Theravance Biopharma, Inc. (TBPH) Q2 2018 Earnings Report, Transcript and Summary

Ladies and gentlemen, good morning. At this time, I’d like to welcome everyone to the Theravance Biopharma 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 would like to turn the call over to Alex Dobbin, Head of Investor Relations. Please go ahead.

Thanks Candice. Good morning, everyone. Thank you for joining our conference call and webcast to discuss our Second Quarter 2018 Financial Results. With me on the call today are Rick Winningham, Chief Executive Officer; Renee Gala, Chief Financial Officer; and Brett Haumann, Chief Medical Officer. Following our prepared remarks, we’ll open the call for questions. A copy of the press release is associated with today’s call and slides accompanying this call can be downloaded from our website, or you can call Investor Relations at (650) 808-4045, and we’ll be happy to assist you. Before we begin, I’d like to direct your attention to Slide 2 of the deck and to remind you that this conference call will contain forward-looking statements which involve certain risks and uncertainties, including statements about our product pipeline; expected benefits of our products; the anticipated timing of trial results and regulatory filings; and expected financial results. Information concerning factors that could cause results to differ materially from our forward-looking statements is described further in the company’s filings made with the Securities and Exchange Commission. And with that, I’ll call your attention to slide 3, and hand the call over to Rick Winningham.

Thanks, Alex. Good morning everyone and thank you for joining us. 2018 in unfolding as a year of great progress with Theravance Biopharma, as we focus on strategic priorities for the company. Those programs where we think there is the greatest opportunity to create transformational medicines. Today we are pleased to report updates on two of those strategic priorities with positive results from both the phase 2 trial of TD-9855 in neurogenic orthostatic hypotension and from the phase 1b trial of TD-1473 in ulcerative colitis which complement the data previously reported. With both programs we’ve also completed exhaustive and extensive regulatory discussions to inform the progression of these programs in the pivotal registrational studies. Starting with 9855, our goals in the phase 2 study were to demonstrate a positive therapeutic impact on blood pressure and symptoms of nOH and to show durability of effect as well as safety and tolerability. We believe that the topline four week data detailed today in a separate release, strongly support advancing TD-9855 in to a phase 3 registrational program. In a few minutes Brett will provide additional perspective on the phase 2 data, but we’re pleased with these results and especially gratified by the responses from key opinion leaders in neurology with whom we’ve discussed the dataset. These clinicians support the view that these data are clinically meaningful and highly encouraging and that 9855 has the potential to be a transformational treatment for this debilitating condition in need of new options. We concluded our discussions with FDA on the design of the pivotal phase 3 registrational program and we plan to initiative the program in late 2018 or early 2019. Earlier this year, we announced a global collaboration with Janssen for the development and commercialization of 1473 in inflammatory intestinal diseases and plans to move forward in both ulcerative colitis and Crohn’s disease. As Brett will detail in a few minutes we are excited to share our learnings today from cohorts 2 and 3 of the phase 1b study in ulcerative colitis patients, rounding up findings from previously reported first cohort these results demonstrated localized biological activity in minimal systemic exposure with a favorable safety and tolerability profile. Data from all three cohorts underpin our confidence in accelerating to a phase 2b/3 induction and maintenance study in ulcerative colitis and provide a basis to initiate a phase 2 induction study in patients with Crohn’s disease. Our regulatory interactions are progressing well around Revefenacin, our once daily nebulized long acting muscarinic antagonist currently on file for review and today we introduced our brand name for Revefenacin Yupelri. For Theravance Biopharma 1473, 9855 and YUPELRI all represent strategic priorities and each of which was internally discovered and developed by an R&D engine which serves as an important driver of longer term value for the company. As an example of how we continue to bring new programs from research to the clinic are novel inhaled JAK inhibitor for serious respiratory diseases, TD-8236 is on track to advance in to first in human studies later this year. This program plus other research stage of projects comprising our next generation R&D portfolio where we leveraged our deep institutional knowledge and expertise in therapeutic area such as respiratory GI as well as immunology with a focus on developing localized medicines for localized disease. We look working forward to showcasing our foundational research strategy and programs at our R&D day planned for later this year. I’d now like to ask Brett to discuss the 9855 phase 2 data we announced today and provide updates on our development programs including learnings from cohorts 2 and 3 of phase 1b study of 1473.

Thanks Rick. I’ll begin on slide 4 and discuss the phase 2 trial of 9855 in norepinephrine and serotonin reuptake inhibitor in patients with neurogenic orthostatic hypotension or nOH. nOH is a rare autonomic disorder which presents in a proportion of patients with Parkinson’s disease as well as the majority of patience with multiple systems atrophy and pure autonomic failure. The phase 2 study of 9855 consisted of three parts; Part A was a single ascending dose from 1 milligram up to 20 milligrams, designed to evaluate the impact on blood pressure and standing time for 9855. Part B was a double blind single dose study designed to evaluate the impact on blood pressure for 9855 as compared to placebo. Following emergence of encouraging improvements in patients in Part A and in response to patients request to continue taking therapy, the study was amended to include Part C. This part of the study focused specifically on evaluating improvements in both blood pressure and symptoms in nOH and to repeat dose conditions. The primary assessment in the study was measured after four weeks, although patients can continue to receive medication for up to five months. Before I describe the data, I’ll take a moment to explain what we mean by OHSA question one and the symptom measurement scale used in nOH. OSHA stands for Orthostatic Hypertension Symptom Assessment, and it’s a validated scale assessing the presence of a range of symptoms in nOH including dizziness, weakness, problems with vision, fatigue, trouble concentrating and head and neck discomfort. It’s based on a scale from zero with no symptoms to 10, which is the worst possible to very serious symptom with reductions in OHSA indicating symptom improvements. OHSA question one specifically measures patients dizziness, light headedness, feeling things or feeling that they might blackout. OHSA question one has been accepted as a suitable endpoint in the investigation of nOH by regulatory agencies and was used in the conditional approval of droxidopa in nOH. With that in mind, I’ll turn your attention to slide 5 and the results we generated in the phase 2 study starting with observations from Part A and B. As we previously reported the majority of patients treated in Part A, 27 of 34 patients or 79% showed a response in improved systolic blood pressure of doses above 5 milligrams. We were very encouraged not only by the percentage of patients reporting improvements in this portion of the study, but also by their request to continue therapy beyond a single dose, which led to an additional Part C of the study. Part B was with single-dose placebo-controlled sub-study of 10 patients, 5 on placebo and 5 on active 9855, which showed a blood pressure improvement in Part A. These patients started from a lower than normal base line systolic blood pressure. The plots at the bottom of slide 5, shows systolic blood pressure response after dose. Placebo patients showed a continued drop in mean systolic blood pressure during the course of the day in response to postural changes and after meals, consistent with the underlying condition. In contrast, patients on 9855 showed an increase in mean systolic blood pressure during the day. The treatment difference between 9855 and placebo was 13 mm of mercury at the four hour time point, a statistically significant difference with a P value of 0.11. Importantly, there was no evidence of 9855 causing elevations systolic blood pressure at 12 hours or beyond at time when patients would be lying down to sleep and where supine hypertension is a risk with other therapies such as midodrine and droxidopa. Now moving to results from the Part C extension phase on slide 6, we were extremely pleased to observe that more than 75% of patients, 16 of 21 enrolled in Part C, continue to take their therapy after four weeks. In 16 patients showed a mean reduction of 2.4 points in the OHSA question one at four weeks, with more than 60% of patients showing a reduction of two points or more. Recall that patients were eligible to be enrolled in Part C based on their blood pressure response in Part A and also on severity of their dizziness. There is an OHSA question 1 threshold of four points or more that’s used by clinicians and in pivotal clinical trials to define patients with clinically meaningful dizziness. This is the threshold we’ll be using as an inclusion criterion in our phase 3 program. Applying this threshold, three of 16 patients were not symptomatic coming in to Part C, but 13 patients were. These 13 patients reported a mean OHSA question one reduction of 3.8 points from base line after four weeks of treatments. To put this in context, the droxidopa label reflects a maximum reduction of 2.3 points from baseline at one week of dosing and droxidopa has not been show in clinical studies to produce durable response beyond two weeks. In terms of blood pressure effect observed in the extension phase of this study, treatment with 9855 in Part C led to clinically meaningful increases in standing systolic blood pressure three minutes after standing up, with a 7 mm mercury or greater increase at all time points on all clinical [results]. Although patients could change their dose during the course of their study, the 10 milligram dose was the most frequently prescribed dose. \ 9855 was generally well tolerated through this four week testing period. The most commonly reported adverse event in Part C was urinary tract infection, a condition commonly associated with nOH as a result of impaired bladder function caused by autonomic nervous system dysfunction. There were four serious adverse events, but none were assessed as drug related. As Rick noted earlier, we are highly encouraged by this data and by the favorable responses to these results from urology experts who treat patients with nOH, and who are acutely aware of the debilitating nature of this condition and the unmet need it represents. As we had hoped when we undertook Part C, we believe the durability of effect on dizziness and blood pressure observed in patients on active therapy after four weeks of dosing may prove to be one of the key differentiating features for 9855. We will continue to track all patients through the remainder of their five months treatment period and will report detailed results from the full study at a future scientific meeting. We’ve also completed a series of interactions with the FDA to confirm the scope and design as a pivotal registrational program for 9855. We have clarity on the endpoints that will be required and are now in detailed planning activities to initiate the program in late 2018 or early 2019 testing the 10 milligram dose. We will be providing more details on the phase 3 program in future business updates. Now I’ll turn your attention to slide 7 and our phase 1b study of 1473 in ulcerative colitis. Recall that in February, we announced a global collaboration agreement with Janssen for the joint development and commercialization of 1473 and related backup compounds. We also previously communicated data from the first cohorts of 18 milligram dosed once daily. Recently we’ve completed the two additional cohorts, one dose in 20 milligrams and the other 270 milligrams once daily. While we and Janssen plan to provide complete results from the study at an upcoming major GI conference, I’d like to provide a little bit more detail on these two cohorts to provide further context in support of our confidence to progress the program in both ulcerative colitis and Crohn’s disease. A total of 40 eligible patients with moderate to severely active ulcerative colitis were enrolled across the three cohorts, and received either Placebo 20, 80 or 270 milligrams of 1473 once daily for 28 days, with approximately 10 patients in each arm. I’ll remind you that this study was not powered to evaluate efficacy and only dosed patients for four weeks, as opposed to most beta two and three induction studies that include eight weeks of dosing. Even with the shorter treatment period of only four weeks, we observed encouraging evidence of biological effects including on efficacy endpoints. Rates of clinical response were higher for all active doses than for placebo using both the partial Mayo and total Mayo definitions for clinical response. And the greatest effect was seen with a top dose. Rectal bleeding scores were improved relative to placebo for the 80 and 270 milligram doses. The most notable findings were that endoscopic improvement and even mucosal healing were reported in each of the three active treatment arms, while in contrast no patients in the placebo arm reported either endoscopic improvements or mucosal healing. Recall that all endoscopic readings were conducted essentially by a blinded gastroenterologist. Clinical responses were matched by dose dependent reductions in surrogate biomarkers, notably C-reactive protein and fecal calprotectin. The pharmacokinetic data from 1b study in patients also provided critical insights regarding the localized effect of 1473. Most importantly, personal levels of 1473 in patients were all very low across all three active dose groups consistent with those previously observed in healthy volunteers. In terms of tissue PK taken from 5C samples of the effective gut wall, there was evidence of dose-related increases in local GI tissue drug concentration. With 20 milligrams showing lower concentrations than either 80 or 270 milligrams and the latter two doses producing mean concentrations above the JAK IC50 or inhibitory concentration in the inflamed tissue. Data confirmed 1473 is being delivered locally to the gastrointestinal tract with minimal systemic absorption. There were two serious treatment emergent to adverse events, both hospitalizations for ulcerative colitis exacerbation. One occurred on a patient on 20 milligrams at day seven and one patient 10 days after completing treatment with the 80 milligram dose. Neither were assessed as related to study drug. There were no reports of systemic or opportunistic infections including Herpes zosterb or reports of intestinal proliferation. 1473 did not show any evidence of reducing white cell counts including NK cells or platelets or red cell markers. And while HDL showed dose dependent increases from low to normal levels possibly related to reduced inflammation, there was no evidence of elevated LDL relative to placebo. In summary, the phase 1b study of 1473 in ulcerative colitis patients demonstrated localized biological activity and minimal systemic exposure with a favorable safety and tolerability profile. The next ulcerative colitis study is a Phase 2b/3 induction and maintenance study in moderate to severely active ulcerative colitis patients. Patients will receive one of three doses of 1473, 20, 80 or 100 milligram or placebo once daily for eight weeks in the phase 2b induction study. Responders will then be rerandomized in to the phase 3, 44 week maintenance study. In a study designed and intended to improve efficiency and accelerate the clinical program. FDA and EMA have agreed to the design features and the study is planned to start in the fourth quarter of 2018. In Crohn’s disease, we plan to initiate a phase 2 induction study in the third quarter of 2018. This proof of concept study will assess two doses of 1473, 80 and 200 milligrams, given once daily for 12 weeks versus placebo. We and our partner Janssen are very excited about the progress in the 1473 program, and its potential to transform the treatment of gastrointestinal diseases. Turning now to slide 8, and Revefenacin, a once daily nebulized LAMA for the treatment of COPD and for which we are pleased to share today the proposed brand name Yupelri. Our NDA is currently under the review. As we’ve previously noted in the first quarter we completed our mid-cycle review meeting with the FDA. We remain on track for the PDUFA dates of November 13, 2018. If approved Yupelri will be the first once daily nebulized LAMA for COPD patients, an attractive proposition over current standard of care based on the market research we’ve completed. We and our partners Mylan see significant commercial opportunities in three major market settings, in-patients, out-patients, and during the hospital discharge transition period. Our joint commercial planning includes a strategy Theravance Biopharma to leverage its hospital base sales force in the in-patient setting, for Mylan to capture the very large out-patient markets and for combined efforts by both companies in the hospital discharge arena. We’re also determining responsibilities for other commercialization elements such as DME providers and distribution channels. Now I’ll pass the call over to Rene for a financial update.

Thank you Brett. Starting on slide 9, revenue for the second quarter of 2018 was $23.5 million comprised of revenues from collaborative arrangements at 18.1 million and product sales of Vibativ of 5.4 million. Revenue in the second quarter represents an increase of approximately $20 million over the same period in 2017. The increase is primarily related to revenue recognized from both the Alfasigma opt-in payment for Velusetrag and the Janssen upfront payment for 1473. As we’ve stated previously, we expect to recognize a $100 million Janssen upfront payment over the course of the 1473 phase 2 program. R&D expenses for the second quarter of 2018 were $48.6 million compared to 42.9 million in the same period in 2017. The increase is primarily due to higher share based compensation, external related and other allocated expenses. Second quarter R&D expenses include non-cash share based compensation of $6.9 million. SG&A expenses for the second quarter of 2018 were $25 million compared to 24.3 million in the same period in 2017. Second quarter SG&A expenses include non-cash share based compensation of $7 million. We remain in a well-capitalized position with approximately $371 million in cash, cash equivalents and marketable securities as of June 30. Our 2018 financial guidance remains unchanged. For the full year of 2018, we expect our operating loss excluding non-cash share based compensation to be in the range of $180 million to $200 million. As a reminder, our guidance does not include income related to our economic interest in Trelegy Ellipta, as we recognize this income below the operating line, as other income related to our equity interest in Theravance Respiratory Company or TRC. I’ll close on slide 10, with an update on our economic interest in Trelegy, the first and only once daily single inhaler triple therapy. Trelegy continues to perform well since its approval late last year, with steady progress in payer coverage, strong uptake in [scripts], and as we previously noted, an expanded indication in COPD patients based on data generated from the landmark IMPACT study. For the second full quarter since the product’s approval, GSK last week reported Trelegy net sales of approximately $36.5 million compared to $14.6 million in the previous quarter. GSK stated they are applying a commercial prioritization to Trelegy both in terms of level of investment and product positioning, given the unique value proposition provided by Trelegy and in anticipation of additional launches in new markets. Finally, GSK recently announced a regulatory submission in Japan for the treatment of adults with chronic COPD. Theravance Biopharma holds an economic interest in Trelegy that equates to upward tearing royalties of approximately 5.5% to 8.5% of worldwide net sales. This economic interest represents an important strategic asset to the company as both an emerging future contributor of growth and an alternative source of funding for our pipeline. We believe Trelegy has the potential to deliver significant value to Theravance Biopharma overtime, and we look forward to seeing GSK’s continued progress with this important medicine for patients suffering from COPD. Now I’ll turn the call back over to Rick.

Thanks Renee. Moving to slide 11, we’ve made exciting progress across our portfolio. Positive data from the 1473 1b study in ulcerative colitis and 9855 phase 2 study in nOH provides strong clinical rationale for the progression in the registrational programs. With regulatory dialogs recently completed, each program now has a clear path to late stage studies. For Yupelri, our brand name for Revefenacin, we and our partner Mylan are finalizing launch readiness activities in anticipation of a potential FDA approval later this year. In our early stage pipeline, we’re preparing to advance TD-8236 our novel inhaled JAK inhibitor for serious respiratory diseases in to the clinic. These recent pipeline advancements along with a strong balance sheet and emerging cash flows from Trelegy position us to continue to delever growth across our businesses from research to commercial to drive value for shareholders and maximize the impact we can make on patients’ lives. Our anticipated upcoming milestones are; for 1473 initiation of a phase 2 induction study in Crohn’s disease in the third quarter and a phase 2b/3 induction and maintenance study in ulcerative colitis in the fourth quarter, plus full results from the phase 1b study in ulcerative colitis at a future medical meeting. For 9855, the initiation of a registrational phase 3 program in nOH later this year or in early 2019, additionally presentation of pre-clinical 9855 data at the Movement Disorders Congress in October. For Yupelri, COPD exacerbation data from the phase 3 clinical program will be shared in an oral presentation at ERS 2018 in September in Paris and a potential regulatory approval and commercial launch in the fourth quarter. For TD-8236, our novel inhaled JAK inhibitor and a compound that leverages our unique and powerful institutional knowledge regarding both the lung and JAK inhibition, progression in to the first inhuman studies in late 2018. For Trelegy Ellipta, potential label expansion in the EU supported by submission of the impact study to the EMA, potential regulatory approval in Japan and an early 2019 expected completion of the phase 3 CAPTAIN study in asthma patients. And finally, we look forward to R&D day in December focusing on research in the next generation of clinical programs which represent the insight in innovation at the heart of our company. And now I’d like to turn the call over to the operator for questions.

[Operator Instructions] And our first question comes from Jeffrey Borges of Leerink. Your line is now open.

First question on 9855, Brett could you help me understand the flow of patients from Part A to Part B and Part C. I just wanted to know which patient was selected on the basis of their responses before progressing to the subsequent stages to understand the context of the placebo comparison. That was a little bit confusing. And then secondly, could you talk a little bit about what the individual patient blood pressure excursions have been? Have you had any patients with systolic blood pressure getting say above 160 or 180? And then lastly could you give us a sense of what you’re seeing in the extended follow-up after the four-week dosing period? At times as though I think you said 76% of patients are continuing, but are they continuing to get the same level of response or is the response eroding? And then just quickly for Rick, Trelegy you’re clearly breaking it out as a separate asset for the company, so why you’re not operationally involved at this stage. At what point do you feel a sufficient confidence in the outlook for the product and the value of that royalty stream that you might contemplate realizing that value in some other way? And then Renee, could you just comment on the trajectory of R&D spend, because it sounds as though you got to really be wrapping up with pivotal trials for 9855 and then the phase 2b/3 trial for 1473 which you are funding. So could you give us a sense of how much of a step up we should be expecting in our R&D forecast for the next few quarters?

This is Brett. On to your first three questions, you are asking about the flow of patients. I’ll actually combine that with an answer on the extended phase because we’ll speak about the flow and then you asked about blood pressure excursion as well. So just to explain how we set the study up, the initial design of the study for only for two parts, Part A and Part B, and we had 34 patients coming in to Part A. They were test by their physicians, the treating investigators who were experienced clinicians in treating patients with nOH and 27 of those 34 were deemed to have a clinical response either on blood pressure change and/or a standing client improvement at one of the doses that was assessed, and that dose was different for different patients but on average settled around the 10 milligram dose. So 27 patients were eligible to continue beyond Part A. The first 10 of those patients were considered for Part B and they were in fact randomized to either active or to placebo and their blood pressure was assessed in the double blind phase that I shared the data for. But while we were conducting Part B, we acknowledged and recognized that there was several of these 27 patients requesting extension on their therapy. And so alongside Part B we designed Part C and allowed patients to move in to this ongoing maintenance portion. That took us a little while to get up and running and sadly during that time, there were patients that became ineligible from Part A to go in to Part C. Of the 27 that could have been considered, 21 went in to the extension study sadly because of the progressive nature of this disease. There were some patients who were either too well or in some cases sadly had died before being able to go in to Part C. So 21 patients were able to go in to Part C, 16 of those completed the first four weeks, there were five withdrawals. One patient just withdrew consent and other patient sadly had a fall and there were three patients in whom the physician felt there was not enough benefit within that first four weeks to continue. But 16 patients continued. Those 16 have continued to receive therapy beyond four weeks. And in fact the first four patients have now gone all the way through their five months of dosing. We’ve had one patient drop out only after two months, but everybody else is continued. So of the 16 who got past four weeks, 15 are either ongoing or have completed the full five months of treatment. Now although these numbers are small in this rare condition, I see each of these is really encouraging for us. We interpret these as indicators of ongoing clinical benefit. These patients are free to withdraw consent at any point. I’ll remind you that there patients are not able to use either midodrine and droxidopa at any point in this study. So they really are dependent on therapeutic benefit here and are free to withdraw and go on to other therapies if they feel that they are not gaining any benefits. So we use those surrogates already as markers of confidence. You asked blood pressure excursions, perhaps by way of background just to remind you that patient (inaudible) nOH around 50% of patients experience supine hypertension in the essence of any treatment. So that’s the background prevalence. We had one patient with supine hypertension as a precondition at baseline and that patient was withdrawn after having a relapse of that supine hypertension during the course of the study, and one of the patient had a reported new supine hypertension not previously reported. But those were the only two and as reported in the early Part A of the study, nothing in Part C. And as you saw in Part B, we really saw no evidence of supine hypertension during the double blind portion of the study. Turn to Rick to answer Trelegy.

Yeah Trelegy, while Jeff we continue to be favorably impressed with the progression of the product in the US because that’s where you have the most granular information. But I think the European Trelegy sales and success are just getting started, and then as GSK rolls it our across the world I highlighted the Japanese submission in my comments. So I think we’re in the early stage of sort of the sales evolution of the product and clearly it would be accelerated with positive results from the asthma study early next year. We do look at this as a strategic asset; we do look at it as a potential source of funds either directly or through debt instrument of some kind. But we’re really – early on in the evolution of the sales cycle, when we would expect based on everything GSK has said and how the product is performing for the sales and therefor the economic benefit that accrues to us to continue it to improve quite significantly over the next 18 months.

And Jeff you had asked about the trajectory of R&D spend, given the studies that we’ll be initiating. And yes, you’re correct; we’ll be paying for the current study to be in the ulcerative colitis program as well as the 9855 study. As you know, we don’t generally provide quarterly guidance, but I would reiterate that we are on track with our financial guidance for the full year of $180 million to $200 million in [op] loss excluding stock based compensation. And if you look at where we are year-to-date with about 86 million on that metric including roughly $10 million received from [Alfasigma] you’ll see that we’re on track there. With respect to 2019 guidance, I would expect we’ll provide that earlier in 2019 as we normally would. So stay tune there, but we are pretty comfortable with where we are relative to our full year guidance.

Your next question comes from Tyler Van Buren of Piper Jaffray. Your line is now open.

The first question would be, as we think about the results that were reported for 9855 and comparing it to the historical (inaudible) data, I guess it’s a little bit difficult because we don’t have mean baselines. But as you look at the earlier time points perhaps at one week and then as you’ll also look at the data at four weeks, is it possible to give us any sort of a sense of the percent reduction in the OHSA item 1 score or perhaps the placebo adjusted percent reduction and how we should look at comparing that to the (inaudible) data.

This is Brett. As you know Part C lacked the placebo and that by design, these were patients who were requesting ongoing active therapy. So we haven’t got a perfect colors to answer your question. And in terms of comparing to the placebo controlled responses that we’ve with droxidopa, but I think we can provide some measure of overlap with what was reported before. With the droxidopa pivotal study and in fact particularly the study 306b that was reported in support of their approval. They were able to demonstrate a change from base line on active of around 2.3 points, and this was in patients who had to have some symptoms at baseline. When we apply the same threshold and by the way that change of 2.3 was seen at one week. That was the deepest response they got, and actually saw less response when they continued to track patients at two, four and eight weeks. The treatment delta or a change from baseline drifted back up towards two points. But if we apply the same criteria at baseline, it’s those 13 of 16 patients I am referring to who were symptomatic at baseline coming in to Part C. In those patients, we see a change from baseline of 3.8 points. So the treatment difference that we’re able to overlay on droxidopa would suggest that in patients who were symptomatic at baseline and these are the patients we’ll recruit in phase 3, we should see treatment differences that are at least as good as droxi for longer. But if we are able to maintain these effects, we should see greater treatment differences than we’re seeing with droxidopa, assuming of course that the placebo response is comfortable to what they had in their own studies and we had no reason to believe that it would be different. Does that answer your question Tyler?

Yes, that’s very helpful and I’m starring at OHSA item 1 score graph in the label. So is it safe to say and that’s how from the magnitude of week one, but is it safe to say that these patients didn’t have that rebound from week one to week two as we saw, as that graph shows in the droxidopa label?

So in our own program we’ve evaluated the treatment effects on weekly interval throughout the four weeks, and the durability that we described here is because we’re seeing that degree of change that magnitude of effects in each of the weekly assessments. So our improvements we believe are more durable because we’ve seeing greater magnitude of defects not only at four weeks but throughout the four weeks dosing interval.

And I believe you all were measuring low reduction levels at baseline or throughout the study. Was there any correlation there to response and what do you think about it as using as a potential biomarker moving forward?

So it’s a great question Tyler and in fact some of what we’ll be disclosing at future scientific meetings will give a lot more insights including correlation with underlying disease state as well as baseline norepinephrine levels. Today we’ve obviously focused on the topline results, but we said and will be bringing that material, those data to future scientific meetings.

And just finally, if the pivotal study has started around year-end or early next year, what you all think is the approximate timeline to approval and market launch?

We’re always a little bit hesitant to perfectly predict on our involvement grades. I think it’s fair to say that right now having just completed our regulatory discussions, we’re finalizing our sample size for the entire program and that will obviously drive recruitment grades. But we’re advanced discussions with investigators in scaling up for this program. So really all eyes now are on initiating this program before the end of this year or very early next year.

Once we get the study up and going, we’ll be able to provide more context and anticipated timing.

I was just saying and I know it’s - may be not a fair proxy, but could you just remind us how long the (inaudible) pivotal trial took from start to beta?

They had several attempts as you may recall Tyler in getting successful approval, there were two separate findings and they had to run further studies after a series of failed studies. So I’m not sure that their program would necessarily be a reasonable proxy for what we’re hoping to achieve. I think our intention here is obviously to seek an expedited path with doing a program as possible. So I’m not sure that the droxi analog would necessarily be one that we draw reference to.

And our next question comes from Josh Schimmer of Evercore ISI. Your line is now open.

First on 9855, how is the dose determined for Part B and how do you assess whether any individual patient is dose optimized?

This is Brett. So in fact in the early part of the study, we didn’t have a perfect answer to that. We were curious as to whether there may be very different doses required for different patients in order to titrate. But really the observations that we had in the single ascending dose, we reaffirmed in Part C where patients could change their doses if they needed to base on symptoms or blood pressure. What became evident is that the majority of patients were really gravitating around the 10 milligram dose and that was producing really the most consistent response. So even though we’d allowed for titration in the early parts, our view on the basis of this data is that the 10 milligram dose would be a central dose for phase 3. It would be the dose we would focus on.

I think other point I would add is, we’ve published some data on 9855 with regard to central [nap] occupancy based on cat scans that we’ve done with the compound and clearly if you look at the occupancy measures, it would also guide, it would provide additional support to what we actually found in the chronic 10 milligrams.

And is the 20 milligram not give incremental benefit or it doesn’t lead to excessively high blood pressure?

So it doesn’t lead to excessively high blood pressure Josh, but when given the opportunity to increase the dose, physicians didn’t feel that it was needed or warranted, because the patients were getting adequate responses clinically of the 10 milligram dose.

And for the 30 millimeter mercury benefit at four hours, seems like it was split fairly evenly between a gain in the treatment earning a lot and a reduction in blood pressure and then placebo arm. How do we think about what a typical placebo responses in these trials might be or what for this specific trial design the placebo response might have been, since it looks like it’s a little bit hard to get a hand on how the placebo arm performed on blood pressure at least in the droxidopa studies?

So I think that one difference in certainly Part B of this study is that we track this blood pressure over a 24 hour duration. We were really interested in seeing what the profile would look like. The placebo response was very much as we might expect it to be. Patients starting with a low base line, a low blood pressure – never mind these are patients with nOH, their blood pressure even early morning can sit at somewhere between 50 and 70 millimeters of mercury as opposed to where all of us operate at around a 120. So it’s a low baseline to begin with, and then as patients become active in the absence of therapy their blood pressure drops. Interestingly their blood pressure also drops after meals, because blood directed away from the brain and actually we circulate it to the guts in order to facilitate absorption. So patients often will have further decline in their blood pressure after meals, and indeed we see this profile in the placebo response. You’re right that’s part of the difference. The increases that we saw with the active therapy taking us around 15 millimeters of mercury above their baseline is actually quite reassuring to us, it’s an evidence of the pressure effects. You can [cross away] from droxidopa, I think in the label they quote improvements of around between 6 and 12 millimeters of mercury based on or depending on the study. In the placebo rounds of those studies, on average they see a slight increase around 4 millimeters of mercury, but I think it’s probably not fair to compare it directly because those are often spot blood pressure as opposed to profile since we’ve generated in the study. But I think we’ll continue to monitor for blood pressure obviously through the remainder of the phase 3 program as we accrue more patients. It will probably be easier and certainly once we’ve got balanced numbers of active and placebo in later studies, we’ll be able to create a useful frame of reference. So one last thing I will say on blood pressure is that although it’s an important precursor to improving blood pressure in this condition, it isn’t an end point that regulators are interested in. And in fact even physicians will tell us that blood pressure is an important enabler, but it’s the symptoms that are critically important. In fact above a certain blood pressure improvement, symptoms will completely disappear. And the reason for that is, that above a certain threshold on blood pressure the brain is adequately profuse to prevent or to ablate dizziness. So you don’t have to see a perfect correlation between blood pressure and symptoms, and symptoms has emerged really under the experience of droxidopa as the sentinel measure of benefits and that would be the key focus in phase 3. That’s why I would just say Question one is of central importance to us.

Maybe just one follow-up to that and while there are questions, I guess given that commentary about, it sounds like blood pressure is kind of a proxy for the therapeutic effect, it looks like that the benefits sustained for seven maybe nine hours, but by 12 hours at least blood pressure the effect versus placebo is diminished. What is the optimal duration of benefit for a patient? Isn’t 12 hours a little short from what they might want to be to kind of make it through a full day and early evening or is that the charter profile. And then a quick one on 1473, you had mentioned that the highest dose had greatest efficacy, was the difference between a high dose and a middle dose meaningful, and do you have any plans to explore higher dose given it sounds like you’re seeing a dose response.

Just on your question about 9855, the first one that we’re describing on the blood pressure we believe to be really very much in line with what we would like to see. We don’t need these patients to have high blood pressures when they are lying down at night. In fact we did during droxidopa carried box warning for the risk of supine hypertension in the evening. Both therapies need to be administered at least three hours before patients lie down to prevent the risk of over shooting on blood pressure. And in contrast to our product, those once daily we think in the morning producing this sort of profile would really be ideal, because patients don’t need that elevated blood pressure when they’re lying down. In fact we want to mitigate against the risk of supine hypertension. So this profile is very much in keeping with what we would like. Symptoms of course remain the key measure, and OHSA 1 ultimately in our phase 3 program, we’ll be looking on a chronic basis at improving symptoms regardless at the time of day. The recall period for that instrument is seven days. So it really looks back over the last week. On 1473 you were asking about whether there were any meaningful difference between the top two doses. We said and we will be sharing more information on each of the various responses on a number of our clinical end points including partial and full. I think it’s fair to say that’s both the 80 and 270 milligram dose were giving us confidence that those are within a therapeutic range. And it’s on that basis that the 80 and 200 milligram doses going forward remain central both for Crohn’s and ulcerative colitis. Based on our [patient] concentration data, we are not convinced that there is any additional benefit above 200, which is why we have pulled that as the top dose for the next range of studies as oppose to 270. But the 80 and 200 remain of significant interest to us, and I think 20 milligrams although we’ve evaluated in this program was beginning to suggest that that maybe sub-optimal, not ineffective but suboptimal. You’ll see that it appears in our ulcerative colitis program and the reason for that is purposeful, just as we did with the Revefenacin program its important still to anchor pivotal registrational studies on what we deem to be a sub-effective dose and that’s the reason for the inclusion of the 20 milligram dose in ulcerative colitis pivotal programs going forward.

And our next question comes from Alan Carr of Needham & Company. Your line is now open.

It’s sounds like you’re hesitant to give the mean baseline number, but I’m sure if you can at least tell us if its meaningfully different from the approximately 5 that was in the [Procera] trial. I was wondering also can you tell us whether there were other metrics, other component of OHQ that were accessed in the 9855 trial and any patterns there. And then lastly around 9855, OHSA 1 is obviously importantly from a regulatory perspective, but I’m wondering if you can comment on duration, is this going to be for the phase 3 trial check plan. Is there any reason to believe that it’s going to be different from the 8 to 12 week range that we’ve seen for some of these other trials in the past?

So no sensitivity in sharing baseline, actually you’re right, the droxidopa average baseline certainly in their pivotal registration study was 5.1. In this study, the extension study, the average baseline for our patients, for all patients 16 of them coming in was 6.6. So slightly more severe in terms of their baseline OHSA than what was reported, but within a range that we think was still significant. And bear in mind three of those 16 patients actually didn’t have symptoms to begin with. So you can get a sense around the severity of their baseline dizziness. And you were asking about associated changes in other measures, although we are looking in to all the detail of the study today, we will be sharing that in the future. I think it’s fair to say that looking at the umbrella terms we tend to focus very much on OHSA Question one. It’s viewed by clinicians as being the least confounded of the measure. As you would appreciate measures such as fatigue or activity in the context of the patients with Parkinson’s disease, there may be reasons why they’re fatigued or not active unrelated to orthostatic hypotension, but still related to Parkinson’s. But nevertheless we still measure them and we saw consistent changes at the overall level with reductions on the OHQ, the Orthostatic Hypotension Questionnaire as well as the subdomains looking at OHSA, the symptom assessment as well as OHDAS, that the daily activity symptom. And we will be reporting more detail on that at our coming scientific conferences. And your last question I think related to duration of studies, is that right? And forgive me; was that in relation to 1473 or 9855?

I am thinking more of 9855, the FDA ad comps for (inaudible) and then a focus on a 12 weeks wondering if your proposed design with the FDA is meaningfully different from it?

So again we’ll be sharing more details around the studies at future business updates. I think it’s fair to say though that we’ve got real clarity from the agency, and the endpoints that we’re looking at are conventional endpoints. OHSA Question one remains really important in terms of assessing the efficacy. And then consistent with droxidopa, the agency is also looking for confidence of durability of response. And so the designs that we’re really now finalizing will reflect that. But we look forward to updating you on those designs really as we begin to initiate these programs. We’ll provide more details on what those are.

I wondered if you could comment a bit more about the baseline of 6.6 or actually it would be even higher for the 13 patients that had, I guess their average response 3.8 of those 13, and to have a baseline it’s going to be well over 6.6. Can you comment on and why is this a – why do you think you had such a different baseline population here versus some of the other trials, the [choice] you had and then is that something that can be easily replicated under phase 3 whilst you have enrollment challenges or greater enrollment challenges with higher baseline and can you talk about that a bit?

So just to be clear Alan, although there are numerical differences here, I’d be careful not to over interpret them just because they are very different size of studies. The droxidopa program had almost 300 patients; we are talking about a much smaller denominator here, but notwithstanding that, allowing all chemist to come into our program. I think what we were satisfied with is that we weren’t getting patients with really zero symptoms. We feel confident that interpreting this magnitude of change in dizziness comes of a baseline that was significant to begin with. You raised a very good point about the eligibility in phase 3 and really what we’re focused on is ensuring that we enroll the right patients coming in to the program that are able to demonstrate improvements to a meaningful treatment, and in that respect we’re putting not only criteria around a minimum threshold for OHSA, and I mentioned that we’re going to use that threshold of 4 points or more coming in to the program. But we’ll also be really rigorous in ensuring that these are patients who are able to report those symptoms with accuracy. So we’re putting a lot investment in to ensuring that these patients are properly screened including with two table assessments coming in to the next portion of the study. Tyler asked earlier about threshold for norepinephrine and again that’s a plan in the program is to use thresholds to ensure that the patients who are coming in could respond to this mechanism. Bear in mind that in contrast to droxidopa and midodrine, this compound 9855 doesn’t add extra exogenous (inaudible) in to the system, it really prevents the breakdown of what’s already in the body. And that’s in contrast to these other two mechanisms. So we’re going to be those sorts of criteria to ensure that we have recruited the right patients. And we are confident having done feasibility with sites that treat these patients, we are confident we’ll be able to identify them.

I’ve a question, what percentage of these patients and did you disclose what percent of these patients were Parkinson’s versus pure autonomic failure or MSA. Can you tell us that if you haven’t disclosed it?

We haven’t disclosed this but plan to at a future scientific congress. So we’ll provide the details around that in a scientific forum.

Can you say whether it was distributed across and what percentage?

Again I think we’re going to hold that for the scientific congress just out of respect for the fact that today was a topline review. Let’s hope it was representative of the population.

Representation of the population both MSA and Parkinson’s disease patients were in the study.

Operator we are just about up. Just about up on the hour operator if there is another question in the queue, we have another minute or two.

And our final question comes from the line of Louise Chen of Cantor Fitzgerald. Your line is now open.

Last question I have is based on the latest data for 9855, do you still believe you can get an expedited development pathway for this product, and then I just had a question on your TD-8236 product, where is market landscape here and what supports proof of concept for the opportunities for you?

Plans continue to be for an expedited program. We are working with a rare condition here, and so certainly this is aligned with the program that we’ve agreed with the agency. The purpose is very much to continue in expedited development. You had asked about how inhaled JAK and I’ll ask Rick to comment too, but certainly I think we’ll provide more details in terms of clinical development strategy as we get very closer to the clinic should I say. But let me pass over to Rick to comment on the Inhaled JAK.

Sure, I think clearly there continues to exists an unmet medical need in the broad (inaudible) population in severe asthma. So the patients that are uncontrolled on current therapy and compliant to current therapy, these mix between maybe tradition TH2 and non-TH2 patients. I think even with the advent of some improved medicines out there such as [IO4] [I13] product. I think that the market continues to be quite significant. And the beauty of an inhaled medicine and our objective with all localized therapies is that you can deliver the medicine directly in to the lung without overlapping toxicity of a systemic therapy. Therefore for the potentially first time, for those very serious patients being able to execute a combination therapy without overlapping toxicity. But we’ll be talking and providing more market data and so forth through the rest of the year on 8236 and the opportunity that exists there.

Thank you. It appears we have no further question on the phone. I’d now like to turn the conference back over to Mr. Winningham. Please go ahead sir.

Thank you very much operator. I’d like to thank everyone for joining us today and listening to our business update. Have a good day.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may now disconnect. Everyone have a great day.