang from 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?

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.

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?

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.

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.

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.

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?

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.

Our next question comes from Tom Russo from 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?

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.

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.

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.

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

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?

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.

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

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.

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