Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to the Theravance Conference Call. 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) Today's conference call is being recorded. And now I'd like to turn the call over to Eric D'Esparbes, Chief Financial Officer. Please go ahead, sir.

Good afternoon, everyone and thank you for joining us. With me on the call today is Mike Aguiar, our Chief Executive Officer. On today's call, Mike will review the highlights from the quarter and then I will review our financial results. Following our comments, we will open up the call for questions. Earlier today Theravance issued a press release announcing recent corporate development and third quarter 2014 financial results. A copy of the press release can be downloaded from our website. Before we get started, we'd like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance. Forward-looking statements include anticipated results and other statements regarding Theravance's goals, plans, objectives, 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 containing factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the Company's press release and Form 10-Q for the quarter ended September 30, 2014 to be filed with the Securities and Exchange Commission. I'd now like to turn the call over to Mike Aguiar, our Chief Executive Officer. Mike?

Thank you, Eric. And good afternoon, everybody. Before I discuss the Q3 business results, I have several personal items to cover. First, I'd like to ask everyone to join me and welcoming Eric D'Esparbes to Theravance team. Eric brings a wealth of financial and tax return experience that we believe will be a significant asset as we work to optimize the financial performance of the company. I hope over the comping months many of you have the opportunity to meet and interact with Eric. Also today we announced that William Waltrip has been appointed as a new Chairman of the Board of Director and that Rich Winningham is stepping down. The transition of the chairman role was part of the overall plan to complete the separation of Theravance Biopharma from Theravance, Inc, once we are confident that the new leadership, systems and processes were ready to support a standalone public company. I am very lucky to work closely with Rick for nearly a decade here at Theravance. His leadership support and mentoring have been very important to me, and I wish him all the best as he strives to develop additional medicines at Theravance Biopharma that can make a difference in patients' lives. Importantly, I am also confident that the chairman role is in great hand with Bill, who has been in the Board since 2000, and most recently as a lead independent director. Also today we announced the appointment of Terrence Kearney to the Theravance Board of Directors. Terry got a broad background in healthcare including senior positions at Hospira and Baxter, and currently sits in the Board of Vertex. I believe the Terry will be a strong addition to our Board and look forward to working closely with him as well as we continue to build the company.…

Thank you, Mike. Before I discuss the results from the quarter, I would like to thank Mike and the Theravance Board and to say how I am proud I am to join the management team. Also before I present the Q3 results, I want to remind you that Theravance completed the separation and spin-off of Theravance Biopharma from Theravance, Inc earlier this year. And a financial impact of this is reflected as discontinued operations accounting which makes a number of adjusting entries to prior period. As a result, there is a limited comparability between Q3 financials, our previously reported results and our future operating results. Royalty revenues received on net sales of RELVAR/BREO and ANORO for the quarter ended September 30, 2014 were $4 million. The majority of royalties were driven by RELVAR/BREO sale which grew 40% versus the last quarter. This growth was mainly driven by a steadily improving coverage and access. Looking forward, we expect additional improvements in coverage for BREO as disclosed last quarter where from January 1, 2015, CVS Caremark will move BREO from its current non formulary position to a Tier 3 unrestricted position and Express Scripts will move BREO from its current Tier 3 position on the basic formulary to preferred Tier 2 unrestricted position. With regards to ANORO, sales were down versus the second quarter due to the initial stocking of the US wholesalers during Q2 and the gross to net charges related to discounting and couponing. Regarding the levels of couponing in product sample mentioned by GSK on their call, we have received a number of investor calls expressing concern at the level of sampling and couponing is too high. I would like to note that Theravance does not believe that this is the case. As couponing and sampling are integral components…

Thanks, Eric. Looking forward, we remain excited about the opportunities available at Theravance. Our immediate priorities are to complete the transition to a standalone entity and importantly to continue working with GSK to achieve our goal of maximizing the value of commercial assets. As I mentioned earlier, there are number of catalysts and actions for the potential for significantly increase the launch slope and long-term potential for both BREO and ANORO including the continued global rollout of both products. Ongoing improvements in coverage and reimbursement in the US, the potential approval of the BREO asthma NDA in April, results from the SUMMIT mortality study with BREO in 2015, and the COPD Sanford lung study in 2016. We believe that Theravance is well positioned from a strategy, product portfolio and cash position. Our long-term priorities are to maintain low overall cost structure, reduce our overall corporate cost to capital, and to build a recurring revenue business, attractive to investors seeking capital returns from dividend payout and potential future share repurchases. I'll now like the turn call over to conference facilitator and open the call for questions.

(Operator Instructions) And our first question comes from the line of Tyler Van Buren with Cowen and Company

Hi, there. Thanks for taking the question. On GSK's call about a week ago, I think they mentioned that the ANORO rejection rate is still fairly high at around a third to 40% of scripts, so I am curious just if you could may be contrast that with BREO and the current rejection rate and accordingly as we see formulary positions approve -- improve here in the near future and coverage continue to approve. What are your thoughts on the doctors' responses to the improved coverage and how that might affect prescriptions? I think that commentary will be very helpful. Thank you so much.

Hi, Tyler. Thanks for the question. You are right on the number of it, GSK quarter related to ANORO. I am not sure we've actually ever disclose any specific number related to BREO, but certainly early in the BREO launch, there was a very high percentage of overall rejections for a lack of coverage. As you probably remember, the initial coverage for the first few months of the BREO launch was quite low principally related to timing. If you recall, we launched in the fourth quarter of last year. And it's a little bit difficult to get on 2013 formularies say in the fourth quarter. So I would say looking on a month by month basis, ANORO was certainly ahead of where BREO was at that particular point in time. Today of course those numbers have changed, BREO is in a better overall position principally because it's been on the market for a longer time. But ANORO is certainly doing quite, quite well. And I think overall from a reimbursement perspective, GSK has done a very good job this year and securing overall reimbursement status for both products. So looking forward, our expectation is that we are going to continue to improve and in over time hopefully approach where the current market leaders are in terms of overall reimbursement. I am not sure that I have a specific forecast I will be comfortable giving on our rejection rate today. I would like to highlight comment that Eric made here, we do get a number of calls following the GSK call where there were some level of concern about the discussion that Andrew have regarding the overall level of couponing and free sample that were going on. And this is absolutely critical in the launch. When you have patient who comes in and is prescribe to medicine, if they don't have coverage, more likely than not without some sort of couponing they would not fill that overall prescription. So there is a lot of work going on, a lot of investment going on by GSK to number one improve the overall reimbursement status and I think just back as our history here will certainly demonstrate that. And number two, to facilitate patients today who don't have coverage to get on this medicine. So I would just say stay tune, we are looking forward and expected these metrics will continue to improve over time. Last point, there are pieces of business that of course had been won and still are reflected in scripts. If you look at the recent wins that we had with BREO at Express Scripts and Caremark those now kicking for example until lot of the turn of the year. So we do expect to see coverage continue to improve going forward.

Thank you. Our next question comes from the line of Steve Byrne from Bank of America Merrill Lynch. Your question please. Sarah – Bank of America Merrill Lynch : Hi, this is Sarah on for Steve. Thanks for taking the question. So since you control the relationship I guess of GSK. Would you be able to provide some color on when you would expect MABA Phase 3 study to start? And I guess the priority level for triple therapies?

Thanks, Sarah. With regard to MABA, I don't have an update at this point in time. The last guidance we gave we were not expecting a Phase 3 program to start in 2014. And we are in the middle right now where we have characterize externally as the Phase 3 enabling work, so that consist of fairly wide variety of pre clinical as well as clinical study to complete the transition from discussed device into the ELLIPTA device and also in combination with from transition FP into FF. So that process is underway today. Of the two programs that we have going towards triple therapy which is number one MABA FF and then what we have called the close triple which is the combination of umeclidinium/ vilanterol and FF, clearly that the close triple is ahead. It is already into Phase 3 now and moving forward. So we had two shots on goal. We are pursuing a one which is in Phase 3 today. Again that's a close triple and then MABA FF program is working its way towards completion of the overall Phase 3 enabling work. So we do have an update the MABA program. We will provide that but again the overall triple program I think is in pretty good shape given that the close triple is currently in Phase 3.

Thank you. (Operator Instructions) And our next question comes from the line of Gena Wang from Leerink Partners. Your question please.

Thank you for taking my question. So it seems that there is a disconnect between IMS Script and reported revenue. I wonder what the IMS capture rate is and gross to net for ANORO and BREO. And a related question for ANORO, I am wondering what's the treatment duration that the free trial offers and what is the percentage of this free trial offer turned into commercial script? And I will have a follow up question.

Sure. So with regard to your first part which was the disconnect or apparent disconnect or potential disconnect between IMS data and reported scripts, as I reported revenues, early in the launch you tend to have a lumpiness to reported sales principally due to things like initial wholesale and inventory stocking that certainly impacted ANORO sale this quarter. As you recall last quarter we put about $10 million into the channel. And so during this quarter, you had some portion of the time where you are burning that off. That was highly expected certainly by Theravance here. We've seen this happen over and over with product launches where once the initial launch, inventory goes out, and it takes a period of time for the wholesaler inventory to get to the right level. So it did take a couple of months while a wholesaler to adjusting to the expected flow going forward of sales. So I am not sure in aggregate per se that there is a significant difference between the IMS scripts and the overall reported sales, it is just the timing difference right now as we are working through the launch. And again that is pretty typical and is highly expected on our part. Your second question was regarding the treatment duration of the samples and the percentage conversion from a free sample into paying customers. The second one, I don't have that data here. So I am not sure what the actual conversion rate is from a sample into a paying customer. The treatment duration is 14 days, so samples are 14 day a vial so you would have to have two samples to have full month's supply of either ANORO or BREO in sample form.

Thank you. So my last question is could you provide an update on operating loss carry forward, and would you expect your tax rate will be once operating loss complete offset the tax payment?

Yes. We haven't -- we don't have NOLS updated on a quarterly basis. We had approximately $1.3 billion coming into this year. You would have to work through the spending to date that would obviously add to the NOLs and you would subtract after that to gain associated with the Theravance Biopharma, a dividend was going to be in the neighborhood of $400 million. So while we don't have exact number if you stick to $1.3 billion, subtract out year to date spending and added that and then took out the gain on the transaction, you are probably somewhere in the neighborhood of $1 billion. But again that's a guess as opposed to actual number. We don't complete the actual NOLs calculation till the end of the year. On an going basis that tax rate once we burn through NOLs will be just standard US corporate taxes where US entity so it will be neighborhood of 35%. But again coming out of the share we will probably have somewhere in the neighborhood of $1 billion worth of NOLs to burn through before we actually have cash expenses associated with the taxes.

Thank you. Our next question comes from the line of Brian Skorney from Robert W. Baird. Your question please.

Good afternoon. This is Morgan on for Brian. I just had a quick question. I am sorry if I miss this earlier. I am just wondering with the size of SUMMIT and Salford study. Thanks.

Sure. So SUMMIT again is a mortality study with BREO and COPD. We previously had guidance out, this will complete in 2016, we pull that up our last quarter, and it looks to us right now that we are going to be completing that in 2015. As you know, this is an event driven study, so it is not really a question of timing, it is a more question of number of events so it could be little sooner or little bit late and that we have to continue to watch that going forward here. But the most recent guidance was there around the middle of the year we were hopeful to see results from the SUMMIT study. Salford on the other hand is 2016 for the COPD study. We haven't been any more specific than that, whether it is first half or second half. Right now we have to see that continues to rollout. The asthma study is only behind that right now, so COPD is really where the majority of the clinical data is coming out here, middle of the next year SUMMIT and in 2016 Salford.

Okay, great. And then I have one more question. So with the open triple so the Phase 3 enabling work that you are working through right now, that just converting other, you were talking about earlier occurring in discuss into (inaudible) correct?

Yes. There is two pieces to it. One is we are combining MABA with a different steroid. So if you recall previously they work with then in combination with FP, we are doing this now in combination with FF which is the once a day steroid. And in addition to that we are putting it into the ELLIPTA device versus the discussed so there is a fair amount of work going on in that program right now to convert from one steroid to other and then one device to the other as well.

Thank you. And we do have a follow up question from the line of Gina Wang from Leerink Partners Your question please.

Thank you for taking my follow up. So just wondering given current relatively weak sales, wondering how should we think about dividend payout for Q1, 2015?

Yes, great question, Gina. Thanks for that. Today, looking forward here I think we are very confident where we are with the dividend. Obviously we did quite a bit modeling before we initiated the dividend; we understand the commitment around that. And we did not model our highest scenarios in terms of deciding what level of overall dividend we will be paying. So sitting here today, I would make two comments. One is we actually did model the dividend forecast on numbers that are lower that where we are today, so we took a pretty conservative view in terms of the overall forecast when we decided to initiate a dividend. Clearly there is growth associated in that forecast going forward. And then number two based on where we are today, overall cash position and in particular looking at the catalysts coming forward for both products I think we are pretty comfortable. Again, looking forward here, there are some significant catalysts that are coming down the pipe. Number one, we remain quite committed to working very closely with GSK to optimize the launch. There is a lot of activity going on that front in terms of the overall marketing mix and various components to that. Number two, the upcoming asthma PDUFA date. This is certainly probably the single most important event I have been watching here going forward. Roughly speaking the US asthma market is in the neighborhood of 25% of the global dollar value of the LABA/ICS market, so this obviously a very important potential approval coming up here. And that has a potential to significantly increase the overall economic opportunity available to BREO in the US and in globally. And again SUMMIT later this year, if SUMMIT hit, it would be the only LABA/ICS it has shown a mortality benefit. So looking forward we see significant catalysts coming forward. There is a potential to significantly increase the overall launch trajectory of the products.

Thank you. Our next question comes from the line of Stephen Willey from Stifel. Your question please.

Yes, hi, thanks for taking the question. Do you managing SUMMIT, is that all cause mortality or is that mortality based on some kind of adjudication process that's actually the COPD specifically.

Thanks for the question. This is going to be all cause mortality, and that's the way you typically run these studies, clearly there will be various adjudication going through there on assignments of causes of mortality and all that, but it is an all cause mortality study.

Okay. And you know, I am presuming the control arm again is just positions some choice with respect to treatment?

Yes

And you know what the range of treatment looks like at this point or presumably these patients are getting cycle through a variety of different options.

Yes. So I certainly haven't seen any interim data at all. I would suspect that it is going to be the usual group of product that is out there. I couldn't honestly tell you what the mix is on that but again I would suspect when it is done you will see all the representative products that are in this space probably in some level of proportion to their availability out there in the market today.

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

Great. Well, thank you very much, operator. And thanks again to everyone for participating today. Have a great day.