Theravance Biopharma, Inc. (TBPH) Q4 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravance Biopharma Fourth Quarter and Full Year 2020 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] Also, today's conference call is being recorded. And now, I would like to turn the call over to Gail Cohen, Vice President, Corporate Communications. Please go ahead.

Good afternoon, and thank you for joining the Theravance Biopharma quarterly and full-year 2020 conference call to discuss our business. As always, I remind you that this call will contain forward-looking statements, which will involve risks and uncertainties, including statements about our development pipeline, expected benefits of our products, the anticipated timing of clinical trials, 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 our filings with the SEC. And now, I would direct your attention to Slide 3. Joining us are Rick Winningham, Chief Executive Officer; followed by Frank Pasqualone; Chief Business Officer; Brett Haumann, Chief Medical Officer; and Andrew Hindman, Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Now, I will hand the call to Rick for opening remarks.

Thanks, Gail. Good afternoon, and thank you for joining us. To begin, I want to highlight the resilience and the persistence of the Theravance Biopharma team in 2020. Teams that drove our programs forward and helped us lay the foundation for 2021, which we believe will be a transformational year for the company. If you've been following Theravance Biopharma it would come as no surprise during our fourth quarter and year-end presentation, we're leading with YUPELRI. YUPELRI is the first and only once daily nebulized bronchodilator approved in the U.S. for the maintenance treatment of patients with chronic obstructive pulmonary disease or COPD. YUPELRI reached standalone profitability, as reported last quarter, and continued to grow market share each quarter last year, despite a respiratory pandemic. This profitability measurement is based on accounting for consolidation of our 35% of the profit loss split with Viatris, formerly Mylan, and then factoring in additional YUPELRI expenses by Theravance that are not shared with the interest. The interest in Theravance Biopharma commercial teams accomplished this during an ongoing COVID-19 viral surges, as while, always remaining mindful of the health and safety of our teams and the communities that they serve. Our market share continue to grow in the fourth quarter. And Frank will share the details of our progress with YUPELRI in 2020. YUPELRI is one of the key pillars for transformational change. Moving to Slide 4. The second major pillar for transformational changes our pipeline. And today we'll focus on TD-0903, an investigational nebulized lung-selective pan-JAK inhibitor, to treat patients hospitalized with acute lung injury due to COVID-19, who required oxygen at the time of enrollment. This is part of our inhaled JAK inhibitor portfolio. The Theravance Biopharma team moved 903 rapidly from preclinical stage into the clinic last year in response to the global pandemic. Our press release today share the encouraging initial clinical data from the first part of a two part, placebo controlled randomized Phase 2 study, including new miracle improvements in clinical outcomes, shorter hospital stays, and fewer deaths when compared to placebo. TD-0903 was generally well controlled and demonstrated evidence of improvements in several relevant inflammatory biomarkers with low systemic exposure at all doses. Part 1 of the Phase 2 study enrolled a small number of patients consistent with other dose escalation studies, and wasn't powered for efficacy. Importantly, Part 1, as I said, is a double blind placebo controlled study, in contrast to some of the early open label COVID-19 studies. And we allowed all patients including those on placebo to be on standard of care treatment, including oxygen, anticoagulants, and dexamethasone. Brett will walk through the results of Part 1 in more detail shortly. In the past year, we've pioneered pan-JAK inhibition of the lung and garnered an incredible amount of data and insights. Our team is working diligently, put the puzzle pieces together to help make a difference for patients suffering from respiratory conditions, both acute conditions and chronic conditions. Since we last reported, we completed the additional analysis on TD-8236, a dry powder lung selective pan-JAK inhibitor in asthma, taking a deep dive into the gene signature and biomarker data from the Phase 1c study. The gene pathway analysis and biomarker data are consistent with target engagement in a lung. The robust body of scientific evidence from TD-8236 and TD-0903 provide confidence for us to continue the lung selective inhaled pan-JAK inhibitor program for asthma. However, based on our current understanding of 8236, we decided to pause that clinical program for TD-8236 in its current form, and apply our 8236 and 0903 learnings by refining the form of 8236, as well as expanding the number of molecules in our portfolio of inhaled JAK inhibitors suitable for dry powder inhalation, drawn from our ongoing research efforts. The full dataset for TD-8236 will be presented at future scientific meetings. Turning to our later stage programs, we continue to expect Ampreloxetine Phase 3 results for symptomatic neurogenic orthostatic hypertension and Izencitinib Phase 2 results in ulcerative colitis and Crohn's disease to read out during the third quarter 2021, likely in three separate press releases. And finally, as I highlighted during my presentation at the Annual JPMorgan Healthcare Conference last month, the third pillar of the transformation we expect to see in 2021 is our changing financial profile. And Andrew will end the presentation with a financial update that includes 2021 operating guidance. So now let's move to Slide 5, and Frank will speak to the commercial team's progress with YUPELRI. Frank?

Thanks, Rick. Remember, YUPELRI is indicated for the maintenance treatment of patients with COPD. It's the first and only once daily nebulized long-acting muscarinic antagonist that provides a full 24-hours of control for patients. In the second full year since its commercial launch, YUPELRI continue to experience solid net sales growth on an annual basis in 2020. This was achieved through our combined commercial sales and marketing efforts with our partner Viatris, formerly Mylan. Theravance Biopharma and Viatris co-promote in the U.S. with our combined sales infrastructure targeting healthcare professionals that treat the universe of COPD patients suitable for YUPELRI. We cover the hospitals, Viatris covers a community. YUPELRI year-over-year sales grew by 159% compared to 2019, in the face of many obstacles related to the pandemic. Turning to Slide 6, since the launch of YUPELRI, we've gained share in both the hospital and the community settings. Many patients with COPD experienced an acute episode serious enough to require a trip to the hospital for immediate care. The hospital then becomes a key point to switch a person with COPD from a handheld inhaler to YUPELRI. Data shows that most patients that received YUPELRI in the hospital are discharged with the prescription to continue treatment, allowing for continued YUPELRI therapy post discharge. You can see by the market share and its growth, the strategy and collaboration between the Viatris and Theravance Biopharma teams continue to work effectively at converting business from competitive products to YUPELRI. On Slide 7, we breakdown Theravance Biopharma's implied 35% share of net sales for YUPELRI during Q4 of 2020, $13.6 million and totaling $50 million in revenues for full year 2020. Remember, the Viatris - Theravance Biopharma commercial partnership is a 65-35 Profit and Loss split. So this only shows our implied 35% of the YUPELRI sales. It's been reassuring to see that while the COVID-19 pandemic affected YUPELRI sales growth in 2020, specifically in quarter two, we recovered to growth in the second half of the year. Additionally, we continue to be encouraged by market feedback and performance indicators, including hospital formulary wins, patient uptake and market access over the past 12-months. And we continue to track key performance metrics since launch. A total of 627 formulary and non-formulary accounts have ordered YUPELRI, and two-thirds of these accounts have reordered at least once. We’ve recorded 198 formulary wins, covering over 400 accounts with a formulary win rate of 91%. 85% of these formulary accounts are purchased to-date, owing to a lag between formulary approval and ordering, commencing. YUPELRI's commercial coverage is increased to 74%. While we continue to provide exceptional medical information support to our customer base, by fulfilling 100% of healthcare provider requests in under 30 days since launch, we remain encouraged by healthcare industry indicators, the market and customer response to YUPELRI's, promotional efforts fueling YUPELRI's growth, including an emphasis and digital innovation, we will continue to expand as we work through the future stages of the pandemic. To be able to demonstrate month-over-month share gains despite COVID-19 speaks to the unique attributes of YUPELRI, the patient needs in the market and the strategies and promotional investments we have in place for the brand. So now, I'll turn the call over to Brett to delve into the TD-0903 data.

Thank you, Frank. Turning to Slide 8, TD-0903 a lung selective nebulized JAK inhibitor is currently in development for the treatment of hospitalized COVID-19 patients, who require oxygen support. 0903, has the potential to inhibit the pulmonary inflammation that's associated with severe COVID-19 disease, in an effort to reduce the number of patients who require admission to ICU for assisted ventilation, the duration of hospital stay and the risk of death. As previously reported, when the pandemic took hold around the world early last year, we moved 0903 quickly into the clinic, where we evaluated a range of nebulized doses of the single and multiple doses in a Phase 1 study in healthy volunteers. Moving to Slide 9, the healthy volunteer data showed 0903 to have a favorable safety and tolerability profile and low systemic PK. This data allowed us to initiate a two part Phase 2 study. Part 1, was a placebo controlled, double blind, multiple ascending dose study, evaluating three nebulized dose levels, 1, 3 and 10 milligrams in hospitalized patients with COVID-19, compared to placebo with eight patients in each cohort. Today, we're sharing the initial data from Part 1, that has informed our confidence to progress to Part 2, our larger placebo controlled study of 198 patients, testing the 3 milligram dose of 0903 added to standard of care. Part 2 is actively enrolling patients, and we expect to report results in the second quarter of 2021. Turning to Slide 10, Part 1 is a small sub study, intended to assess safety, PK and exploratory clinical measures, but has nevertheless provided us with directional information about the potential of 0903 in COVID-19. 0903 was well tolerated in hospitalized COVID-19 patients, as it had been in healthy volunteers in Phase 1. There were no drug related serious adverse events, although one patient in the 10 milligram cohorts met predefined stopping rules and was withdrawn as a precaution due to an isolated incidents of high ALT. This patient recovered with no additional consequences. From a clinical perspective, it was encouraging to see 0903 show a positive trend versus placebo on a number of parameters, including improved clinical status, shortened hospital stay and fewer deaths, albeit in a small number of patients. As reported in our press release today, we saw a reduction in main hospital stay from 22.5 days on placebo to 15.3 days for those patients on a 3 milligram dose, and 15.2 days for those patients on the 10 milligram dose of 0903. In terms of mortality, we know that hospitalized COVID-19 patients have an increased risk of death, and in this study, there were two deaths in the placebo cohorts. One death in the 1 milligram cohorts and none in the 3 or 10 milligram cohorts. We also saw evidence of improvement in several bio-markets. And in keeping with our lung selective approach, we saw low systemic exposure at all doses. Moving to Slide 11, this histogram shows the clinical status quo for each dose during the seven day treatment period. At a score of five, shown in pink, indicating the clinical status on admission, with darker shades of red, showing levels of deterioration, and levels of grey and blue showing levels of improvement. Now, I must continue to remind you, this is a small study group. But what is noteworthy is that the number of patients in the placebo group continue to decline after admission into the hospital, with 50% requiring intubation by day seven. In contrast, none of the patients in the 0903 cohorts declined during the seven day treatment period, and some patients show evidence of improvement. Turning to Slide 12, the numerical differences between placebo and 0903 cohorts continue for the remainder of the 28-day observation period. With the treatment effects more marks for the 3 and 10 milligram cohorts than the 1 milligram cohort. Moving to Slide 13, 0903 also demonstrated the same consistent PK characteristics that had previously been seen in the healthy volunteers, with low dose dependent concentrations in the blood, following once daily administration for seven days, that were well below those expected to inhibit systemic JAK pathways, and consistent with our intended profile for this lung selective nebulized pan-JAK inhibitor. Note that we administered a loading dose on day one of double the dose in the 1 and 3 milligram dose groups, in order to achieve steady state levels more quickly in the lung, in recognition of the fact that hospitalized COVID-19 patients on oxygen are prone to deteriorate quickly after admission. Turning to Slide 14, the data from Part 1, including safety and exploratory clinical data across all of the doses informed our decision to progress the 3 milligram dose into Part 2 of the study. If the data from Part 1 is ultimately predictive of what we see in Part 2, including these days are showing the improvements in oxygenation in the blood, with the 3 milligram dose compared to placebo over the seven day treatment period, then, 0903 could potentially offer an important additional treatment option for hospitalized COVID-19 patients. Importantly, 0903 offers the potential for broad pan-JAK and anti-inflammatory therapy in the lung, without increasing the risk of systemic side effects that are associated with other JAK inhibitors, including the risk of blood clotting, already a high risk in patients with COVID-19. 0903 also targets the lung inflammation caused by COVID-19, not the Coronavirus itself. So, it should not be affected by which mutational strains of COVID-19 cause this acute lung injury. In fact, 0903 could potentially produce similar anti-inflammatory effects in response to other sources of acute lung injury, including influenza, higher influenza, and other coronaviruses, such as MERS and SARS. We look forward to updating you on our progress with 0903 next quarter, when we expect we'll have data from Part 2. I'll now turn the call over to Andrew for the financial updates.

Thank you, Brett. And before moving to our financials, let's start with an update on GSK's TRELEGY on Slide 16. As a reminder, TRELEGY is the first and only once daily single inhaler triple combination therapy approved for the treatment of COPD and asthma. Theravance Biopharma receives upward tearing royalties on global net sales of TRELEGY. At present, 75% of the income from our economic interest is pledged to service principal and interest payments on our outstanding 2035 non-recourse notes, and the remaining 25% of income is retained by us. During GSK's recent earnings call, they noted that TRELEGY continued to lead the market as a single inhaler triple therapy, with full year-over-year global sales growth in 2020 of 60% over 2019 results, generating global net sales of $315 million during the fourth quarter of 2020, and $1.1 billion for the full year. Moving to Slide 17, here we provide our 2021 financial guidance, providing a new format that focuses on key operating expense categories of R&D and SG&A, excluding share based compensation. We believe this change provides greater transparency in how we are allocating capital. And we'll begin to highlight the changing financial complexion of our business. For 2021, R&D expenses excluding share based compensation, we expect to invest between $195 million and $225 million, relative to an actual expense of $230 million in 2020. For SG&A expenses, excluding share based compensation, we are providing a range of $80 million to $90 million relative to an actual expense of $70 million in 2020. Regarding the timing of expenses throughout 2021, for R&D in particular we expect greater spend during the first half of 2021, due to the completion of the Ampreloxetine and Izencitinib studies in Q3. With that, I'll turn it back to Rick for some closing remarks.

Thanks, Andrew. Moving to Slide 18, I remain grateful for the work of the Theravance Biopharma team, and what they've been able to deliver for their passion, dedication and commitment 2020, as we move into 2021. We anticipate 2021 will be a transformational year for Theravance, thanks in part to YUPELRI, with its capability to continue to grow market share and sales and beyond in 2021 and beyond. GSK's TRELEGY, in which we have an economic interest continues its strong commercial launch, each central to our changing financial complexion. Our lung selective JAK inhibitor TD-0903 was encouraging data in the Phase 2 Part 1, and Part 2 data not far behind with results expected next quarter, is also part of the picture. Therapeutics, anti-inflammatories will continue to play an important role in the COVID-19 fight, making the investigation of TD-0903 that much timely or more important. Three critical data readouts in Q3, 2021. Ampreloxetine Phase 3 for symptomatic neurogenic orthostatic hypertension, Izencitinib in Phase 2b for ulcerative colitis, and Phase 2 for Crohn's disease, a very busy third quarter for the company. Over the past few years, our knowledge of organ selective drug design applied to modifying inflammation and specific tissue is increased significantly, whether targeting tissues in the lung, the gut, the eye or the skin. We rely on our proven development and our commercial expertise, complemented by strategic partnerships and a strong capital position to create the value driving catalysts that we expect to see in 2021. A transformational year. I'll now hand the call back to the operator for questions.

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

Thank you very much, and appreciate all the additional data on 0903. Quick questions if I may a few on 0903. Could you just remind us of the frequency of dosing over the seven day course? And then Rick, could you perhaps give us an update on the arbitration with Innoviva, the timing for resolution of that? Another question for Brett. Look, there is obviously being a bit of noise about JAK inhibitors and their safety. And just wondering if you have been contacted or have any requests from the FDA, about CV safety observations, studies or anything that you might have any additional requirements that might be imposed on you for Izencitinib. And then Rick, lastly, could you just comment on the process and timing for an opt in decision from J&J after you get those Phase 2 results? I know it's not talk you through?

Yes, absolutely. I'll address both of my questions, and then I'll turn it over to Brett. Well, the in the arbitration, the arbitration is the hearing and we finished the arbitration hearing. We have yet -- we have to file a brief at closing arguments. We would expect results from the arbitrator late in this quarter or early in the second quarter. And because the confidentiality provisions the LLC agreement, I really can't go beyond that right now. So, that's where we are with the arbitration. We expect to see it resolved here over the next several weeks. In terms of the process for timing on the J&J opt in, what we do is we deliver a data package to them that begins the trigger of a 90-day clock for opting. We've worked with J&J very closely throughout this process. I think they've been an extraordinary partner in the IBD program. And so that we've already developed what that package is the information that's included, all of our programming has already begun. So, that once the study's close, and we have data, we'll be able to turn that data package into J&J very quickly, sort of the start the clock. So those are my two questions. Now, I'll turn it back to Brett for 0903, commentary on dosing frequency first. Brett?

Thanks, Rick. Hi, Jeff, thanks for your question. In terms of frequency of dosing, we administered the first dose as patients came into the hospital and were admitted requiring oxygen. And then subsequent doses were given once daily, every morning for the remainder of that seven day period, or until patients were discharged from hospital. So, if they left sooner than they would obviously receive the number of doses before being discharged. But up to seven days of dosing, and it was a single administration each day. It was delivered by a nebulized device. And one of the benefits of that nebulized device would be that it can be given to patients who are on oxygen. But it could also be given to patients who go on to a ventilator. We actually didn't see any of our patients go onto a ventilator in the active group. But if it were required, you can introduce this nebulizer into the ventilation circuit as well. In terms of general safety, you're asking Jeff about presumably the most recent data, which is around tofacitinib, from a recently published MACE Study, and [technical difficulty] not being contacted by the FDA since their data came out, requiring any additional safety observations or any additional monitoring, we do have a an established surveillance program in place, looking for a broad range of known JAK inhibitor risks. Of course, with our own approach, we believe that the lungs selective or in the case of Izencitinib gut selective approach should reduce the risk of systemic side effects. But nevertheless, because they're well established, we continue to monitor for those on an ongoing basis on all of our programs. But we've not had any additional requirements from the FDA beyond a routine surveillance. I think one last thing to add on that is that, of course, the tofacitinib MACE data was generated in patients with rheumatoid arthritis, and follows on a long history of data having been generated in the RA space, with either tofacitinib or in the case of baricitinib, Erlotinib, a lot of the data coming into their safety database comes from the fact that they're treating other systemic conditions like RA. In our case, with Izencitinib, our focus is entirely on a gut selected program. So we don't seek particularly to treat patients with conditions in other parts of the body, because in fact, we believe that our therapy remains organ selected. So, there are elements of our program that distinguish us and differentiate us from the existing products went to Izencitinib.

Great, thank you.

Our next question comes from Marc Frahm with Cowen and Company. Your line is open.

Hey, thanks for taking my questions, and congrats on nice quarter. Brett, just digging into the 0903 data a little bit. I know, you mentioned there's not a background of standard of care. But of course, it seems like standard of care for treatment COVID-19 changes every day. Can you describe what the patients in the different groups were actually receiving in terms of how much steroids were any of them getting remdesivir or some of the antibody therapies are out there? And were there any differences between the groups in this therapy?

Thanks for the question, Marc. Great question. And in fact, I should point out that we were running this study in the late summer and into the fall of last year, at which stage Dexter method zone had become established as a standard of care therapy. It wasn't established in the first half of last year and nor placebo controlled study. So if you go back and look at the first generation of studies that were run, they were non-placebo controlled, and very few of them had background steroids, including the baricitinib study. So our study has got a high degree of background use, in fact, almost all of our patients were on dexamethasone at the standard 4 milligram dose every day. All patients were also receiving anticoagulant therapy, because by the time our study started it was fairly well understood that clotting was a background risk factor. Now we started a study in the UK and then moved into parts of Eastern Europe, Moldova, Romania, Ukraine, where remdesivir was not an established standard of care. We've subsequently moved with Part 2 study into a much larger range of countries, including the U.S., Brazil, Argentina, South Africa. And we've seen not only a broader reach across sites, but we're now also seeing a more established use of remdesivir. So the Part 2 study is likely to include a greater use of remdesivir, but we saw very little of that in the Part 1 study. We also deliberately excluded patients on Izencitinib in Part 1, because of the potential for interference with IL-6 and because in truth, we weren't confident that Izencitinib had actually established itself as the standard of care. I think there's still a question mark about that. So for Part 2, Izencitinib remains a contraindicated therapy, but the use of Izencitinib is nearly [multiple speakers].

Yes. How about [Indiscernible]? Brett, you mentioned Izencitinib, I think you were...

I am sorry. I beg your pardon. It’s a tofacitinib, yes toci [ph] is the drug, I'm referring to.

Okay. And what about, I'm guessing, since remdesivir was not standard of care most in place since then, also the antibody therapy was also not being pursued in those new sites.

That's correct. So I think what we've seen is that therapies such as convalescent plasma, tofacitinib, Izencitinib are being reserved really for patients who cannot tolerate dexamethasone. And that's consistent with current guidance, which is now emerging based on evidence that's been generated over the last six to eight months of different therapies.

Okay, that's very helpful. And then with the reformulation work on 8236, what's the goal with this reformulation? What's the target profile for it, is it longer duration of exposure or shorter? Just what are you trying to accomplish?

Yes. I think what we're trying to accomplish a number of things. I think people can oversimplify a bit the optimization of parameters for inhaled medicines. Obviously with JAK inhibition, we're into a new class. Some people might focus on potency. Well, potency is what attribute, it's an important attribute. That's about one of 15 attributes that you need to optimize in order to deliver a successful respiratory medicine. So, when I said form, this wasn't so much formulation as it was sort of the physical characteristics or crystallization of 8236. And I don't want to go into this too deeply, because merely by describing it, we will begin to give perhaps competitors an understanding a better understanding of what needs to be done. But nonetheless, one or two of these 15 parameters that we think can be further optimized, either with a different form of 8236 or with one of the other JAK inhibitors that we've got in the coming out of the research efforts.

Okay, great. Thank you.

Our next question comes from Douglas Tsao with H.C. Wainwright. Your line is open.

Hi, good afternoon. Thanks for taking my questions. Just, if you could Brett, maybe walk us through the decision to proceed with the 3 milligram versus the 10. It seems that perhaps, on some of the metrics, it seems like maybe the 10, the 3 does better sort of in the first seven days or by day seven, but by day 28, you start to see some sort of somewhat better trends in the 10 mg, although I get it, that these are super small numbers. But in that same vein, why not potentially investigate the 10 milligram?

Thank you. Great question, Doug. And really, I think I'd start by describing the way in which we approach our assessment of all of our JAK inhibitors, which is to look at therapeutic index. So we put a great deal of emphasis on the evidence that we are seeing on the safety side, as well as on the efficacy side. I mentioned that one of our patients in the 10 milligram group triggered a stopping criterion for an isolated elevation on one of the liver function tests, ALT. Now, it's not clear whether that was actually associated with therapy or not. There are other reasons why patients can have elevations in lung a liver function tests in hospital. But out of an abundance of caution, we acknowledged that that patient had met that stopping rule. When we looked at the treatment differences between 3 and 10, I think you've described it well, there was some modest differences between 3 and 10. They both seem to sit apart from the 1 milligram and both were providing comparable benefits. So on balance, we felt that the 3 would have an optimal balance of both safety and efficacy. A reminder that we did give a doubling dose in a 3 milligram group as well. So actually, those patients get 6 milligrams in total on the first day. We did not do that with a 10 milligram group, because they -- our modeling had suggested they would not need that loading dose. But the 3 milligram group do get that extra shot in the arm, so to speak, inhalation to get them up to a steady state more quickly. And for those reasons, we felt that the 3 was really optimal for further assistance.

Okay, great. That's really helpful. And then just turning to YUPELRI, if I look at the trends, in terms of the hospital market share, it looks like in the third quarter, it increased a little bit and then really came back strong right in the fourth quarter. I know that there was some talk or sort of confusion around sort of the use of a nebulized therapy in the context of COVID. Do you think that was what attributed sort of that step back in the third quarter? Or was it just a lack of access, just given the situation in terms of being able to get into institutions to talk about the product? Thank you.

Hey, Frank, you want to handle that?

Yes. It was mostly attributed to pulmonologist being very, very busy treating patients with COVID-19, coupled with the lack of access to healthcare, institutions, and quite frankly, doctors’ offices that were closed. The other factor that compounded it is pulmonologist based on our marketing research, we know that pulmonologists are reticent to change therapy or initiate a new therapy unless they do a real live examine, including spirometry in other words, not telemedicine. So, all of those factors caused the dip that you see there in the third quarter. It recovered nicely in the fourth quarter, and it appears the recovery is continuing in the beginning of 2021.

Okay. And then just frankly, a quick follow-up. I mean, I know towards the end of the year, we did see another surge in infections, and that seems to be fortunately coming down pretty quite dramatically. Did you see any sort of impact on trends at the end of the fourth quarter and into the first quarter? Or was it really just limited to that third quarter? Thank you.

Well, yes, the business recovered nicely in December. In fact, December was our biggest month of all the months involved in the pandemic, in other words, dating back to March. And we also see a desire on the part of pulmonologist to want to see patients to want to have patients come in, get checked out, because they haven't checked out in quite some time. So, we are seeing as the country is seeing a bit of a recovery and the vaccines are beginning to roll out, we're seeing a requisite increase in the number of visits to pulmonologist.

Okay, great. Thank you so much. That's very helpful.

Our next question comes from Liisa Bayko with Evercore ISI. Your line is open.

Hi, there. Can you maybe talk a little bit more about how you are thinking about read through from anything you've seen with COVID into the asthma program, and maybe a little bit more about what you're doing to tweak the asthma program? And what we should expect on timing there? And then I'll have one more question after that. Thanks.

Yes, I'll start and then, I'll transition it over to Brett. I mean, I think clearly, the biomarkers in 0903 that we saw move the number of other metrics that we follow, that give us an understanding of how a JAK inhibitor can be used in an acute hyper inflammatory state, like COVID. It informs the asthma program. The other aspect of this, I mean the work over the last couple of months that it's been incredibly informative was really dissecting the gene pathway data from the 1c study. And I think, we were having broadly and directionally the effect that we wanted to have on a number of gene pathways. And keep in mind, if you remember the 1c study, these patients were on inhaled corticosteroids. And we were seeing a change in proteins on top of what these patients were experiencing on steroids. So this was another important piece of the puzzle. Brett?

Thanks, Rick. And just to add to what Rick was saying Liisa, in the asthma program with 8236, we now have consistent evidence of target engagements, whether we look at nitric oxide that's excluded in the breath or if we look at cytokines that are released into the fluid that fills the lungs, or even in the gene signature days, all of that is telling us that if we deliver a JAK inhibitor into the lungs, we're able to modulate that inflammation. So, that's how 8236. Clearly this data with 0903 in COVID-19, is further validation to the fact that we're engaging the target. We've seen some improvements in markers of inflammation in the blood of these patients, that tells us that their clinical improvement is being matched by improvements on some of these key markers. For example, CRP, which is a marker of inflammation in the body. So, if we take those two different signatures from these two different molecules, albeit in different disease states, I think it's giving us a greater understanding of the ability to modulate inflammation in the lung in these different conditions. One last thing to add is that, of course, 0903 prior to COVID, was being developed for a chronic condition. It was being looked at for lung transplantation. And although the COVID signal is in acute condition, it obviously gives us some encouragement that this anti-inflammatory mechanism may be of utility in chronic conditions as well, such as in reducing the rejection rates in lung transplantation.

I think the other just to close, Liisa, and this ties it back with other publications that we've had. We've seen now in the COVID-19 study, a reduction in the CRP, a systemic marker of inflammation. And, as a reminder, in Izencitinib Phase 1b, even though the drug was almost completely contained to the intestinal tissue and very little drug and less systemic circulation, we also saw a reduction in the marked reduction in CRP in patients with ulcerative colitis. So, we know that we're reducing systemic markers of inflammation by simply focusing on the organ that is inflamed.

Okay. And so I guess, as it pertains to the asthma program, what are the next steps then?

Yes. Brett, you want to start and then I'll close? You are on mute, Brett.

Apologies, sorry. I think as Rick was saying earlier, Liisa, we were really taking the learnings from these programs. We've decided that for the lead form of 8236, we're going to pause that development program. We're investing our efforts in the portfolio of JAK inhibitors, that could be brought forward to evaluate in asthma and in other inflammatory conditions. But really looking to pick the best candidates amongst these, this is something that we have previously done, for example, in the beater agonist program, where we considered several iterations before landing on the optimal performing agent, which actually went on to become a component of [indiscernible] and TRELEGY. So, this approach of looking for the best rather than first past the post, I think, could be really well applied to JAK inhibition.

And just to add to that, I think that's where our focus is. Our focus today is on the development of a medicine that can stand the test of time, in a chronic condition that is delivered via dry powder inhaler for asthma patients. And we have an understanding of how good that drug has to be. And I think the quality of the drug itself certainly creates a barrier of entry for others. So, the next step quite simply are working through the 8236 in another form, and bringing the other potential DPI JAK inhibitors forward into translational science, and then continuing to move 0903 forward. And most importantly getting the data from Part 2 of the Phase 2 study, which is going to give us a larger data set than what even we've seen today. However, the Part 1 I just underscored the Part 1 data that we do have is now a JAK inhibitor not in a disease model, but in a disease and showing albeit small numbers, showing an effect of reducing inflammation in the lung in that disease.

Okay, thanks.

Our next question comes from Anupam Rama with JPMorgan. Your line is open.

Hey, guys, thanks so much for taking the question. Just a quick one for me on Izencitinib. The press release noted and I think you guys talked about on the call that UC and Crohn's disease readouts, they're going to be provided separately in 3Q. Can you maybe talk to us a little bit about the cadence of the disclosures if you can? And my kid might have a follow-up, I'm not sure.

Hey, Andrew, you want to touch on that?

Sure. Yes. Anupam, really unfortunately, we can't give you much more granularity right now. The studies are ongoing. And we'll be as forthright and transparent in the communication as we can be. We understand the criticality and the materiality of the data for both studies, and also for Ampreloxetine. But unfortunately, we're not going to be able to get more granular right now.

Great. Thanks for taking my question.

Our next question comes from Vikram Purohit with Morgan Stanley. Your line is open.

Great. Thanks for taking my question. So my first one was a follow up on Izencitinib, specifically with regards to the J&J opt in. I was wondering if you could just kind of clarify for us for that 90-day period that you mentioned that J&J has, is that 90-days per indication? Or is the process more that they get a data package that combines both data sets for UC and Crohn's, and then they have 90-days based off of that data package to make a decision for both indications? That's my first question.

Yes, it's good question. We anticipate delivering the data package that has both sets of data in it to J&J for their decision.

Understood. And to the best of your understanding with J&J, are they going to be making separate decisions for UC and Crohn's? Or is it a decision for a broad development program in IBD based on both datasets?

Well, I think they'll consider both datasets. I don't have a perspective on, whether one is more important than the other. I think they're going to be looking at both data sets. Obviously, the ulcerative colitis data set is a more advanced data set being in Phase 2b, and now we're actually rolling patients out of the 2b program into the Phase 3 maintenance study. Whereas the Crohn's study is a Phase 2 sort of proof of concept and Crohn's. And I'll just ask Brett to add anything.

Yes, just perhaps one additional comment, Vikram. And that's that it's not a sense that we don't know who we're talking to with on Janssen colleagues, and we'll pass this data over to some strangers that we've never met. We're working day to day with these individuals. On the ongoing conduct, they had an integral part in the original design of these studies. And this has been a real hand in glove partnership. So we continue to work very closely with them in anticipation of these readouts. So that that 90-day period is really used to maximal effects in them getting stuck into the data. A lot of the planning work is going into this right now is being done in very close collaboration with Janssen, really to look to make a best use and make the inefficient window of time.

Okay, understood, that's helpful. And then just one follow up shifting gears to your earlier stage programs like 5202 and inhaled oxide inhibitor you spoken about previously. Just wanted to get a sense of what the status is with those programs and what the next milestones are that we should be looking for?

In 5202, we continue to work with Janssen on the next stage of that program, likely targeting a development pathway in celiac disease. With the IL 5 inhibitor we've been going through a Phase 1 single ascending and then multiple ascending dose ranging study of the inhaled our five inhibitor. We're continuing to work through that. And before the end of this year, certainly, we should have Phase 1c or b, where however you'd like to characterize it with some exposure in patients with idiopathic pulmonary fibrosis in that program. So, Brett, anything to add there?

No, I think you summarized it well, Rick. Nothing to add.

Okay, great. Thank you.

Our next question comes from Brian Skorney with Baird. Your line is open.

Hey, good afternoon. Thanks for taking the question. Two questions. I mean, to start, I guess, I think the other week, Glaxo filed a pretty brutal 13D on Innoviva. And I'm just wondering if there's anything to take away from this vis-à-vis the arbitration decision, and I think it's the first time like we've sort of seen publicly Glaxo weigh in and they kind of call out, very specifically Innoviva is intending to be divergent with what the intense of the parties roll out at the time of separation. So, is that admissible? Is Glaxo a party to the arbitration? Do they have sort of a role in testifying here?

Yes, Brian. Listen, thanks for the question. I really can't get into the arbitration process itself. I think we are surprised as anybody with regard to the filing. And to get more color on it the filing, I think it probably should come from GSK. Because, again, we weren't aware that it was going to be done.

Got it. And then I have a next question on 0903, just in terms of the ALT threshold achieves the stopping criteria at 10 mg dose. Can you outline what that threshold was? And then whether or not there was any concomitant bilirubin increases? And then have you guys looked at all at systemic administration of 0903 in any of the animal models? And if so, is liver, the end organ tox there?

Thanks, Brian. I can describe ALT we put a threshold across all of our protocols, actually, for four times the upper limited normal. And this patient treated only on ALT, there was absolutely no change on AST bilirubin or any of the other liver function parameters. So there was no highest rule trigger or any clinical manifestations with this patient at all. It was purely a single biochemical arrangement. But because we continue to monitor for these things, and because it was stipulated in the protocol, we withdrew therapy as a proportion. Certainly if you look at our preclinical tox, these molecules are actually designed to be labeled, so they don't generate very high levels in the systemic circulation. They break down very quickly when they get into systemic circulation. Liver toxicity is not a concern in animal models. And so this is really just a standard surveillance in the clinic. It was not done, specifically because there were any preclinical concerns.

Got it. Thanks. That's helpful.

Our next question comes from Joseph Stringer with Needham and Company. Your line is open.

Hi, everyone. Thanks for taking our question. Just wanted to switch to Ampreloxetine and no shot, given that there will be all back in 2021. I was just wondering if you could comment on potential thoughts on pricing given sort of the two opposing forces of generic entry and that potentially better profile for Ampreloxetine. And secondly, how does the generic entry potentially affect the target patient population for the drug? Would you see it as more inadequate responders or treatment naive patients, maybe some color on that? Thanks.

Yes, I'll start. Just give Brett, a heads up that I'm going to come to him after a couple of remarks. I think we see Ampreloxetine as dramatically different medicine than the Northera droxidopa. The fact of the matter is, in the label the effect of Northera does not lasts very long in terms of effect on OHSA-1, because it's really an agonist. So there's probably some tacky flexes that in fact happens with longer exposure to droxidopa. And you see cycling coming in and out. Whereas a drug like Ampreloxetine once a day, it's effectively operates like an antagonist making use of the body's own Norepinephrine was droxidopa effectively introduces exogenous Norepinephrine [Indiscernible] into the system. So, I think these are dramatically different medicines. There's a relatively small number of patients that are treated with Northera day in, day out that have nOH. We would see that Ampreloxetine finding a home in a much larger patient population. And hopefully, we'll see what we've seen in other studies with Ampreloxetine that we don't see his supine hypertension, that in fact, plagues droxidope’s use. So, Brett?

Yes, I think he said it well, Rick. Again, this is about therapeutic index, just as it is with the rest of our portfolio. And Ampreloxetine is really optimized to drive the efficacy when it's needed to take the body's own endogenous Norepinephrine and to allow it to last for longer. That tends to occur in the early part of the day or when patients are eating, and the levels of norepinephrine need to be high during that time of the day. So Ampreloxetine maintains those. When patients go to sleep at night and the nervous system shuts down and not producing as much Norepinephrine and our drugs will not potentiate any additional effect because the body is not producing Norepinephrine. So it's a much more physiological response. And we think that will translate into better efficacy, more sustained duration of therapy, as well as better safety, lower risk of supine hypertension, when patients are sleeping at night. Those should set us apart from droxidopa. We know, for example, even today that if we see efficacy at four weeks in our pivotal Phase 3 study, the FDA would view that as distinct and improved on the Northera data, which is nOH end efficacy at one week. One last point to make is that the Northera labeled, in fact, is a conditional approval. They still don't have full approval because there's an outstanding data set that's required with the originator company with Lundbeck. One of the question marks around the introduction of generics is what will happen if Lundbeck is the originator isn't able to support the labeling requirements, and what implications that may have with generic substitutions as well. So for all those reasons, we still remain really committed to the Ampreloxetine program. We think it will be highly differentiated from Northera.

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

Thank you, operator. I'd like to thank everybody for joining us for this call. We're very excited about the year ahead, what we have the capability to do as an organization that we look forward to updating you as the quarters roll by for 2021. Please have a good day and stay safe. Thank you.

This concludes today's conference call. We thank you for your participation. You may now disconnect. Everyone have a great day.