Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to the Theravance Fourth Quarter and Full Year 2014 Financial Results Webcast and 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 is being recorded. And now, I'd like to turn the conference over to Eric D'Esparbes, Chief Financial Officer of Theravance. 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 the year and 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 developments and fourth quarter and full year 2014 financial results. A copy of the press release can be found on our website. 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, 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 concerning 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-K for the year ended December 31, 2014 to be filed with the Securities and Exchange Commission. I would now like to turn the call over to Mike Aguiar, our Chief Executive Officer. Mike?

Thank you, everyone, and good afternoon. 2014 was an important year for Theravance. During the year we successfully transitioned from a fully integrated research development and commercial-based biopharmaceutical company to a lean organization of approximately 10 employees, focused on maximizing the value of our collaboration products partnered with GSK. We had a number of successes in 2014 including the approval and launch in multiple countries of both RELVAR/BREO ELLIPTA which we will refer to in the call as BREO and ANORO ELLIPTA which we will refer to in the call as ANORO, as well as the completion of the spin-off of Theravance Biopharma from Theravance, Inc. Our primary disappointment in 2014 was lower than expected sales performance for both collaboration products and the associated decline in our stock price. That being said, we are entering 2015 in a strong financial position and are quite optimistic about the future prospects of Theravance, based upon recently improving uptake and market share for both products, and upcoming regulatory and clinical events in 2015 and 2016 for BREO that had the potential to further increase its overall market opportunity, product differentiation and sales trajectory. Regarding the spin-off, one of our primary objectives was to create an efficient, low expense company with a short path to profitability. Toward this end, I'm pleased to report that in Q4 only two quarters after the spin-off, Theravance has now achieved positive income from operations. Our second important goal of the spin-off was to return capital to shareholders through a combination of dividends or share repurchases. During 2014, we returned a total of approximately $58 million to shareholders via dividends during the third and fourth quarters. As we mentioned last week at the Leerink Conference, we remain comfortable with our overall levels of capital returns going into 2015 and…

Thanks Mike. Before I present our Q4 and full year 2014 financial results, I want to remind you that as a result of this operation of Theravance Biopharma from Theravance, Inc in mid 2014, we have reflected the financial impact of this as discontinued operation accounting which makes a number of adjusting entries to prior periods. This will result in limited comparability between Q4 and full year 2014 financials, our previously reported results and our future operating results. Therefore, I will primarily focus my commentary today on Q4 rather than full year 2014 results. During the fourth quarter, net sales of RELVAR/BREO and ANORO increased substantially and this translated into a significant increase for us in terms of royalties versus last quarter. Royalty revenues earned on net sales of RELVAR/BREO and ANORO for the quarter ended December 31, 2014 were $10.5 million. This is composed of $9.4 million for BREO and $1.1 million for ANORO, representing in total a 164% increase on the previous quarter. Full year royalties earned in 2014 were $18.4 million. The majority of the royalties for the fourth quarter were driven by BREO sales which grew 142% versus the third quarter. This was mainly due to growth in the U.S. and in Japan associated with the ending of the Ryotan restrictions. With regards to ANORO, sales growth was largely due to higher revenues in Japan, Germany and U.S. As Mike mentioned, we generated a profit from operation in Q4 2014. We believe that this is a significant event as it clearly signals a new phase into Company’s development. Our total revenues were $7.3 million. This is composed of the $10.5 million in royalties earned, plus $0.3 million of revenues from collaborative arrangement, less 3.5 million of amortization of intangible assets. Our operating cost for the fourth…

Thank you, Eric. In summary 2015 is an important and exiting year for Theravance. Our primary focus this year will be to maximize the value of our base business collaboration with GSK. This includes working with GSK to optimize our commercial success both BREO and ANORO, working toward a positive outcome on the BREO asthma SNDA and continuing the global roll out of both products. We are encouraged by recent commercial trends for both BREO and ANORO and remain optimistic about the future prospects of Theravance. I'd now like to turn the call over to the conference facilitator and open up the call for questions.

[Operator Instructions] And our first question comes from the line of Tyler Van Buren of Cowen and Company. Your line is now open.

Hi, thanks for taking my question. So, if we look at the IMS group trends over the last two weeks there is somewhat intriguing. So I wanted to get your thoughts on with respect to the sustainability of that new trend, I know there was a DTC campaign that started in the second or third week of January, wondering if perhaps getting some increased scripts from that, and how we should look at that moving forward, if its going to be in waves as well as some potential thoughts on perhaps less sampling and also may be just commentary on current rejection rates for the products. Thanks.

Thanks Tyler, its Mike. So a lot is going on commercially I think as everybody knows and there is a variety of things that are happening here. So, it's a little difficult to sort of tease out each of the individual contributions. I would actually get to that level. I would just say, we came into 2015 with the level of optimism based upon sort of where we were in a variety of things that were coming down the Pike. As you think about 2015, there were some big trends out there. So certainly one big thing is, we recently initiated the DTC with ANORO. This would be about the time when we would expect to see an impact on that. I can't guarantee that everything you're seeing with ANORO is related to that but month or so after the, the DTC starts is generally a good time to think about. Number two, there has been additional messaging with ANORO particularly related to the superiority versus tiotropium, there has been the promotional materials, so that’s probably having some level of impact as well. As you think about BREO, there has been a level of dislocation that's happening in the market this year related to changes at CVS Caremark, on particular Symbicort, the LABA/ICS came off and so there is some level of dislocation entrance happening around there. So I think that is another piece of what's going on. And then finally you hit upon an interesting question which is this couponing. If you go back to the third quarter, there was a fair amount of questioning we had about the level of couponing, that was going on. And this is certainly something that's continuing and probably is going to increase here and particular because one of the areas that we've had some efforts going to continue to close the gap as related to the perception at the physicians level coverage which is not quite as high as the actual levels of coverage. And so, we have - our work with GSK is a program in place, this should largely eliminate that this year. And it wouldn’t surprise me to see the level of couponing going up, but this is certainly something that Theravance supports quite a bit. So last part of your question around sustainability, we clearly think we’re on a growth trajectory here, I think these early 2015 trends are quite encouraging. I would love to see 11% week over week like we had this last week, I think that’s probably little optimistic for a long, long, long term trend. But clearly I think we’re feeling pretty good about where we are and the prospects for these products. So I hopefully I cover the major points, let me know if there's anything else you wanted to have me cover.

That was great. Thanks so much.

Thank you. And our next question will come from the line of Steve Byrne of Bank of America. Your line is now open.

Just wanted to clarify what Eric was saying there earlier about operating expense guidance for the year in the 17 million to 19 million range. Does that include or does not include stock-based compensation expense?

Thanks Steve for the question. It excludes stock-based compensation accrual.

Okay. And the level of accruals that you had in 2014 for those - for G&A is that reasonable to assume something similar in 2015?

I would say that the level of activities have changed, so we would expect the reduction should perform the sheer, - a reduction in number of employees as to the exact level of accrual, the calculations - some technical inputs. So, I can't comment and give guidance exactly that level but it should definitely be lower than what we had in 2014.

Yes Steve, it is Mike. The only thing I would add on top of that is, obviously there are fewer people here than there were certainly at many points a time in 2014. But also as we were completing the transition from Biopharma which we are mostly done with now but certainly impacted the Q4 results there, there are number of costs that are rolling through there that are going to be higher as we're are paying for them, and as a transition ops will go down. So, our expectation is that spending for both R&D and G&A will go down year-over-year.

So the first quarter could still be at a - somewhat elevated level and then trending lower in the subsequent quarters?

Mostly for the outside services I would say because all the other expenses are pretty much tied with ongoing operations based on the profile that we have currently. So, initial Q1 outside services will be slightly higher.

Okay. And then with respect to fourth quarter revenues, the ex U.S. RELVAR number was a big jump up and it seems like something near 20 million of that was in Japan. Do you have any information on how much of that was an inventory build versus how much of it is just underlying demand?

I don't have a breakdown for you. Clearly there was some level of inventory that went in. The big jump in Japan was coinciding with the end of the Rio time period and what that is again for everybody is during the first year of launch, these products can only be prescribed in two week dosage forms. And at the end one year you go to the full one month. So of course, there is some level of switching as you're putting the one month suppliers into the channel at that point in time. So there was some level of that of course. But also I would comment that, certainly from our perspective, the Japanese subsidiary of GSK does a pretty good job. They run a pretty good ship over there from what we have seen. So they are experiencing reasonable demand over there as well. But I don't have unfortunately an exact breakdown of that at this point.

And similar question on the ex-U.S. ANORO. It was much lower level but a meaningful jump in the fourth quarter, do you have any information about whether or not that's reflective of underlying demand?

Well ANORO is a little more complex picture. There is a lot of stuff going on there because of various country launches and all of that. So, we were relatively early into the launch phase and it wouldn't surprise me to see a little bit of lumpiness out there as you kind of, getting country A coming on board and then establishing run rate and all of that. So, I think most of what you are seeing is really just a consequence of a normal global rollout. If you recall the last time we were chatting at the end of the third quarter, ANORO was only launched in nine countries. We are up about 20 now and so there is just a lot of activities happening there. So again it wouldn’t surprise me to see a level of lumpiness as you go through the launch with ANORO and particular at this point.

Okay. Thank you.

Thank you. And our next question comes from the line of Gena Wang of Leerink Partners. Your line is now open.

Thank you for taking my questions and congrats on a good quarter. So, for 2015, wonder geographically Japan, Europe and U.S., where do you see the main driver for BREO and ANORO revenue contribution?

Thanks Gena. I don’t know that we have kind of guidance that are going to be at that level. Today clearly the big countries are the U.S., Japan and Germany, I think where we are seeing most of the initial uptick. As you look forward a little bit, of course you could say in the U.S., if we are successful with asthma, that's a potential to increase the growth trajectory in the U.S. And I think you will probably see a level of other countries picking up across the board. So I don’t have a perfect piece of guidance to give you on what the mix will be. Generally, historically if you were to go back a few years, we tended to think of the U.S. being roughly equal in dollar terms to the outside the U.S. business, meaning roughly one to one. We are running a little over that with the ex-U.S. being a little larger right now than the U.S. I think the actual results for 2014 were like 1.3 to 1. So, the ex-US is a pretty important market for us. And again now, we have to see how that enrolls but the other big driver there is the potential for the asthma approval in the U.S. that could add quite a bit of growth to the U.S.

Thank you. For the SUMMIT data timeline, it seems there is a slight pushback from mid-15 to second half or end of 2015. I wonder what are the changes there?

I’m not aware of any changes in guidance recently. We actually pulled it up here from 2016 into 2015. Three, four, five months ago, I feel exactly the timing on that. So we pulled it up. I'm not sure that anything is moved around per se beyond that. So there is been no timing changes that I'm aware of. So, again I’m kind of expecting it, second half of this year but that's not a change in terms of anything that I'm aware - maybe somebody is using slightly different terms but that really hasn’t really moved around from my perspective.

Okay. So, what would be the form of the data release?

It's just still to be determined what exactly the data is going to look like. Historically, what we have tried to provide is top level primary efficacy and safety data. Typically is what will come out in a release like this. As well as anything that we thought was important, so, what I mean by that is, if there is a smaller safety signal or if there was some other area of efficacy that warranted calling out. I would say that the reasonable expectation we try to present a comprehensive picture that has all of the relevant pieces while still saving enough information to get either published or the relevant conferences. So, I think it is reasonable to assume. You would look at primary efficacy end-point things like that in the safety summary but we haven't quite got to that point yet. It's a big study, 15,000 patients so you can imagine there is a lot of data in here and will be fair amount of time required to get it all cleaned up.

Thank you. And I have two more questions for Eric. So, what is the remaining milestones that you need to pay to GSK?

Zero. We have made all the milestone payments in 2014.

Okay, great. And what kind of the cash level you will feel comfortable to continue current dividend policy?

So, I think right now the way we are looking at this is that, we are comfortable with the level of capital return that we have put in place. And right now we are tracking above the revenue forecast we had used to establish the capital return policies. So from that perspective in our line right now, we don’t have anything else to really focus on. At this stage we are really more looking at from that perspective.

Gena, only thing I would add on top of what Eric mentioned is, generally I think about where we are from a capital returns perspective more along a sales ramp trajectory rather than a minimal cash direction. Clearly we think about minimum cash levels. But as we said several times that we are currently running above the model we use to determine what our total capital returns would be. So I don’t suspect that I will find myself in a minimal cash position at this particular juncture. So, again, we tend to look more at sales trajectory and where we are going rather than a specific number that we wouldn't want to go below.

Thank you.

Thank you. And our next question comes from the line of Stephen Willey of Stifel. Your line is now open.

Thanks for taking the question. Actually just a question about the Phase 3 on going triple therapy study that Glaxo is running with 10,000 patient registration. I’m just curious as to what your level of understanding is with respect to their need to hit both of the co-primary end points on the efficacy front and whether or not you think they can - kind of have a regulatory conversation at that point to see whether or not the data is adequate for registrational purposes?

Thanks Steve. I don’t want to get too far down the line of what we have asked and heard back from the regulators other than to say obviously we would not be running a 10,000 patient study absent the fair amount of regulatory dialogue. The 10,000 patient study, again just everybody on the line knows it the one for the closed triple. The way its designed is three arms you have the triple versus both BREO and ANORO. Obviously I would love to hit on all of those end points there but I really wouldn't won't to get into speculate whether you could hit on one or both or something like that and get through. I would say, let's get across the line first and see how we're doing. This is a big study as you think through the arms looking at exacerbations, the triple versus ANORO is probably a little easier comparison probably and the triple versus BREO is probably a little bit harder by comparison. So there is some asymmetry to how the study was powered with the - versus BREO on being a little bit larger. But again we will see how that study reads out other than, I would just say, we obviously hope to get on both of the primary efficacy end point comparisons.

Okay. And then justa quick question on SUMMIT. Can you remind us what the exclusion criteria is for the background medication? I guess specifically in the LABA arm and whether or not these patients are allowed to see any kind of longer term antibiotic or systemic corticosteroid usage as background?

I don't have the exclusion list here with me. Steve, I'm going to have to punt on that question. Generally what allowed in these types of study the rescue medications, but again I don’t have the whole list of exclusive medicines rather than speculate. I would probably get back to you, my apologies on that one.

No worries, thanks.

Thank you. And I'm showing no further questions from the phone lines. I'd like to turn the conference back to Mr. Aguiar for any closing remarks.

Great. Thank you very much everyone, and I appreciate your time this afternoon. Take care, bye.