Ladies and gentlemen good afternoon. 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 Jessica Stitt, Vice President, Finance and Investor Relations. Please go ahead.

Good afternoon everyone and thank you for joining our conference call and webcast to discuss our first quarter 2019 financial results and outlook. Joining us are Rick Winningham, Chief Executive Officer; Brett Haumann, Chief Medical Officer; and Frank Pasqualone, Chief Commercial Operations Officer. Following some prepared remarks, we will open the call for questions. A copy of the press release and the 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. As always, I will 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 with the SEC. And now, I would like to direct your attention to slide 3 and hand the call to Rick.

Thanks Jessica. Good afternoon everyone and thank you for joining us. As we continue to make progress in 2019, we remain highly focused on implementing our strategy to discover develop and commercialize transformational medicines with the potential to address important unmet patient, payer, and caregiver needs. Our key programs are all advancing. TD-1473, our gut-selective JAK inhibitor for inflammatory intestinal diseases partnered with Janssen; ampreloxetine our once daily norepinephrine reuptake inhibitor for symptomatic neurogenic orthostatic hypotension or nOH; TD-8236 our lung-selective JAK inhibitor for serious respiratory diseases; and YUPELRI our recently launched once-daily nebulized long-acting muscarinic antagonist approved for the maintenance treatment of COPD partnered with Mylan. Each of these programs represents our unique research approach that leads differentiated products which have the potential to offer meaningful benefits to patients, payers, and caregivers. Over the last several weeks we have achieved important milestones in these programs. Of note we dosed the first patient in the Phase 2b/3 study of 1473 in patients with ulcerative colitis. 1473 is a novel orally administered in gut-selective pan-JAK inhibitor in clinical development as a treatment for multiple inflammatory intestinal diseases. In contrast to other oral JAK inhibitors in development or approved for inflammatory bowel disease, 1473 is designed to act locally at the site of inflammation in the intestinal wall to minimize systemic risk. We are conducting this Phase 2b/3 study in ulcerative colitis patients in parallel with Phase 2 study in Crohn’s disease which is also underway in dosing patients. In addition we're pleased to be presenting data from our completed Phase 2 study of ampreloxetine at two upcoming scientific conferences, the International Association of Parkinsonism and Related Disorders and the 32nd European Neurology Conference the latter inviting an oral presentation of the data including the efficacy safety and tolerability of ampreloxetine over…

Thanks, Rick. Starting on slide 5, 1473 is our oral gut-selective pan-JAK inhibitor that's designed to treat inflammatory intestinal diseases directly at the site of inflammation in an organ selective manner, with minimal systemic exposure or corresponding immunosuppressive effects. Our objective is to enhance efficacy and safety of the conventional systemic therapies. As Rick noted, 1473 is now in two late-stage studies in ulcerative colitis and Crohn's disease. Turning to slide 6, we recently announced the dosing of the first patient in a Phase 2b/3 called RHEA, a 1473 in patients with moderately to severely active ulcerative colitis. The Phase 2b dose-finding induction portion of the study assesses the effect of eight weeks of treatment for 1473 on changes from baseline in total Mayo score as the primary endpoint as well as assessing rates of clinical response and remission, endoscopic mucosal healing and safety. Patients who successfully complete the Phase 2 induction study are immediately enrolled into the Phase 3 maintenance portion of the study, which assess the ongoing efficacy and safety of 1473 for an additional 44 weeks. In parallel, we're conducting DIONE, a Phase 2 12-week randomized double-blind placebo-controlled study designed to evaluate 1473's efficacy and safety in patients with Crohn's disease, which began dosing patients at the end of 2018. The primary endpoint of this study is improvement in the Crohn’s disease activity index, CDAI measured to 12 weeks. Patients who complete the 12-week induction phase will continue into the active treatment extension phase where all patients receive open label 1473 for up to 12 months to continue to collect safety data. The breath of our 1473 clinical development efforts in both ulcerative colitis and Crohn’s disease, reflects our confidence in the potential therapeutic benefit of our unique gut-selective pan-JAK inhibitor. As illustrated on slide 7, we…

Thanks, Brett, and good afternoon everyone. Starting with slide 13. I'll take a few moments to discuss YUPELRI inhalation solution and provide an update on our launch activities. YUPELRI is the first and only once-daily nebulized bronchodilator approved for the treatment of COPD in the U.S. having gained FDA approval at the end of last year for the maintenance treatment of patients with COPD. Following shipments into the commercial channel in late 2018, Theravance Biopharma and Mylan formally launched our sales and marketing efforts in early 2019. Turning to slide 14. I'll talk about our commercial strategy with Mylan. Our combined sales infrastructures target HCPs that treat the universe of appropriate patients for YUPELRI with COPD. These include physicians, pharmacists, respiratory therapists and other health care prescribers. Focusing on the institutional setting there are about 800,000 patients admitted each year to U.S. hospitals for worsening of their COPD. About half of those patients leave the hospital with a prescription for nebulized therapy. Having an established commercial presence in and around acute care centers gives us the opportunity to target large and addressable patient populations at pivotal times starting in the hospital and with our partner Mylan expanding into the outpatient treatment setting. Theravance Biopharma is focusing on the hospital segment where we understand well the target audiences for YUPELRI. The hospital is a critical site of care for patients with worsening COPD symptoms as many experience increased difficulty using their standard maintenance inhaler device. By targeting HCPs at key intersections in the patient's disease management process, our goal is to ensure appropriate patients have access to and begin using YUPELRI in the hospital. We plan to partner with institutions in order to assist transitioning appropriate patients from hospital to home on YUPELRI with a unique and proprietary program called, Care…

Thank you, Frank. I'll begin on slide 16. Revenue for the first quarter of 2019 was $5.3 million comprised of collaboration revenue, primarily related to our global collaboration agreement with Janssen for 1473. Revenue for the first quarter of 2019 represents a decrease of approximately $3 million over the same period in 2018. The decrease in total revenue resulted primarily from new product sales being recognized in the first quarter of 2019, following the sale of VIBATIV to Cumberland Pharmaceuticals late last year. R&D expenses for the first quarter of 2019 were $53.8 million, compared to $57.8 million in the same period in 2018. The increase was primarily due to higher external expenses driven by our key programs and higher employee related expenses, which include the impact of the reduction in force, announced in the first quarter of 2019. First quarter 2019 R&D expenses include non-cash share-based compensation of $6.2 million. SG&A expenses for the first quarter of 2019 were $25.2 million, compared to $24.7 million in the same period in 2018. The increase was primarily due to higher collaboration expenses associated with the launch of YUPELRI, an employee related cost, which include the impact of the reduction in force announced in the first quarter of 2019. First quarter SG&A expenses include non-cash share-based compensation of $6.1 million. We ended the quarter in a well-capitalized position with approximately $434 million in cash, cash equivalents and marketable securities. Our 2019 financial guidance remains unchanged. We expect our full year operating loss excluding non-cash share-based compensation to be in the range of $110 million to $130 million. Operating loss guidance does not include royalty income for TRELEGY ELLIPTA, which we recognize as non-operating income. Our share of U.S. profits and losses related to the commercialization of YUPELRI, potential future business development collaborations as well as the timing and cost of clinical studies associated with our key programs among other factors could impact our financial guidance. Now, I will turn the call back over to Rick.

Thanks, Jessica. Just for clarity the -- our operating loss guidance excluding non-cash share-based comp is in the range of $210 million to $230 million. So as shown on slide 17, execution against our key programs is driving us forward towards value creating events in both the near and the long-term. Important upcoming milestones include GSK's submission of the full Phase 3 dataset of TRELEGY ELLIPTA in patients with asthma to regulators, additional commercial metrics for YUPELRI and COPD as the year progresses. Supplemental data from the Phase 1b study of TD-1473 in ulcerative colitis to be presented at DDW 2019 in May; detailed results from the Phase 2 study of Ampreloxetine and nOH in the presentation of data at the IAPRD meeting in June and the European Neurology Congress in July; completing and reporting from our Phase 1study of our lung-selective inhaled pan-JAK inhibitor for TD-8236 to further progression of our Phase 2 Crohn’s disease and Phase 2b/3 ulcerative colitis studies for 1473 as well as our Phase 3 registrational studies for ampreloxetine; and advancement of our novel organ selective research programs towards the clinic. Our focus will continue to be on advancing our pipeline and reaching value creating milestones. And now before I turn the call over to the operator for questions, we also announced today that Theravance Biopharma has initiated arbitration against Innoviva in connection with Innoviva's material breach of its obligations to disperse certain royalties to us. The royalties in dispute are those received from GSK as a result of net sales of TRELEGY. We are proceeding with the arbitration, which is confidential subject to any required disclosure obligations under applicable law. You may be aware that upon our spinoff from Innoviva in 2014 both companies entered into a binding limited liability company agreement that established…

Thank you, sir. [Operator Instructions] We'll have our first question from Geoffrey Porges from SVB Leerink. Your line is now open.

Good afternoon. This is Brad Canino on for Geoff. I have questions on both YUPELRI and TRELEGY. For YUPELRI I'd like to hear if your initial 4,500 patient volume has been from stealing share from the other nebulized LAMA? Or if it has been accretive to that specific market segment? And then going forward with your current commercial strategy how much market expansion do you anticipate versus direct competition?

Yeah. Good question on YUPELRI. The patients that we've treated thus far may have taken some share from the other twice-a-day long-acting muscarinic antagonist, but I also think that largely we're adding some new patients probably from the handheld market who in fact just can't get benefit through the repeated use of the handheld products. There's probably also some share coming from nebulized products that are used three to four times a day like DuoNeb because in many instances the inconvenience and the pressure put on patients to administer drug three to four times a day to get adequate broncodilation is just – it's just not that – it's just not efficient to get their therapy versus a once-a-day product. Frank, any other comments?

No I think you've covered it Rick. We are seeing some business move over from handheld devices in the hospitals, because there's a lot of wastage in hospitals with handheld devices. And there is a lot of momentum within hospitals to switch patients to nebulized therapy. So we've seen some share gain there. And to your point, we've also seen some share gain from products that are administered more than once daily.

Thanks. That's helpful. And then on TRELEGY asthma. Should we at all temp our expectation for the opportunity given the exacerbation benefit miss statistical significance? I realize that patients care a lot about increased breathing ability but I'm asking more in relation to potential payer and access challenges without this specific benefit on the label? Thanks.

Yeah, I'll start then I'll turn it over to Brett. I think – GSK markets – market TRELEGY I think to get the an extraordinarily detailed answer you probably should check with them. But I think what the CAPTAIN study show as you know, was this pretty significant level of additional broncodilation on top of gold standard therapy for these patients in asthma that in fact they would feel every day. Brett given that he conducted the BREO Phase 3 program I think can provide – when he was at GSK can provide some additional context on the benefit that was seen with TRELEGY.

Thanks, Rick. Thank you for your question. I think again obviously GSK would be in a – the best position to answer the question about how they intend to use the data with payers. I do think though having seen at least the limited information that they presented the numerical improvement of 13% is an important one, particularly if it's supported by other evidence and full dataset of improvements for example in severe exacerbations or improvements in the time to the first exacerbation neither of which were reported but almost certainly recollected. And the reason, those are important is that those collectively point to the additional benefits that a triple-based therapy like TRELEGY could confer over and above what BREO already brings to bear. And BREO's improvements are considerable. Its own record based on the registration studies and asthma showed a 25% improvement over the fluticasone furoate component alone. If this data is robust and consistent, it would suggest that there maybe an additional improvement over and above BREO that's conferred by adding that anti-muscarinic component. Again, we don't have the full dataset. So I don't want to speculate too much. but I do believe that that information in its totality could be presented to payers in support of the additional benefits over and above those statistical significance achieved on lung function.

Very helpful. Thank you.

Thank you. Our next question is from Louise Chen from Cantor Fitzgerald. Your line is now open.

Hi. Thanks for taking my question. I had a few here. So first question, I had is why this selective JAK inhibition still drive safety issues? And is pan-JAK inhibition more efficacious than selective JAK inhibition? Second question, I had was on ampreloxetine. What aspects of the drug based on your diligence of physicians support a first-line usage? And do you anticipate, any challenges to enrollment given a long placebo period? And last question, I have was on given the fact that you have this positive CAPTAIN data what is the additional sales opportunity for TRELEGY to you?

Thanks Louise. I'm happy to take the first two questions and then I'll pass over to colleagues on the TRELEGY asthma. Your first question was around selective JAK inhibition and whether that in fact has any benefits or challenges and whether pan-JAK inhibition may be better. I think it's fair to say that people have pursued pan-JAK inhibition, because of its broad-based anti-inflammatory potential. And if you're able to harness all of the value of blocking all the isoforms of JAK, you really should get a broad-based anti-inflammatory effect. And in fact that has been the principle with several products, including tofacitinib that was designed initially to prevent organ rejection and then was then repurposed for RA and more or less relieve for IBD. Now the risk without it, as you will know is that, as the dose is driven up to try and get better efficacy, the systemic liabilities come to bear, because that drug is designed to get into the systemic circulation, ideally to treat joints. And as a result what you see is immune suppression that really tempers or prevents being able to get up to the proper dose. Tofacitinib demonstrated this very clearly in the Phase 2 program in IBD in ulcerative colitis where the 15 milligram dose produced greater efficacy than 10 and the three milligram in that particular study. They then went on in Phase 3 to test 5, 10, 15. And after only a handful of patients who dosed to 15 milligrams, that arm of the study was stopped extensively, because of concerns in the RA indication, not from the study itself. But there were limitations in being able to get to optimal efficacious dose. Now you might ask why on earth would we continue to pursue pan-JAK inhibition, if that's the case.…

Sure. Going forward, looking at TRELEGY, I mean from a distance, I think we see three potential drivers of growth. One of them is continued penetration in existing markets for COPD, of which -- which we still believe current levels of penetration in COPD are relatively low. The second growth driver is the addition of new markets in COPD. GSK in their call highlighted the recent approval of Japan and made some positive remarks about the potential in China. Those markets clearly would add significantly as would continue to rollout along the rest of the world. And then the third driver, as you note, is asthma. Asthma would be a significant addition to TRELEGY sales. What the level is? I'm not projecting exactly, but I do believe that it's quite significant relative to the existing base of business with triple therapy and COPD. Now the market -- the market development opportunity is a little bit more in asthma, but I think GSK will likely be able to take advantage of the number of years of work by Boehringer Ingelheim where they have added SPIRIVA. They have studies adding SPIRIVA to LABA/ICS therapy showing a benefit and getting physicians and health care providers more comfortable with the use of triple therapy in asthma and in fact conveying benefits to patients much as you've seen in the TRELEGY CAPTAIN study. So we would expect a fairly significant increase in the overall market opportunity for TRELEGY with an asthma indication in the United States and around the world.

Thank you.

Thank you. Our next question is from Tyler Van Buren from Piper Jaffray. Your line is now open.

Hi. This is Alex on for Tyler. Thanks for the questions. In terms of the upcoming ampreloxetine for Phase 2 data readout, is the five months time point cut off based on efficacy and/or tolerability? Or was it more of a logistical consideration? And secondly, is there a potential for some patients to stay on therapy for an even longer period of time? Then lastly, do you expect to see a difference in durability between Parkinson's and MSA patients? Thanks.

Thank you, Alex. This is Brett. The five months period of time actually was pragmatic. It's was purely logistical. There was no either safety concern or concern about loss of efficacy. We just felt that that would provide sufficient durability of response for us to get a patent some sort of sense of how these patients were tolerating the medication and whether they chose to continue taking the therapy. In the six months, we withdrew therapy really as a proxy for not having had a placebo arm in the study up to that point. And that was the opportunity to see whether symptoms would reemerge. Your question about whether patients have the opportunity to continue beyond is a good one. Several patients actually approached us and their physicians to request ongoing access on a named patient basis and in fact, we have supported those requests to date. So there are patients who have continued beyond the completion of the study and are now being supported under investigator initiated I&Ds to support ongoing treatment. Of course, the other studies, the formal studies that will be running have the placebo built into them. And so they will give even more robust assessment of the ongoing durability. Those of what are required in order to file. You asked about I think the durability of the response as well. I think -- if I understood your question correctly we do believe that both the mechanism of action as well as the fact that this is an antagonist sits this product up to be more likely to be durable. You may be familiar with the fact that even in the droxidopa label they reported efficacy only after one week. Now droxidopa is an agonist. It's a pro-drug of norepinephrine. And it may be that in fact stimulation of receptors by an agonist causes down regulation which might explain why efficacy is lost over time. In fact what we see in our assessments of patients who take droxidopa is that the therapy appears to wax and wane in its efficacy, probably driven by the source receptor down regulation. And the antagonist such as ampreloxetine should not result in that effect, because these studies that we are conducting right now are designed to confirm that finding. Did that answer your question Alex?

Yes. And one further one. Do you expect to see a difference in durability between the Parkinson's and MFA patients? Because I believe….

Thank you.

…it was potential for an efficacy or driving benefit in one population or the other?

Yes. Sorry I forgot to answer that portion of your question. Based on the information and it was limited in the prior study, but we did enroll patients with both MSA and with Parkinson's. Both disease states do appear to benefit from the treatment of ampreloxetine although the numbers of patients are obviously small in that study. We have though conveyed and carried that information forward into Phase 3. If anything the signal and perhaps the mechanism of action would suggest that those patients with MSA are particularly well-suited. That doesn't mean it wouldn't work in Parkinson's but the patients for the MSA may in fact have a strong response. For that reason as reported in clinicaltrials.gov we will incorporate a stratification into our studies and a minimum of 40% of our patients will be enrolled with MSA and that's intended to look specifically at your question whether these populations benefit to a greater or lesser extent.

Great. Thank you.

Thank you. Our next question is from Brian Skorney from Baird. Your line is now open.

Hey, good afternoon guys. Thanks for letting me ask a couple of the questions here. Rick I've certainly followed this company for a long time, so I'm as shocked as you and certainly the decision from Innoviva seems unjustified from everything. I have known about the company. But maybe you could just kind of provide a little detail in terms of any guidance on what their justification or their explanation actually is? Are they questioning -- how that 85% interest should be applied or they questioning the validity of that 85% entirely or somewhere? And that is a -- are they trying to apply some sort of expenses to TRC before, the amount that gets paid direct to you? Are they questioning the basis for the entire origination of the 85%, 15% split?

Yeah. So – Brian on that you know one of the – for just everyone's edification the entire TRC, LLC agreement was filed in an unredacted form at the time of the separation. So, anyone can go to the SEC website, and take a look at the entire LLC agreement, including the dispute mechanism. The one aspect of the mechanism overall, is the nature of conflict between the parties should needs to remain confidential, except as required under applicable law. So I really can't comment on the nature of the dispute. I can just comment on my optimism with regard to prevailing in the dispute with Innoviva in a timely manner. And I think to the extent that one goes to Section 15.1 in the LLC agreement, that will describe in greater detail the dispute mechanism and in fact the timing of it.

Got you and then if I can just ask one more. Just in terms of the collaboration revenue and how to think about the contribution from the Mylan, YUPELRI and the Janssen collaboration. I guess a can you break that out at all? And here if you actually explicitly said about YUPELRI sales were for the quarter. And in future quarters or even in the 10-Q what will kind of the components of collaboration, revenue be broken out?

So, -- yeah -- so the components of collaboration revenue, I mean we will break them out. Of course the two competences right now one of them is more or less the amortization of the Janssen upfront, which Jessica described, is coming into the revenue line of the P&L. The second one is, effectively our share of the operating profits of the collaboration with Mylan. Now when that is -- as we've noted before, when that's in a loss position, it shows up down in the body at the middle of the P&L. And that loss which will be described in the Form 10-Q is like $1.4 million -- our share of that loss is like $1.4 million or something for the first quarter. We haven't disclosed YUPELRI sales. Mylan didn't disclose them today. And we'll rely on Mylan's disclosure for the YUPELRI sales overall. But what would be reported in the revenue line going forward is when that collaboration number turns positive, then that positive number will be reflected in the revenue line. I'm looking across the table at Jessica to make sure I've got this right. So...

Yeah. No Rick …

Okay, thanks guys.

…that's true. Okay.

Thank you. Our next question is from Alan Carr from Needham. Your line is now open.

Hi, thanks for taking my questions. Maybe we can spend a little more time talking about the lung-restricted JAK drug in terms of what you're assessing in that Phase I trial? And what are the plans after that's completed in-house? Thanks.

Yeah. Thanks Alan. I'm going to just make a couple of comments and then turn it over to Brett. We're quite excited about the inhaled JAK program. It's being delivered in patients currently in a dry powder inhaled form that is commercializable. So, the team here has done really extraordinary work not only in the characterization of the molecule but also in the formulation of getting the drug formulated into a DPI that can deliver to asthma patients. The team also designed an aggressive Phase 1 program, that got us into patients very quickly after the single ascending dose portion of the Phase 1 and then I'll turn it over to Brett to describe it a little bit better.

Thanks Rick. Alan what we've done is we did single ascending dose exposures just in healthy volunteers. But then immediately moved to 14-day duration studies once daily administration for 14 days in patients with asthma and who had elevated nitric oxide levels in their breath. Patients who are on perfectly controlled on existing therapy do tend to have elevated NO. The reason we test these asthmatics is twofold. Actually we want to make sure that when they inhale a drug like 8236, they don't have paradoxical constriction of their airways, that's an irritancy issue that we try to rule out very early in these inhaled programs. But of course the fact that they also have elevated NO allows us to look at that as a marker of biology. I wouldn't call it a marker of efficacy, but it's exactly is an -- it's an early marker of whether we're engaging the targets. We do also look at things like lung function, but it's not in a powered fashion to look at lung function improvements. It's purely to ensure that they don't have a decline in lung function enough to exposure to our drug. So, this is going to be descriptive. It won't be a powered study in the classic sense, but I think we'll be able to create an early sense of whether this drug is in fact engaging the targets. In that sense analogous to what we did prior -- previously in the IBD space with 1473, looking for early markers of biology and disease activity. We're actually looking in addition with a limited number of patients at evidence of reduced inflammation in the lung itself. So some of these patients are consenting to bronchoscopy and will be able to look at what they call brushings and washings. We don't actually cut into the tissue, but we brush along the surface of the bronchus and look at cells that are produced from those brushings. So, we will be looking at that as well.

Yeah. Just as …

If you see something, okay.

Yeah. Just quickly to what size of the opportunity, if you look at some data that AstraZeneca has presented where they cite some decision resources and IQVIA data source, there is probably about 5.6 million severe asthmatics in the United States that are -- that may be in fact treated with steroids, but are not fully under control. So, the opportunity here is quite significant. And the primary objective of the therapy is right along the same lines as what we're trying to do with IBD and that's to deliver a powerful inflammatory modulator into the lung without getting -- having any effect systemically on the immune system.

If the -- sorry, go ahead.

Yeah. I was wondering if this is -- if the results are encouraging whether or not this is something that you do another round. And how is to add more value? Or do you think at that point, it's time to look for a partner to take it from Phase 2 on?

So, it's a great question, Alan. I think our current view is to keep going. We have a product at the moment that is already in a formulation that could be commercialized. It's dry powder from the very first study in man. We obviously appreciate that there maybe parties out there who become interested in data and I think in that respect we need to appreciate that we may not be the only people looking at our own data with interest. But certainly, our view here is that provided we see evidence of biological engagements that we would progress into later-stage development. One of the advantages of the current study is, it's testing multiple doses over 14 days. So we are hoping to get some early read even on whether we're able to start to tease out the dose response.

Great. Thanks for taking my questions.

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

Okay, operator. Thanks, everyone. It was a pleasure to provide an update to you on what's happened with the company through first quarter. We've got a very exciting year ahead of us as well as 2020. And we look forward to updating you as the events in the company unfold over the next several months. So, thanks for participating and have a good day.

This concludes today's conference call. We thank you for your participation. You may now disconnect.