Innoviva, Inc.
Q4 2017 Earnings Call Transcript

Published: 9 Feb 2012

[Operator:]

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to the Theravance Conference Call to Review Results for the Quarter Ended December 31, 2011. [Operator Instructions]

[Today's conference call is being recorded. And now, I would like to turn the call over to Mike Aguiar, Senior Vice President and Chief Financial Officer. Please go ahead, sir.:]

[Michael Aguiar:]

Good afternoon, everyone, and thank you for joining us. With me on the call today are Rick Winningham, our Chief Executive Officer; and Mathai Mammen, our Senior Vice President of Research and Early Clinical Development.

[Today's call will be in 3 parts. First, Rick will review highlights for the quarter and the year and he will provide an update on our clinical programs, and I'll review our financial results, and finally we will open up the call for questions.:]

[Earlier today, Theravance issued a press release detailing fourth quarter and full year 2011 financial results and recent corporate developments. A copy of the press release can be downloaded from our website, or you can call Investor Relations at 650-808-4100 and we'll be happy to assist you.:]

[Before we get started, we would like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance. Forward-looking statements include anticipated results and other statements regarding Theravance's goals, expectations, strategies and beliefs. These statements are based upon the information available to the company today, and Theravance assumes no obligation to update these statements as circumstances change.:]

[Future events and actual results could differ materially from those projected in the company's forward-looking statements. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company's Form 10-Q filed with the SEC.:]

[I will now turn the call over to Rick Winningham, our Chief Executive Officer. Rick?:]

[Rick Winningham:]

Thanks, Mike. Good afternoon, everyone. We're very pleased with the significant advancements made since the beginning of 2011 across our pipeline and in the respiratory programs in particular. The most important development was our recent announcement that GSK intends to commence the global registration process with RELOVAIR based on the initial results of the Phase III programs in asthma and COPD.

[In addition, GSK has now completed enrollment in the Phase III pivotal program for LAMA/LABA and expects to complete the program before the end of the year. There are a number of important events coming up in 2012 that make this is a very significant year for Theravance.:]

[Turning now to our respiratory programs in more detail, I'll focus on RELOVAIR and LAMA/LABA which are under development as once a day combination respiratory medicines. RELOVAIR is being developed for both COPD and asthma, and LAMA/LABA for COPD. With these respiratory programs we intend to address a significant unmet need in COPD and asthma, which represent a considerable market opportunity.:]

[According to data from IMS Health, medicines containing long-acting bronchodilators for the treatment of COPD and asthma today have revenues totaling approximately $19 billion for the 12 months ending in September 2011.:]

[This global market has been growing at a high single-digit rate over the last several years. Based on data from Decision Resources, future market growth will be driven primarily by COPD. In early January, GSK and Theravance issued a release announcing the decision to commence regulatory filings for RELOVAIR in Europe and the U.S. for COPD and in Europe for asthma beginning in mid-2012.:]

[In the U.S., GSK continues to continue discussions with FDA regarding the requirements for an asthma package. Based on initial assessment, GSK believes that Phase III data supports the plan to seek global approvals of this once-daily medicine for the treatment of patients with COPD and asthma. We have now reported topline data for Phase III studies that enrolled approximately 11,000 patients. The full results of these studies will be presented at future scientific meetings.:]

[In addition, GSK plans to begin additional clinical work to investigate the potential effects of RELOVAIR in real world effectiveness studies. These studies are intended to demonstrate the impact of once-daily dosing on patient outcomes.:]

[Now turning to the LAMA/LABA program, there are 7 ongoing Phase III studies evaluating this once-daily combination dual bronchodilator for the treatment of patients with COPD. The program is progressing in line with expectations and GSK has now completed enrollment in all studies.:]

[The LAMA/LABA combines 2 once a day investigational bronchodilators:]

719, or once-daily long-acting muscarinic antagonist or LAMA; and vilanterol, the once-daily long-acting beta2 receptor agonist in RELOVAIR. The overall Phase IIIa program will evaluate over 5,000 patients globally. The LAMA/LABA Phase III program is anticipated to complete in 2012.

[Recently, GSK announced that it completed a Phase IIb dose ranging study in COPD evaluating lower doses of 719, and the results from this study support the doses and dosing regimen being evaluated in the Phase III program.:]

[In our MABA program, we remain on track to report Phase IIb results for the lead asset 081 during first half of 2012. In addition during the fourth quarter, we and GSK amended the strategic alliance to expand the pool of MABA compounds under the alliance.:]

[We believe that together these 3 programs, RELOVAIR, LAMA/LABA and MABA have the potential to address the needs of a wide range of COPD and asthma patients suffering from these debilitating diseases.:]

[Now let me discuss the PuMA program and our lead compound TD-1211. With this program, we are focused on alleviating the gastrointestinal side effects of opioid therapy without affecting analgesia. TD-1211 is a once-daily orally administrated peripherally selective multivalent inhibitor of the mu opioid receptor.:]

[Our Phase IIb program consists of 3 studies that together address key questions that will help define dose and dosing regimen for Phase III. Enrollment is progressing well in the Phase IIb program, and we expect to report data from these studies around the middle of 2012.:]

[Recently Theravance regained full rights to VIBATIV, our once-daily injectable lipoglycopeptide antibiotic approved in the U.S., Canada and European Union. While it's still early in the transition process, our initial efforts are focused on evaluating commercialization alternatives for VIBATIV, including re-partnering and reestablishing consistent VIBATIV product supply. We believe that VIBATIV is an important life-saving medicine, and we look forward to providing further updates later in the year.:]

[I'll now turn the conference call over to Mike Aguiar, our Chief Financial Officer. Mike?:]

[Michael Aguiar:]

Thanks, Rick. Today I'll discuss the results of the quarter ended December 31, 2011, and will provide guidance for full year 2012 expenses. For the quarter ended December 31, 2011, Theravance had a net loss of $37 million or $0.45 per share.

[Research and development, plus general and administrative expense excluding stock-based compensation, totaled $34.7 million for the fourth quarter and $109.3 million for the year-to-date, which was in line with our expectations in prior guidance.:]

[2011 ending cash, cash equivalents and marketable securities was $240.9 million, a net decrease of $68.7 million during the year. Revenue totaled $5.4 million during the fourth quarter 2011, and consisted primarily the amortization of deferred revenues from the company's partnerships with GSK and Astellas.:]

[Royalty revenues from VIBATIV totaled approximately $300,000 from net sales of $1.6 million during the fourth quarter. For the full year 2011, VIBATIV total net sales in the U.S. were $13.5 million, which resulted in royalty payments to Theravance of $2.4 million.:]

[Looking forward, I would like to note 2 changes to expect as a result of the termination of the VIBATIV collaboration agreement with Astellas. First, during the first quarter of 2012, we will be recognizing to revenue the remaining deferred revenue balance of approximately $125 million.:]

[Second, we will no longer recognize either royalties from Astellas or ongoing amortization of the Astellas' up-front and milestone payments previously received. As a reminder, deferred revenues are a non-cash item.:]

[Total R&D expenses for the fourth quarter 2011 were $32.5 million, compared with $17.5 million for the same period last year. This increase was primarily due to higher clinical costs related to our P'MA and MARIN program, and higher expenses associated with our HCV and cardiovascular programs in late-stage discovery.:]

[Excluding stock-based compensation, non-GAAP R&D spending was $29.1 million during the fourth quarter of 2011, compared to $14.9 million for the same period last year. For the full year 2011, total R&D expenses were $103.5 million, compared to $75.1 million for 2010.:]

[General and administrative costs were $8.5 million during the fourth quarter of 2011, compared to $7.4 million for the same period last year. This increase was primarily due to higher employee related and external expenses offset by lower facility related costs. Excluding stock-based compensation non-GAAP G&A expense was $5.7 million during the fourth quarter of 2011, compared to $5.3 million in the same period 2010.:]

[Now turning to our guidance regarding non-GAAP expenses for 2012. For the full year, we expect operating expenses to be in the range of $120 million to $130 million. This forecast is higher than in 2011, driven primarily by clinical spending related to the Phase IIb program with P'MA, the Phase II study with MARIN, and preclinical work with our HCV and cardiovascular programs.:]

[As a reminder, our guidance includes total research and development expense and total G&A expense, but excludes stock-based compensation.:]

[Now, let me turn the call back to Rick for final closing comments. Rick?:]

[Rick Winningham:]

Thanks, Mike. We're excited about our progress and we're excited about the important milestones in 2012, particularly in the respiratory programs. We look forward to GSK's filing of applications for RELOVAIR; the completion of the LAMA/LABA Phase IIIa program; reporting topline data from the MABA Phase IIb program; and to GSK presenting RELOVAIR Phase III data at scientific conferences later this year. We'll continue to advance our diverse pipeline and focus our expertise in areas where there are unmet medical need and significant market opportunity.

[And now, I'd like to turn the call over to the conference facilitator and open the call for questions.:]

[Operator:]

[Operator Instructions] Our first question comes from Steve Byrne with Bank of America.

[Steve Byrne:]

In the COPD exacerbation studies, when you look at some of the other endpoints, such as percent of patients that had exacerbations or time to exacerbation, do they strengthen your view that you have a compelling story here?

[Rick Winningham:]

Well, I wouldn't want to comment on the endpoints other than what we've described in the press release and in the slides at the J.P. Morgan conference, but in both studies all doses of FF and VI demonstrated reductions and annual rate of moderate/severe exacerbations compared to vilanterol alone. We had highlighted the 125 dose in particular across both studies and we did -- we said that FF and VI or RELOVAIR demonstrated numerical increases in lung function across the Board versus VI, but not all increases were significant. I think overall, as both GSK and Theravance have said since the -- in the release and since the release, that the totality of data that we have in the COPD program support the position of filing the applications for COPD in the U.S. and Europe.

[Steve Byrne:]

And just continuing on that, Rick, have you looked into these data as to the potential for meaningful outliers?

[Rick Winningham:]

I think a thorough data analysis is certainly under review, certainly in process, as you might imagine, as GSK prepares to file the regulatory applications in U.S. and Europe, and we continue along that path.

[Michael Aguiar:]

Yes. Steve, this is Mike. I would just say while the data still continues to be analyzed, et cetera, we were pretty diligent in terms of our press release, and based upon what we had at that time were fairly inclusive in highlighting what we thought were potential areas of concern at that point in time. So I think I would just point you back to the release and say, those were really kind of the conclusions from the stage at this point that we would talk about. But again, I think we are fairly inclusive of things that we thought potentially would be of interest to investors.

[Steve Byrne:]

Okay. And just lastly. Is the remaining asthma study still on track to read out in the second quarter?

[Rick Winningham:]

Yes. Things are still on track. I don't, today, expect to have a release around that unless something more were to go awry. But as far as I'm aware, everything is still generally on track.

[Operator:]

Our next question in queue comes from Marko Kozul with ThinkEquity.

[Marko Kozul:]

Hopefully you can answer this. I wanted to ask, assuming RELOVAIR is approved, can you describe what data you might highlight in negotiations with payers in an effort to potentially seek premium pricing?

[Rick Winningham:]

Well, I think it's still too early to talk about the -- marketing strategy with RELOVAIR. I think, I can just point you really back to a very large and significant program across 2 different diseases in COPD and asthma that GSK has executed with data in -- specifically in the COPD program around the exacerbations, and certainly very encouraging data in the asthma program from a 2,000-patient study in exacerbations. And GSK's stated commitment to continue the development with the real-world effectiveness studies, as well as the ongoing mortality study. So I think together, GSK and Theravance feel quite confident about COPD and the asthma data that we have in hand, and look forward to eventually filing this application and moving on from there.

[Marko Kozul:]

Just as a follow-up, since your remarks in early January, have you received any additional safety updates or granular details on the program?

[Rick Winningham:]

No, I think as Mike indicated, before GSK and Theravance issued the release, we did a fairly exhaustive look at the data that was in-house at that time before drafting the release. We believe that we've included all the pertinent information that is there in the program at this point in time. So I think we've been pretty descriptive in that first release about the contents of the large Phase III program. Mike?

[Michael Aguiar:]

Marko, I agree.

[Marko Kozul:]

And, sorry, just to sneak in one more. The MABA program, should we expect data at ATS?

[Michael Aguiar:]

Yes, I think just with regards to MABA, the communication we've been giving is that we would have results during the first half, and so I wouldn't want to change any guidance on that. With regard to ATS, that's coming up obviously pretty fast and furious, and so that feels like a low probability. But I would just point you to the previous guidance of topline results are expected here during the first half of 2012.

[Operator:]

Our next question comes from Tom Russo with R. W. Baird.

[Thomas Russo:]

The Glaxo positive update on the Phase II dose ranging trial for LAMA seems like it could be a pretty big deal. And I was just hoping you could help put how it supports those selections into a little more context, maybe what the efficacy trend looked like at those doses below 62.5 or what the goal or requirements were for that trial to consider it successful and supporting what you took into Phase III?

[Rick Winningham:]

Yes, well, as GSK had commented in their call earlier in the week, I don't think they were prepared at that point in time to share any specific -- additional specific data. What I can say is that there's been someone from Theravance that's a member of the joint project committee has seen -- has looked at the low dose 719 data and after the review, concurs with GSK's view that the doses that are currently being studied in Phase III are appropriate. So I think overall, if you look the dose ranging studies that are current -- that have currently been completed and are listed on clintrials.gov., GSK has conducted an extraordinarily extensive dose ranging study looking at doses all the way from 62 -- 16 micrograms, all the way up to 1,000 micrograms. And I think the long and the short of it is, after all of this review and 2 very nicely designed and well-conducted studies, GSK and Theravance are quite comfortable with the dose selection of 62.5 and 125 for 719 in Phase III.

[Thomas Russo:]

Okay. And just to quickly follow up on that. Will that study that they mentioned yesterday be presented at a medical meeting this year? Is that something that will be in an 8-K somewhere along the way?

[Rick Winningham:]

Tom, I don't expect to have a pre -- excuse me -- a press release on that. It potentially could be presented at an upcoming scientific conference in accordance with GSK's practices of communicating data. So I wouldn't want to comment any more than that. But I don't really expect a press release to come out. I didn't have this as a high-risk item on my agenda in terms of communication. So at least as of today, I don't expect to see that. So I would just say, we will work with GSK on whatever the appropriate venue is in accordance with their communication practices.

[Thomas Russo:]

Okay. And then just one last question, totally different topic. Can you give us a little bit more color on what you've got going on pre-clinically in Hep C, and is that a potent nucleotide by any chance? I'm just curious, you mentioned that in your update, what it is that you have going on?

[Rick Winningham:]

Sure, I'll let Mathai provide a little bit of background on that program.

[Mathai Mammen:]

Tom, it's Mathai here. So we have -- we've in all of our programs taken what we think is a distinctive multivalent approach to whatever targets are out there. And we believe we have a distinctive approach against the target NS5A. And we're pretty far along in our investigations, and we're feeling good about where we are, understanding that this is an ultra-competitive space.

[Operator:]

Our next question in queue comes from David Friedman with Morgan Stanley.

[Sara Slifka:]

It's Sara calling for Dave. You mentioned in the press release that you finished the MABA Phase I in combo with FP. I was wondering if you can tell us when we might see that data, and what are the plans for next steps for that regimen?

[Michael Aguiar:]

Sara, it's Mike. Again, it's kind of the same comment I had given a little bit earlier. Today, I don't plan on having a release around that. And so again, this is something I'm going to work with GSK in terms of coming up with the right venue again in accordance with their scientific engagement policy. So I don't have any specific updates. Historically, we have -- or GSK has actually communicated all these in that venue, so what will be the right timing on all that is still to be determined at this point.

[Sara Slifka:]

Okay. And do you have any idea of what the next step for that regimen might be, or when you'll start another trial?

[Michael Aguiar:]

I think the next external thing that will be communicated is going to be around the Phase IIb results, which is what I mentioned a little bit earlier, which we've given guidance that would likely come up here in the first half of the year. So that's probably the next big communication venue that happens. In addition to the Phase IIb and the Phase I program, of course there's a variety of stage -- what we call Phase III enabling studies going in the background that we will be reading out at various times. So once we get the data all in-house, we'll have the ability to make a decision which direction we're going with the program. The one thing I would point out about this is we are looking at twice a day and once a day dosing regimens in this Phase IIb program. And if it turns out it's a twice-a-day compound or once-a-day compound, we would be able to have the ability to move it forward in that capacity. So this is something I think that we're looking forward to quite a bit. And certainly, once the data gets here and all that, we will have it communicated out.

[Operator:]

Our next question comes from Ian Somaiya with Piper Jaffray.

[Ian Somaiya:]

Just wanted to follow-up to your answer to last question. So in the event that we're looking at twice-a-day drug, what would the development timelines be, and how would the twice-a-day development program compare to the once-a-day?

[Michael Aguiar:]

This is Mike again. If it turns out it was twice-a-day, as you are probably aware, the Phase IIb study that's running right now is being done in the discus. So there's devices out there today. GSK has fluticasone propionate which is the steroid in ADVAIR, so we have both the compounds there as well as the device for twice-a-day. And we have again, obviously, a device and a steroid for once-a-day. Well, I'll have to wait and see what the actual data looks like, and coming back from the teams when we get it here, that will really determine the path of what it would be, whether it's twice-a-day or once-a-day and what the exact next steps are. So I wouldn't want to get too far ahead of that, or try to predict what a once-a-day or twice-a-day path might look like at this point. Rick?

[Rick Winningham:]

Yes, other than the study that's ongoing is in COPD, and that's likely, if we're successful with the program, in the Phase IIb, with the IIb program, and everything points towards progression, then that would clearly be what we would evaluate in Phase III or COPD patients.

[Ian Somaiya:]

I'm just trying to reconcile that with guidance you've given previously, which is looking at 3 different combination products and assuming they're roughly 12 months apart in terms of their market introduction. So if we assume RELOVAIR does reach the market at some point next year, is LAMA/LABA still on track for 2014, and is MABA on track for 2015? And is it the once-a-day or twice-a-day that you'll be able to get in 2015?

[Rick Winningham:]

Yes, so that's looking a fair ways out but the guidance, we've given the guidance on the RELOVAIR filing, so you have to pivot off of what an estimate would be for regulatory review of those filings. And then we've now and GSK has given guidance that we plan to complete the LAMA/LABA program this year at the end of 2010, carry forward some reasonable estimate on if successful what that filing strategy and timing would be. And then MABA is the third in the queue. And it will -- the finishing the MABA program will first and probably most importantly depend on the starting of the MABA program. So it's likely that overall a program in COPD with inhaled respiratory medicines, I'd just give you guidance to look at what's been done historically, not saying that, that would be the guidance that we would stick to, but it's as good as anything else that's out there publicly today to sort of estimate what a development time line is. I think what we're particularly excited about and what GSK, based on the comments that they made in their call earlier this week is obviously excited about, is the ability to treat a broad range of patients within the products that we're developing with GSK. And I think that that's what's so exciting for us about these 3 programs.

[Ian Somaiya:]

Fine. And just a question on the asthma exacerbation data. Why or why not -- and just some things with U.S. regulatory path for the product -- why not should we choose to sort of assume success there? And I guess Glaxo has publicly stated that they'll pursue European filing in asthma. In your opinion, as we think about the FDA requirement for asthma, at least these studies that they've asked for commercially available drugs, does the exacerbation study meet those requirements?

[Rick Winningham:]

The challenge that I think we have and probably others have is that the requirements currently are not clear. That's one of the reasons for GSK continuing their discussions with FDA on what is required. Clearly if you look at the overall balance of information that we have, the asthma exacerbation study is a positive relative to the overall asthma program. But the progress in asthma in the United States will really depend on the outcome of GSK's discussion with the FDA, which they've communicated they plan to do.

[Michael Aguiar:]

If your question was related to the large post marketing studies that are underway by GSK and the other players in this space, then I think the answer is pretty clearly no, that the exacerbation study doesn't meet, that those are totally different studies. I would say we were quite pleased with the outcome of this, and it would certainly provide a pretty large study with some very positive conclusions for the regulators to look at. But again, sitting here today, without having definitive guidance from the FDA on asthma, it's a little bit tough to know exactly where the FDA is ultimately going to land on this one. So I would prefer just to keep a little bit conservative on that, like we have been with regard to asthma in the United States. And we'll let GSK continue their discussions and see where things end up on that.

[Ian Somaiya:]

Okay. If I could just ask one last question, for you, Mike. Can you just remind us what Glaxo's equity stake is in the company today, and how that compared -- compares to their interests following the November 2010 offering?

[Michael Aguiar:]

Yes, so they're just under 19% today. They've been truing up kind of on a quarterly basis fairly regularly up to this point. We'll have to wait and see what they do this quarter. But they had come up from somewhere in the neighborhood of 12% to just under 19% in the offering that you were referring to.

[Operator:]

[Operator Instructions] Our next question is from Howard Liang with Leerink Swann.

[Howard Liang:]

Just wondering about the data for the lower doses, 719, how -- I think you said it's supportive of doses starting in Phase III. And how is that study different from what was done for vilanterol?

[Rick Winningham:]

Well, in both instances, with both the LABA and the LAMA, there were extensive dose ranging studies that were done by GSK. All of those studies are posted on clintrials.gov. The dose range of the LABA was studied over a number of different studies. The dose range of the LAMA has been studied over a number of different studies. And I was just highlighting specifically 2 studies that are once-daily, twice-daily study at a very -- covering a very large range of doses of 719, from 15.6 micrograms once-daily to 1,000 micrograms once-daily. And I think the evaluation by GSK has been relatively exhaustive in looking at this long-acting muscarinic antagonist. And the comment that I made that a member of Theravance, person who is a member of the joint project committee has reviewed now the most recent study, the data from the most recent study, and it independently concurs with GSK's view that the doses that we currently have in Phase III are appropriate.

[Howard Liang:]

Great. And do you have a date for the pre-NDA meeting for RELOVAIR?

[Michael Aguiar:]

We don't make any specific comments around kind of the very daily ins-and-outs on a regulatory basis. So I wouldn't want to give any guidance on that. I would just point back to the guidance we gave beginning the filing process around the middle of the year. So I wouldn't want to get into specific dates for meetings.

[Howard Liang:]

And just the filing decision, can you say there's been some interaction with regulatory authorities on filing, you can -- can you expect to file?

[Rick Winningham:]

Yes, GSK doesn't comment on the interactions with regulatory authorities, so, Howard, I just can't give you any more guidance on that.

[Operator:]

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.

[Rick Winningham:]

All right. Thank you. And I would like to express my appreciation for everyone joining us on the call today. We've highlighted a number of accomplishments in 2011 and early 2012, and we look forward to a very exciting year of accomplishments in 2012 for Theravance across a very broad set of programs in the pipeline. But in particular, the respiratory programs that we have partnered with GSK. Thank you very much, and have a great day.

[Operator:]

This does conclude today's conference call. We thank you for your participation, and you may now disconnect.