Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravance Biopharma conference call. Today's conference call is being recorded. And now I would like to turn the call over to Gail Cohen, Vice President, Corporate Communications and Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining the Theravance Biopharma conference call and webcast to discuss our second quarter 2020 financial results and outlook. As always, I 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 sales and financial results. Information concerning factors that could cause results to differ materially from other forward-looking statements is described further in the company's filings with the SEC. And now I would direct your attention to Slide 3. Joining us are Rick Winningham, Chief Executive Officer; who will open today's call with an overview, followed by Frank Pasqualone, Chief Commercial Operations Officer; and Brett Haumann, Chief Medical Officer, who will review the specifics about our commercial and development portfolios. Andrew Hindman, Chief Financial Officer, will share our second quarter financial update, and Rick will close the presentation. Following the 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, we'll be happy to assist you. Now I will hand the call to Rick for opening comments.

Thanks, Gail. Good afternoon, everyone, and thank you for joining us. I'd like to start by thanking everyone at Theravance Biopharma for their passion and their dedication to our mission and the communities we serve. Despite the pandemic, our teams leaned into our core values and mobilized and endured in ways beyond my expectation. We are advancing our long-term strategic goals, primarily focused on inflammation and delivering organ-selective medicines that we believe have the potential to deliver greater efficacy and safety to patients. This quarter represents the company's first complete quarter working remotely, aside from lab-based employees who have continued their important work with the appropriate safety precautions in place. 2020 remains a critical year for Theravance Biopharma, and much of that has to do with progress on our commercial product, YUPELRI, which we continue to forecast to become cash flow positive this year in the U.S. by the end of 2020. In addition, our clinical programs, we've been working diligently to ensure patients in the hospital setting for COPD remain safe and have continuous access to YUPELRI. Patients in late-stage clinical trials for ampreloxetine and TD-1473 continue to be enrolled while ensuring data integrity is not compromised. As noted in our last quarter update, we have delays in our clinical trials, and Brett Haumann will share additional details shortly. However, thanks to the tremendous endeavors of our teams, suppliers, and partners, the studies are well managed, have adequate clinical trial supply, and we're working to minimize such delays where and when possible. Thanks to the efforts early in the first quarter, we're well capitalized to continue investing in our clinical pipeline. Andrew will walk through the financial specifics at the end of the presentation. I'll now turn the call over to Frank to share an update on YUPELRI commercial operations.

Thanks, Rick, and good afternoon, everyone. Let's advance to Slide 5. YUPELRI indicated for the maintenance treatment of patients with COPD is the first and only once-daily nebulized, long-acting muscarinic antagonist that provides a full 24 hours of control for patients. I'd like to start with a few comments about the impact of COVID-19 on hospitals and health care, lower hospital census, and patients with COPD symptoms, weary of seeking treatment, which requires them to leave home, have contributed to a reduction in the inpatient use of nebulized products, including YUPELRI, during the second quarter. Also recall that our target audience is primarily pulmonologists, many of whom were appropriately focused on treating COVID-19 positive patients during the second quarter. Office-based physicians report that patients are either canceling regular health checkups or using telemedicine to avoid the risk of exposure to COVID-19. In qualitative research with health care professionals that treat COPD, we have heard consistent feedback that telemedicine is not sufficient for assessing and reassessing patients to determine if a treatment change is necessary. As a recently launched brand, YUPELRI is affected by any pressure on new-to-brand patient starts. In acknowledging the changes to our external environment, we've rapidly shifted resources to be more heavily invested in non-personal and digital promotion than before the pandemic, along with metrics to measure effectiveness. Early feedback on our ability to access HCPs and deliver appropriate messages in the new normal has been encouraging. Remember that in our commercial strategy with Mylan, we focus on the institutional setting while Mylan covers the outpatient COPD treatment segment. Along these lines, and moving to Slide 6, we are tracking key performance metrics, including formulary reviews and wins, patient uptake, and market access. Currently, launch-to-date formulary wins total 181, covering just under 350 accounts, with 80% of these accounts having purchased to date. Since launch, a total of 496 accounts have ordered YUPELRI, and two thirds of these accounts have reordered at least once. Despite the impact of the pandemic in the second quarter, the team is on track to deliver on both strategic imperatives, expanding the formulary access base through the second half of the year and prioritizing patient demand pull-through efforts in the accounts with YUPELRI on formulary. We provided exceptional medical information support to our customer base, with 100% of health care provider requests fulfilled in under 30 days. We estimate that through the second quarter of 2020, approximately 44,000 patients have been prescribed YUPELRI since the U.S. launch in February of 2019. Turning to our marketing efforts and the impact on brand perceptions and prescribing behaviors, data as of April 2020 show that including IQVIA retail data and durable medical equipment market segment, YUPELRI achieved a 92% share of the nebulized LAMA market and a 16% share of the long-acting nebulized market, with share increasing every month through April. As of June 2020, 51% of HCPs that participated in our marketing research and who treat COPD had prescribed YUPELRI, up from 39% in September 2019. Penetration is even higher, 68%, with YUPELRI prescribers contacted in our marketing research, treating disproportionately more severe and symptomatic patients classified as Gold Group C and D, suggesting our product positioning and increased focus on key patient types is hitting the mark. Turning to patients and their ability to access YUPELRI, we continue to work to expand coverage for the medicine. Collaborating with Mylan and by working through logistical challenges presented by the pandemic, we are pleased to announce that YUPELRI's commercial coverage has increased to 72% from 62%. This improving picture for access plays an integral role in the strategic outlook for YUPELRI for the balance of 2020 and beyond. Before COVID-19-related restrictions on our field-based activities, institutional volume was strong and growing in our targeted accounts. With our representatives now returning to site-specific in-person HCP engagements at the beginning of the third quarter, the focus is to return to growth by driving awareness and adoption. With an increasing number of hospitals purchasing YUPELRI, prescribers becoming more familiar with the brand and increasing use in key patient types, we believe YUPELRI can return to growth as health care systems adapt and recover from the impact of the pandemic. As our careful and selective reentry continues, we will monitor our environment and our investments closely and are poised to react quickly. And now I'll turn the call over to Brett for an update on our clinical development programs.

Thanks, Frank. The COVID-19 pandemic and associated social distancing measures have created a challenging environment for clinical trials and drug development. We've been working to adjust to the changes imposed in each of the 35 countries where we have clinical sites and accommodating new regulatory guidance as it emerges. We've implemented various approaches to ensure our studies are able to continue in a safe manner, including remote assessments and shipping clinical trial supplies and medication to patients' homes. We've been able to continue randomizing patients in both the ampreloxetine and TD-1473 clinical trials throughout the pandemic. This includes a four-week period in March and April when we suspended the screening of new patients in order to prioritize support for patients who were already in screening and those patients who were already randomized. Over the past three months, we've seen a steady increase in the number of sites that are able to reopen and enroll new patients, and we're now seeing enrollment rates that match or exceed those seen before the pandemic. We continue to monitor the situation around the world closely, but our current forecasts are consistent with 2021 readouts for both of our late-stage clinical programs, ampreloxetine and TD-1473. Moving to Slide 7, I'll provide a brief update on a number of projects in our pipeline. Firstly, ampreloxetine, our once-daily norepinephrine reuptake inhibitor in development for the treatment of patients with symptomatic neurogenic orthostatic hypotension, or nOH. The registrational Phase 3 program of ampreloxetine includes two studies. SEQUOIA assesses the efficacy and safety of a 10-milligram dose versus placebo over four weeks in 188 patients. REDWOOD assesses the durability of response to ampreloxetine by placing 254 patients, including patients from the SEQUOIA study, on open-label treatment for four months and then randomizing half of the patients to placebo in a double-blind six-week withdrawal phase. Both studies have been impacted in terms of enrollment rates, but have been able to continue enrolling patients. Given the ongoing pandemic and the fragility of the patient population, the company, with input from the FDA and other regulators and ethics committees is working to amend the protocols for these clinical trials to accommodate a decentralized approach in which patients can participate in the studies from home without needing to attend clinic visits. We expect SEQUOIA to report results in 2021. Turning to TD-1473, our organ-selected pan-JAK inhibitor for the treatment of inflammatory bowel disease in partnership with Janssen, we have two studies in progress. RHEA is a Phase 2B/3 study of TD-1473 in patients with moderately to severely active ulcerative colitis. DIONE is a Phase 2 study in patients with Crohn's disease. Both studies have been impacted by COVID-19 by slowing enrollment, and both studies are now expected to report results in 2021. TD-8236, our lung-selective inhaled pan-JAK inhibitor in development for the treatment of inflammatory lung diseases, including steroid-resistant asthma, continues to progress in the clinic. We're conducting a Part C extension portion of the Phase 1 multiple ascending dose study in patients with moderate-to-severe asthma. And in parallel, we're also conducting a Phase 2 lung allergen challenge study, a mechanistic study in which patients inhale an allergen that provokes an exacerbation-like response in the lung, under controlled conditions and is accepted as a strong proof-of-concept in predicting a reduced risk of exacerbations in patients with asthma. Both studies have continued to enroll through 2020, and we expect to report results from Part C and from the lung allergen challenge study in the fourth quarter of 2020. TD-0903, a lung-selective nebulized JAK inhibitor, is currently in development for the treatment of hospitalized patients with acute lung injury caused by COVID-19. TD-0903 has the potential to inhibit the cytokine storm associated with acute lung injury and prevent progression to acute respiratory distress syndrome. In doing so, we aim to reduce the number of patients who require admission to ICU for assisted ventilation and to reduce the risk of death. We accelerated development significantly in response to the pandemic, completing a Phase 2 dose-ascending study in short order and initiating a nested Phase 2 study in hospitalized patients in the UK in June. We're now adding sites in other regions, including Europe and the U.S. to accelerate enrollment in this Phase 2 study. For Theravance Biopharma, the insights we generate with TD-0903 for COVID-19 will be important in informing its potential use in other pulmonary settings. We see an opportunity to develop TD-0903 in additional settings where hyperinflammation of the lung is present, including acute lung injury from other sources and the treatment of acute and chronic lung transplant rejection. We look forward to updating you on our progress with TD-0903 in future calls. I'll now turn over to Andrew to review our financials.

Thank you, Brett. And before moving into Theravance Biopharma's financials, I'll speak to GSK's TRELEGY on Slide 9. TRELEGY is the first and only once-daily single inhaler triple therapy approved for the treatment of COPD, from which we receive upward tiering royalties. And as a reminder, 75% of the income from our economic interest is pledged to service outstanding notes, with the remaining 25% retained by us. During their second quarter earnings call on July 29, GSK noted that TRELEGY continued to lead the market as a single inhaler triple therapy, and it grew market share, with sales up 55% year-over-year, and reported net sales of $241 million on a global basis during the quarter. Furthermore, GSK continues to expect an FDA decision regarding a potential approval of label expansion to include an asthma indication during the second half of 2020. Also regarding TRELEGY, we are providing an update today regarding our most recent dispute with Innoviva in connection with Innoviva's management of Theravance Respiratory Company, LLC, known as TRC. As part of its management responsibilities, Innoviva is required to deliver a financial plan to Theravance Biopharma 30 days prior to the first day of each fiscal quarter. On June 1, Innoviva provided us with a draft plan for the quarter ending September 30, 2020, indicating that TRC was considering the potential investment of TRC funds into certain privately held companies. As our 8-K on June 10 disclosed, we objected to the withholding of these funds by TRC for those purposes. On July 16, Innoviva and TRC filed a complaint with the Delaware Chancery Court seeking an order from the court that, among other things, the 2019 arbitration award conclusively established that Innoviva possesses the authority as manager of TRC to cause TRC to use the TRELEGY royalties to make these and other investments. The court directed the parties to refer certain relevant questions raised by the complaint to the arbitrator in the 2019 dispute, who, in turn, determined that the 2019 proceedings did not resolve the issues currently in dispute. On August 5, Innoviva and TRC voluntarily dismissed the complaint without prejudice. We are obviously pleased with that determination, but it does not resolve the dispute. And quite simply, we believe that Innoviva and TRC are wrong and that TRC does not have the authority to use these funds to invest in private companies without our consent. We are pursuing and continue to pursue the protection of the interests of the company in this matter, consistent with the dispute resolution procedures of the TRC LLC agreement, including, if necessary, the initiation of a new arbitration proceeding. Moving to Slide 10, I'll cover the highlights of our financial results for the second quarter of 2020 and then touch on financing activities during the quarter and close with our financial guidance for 2020. As for quarterly financial highlights, revenue for the second quarter of 2020 was $15 million, operating loss was $72.2 million or $55.6 million, excluding share-based compensation expense. Cash, cash equivalents, and marketable securities totaled $438.3 million as of June 30. Turning to financing activities, on June 22, 2020, GSK completed an offering of $300 million of exchangeable senior notes due 2023. $280.3 million of those notes are exchangeable into existing ordinary shares of Theravance Biopharma. The notes are guaranteed by GSK and will be exchangeable at the option of noteholders on any business day on or after September 1, 2020, under certain terms and conditions outlined in the offering documents. Again, importantly, the company will not be issuing any new shares in connection with the GSK notes offering. And finally, regarding guidance, we are maintaining our financial guidance for the year based on our current assessment of the impact of the COVID-19 pandemic. We expect the full year 2020 operating loss, excluding share-based compensation, in the range of $205 million to $225 million. Operating loss guidance does not include royalty income from TRELEGY, which we recognize in our statement of operations as income from investment in TRC LLC, nor does it include potential future business development collaborations. Factors such as potential changes to the timing and cost of clinical studies associated with our key programs, ongoing COVID-19 risks and challenges, and other factors could impact our financial guidance. Now I'll turn the call back over to Rick for closing remarks.

Thanks, Andrew. We are continually assessing the impact of COVID-19 on our operations, and we plan for a positive future. As I mentioned when we started this call, I couldn't be more grateful for the work the team has been able to deliver both in the labs and the field as well as our team working remotely. Going forward, we will incorporate key learnings into our process, and we plan to emerge from the pandemic an even stronger company. Turning to Slide 11, we're making significant progress on a number of critical clinical programs that are the result of nearly a decade of investment and breakthrough translational research by our research and development organization. Executing on our organ-selective research strategy, we have developed a portfolio of highly differentiated therapeutic options in immunology and inflammation that address a range of unmet medical needs. This starts with inflammatory bowel disease and Crohn's and ulcerative colitis, which is really based on earlier work that we've done in respiratory inflammation and extends to ophthalmics and includes respiratory disease like idiopathic pulmonary fibrosis. As of today, and what you can look forward to in the future, Theravance Biopharma clinical programs, and therefore, future data on the Phase 3 program in ampreloxetine as well as the Phase 2B/3 program for TD-1473 in ulcerative colitis. Three Phase 2 programs: TD-1473 for Crohn's, TD-8236 for asthma, and TD-0903 for acute lung injury caused by COVID. Three Phase 1 programs reporting this year with TD-5202 already reporting top-line results, TD-8236 Phase 1 Part C and TD-0903 Phase 1, both plan to report in the fourth quarter, plus a research engine will produce a minimum of two INDs, not just this year, but annually moving forward. On top of the development portfolio and research engine, Theravance Biopharma commercial team will continue to grow market demand and share for YUPELRI. The advancement of this exciting clinical development portfolio with a constant stream of data-rich catalysts, together with the growth of YUPELRI and the TRELEGY royalty stream places Theravance Biopharma in a strong position to deliver value to our stakeholders. We plan to deliver state-of-the-art anti-inflammatory medicines, leveraging our organ-selective strategy designed to maximize patient benefit while minimizing patient risk. Our commitment to the communities that we serve has never been stronger. And now I'd like to hand the call back to the operator for questions.

Thank you, sir. We'll have our first question from Geoffrey Porges with SVB Leerink.

This is Brad Canino on for Jeff. For me, on the COVID program, based on your internal work, can you help us understand the timing of some external data readouts you will be anticipating that might help inform your go-forward decision for the inhaled JAK? Anything on oral JAKs or other immunomodulators would be helpful. And then on the late-stage pipeline, you're giving guidance of 2021 for readouts quite broad. Can you help us understand what is preventing you from being able to guide to a more specific quarter or even first half or second half especially when you've stated that enrollment rates are now at or above the pre-COVID levels? Thank you.

Yes. Brad, both great questions. I'll take them both and then ask Brett to comment. On your first question, obviously, we're looking at most of the products, particularly all the products dealing with inflammation in COVID. I think it's very important to understand and Brett hit on this. What we're doing with the COVID program at TD-0903 is we're studying a hyperinflammation state in the lung that's driven in this instance by SARS-CoV-2. That's important for us to understand and know because as you look at the range of potential diseases to treat between TD-0903 and TD-8236, it really covers a range from acute hyperinflammation to inflammation in a more chronic state. So that's important to understand with regard to our overall objectives for both TD-0903 and TD-8236. Relative to other programs, it's important to understand as we look and continue to work in our labs as well as with external collaborators. It appears now, and it actually appeared to be the case beforehand preclinically, that more cytokine blockade is going to be required in the lung and simply IL-6. Our own perspective is that the ability for a targeted lung agent like TD-0903 is that we can achieve a JAK inhibitor occupancy in order to achieve the target blockade of the relevant endpoints in the acute setting. In fact, we can achieve that occupancy through an organ-selective approach that systemic JAK inhibitors likely don't achieve because it is simply impossible for them to achieve such a high target occupancy in the lung. Relative to the clinical studies, I'll make a comment, then I'll turn it over to Brett. Clearly, the uncertainty is really driven by the depth and breadth of the COVID pandemic. They affect each of the studies, late-stage studies differently, whether it's the IIB/III program for UC, the Phase 2 program in Crohn's, or the Phase 3 program for ampreloxetine. So there's a bit of a sliding scale with regard to effect on the studies: first half, second half that I think right now because we don't know what the fall is going to look like, that's really where our uncertainty arises from. Brett?

Thanks, Rick. I think you said it well. I think that if we look back over the last six months, obviously, coming into March, we wouldn't have expected to see the impact that we did face through March and April. We don't believe based on our current projections that we would face worldwide shutdown as we did during March and April, but it is likely that parts of the world will be affected again through the fall and winter with pockets of pandemic causing localized shutdown. We do think we've got good mitigation strategies in place because we have so many countries that are participating and so many sites participating in each of those countries. But of course, there is an uncertainty factor. Normally, what happens in a crisis is if there's one country that has an impact, and we just divert our efforts to other countries, but of course, we were not able to do that in the pandemic because so many countries were affected simultaneously. We have some sort of sense of how that will go through the remainder of this year, but of course, it's not a perfect sight. We just don't know what the fall and what the winter will look like. Back to the first question, so just to clear out on Rick's comment from earlier. We, of course, are tracking a lot of the mechanisms that are reading out. We're very interested in watching how the systemic JAK inhibitors are likely to read out. We do note that those JAK inhibitors are being used in more severe patients. Actually, one of the things that we've learned from the early readouts, including from tocilizumab, the anti-IL-6, is that these therapies appear to have been reserved until very late in the disease. Often, when patients are in the ICU and on the ventilator. And one of the reasons that may be the case is that these drugs are known to have side effects, sometimes significant side effects, including blood clotting disorders and obviously, the risk of secondary infections. Our vision with our pan-JAK inhibitor is to intervene earlier. It is to intervene as patients are admitted to hospital and really to focus on preventing them from progressing into the ICU. So we do obviously pay attention to how these other therapies are being used, but we still believe that with our organ-selective approach, we should be able to benefit a larger number of patients in a hospital setting. Rick, sorry, you had one last comment.

No. I was just going to close as trying to provide a bit more clarity on timing. It is our objective to achieve the data necessary and get the Janssen opt-in, in 2021, so. Brad?

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

Yes, thanks for taking my question. First, I guess, just to continue on those questions on the COVID trials. You mentioned the exposures you think you're getting in the level of inhibition that you can get to with an inhaled product versus a systemic JAK inhibitor. Would you be able to characterize, given what you've seen in the Phase 1, what level of inhibition you think you're getting to and more concrete terms relative to the systemics? And then what we've also seen from some of these trials that have read out already is a real-time dependency for certain mechanisms as to when the best time to intervene and when to actually see efficacy or potentially even see harm if you are at the wrong timing. So what gives you confidence that this is the right spot to use a JAK inhibitor?

Yes, that is a terrific question on the timing. I think we've done a lot of work on projected occupancy that we can achieve with TD-0903. I think that will be the subject of publication in the future. So I don't want to share that today. But I think the important aspect of it is that we believe based on the data that we have that we can achieve a much higher level of target occupancy with the inhaled JAK inhibitor than what is possible through the systemic JAK inhibitors. So, Brett?

Thanks, Rick. And just to add to that, great question. Not only have we done modeling to try and anticipate this. One of the strengths of the Phase 1 and Phase 2 program is that we're testing more than one dose. And so we'll actually be able to explore whether our early predictions, our modeling, on target engagement are actually carried through both into the Phase 1 data that obviously, we're now looking at but particularly in our Phase 2 setting, where we're looking at patients and clinical outcomes. You are absolutely right around the time dependency. Recent evidence, for example, with dexamethasone in the UK has demonstrated that if dexamethasone is used in the outpatient setting, it may be actually helpful, but when it's used in an inpatient setting, it may be beneficial. And that's an important signal for us because it demonstrates that at some point in this disease, the virus itself becomes a secondary concern to hyperinflammation. It does appear that about 15% to 20% of patients have an abnormal immune response to the virus once it gets into the lung. And that abnormal trigger is what stimulates the cytokine storm. That's where we believe we have the opportunity to intervene with a broad-based anti-inflammatory that targets the lung, which appears to be the organ most hard hit by this virus. And so our focus is on intervening literally as patients present to the hospital with hypoxia. That's the earliest indication that the inflammation in the lung has become deranged or dysfunctional. And so that's the point that we intervene. We have seen some reports with broad-based anti-inflammatories that are held in reserve until the ICU and at that point, it appears that these patients are actually too far gone. Sadly, in most cases, the cytokine storm eventually leads to multi-organ failure. And that's the point at which our mortality rates are extremely high. So our vision, our proposal, our hypothesis here is to intervene earlier in the disease state in hospitalized patients to be able to try and break that cascade.

Okay, great. That's very helpful. And then just quickly on your guidance that you are maintaining that YUPELRI will be cash flow positive by year-end. I guess embedded in that, I assume, it's some sort of assumption on the path of the COVID pandemic or at least within the United States. I guess can you give us some clarity on kind of what you're assuming for the remainder of the year to get to cash flow positivity?

Sure. I think in broad brush terms, we can't – I'll start and then ask Frank to add to it. I mean even coming out of June and into July, we've seen a rebound in the businesses while still, obviously, parts of the United States have been affected that you've got business conditions overall are better, and we're seeing that reflected in sales in July. We would expect that we continue to begin to manage overall in society a little bit better, including the management of COPD patients a little bit better as we progress through the year in an environment that continues to be affected by COVID. But Frank, you want to put a little more meat on the bones.

Yes. Yes, just from a process point of view, I mean, we pulled our reps out of the field in the middle of March. In fact, it was on a Thursday, and the following Monday, we were training them on how to do promotion via Zoom meetings, telephone calls, and text messages. So we scrambled, clearly scrambled, and I have to give a shout out to our training department. They really prepared our field people well. We weathered the storm pretty well, and April was a bit of a reset. Since then, we've seen steadily increasing new-to-brand RXs, our wholesaler shipments in July were the highest since March. In fact, in July, they were almost as high as March. In July, 25% of our rep interactions were face-to-face and our MSL activity was very high in July. Also, in fact, it was as high as it was in February, which we're considering pre-pandemic. A lot of the activity has been around formulary. So there has been some outreach to us from hospitals. We believe it's from pent-up demand to get YUPELRI on formulary as well as patients who, as I mentioned in my remarks, have not been to the doctor to get their regular checkups, etc., and are now either doing that via telemedicine or personal visit. So we're on course to be cash flow positive by the end of 2020.

Okay, thank you.

Our next question comes from Anupam Rama with JPMorgan.

Yes, I'm Rama. Thanks so much for taking my questions. Just on SEQUOIA and REDWOOD and the protocol adjustments you talked about, are there any risks that we should be considering here on the data integrity side if the process becomes a little bit more decentralized? Thanks so much.

Brett?

Thanks, Rick. Anupam, thanks. Great question. We've been working very closely with regulators and with ethics committees to ensure that as we move to this decentralized model, patient integrity is actually foremost in our minds. That plus patient safety, ensuring that these patients are able to be supervised in the setting. But we're taking great care, working with external experts to ensure that the measures that we do in patients' homes match as closely as possible the measurements that they would have done in the clinic. Bear in mind that in these studies, a number of the endpoints that we're depending on require a recall period of up to one week, and that recall period would have been exactly the same, whether the patients were seen in the clinic to report that recall or if they're seen in the home. So we think that particularly with the primary endpoints for the evaluation of a seven-day recall on the symptoms, that should not be disrupted by evaluating these patients in the home. What it is allowing us to do, though, is to reach patients who are either reluctant or unwilling to come into the clinic. So if anything, it's assisting us in identifying patients who will be accessible to our program in a way that we weren't previously able to. Feedback from our sites has been encouraging actually, with this particular disease, given the fragility of these patients and the struggles with daily living and being able to get up and about, we think this may actually assist down our recruitment efforts through COVID.

Brett, you use the phrase seen in the home, patients seen in the home. Perhaps you can put a little bit of description on that.

Yes, of course. Thanks, Rick. So what we mean here is that we're actually doing a number of things that allow us to ensure that these patients still are supervised as they might be in a clinic. That includes web-based calls or video calls from key physicians who evaluate these patients. It also includes home visits by trained nursing staff who are fully trained on the protocol and are able to conduct some of the assessments, including ECGs, blood draws, blood pressure and observations of patient symptoms in their homes. So it's a combination of both technology and face-to-face contact with appropriate PPE, obviously, to ensure safety for both the visitor and the patient. What we've tried to do is emulate as much of the in-clinic experience as possible.

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

Hi, good morning. Thanks for taking the questions. Just first question in terms of TD-0903, as you've transitioned into the Phase 2 study, you noted in the press release that you're looking to open sites globally. Is it becoming a challenge just given the fact that the UK has achieved a certain level of suppression? And is it going to be a challenge just meeting your targeted enrollment in that region?

Thank you. Great question, Doug. So we've seen a slowing of the rate of hospitalization in the UK in response to appropriate social distancing approaches. Obviously, there was an initial surge we were able to benefit from the tail end of that surge and the identification of the first patients. But I think it's fair to say that our strategy now is to broaden the net, so that we're able to pick up on many spikes as they occur in different countries. So we expect to see ongoing sites as we're seeing in countries around the world like Brazil, Mexico, and obviously, the U.S. is an important country for us in terms of enrollment as well. So our current view, which was always part of our strategy with the Phase 2 study, it was to expand the net of sites once we had done this early part of the nested program. And that's really what we're implementing now, hoping to be able to catch patients wherever these flows occur, either in different parts of the U.S. or indeed in different parts of the world on an ongoing basis. In the long term, we hope that, that will mitigate against what you just described, which is that one country may have a decline in its rates. But if we are broad enough in our coverage, that should be compensated for by an increase somewhere else.

Okay, great. And then in terms of YUPELRI, it sounds like we've started to see a nice recovery. Are you seeing variability within the U.S. based on sort of how much the levels of COVID-19 is affecting social distancing? Or is the recovery pretty widespread across the U.S.?

No. I think just – and Frank made comments to sort of – our interactions are heavily dependent on local conditions and sites. These are in different places, at different stages in different parts of the country. Frank?

Yes, no, that's exactly right. I mean, we're essentially following local guidance. Nearly all of our territories are 'open', but they may range from one account to nearly all accounts being opened. So it's literally a ZIP code-by-Zip code evaluation at this point. And again, we're following local guidance.

And this is also the importance of what we call hybrid work of doing both in-person calls as well as leveraging the technology that's available to us, which will likely continue to be important over the next several months.

Okay. And then just one final question, I know there was some question in the scientific community about sort of the risks of using nebulized therapy and could that spread the virus? Have you sort of – has that sort of reached some level of resolution? And that would be helpful to get perspectives on that.

Frank or Brett, either one can take that.

So I can comment from a clinical perspective, but pass on to Frank as well. Doug, I think the view that initially emerged was that there may be some concern about aerosol-generating procedures as creating higher risk of transfer of viral particles. But the data in support of that nebulization is actually not that strong. And in fact, in several parts of the world and in several states in the U.S., it's acknowledged that nebulization does not generate aerosolized particles from patients because the nebulizers are outside the patients. The nebulization occurs in the cup and that liberation of particles of molecules is actually of medicine, but not patient-derived infected particles. That's in contrast to other procedures like dental procedures or intubation and extubation, which carry a much higher risk. Having said that, I think we've been able to support the broad community of understanding in suggesting that certain caution should be applied, including the wearing of PPE in a nebulized setting. Frank?

Yes, no, that's exactly right. The environment out there with respect to this issue is very heterogeneous. It is less conservative now than it was at the beginning of the pandemic when I believe most health care providers would admit they were caught a little bit flat-footed about what to do with these. Since then, they've studied the patients, they put local guidelines in place, and they run the spectrum from some patients that have restricted nebulized patients to certain parts of the hospital to just using nebulization with appropriate negative pressure rooms plus PPE and those sorts of things. So again, it's opening up more than it was at the pandemic, but it's very difficult to say what percentage of effect.

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

Our next question comes from Vikram Purohit with Morgan Stanley.

Hi, thanks for taking the questions. So I had one on the TD-8236 data that we are expecting by the end of the year. So for both of those studies, both for the asthma study as well as for the lung allergen challenge study, just wanted to see if you could talk a bit more about what we can expect to learn with those readouts, how you're thinking about the success there? And then assuming both of those readouts are positive, what the next step is going to be for each of those programs.

Brett, you want to take that and then sort of also put it in the framework of chronic inflammation versus acute inflammation, confidence of a JAK inhibitor, etc.

Sure. Thank you, Rick. And Vikram, thanks for the question. So just to take each of these two studies in succession, you may recall that we were previously running a Part B of the multiple ascending dose study. In fact, that was not in healthy volunteers. That had been done in mild asthmatics. And in that portion of the study, we were able to demonstrate an engagement of biology, and we've reported previously that we were able to see improvements in the levels of nitric oxide that were exhaled by those patients. Nitric oxide is a good marker of inflammation in the lung, and it's very easily measured through commercially available monitors to look at exhaled nitric oxide. So we previously looked in milder asthmatics and seen evidence of dose-dependent improvements. Moving to moderate-to-severe asthmatics, that remains a really important endpoint for us. So we will continue to look at nitric oxide as a measure of the underlying inflammation in the lung. And you should expect to see similar sorts of information presented. Obviously, we don't know yet whether that dose dependency will be maintained, but we do know that moderate-to-severe patients have higher levels of nitric oxide to begin with if they're not well controlled, and our ability to detect the change is even greater than it is in mild asthmatics because of the higher magnitude of NO that they come in with. So that will be a key determinant. We are also looking at some lung-specific biomarkers, including in patients who consented biopsy results, which will look at the fluid in the lung and particular cell types that can be reached through bronchoscopy, again, to look at engagement of the biology. This is not an efficacy study, but a little bit like we previously reported with TD-1473, it will be a collection of biomarkers, which gives us confidence around the biology. The other important thing that we'll collect in that study is the blood PK. And as you will recall from our previous programs, the reason we collect that is to look for the absence or minimal exposure of the drug in the blood. Our organ-selective approach is designed specifically to target the lung in a highly selective way and to really minimize the amount of drug that is found in the blood. This will be an important aspect that we'll look at as well. Turning briefly to the lung allergen challenge study, this is also done in asthmatics. These patients develop a very characteristic response to an allergen that they inhale that they're allergic to. Effectively, it stimulates or provokes an exacerbation-like response in these patients under controlled conditions. In the absence of any treatment, patients have an acute response that causes a reduction in lung function. Curiously, after about two hours, even in the absence of treatment, they rebound, but they give a secondary dip in lung function about four hours later. The reason for that is that cortisol and other circulating endogenous molecules are stimulated to react to the initial stimuli. It's the secondary failure, which is so important. In fact, what is useful in treating patients with anti-inflammatories. So what are we looking for? Well, we're looking to ablate that secondary response. It's called the late allergen response, the LAR. And there are benchmarks that are useful in the setting, including inhaled corticosteroids. We're looking to see inhaled corticosteroid-like ablation of the LAR in this allergen challenge study. It's useful to note that there are other mechanisms that have been tested in the setting, including biologics, including dupilumab, for example. And there are also nonsteroidal therapies like montelukast and lepodin antagonists that have also been evaluated in this model. They all predict how these therapies are likely to respond when it comes to reducing exacerbations in larger numbers of patients. So again, it's an early methodological study, but we should be – as I said, we're reporting by the end of this year, we'll be looking to see whether we can achieve steroid-like ablation of the LAR.

Our next question comes from Alan Carr with Needham & Company. Your line is now open.

Great, thanks for taking my questions. Actually a follow-up on the last one. Brett, what sort of is percent reduction in LAR with steroids in that late phase? And then also, I missed the beginning of your call. So are there any updates with respect to some of the earlier-stage programs like TD-5202 for timing for bringing any other new candidates in the clinic? Thanks.

Thanks, Alan. I'll ask Rick to comment on the earlier stage programs. Obviously, we covered on this. But let me answer your first question. With steroids in the allergen challenge study, we've seen attenuation of the late phase response between 30% and 50%. So that's an impressive improvement. And that's the sort of range that certainly we would be expecting to look at. What's interesting is that if you look at a drug like montelukast, which hasn't shown protection in larger exacerbation studies, its attenuation of the late phase response is much lower, only 15% to 20%. So that's an important differentiator. It's these 30% to 50% improvements that we consider to be meaningful and indeed, what we're powering our study on. Let me pass on to Rick just to speak to early-stage programs.

Yes, on the early-stage programs, obviously, if you were to go back to the set of programs that we outlined at the R&D Day a little over 1.5 years ago. TD-8236 has gone into the clinic now and is in a Phase 2 setting. TD-0903 was the next one up. That's also gone through Phase 1 and is now in a Phase 2 setting. The next program up, likely to go into Phase 1 is our nebulized ALK5 inhibitor, targeted at idiopathic pulmonary fibrosis and perhaps other conditions in the lung. So that's probably the next one up. I think it's likely that we get into the clinic this year with the inhaled ALK5 inhibitor, and we'll be progressing from there.

Okay, great, thank you so much.

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

Hi, good afternoon, thanks for the follow-up. Just in terms of TD-8236, Brett, in terms of the next stage, you mentioned the Phase 2 and Phase 3. Would you be interested in sort of trying to pursue some kind of adaptive design so that next study could ultimately be a registration study? Or is that one where you want to see the results from the ongoing studies to see if you need to sort of go through a more traditional Phase 2 before moving into registration?

It's a great question. Thanks, Doug. And I think hopefully our track record has demonstrated that certainly within Theravance, we are really open to creative ways of thinking about accelerating developments whether it's from a Phase 1 study directly into Phase 2, as we've done with TD-1473, or in the case of ampreloxetine, moving from a single-dose study into a Phase 3 program. So I think we've certainly demonstrated in the past the ability to accelerate development where we need to. The adaptive design is an attractive proposition, particularly looking at exacerbation rates. I think the key issue will be how strong the data is. And then, of course, our interactions with regulators. Once we have data in hand, we'll be able to take that to key decision-makers, including the FDA, to negotiate a program that both we and they are comfortable with to assess this. Great question.

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.

I'd like to thank everyone for joining us today. Thank you for your questions. I look forward to updating you as we progress through the rest of the year. Please stay safe. And again, thank you. Have a good day.

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