Theravance Biopharma, Inc. Q2 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by. Good afternoon. I'd like to welcome everyone to the Theravance Biopharma Second Quarter 2021 Conference Call. During the presentation, all participants are in a listen-only mode. A question-and-answer session will follow the company’s formal remarks. Also, today's conference call is being recorded. And now I'd like to turn the call over to Gail Cohen, Vice President of Corporate Communications. Please go ahead.

Good afternoon, and thank you for joining the Theravance Biopharma second quarter 2021 conference call to discuss our business. As always, I remind you that this call will contain forward-looking statements that involve risks and uncertainties, including statements about our development pipeline, expected benefits of our products, 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. Now I would direct your attention to Slide 3. Joining us are Rick Winningham, Chief Executive Officer; followed by Rick Graham, Senior Vice President, Development; Frank Pasqualone, Chief Business Officer; and Andrew Hindman, Chief Financial Officer. Now I will hand the call to Rick Winningham for opening remarks.

Thanks, Gail. 2021 has been about progress, progress of our clinical pipeline of our commercial asset, YUPELRI, and progress as we, as a company, adapt to the ever-changing pandemic and define what our business will look like in the future. I'm grateful to the team at Theravance Biopharma for continuing to show resilience and perseverance while ensuring our advancement and commitment to developing medicines to make a difference. Starting on Slide 5 in the second quarter, we made strong progress, delivering Phase II data for nezulcitinib, our investigational inhaled lung-selective pan-JAK inhibitor for acute and chronic lung injury. We continue to drive forward our clinical programs preparing for two critical data readouts: izencitinib Phase IIb data in ulcerative colitis, which will report top-line results just ahead of ampreloxetine Phase III data for symptomatic neurogenic orthostatic hypotension in the third quarter. On the respiratory front, moving to Slide 6, YUPELRI and TRELEGY have continued to make strides, showing signs of rebounding from the pandemic headwinds in 2020 with continued market share and net sales growth. Frank will expand on the metrics from the second quarter and trends that we are continuing to see in July 2021. We're also planning for a future of YUPELRI, as we, along with our partner, Viatris, are initiating a Phase IV clinical study. This study will compare improvements in lung function in adults with severe to very severe COPD and some optimal inspiratory flow rate following once-daily treatment with either YUPELRI delivered via a standard jet nebulizer or tiotropium delivered via dry powder inhaler. Findings from this study are intended to provide data to support a possible label update and help better inform physicians as they work with their patients to design COPD treatment plans. We expect the study to kick off later this year. I'll now turn the call over to Rick Graham, who will discuss the upcoming pipeline catalysts.

Thanks, Rick. It's an exciting quarter for Theravance Biopharma as we approach top-line data readouts for two of our key clinical programs. The Phase IIb study of izencitinib and ulcerative colitis will read out first, followed by the first of two ongoing studies for ampreloxetine and symptomatic neurogenic orthostatic hypotension. I'll start with izencitinib, our gut-selective pan-JAK inhibitor to treat inflammatory bowel diseases, which has partnered with Janssen. On Slide 8, we outline details for the izencitinib Phase IIb study. In addition to reporting the primary endpoint, we plan to share key secondary endpoints and standard disease surrogate IBD biomarkers. We will also provide a safety analysis and systemic drug concentrations. Low drug concentration in the systemic circulation is an important differentiator for izencitinib given the JAK class safety concerns. We will report the adverse event profile and highlight adverse events of special interest. As a reminder, the goal for izencitinib is to maximize therapeutic benefit to patients while minimizing side effects. We believe a gut-selective JAK inhibitor like izencitinib has the potential to be a game changer for the treatment of IBD and that it has the potential to become a once-daily oral treatment amenable to earlier lines of therapy as well as combination approaches. On Slide 10 are the details for the ampreloxetine Phase III SEQUOIA study, which will read out this quarter shortly after izencitinib. SEQUOIA is the first of two ongoing pivotal studies. We'll share a timeline for reporting on the second study, REDWOOD, in the near future. As a reminder, ampreloxetine is a once-daily norepinephrine reuptake inhibitor for the treatment of symptomatic nOH. We are working to break new ground in this disease area as there is a significant unmet medical need for the treatment of patients with symptomatic nOH, a condition that profoundly impacts the quality of life and occurs in people suffering from Parkinson's disease, multiple system atrophy, and pure autonomic failure. We plan to share the primary and key secondary endpoints, and we'll also report the adverse event profile, including supine hypertension. We look forward to sharing results for both of these important pipeline catalysts soon. Next, Frank will speak to our commercial team's progress with YUPELRI.

Thanks, Rick. Turning to Slide 12. YUPELRI is indicated for the maintenance treatment of patients with COPD. It is the first and only once-daily, nebulized, long-acting muscarinic antagonist that provides a full 24 hours of control for patients. Last year, despite the headwinds created as a result of the global pandemic, YUPELRI recorded solid sales growth. Through the second quarter of 2021, the trend continues, and we remain optimistic given the significant patient opportunity for YUPELRI. As a reminder, Theravance Biopharma and Viatris co-promote in the U.S. with our combined sales infrastructure targeting health care professionals who treat COPD patients suitable for YUPELRI. Theravance Biopharma’s commercial and medical field teams cover the hospital segment of health care providers, and Viatris covers community health care professionals. Also remember, the Viatris and Theravance Biopharma commercial partnership is a 65-35 profit share split. Slide 13 shows Theravance Biopharma's implied 35% share of net sales for YUPELRI during the second quarter of 2021 of $14.6 million. Importantly, we saw YUPELRI sales pick up momentum throughout the quarter. In the second quarter of 2021, net sales were up 13% from the first quarter of 2021 and up 38% compared to the second quarter of last year. Turning to Slide 14. You can see that our share continues to grow both in the hospital and community settings. As we've noted previously, many patients with COPD experience an acute respiratory episode serious enough to require a trip to the hospital for immediate care. The hospital then becomes a key point to assess a person with COPD and convert or switch them from their current medicine to YUPELRI. Data shows that many patients who receive YUPELRI in the hospital are discharged with a prescription to continue treatment, allowing for continuity of YUPELRI therapy post-discharge. The Viatris and Theravance Biopharma teams continue to work effectively using several tools, tactics, and coordination to convert appropriate patients from competitive products to YUPELRI during the hospital-to-outpatient experience. As evidenced by the share gain since launch, this strategy is being effectively executed by both companies' teams. Demand doses increased 13% in the second quarter over the first quarter of 2021 and 34% over the second quarter of 2020. The impact of COVID on commercial efforts may be easing somewhat as states, local governments, and institutions in some parts of the country are beginning to allow in-person meetings. However, in-person access to customers as well as patient visits to HCPs remain below pre-pandemic levels. Approximately 62% of all COPD-targeted hospital accounts are physically accessible to our field colleagues. However, the TBPH sales team continues to leverage customer engagement opportunities via virtual meetings and phone interactions. In the second quarter, total HCP interactions grew by 16% over the first quarter of 2021 with live face-to-face interactions reaching 39% of total interactions, the highest quarterly average since the pandemic began. We've also been encouraged with prescription activity through June. Both new-to-brand and total prescriptions have continued the upward growth that was reignited in late first quarter. In addition, hospitals continue to add YUPELRI to formularies, and new accounts are being added weekly. Looking specifically at the Theravance field sales deployment efforts in quarter 2 2021, doses sold exclusively in the hospital setting represented a 25% increase from the previous quarter. June hospital volume hit a new launch-to-date high, and we saw 127% year-over-year growth from June 2020. The second quarter of 2021 incremental volume growth was 47% from April to June, representing the highest in-quarter growth launched to date. You can see this upward growth on Slide 15 progressing through the end of the second quarter. We also continue to track the key performance metrics since launch, and the following are the quarter 2 2021 metrics. A total of 815 hospital accounts have ordered YUPELRI, and 69% of these accounts have ordered YUPELRI at least twice. Quarter 2 2021 formulary wins totaled 5, which equates to 446 formulary accounts launched to date with a formulary win rate of 91%, and 85% of these formulary accounts purchased to date, owing to a lag between formulary approval and ordering commencing. The medical science liaison's formulary support for presentations in quarter 2 2021 was the highest since quarter 1 of 2019 when the brand was launched. In-person interactions by the MSL team were 3 times higher in quarter 2 versus quarter 1 but remain markedly below pre-pandemic levels. At the end of quarter 2, YUPELRI's commercial coverage was 75%. So looking ahead, it's important to understand that according to the GOLD guidelines, LAMA is foundational to COPD maintenance care. The execution of our tactical plan will continue to leverage the guidelines in appropriate patient types while we continue to optimize the marketing mix through rigorous and continued measurement of tactics. As Rick Winningham mentioned, we'll be initiating a Phase IV PIPER clinical study aimed at helping to better inform decisions when physicians are designing a personalized COPD treatment plan with patients. YUPELRI has demonstrated resilience to many of the external factors, and we remain committed to continuing to bring this medicine to appropriate patients in the second half of this year and beyond. So now I'll turn the call over to Andrew to review the financials.

Thanks, Frank. And before moving to Theravance Biopharma's quarterly financial highlights, let's start with an update on GSK's TRELEGY on Slide 17. 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 is entitled to receive upward tiering 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 nonrecourse notes, and the remaining 25% of income is retained by us. We've received $46.3 million from TRC LLC during the first 7 months of 2021. And during GSK's recent earnings call, they noted that TRELEGY continued to lead the market as a single inhaler triple therapy with Q2 2021 sales growth of over 68% over Q2 2020, generating global net sales of $405 million. Moving to Slide 18. Here, we provide our second quarter 2021 financial highlights compared to the second quarter 2020. R&D expenses for the second quarter were $51.1 million compared to $62.4 million in the second quarter of 2020. SG&A expenses for the second quarter were $25.9 million compared to $24.8 million in the second quarter of 2020. And as a reminder, all of these figures exclude share-based compensation. In addition to those end-of-quarter financial highlights, during June, we closed a public offering of ordinary shares at a price to the public of $15 per share with gross proceeds of $115.6 million before deducting expenses, and we ended the second quarter with $265 million in cash and cash equivalents. Regarding financial guidance for the full year 2021, we are reiterating previously issued guidance. As for R&D, we expect to invest between $195 million to $225 million relative to actual R&D investment of $230 million in 2020. For SG&A, we provided a range of $80 million to $90 million relative to an actual SG&A expense of $77 million in 2020. And again, all of those figures exclude share-based compensation. With that, I'll turn the call back to Rick for closing remarks.

Thanks, Andrew. On Slide 19, we summarize what makes Theravance Biopharma valuable. We're a unique entity for a company of our size with value drivers that include a mix of differentiated wholly owned compounds coupled with strategic collaborations and partnerships. This includes our commercial partnership with Viatris to co-promote YUPELRI. In the second full year since its launch, YUPELRI continued to experience solid net sales growth on an annual basis in 2020, which is a trend we're continuing to see in 2021. TRELEGY, for which we're entitled to receive upward tier royalties on global net sales; a partner pipeline with Janssen on izencitinib and TD5202, with the potential of up to $1 billion in milestone payments to TBPH, plus profit sharing in the U.S. and double-digit royalties outside the U.S.; and finally, our wholly owned assets, several of which are in later stage development, including ampreloxetine in Phase III and nezulcitinib in Phase II, as well as several other key programs to address large patient populations. When you add this to our in-house research and development capability plus U.S. commercial infrastructures that leverage analytics-driven deployment and have demonstrated success, we believe there's a strong case for value creation of Theravance Biopharma as we deliver key clinical data and YUPELRI commercial performance in the future. In closing, on Slide 22, this quarter is critical to us as we look to deliver the data for izencitinib and ulcerative colitis and ampreloxetine in symptomatic nOH. These programs are value drivers and have the potential not only to be transformational to Theravance Biopharma but also for the patients impacted by these diseases. Our mission is to continue to develop medicines that make a difference in the progress of our clinical pipeline, along with YUPELRI and TRELEGY, demonstrating that we're working to make that a reality. I'll now hand the call back over to the operator for questions.

Our first question comes from Geoff Porges from SVB Leerink. Please go ahead with your question.

This is Anna Baran on for Geoff Porges. First, can you remind us of the hurdle for statistically and clinically significant results from the ampreloxetine trial results coming up? And second, on cash, you ended the quarter with $265 million in cash and then put up a net loss of about $50 million, which presumably approximates cash burn. If you run those numbers out, you have less than 6 quarters of cash runway. Do you expect expenses to come down significantly at the end of the year? And could R&D be cut, let's say, in half once the current trials for ampreloxetine and izencitinib are completed?

Yes, Rick, do you want to take the ampreloxetine questions and then Andrew will take the finance questions and I'll close. Rick?

Sure. Thanks for the question, Anna. Regarding the challenge related to statistical and clinical significance for ampreloxetine, in the SEQUOIA study that we will be discussing in the third quarter, the primary endpoint is a change in OHSA1 from baseline. We have agreed with the FDA that a clinically meaningful change for OHSA number one is 1 point. This is based on a 10-point scale, and that is the primary endpoint for the SEQUOIA study.

Andrew?

Certainly. Regarding the financial profile, I want to highlight two key points. First, simply dividing $265 million by approximately $50 million of cash utilization or investment during Q2 gives you around 6 months of runway. However, this is a simplistic view of our business. We've been discussing with investors and analysts the evolving financial profile of our P&L, particularly due to increased revenue growth and cash flow from YUPELRI and TRELEGY, which are becoming significant contributors to our balance sheet. YUPELRI is generating cash flow for Theravance Biopharma when we factor in our 35% profit split and all associated costs of commercialization, including both shared costs with Viatris and the commercial costs that we fully absorb. The cash flow from YUPELRI and TRELEGY, including the 25% stake not used to pay down the 2035 notes, is becoming increasingly important for our balance sheet. This trend has been consistent and will continue, with YUPELRI and TRELEGY serving as net cash contributors in 2022 and beyond. Looking ahead over the next several quarters, we expect growing cash flow from non-financing sources. Additionally, it’s crucial to note that while Janssen is our collaboration partner for izencitinib, they will need to decide on entering an exclusive global collaboration agreement following the generation of data packages for UC and Crohn's. After receiving the second data package for Crohn's, they will have about 90 days to decide if they wish to proceed, which would involve a $200 million option payment to us. This would be a significant source of capital extending our runway beyond 2023. I hope this provides a detailed response, and if I missed anything, Rick Winningham can add further comments.

I think you've covered everything adequately. We continue to have a robust research organization and translational science group that continues to deliver clinical lab assets into the clinic. Those instances, we will enter into partnerships in certain regions of the world with those assets. I think in total, that's a pretty complete complexion of both the financial picture as well as our expectations for ampreloxetine from the 169 study.

Our next question comes from the line of Marc Frahm from Cowen & Company. Your question please.

Maybe just on RIA, can you remind us kind of what you would expect on the safety analysis just on background rate of the key safety events like infections and thromboembolic events for a study population like RIA and considering the limited follow-up that's in the Phase II portion?

Yes. That's a great point, Marc. Rick, do you want to take that?

Yes, sure, Marc. So the RIA study, and maybe I'll step back for a minute and just remind everybody that the program here is a seamless Phase IIb/III design. The RIA study is the Ib portion. That's a dose-finding portion where we have three different dose levels relative to placebo. Patients that complete RIA, or the Phase IIb study, roll into a 44-week maintenance study. That's the Phase III portion. After we select the dose or more than one dose, we would initiate a second confirmatory induction study. I think what you are alluding to, with regard to some of these adverse events of special interest, with a small sample size of 240 patients, we're probably not going to be able to prove definitively that izencitinib is not causing any unwarranted safety effects. But what we're going to be focusing on is adverse events of special interest like varicella zoster, opportunistic infections, malignancy, and thromboembolic events. These are certainly JAK class events. But again, they have a relatively low adverse rate. We're going to be focused on those, and we'll report on those as we read out the trial. Some of the things that are more sensitive, that we do have confidence in with the sample size of 240, are lab parameters like cholesterol and CPK. These are things that we'll also be focused on to understand whether there's a gut-selective effect or not with regard to izencitinib on safety.

And I think just to close off, Marc, obviously, the driver of the toxicity of the systemic JAKs is the concentration of the drug in the bloodstream and where that bloodstream carries the drug throughout the body. Our expectation in the Phase IIb study for izencitinib is to see extremely low concentrations of the drug in the bloodstream in contrast to the systemic JAK inhibitors.

And then maybe just a follow-up on the last question on cash burn. Can you just remind us kind of what the spend level is on kind of the early-stage pipeline that obviously doesn't get talked about a lot? And then kind of what the expectation would be assuming the ampreloxetine trial is positive in terms of needing to build out the commercial organization to kind of support that filing and hopefully approval.

Yes, Marc, this is Andrew. The short answer is that our spending on early development or research is not a significant part of our R&D budget. You can think of it in terms of a Pareto principle for clarity. Regarding the commercial build-out, I'll provide some details and then Frank Pasqualone can correct me if needed. We are currently focusing on ampreloxetine, which targets a rare disease population, and we plan to develop our commercial infrastructure to prepare for its launch. This approach will depend on the timelines we finalize with regulators after we receive the study 169 results. We intend to invest adequately in the launch well ahead of time to ensure its success. However, we will utilize the investments we are already making to support YUPELRI and other management and medical affairs initiatives. Therefore, the additional investment required to support the launch of ampreloxetine will not significantly increase our overall SG&A expenses. But Frank?

Yes, thank you, Andrew. I don't have much to add. We are currently working to understand where these patients go when they need assistance and which physicians are involved in their care. Our initial focus will be on these areas. I want to emphasize what Andrew mentioned. We plan to make better use of our investment in the commercial organization. Currently, we are somewhat inefficient with one product, but we expect to utilize those investments more effectively as we introduce two products.

And just to conclude, as other rare disease companies have done, the medical clinical team that our clinical liaisons that are in the field will move over to augment the medical group that we currently have in the field. So that really gets at some of the points that are being made about incremental investment.

Our next question comes from the line of Liisa Bayko from Evercore ISI. Your question please.

Can you elaborate a bit more on what you mentioned in your last comment about examining various lipid parameters to determine if izencitinib is indeed selective? What specifically should we be looking for?

Yes, Rick?

Yes, sure, Liisa. What I was meaning is that for the systemic JAK inhibitors across the board, it's been reported that there are changes in a relatively short amount of time in cholesterol, whether that's HDL, LDL. The other one is creatine phosphokinase. So those are parameters that with a gut-selective JAK inhibitor like izencitinib, we don't expect to be targeting or modulating. We'll take a close look at those because with a relatively small sample size, we should be able to discern whether or not there's a signal there.

Okay. So we would expect to see no changes or more modest changes? Or what's the goal?

Yes, we would expect to see no changes in those parameters. Again, they are relatively sensitive to systemic JAKs because we're not expecting to see high levels of izencitinib in the liver, where these enzymes are synthesized or, in the case of CPK, in the muscle.

Can you provide more details about the timing of the various studies in the quarter or indicate which one we should expect first? Should we take anything from the order in which you are discussing them? I'm just curious.

No, I think nothing was any more granularity. I think izencitinib will read out first to be shortly followed by ampreloxetine, and that's the sequence that we'll roll out the data.

And then can you talk about the next step for your acute lung injury program?

Sure. I mean I'll start, and then Rick can chime in. We've begun to meet with regulators in Europe and we'll meet with the regulators in the U.S., really focused on COVID as a part of acute lung injury in defining the sample size that we need for studies in acute lung injury and various types of acute lung injury going forward.

Yes. The only thing I would add there, in addition to interactions with health authorities, which have been very helpful, we've been talking to a number of different groups that have platform trials. So we're getting feedback and considering our options there as well.

Can you explain how acute lung injury differs from ARDS, or are they essentially the same?

No, it's not the same thing. Typically, acute lung injury occurs before ARDS. That's the usual clinical progression of ARDS, and we anticipate being able to influence acute lung injury associated with the inflammatory cascade, similar to what we observed in the CRP subset with nezulcitinib. That discovery was quite significant, and as we have presented the data to others, they have concurred that the CRP biomarker we utilized was a crucial threshold regarding inflammation rates alone.

Yes. Liisa, we previously reported a significant decrease in 28-day all-cause mortality and a quicker recovery time for COVID patients treated with nezulcitinib, particularly in those with a baseline C-reactive protein level below 150 milligrams per liter. Even though we did not meet the primary endpoint on the ordinal scale, which is known to be challenging, this reduction in mortality was significant.

Okay. Great. And then just a final question from me. For ampreloxetine, can you describe any conversations you've had with regulators that may indicate flexibility in how they are willing to consider the data? I just look back at some of the approvals in the space and am kind of scratching my head. So I'm just wondering what the bar is for you guys in nOH. And that's my last question.

Yes. That's a great point. I think we've had a great relationship with the FDA on this application overall since we began the work in nOH because of the paucity of data that exists for the existing agents and, in fact, the risk/benefit that exists for the existing agents. Rick, do you want to provide even more color?

Yes, it's important to step back again and think about the design of this body of work. There are two pivotal trials. One is the SEQUOIA study, which will read out very shortly. That's a 4-week efficacy study, randomized 1:1, active drug, ampreloxetine to placebo. Patients that finished SEQUOIA can then roll into a study called REDWOOD. This is a 16-week open-label study. So everybody gets active drug. At the end of 16 weeks, they are randomized 1:1 again active to placebo. We're looking for a worsening of effect in that randomized withdrawal period over 6 weeks. So between the first study and second, this is a very robust body of work to demonstrate the benefit and risk profile of ampreloxetine. Again, as Rick said, we work closely with the FDA on the design of this body of work. We do expect that both studies are going to be required for a full approval. However, we will have a conversation with the FDA at the end of the SEQUOIA study with the data in hand and have an opportunity to discuss the data. In particular, we will focus on a breakthrough therapy designation request, which is an opportunity for an expedited review of an NDA based on therapies that meet an unmet medical need.

Our next question comes from the line of Douglas Tsao from H.C. Wainright. Your question please.

I'm curious about YUPELRI. You mentioned that the second quarter had the most formulary presentations since its launch. Was this due to improved access after COVID? How long do you think it will take before we see this translate into wins and ultimately revenues?

Frank?

Thank you for the question. Regarding the MSL, we noted a significant number of requests from the field for formulary support presentations, marking the highest quarterly total since we launched the drug in the first quarter of 2019. This indicates that the awareness and interest generated by our field teams are yielding results. We track the time from initial formulary presentations to successful outcomes and subsequent orders. However, since the pandemic began, we've observed that this timeframe has been increasing due to the added responsibilities facing pulmonologists. Generally, even if there is widespread agreement for a formulary review, the pulmonologist's support is crucial. The time typically ranges from around 60 to 90 days. While I hope that clarifies your question, it's important to note that this metric is challenging to assess at the moment because the pandemic is extending our cycle time.

No. That's very helpful. And just on nezulcitinib, it seems that you're considering some of these larger trials that are evaluable or testing multiple products at once. I know the mortality benefit was quite compelling. Are you looking at that as a potential endpoint instead of one that's focused more on respiratory function?

Yes. Rick, do you want to...

Yes. Thanks, Doug. The general interest, as Rick has said, not just from Theravance Biopharma but from the stakeholders externally that we've shared the data with has really been around the mortality benefit. Certainly, as you've said, with each of these platform trials, they have different objectives, and we're keeping our options open with regard to what makes sense for the next steps with nezulcitinib.

Our next question comes from the line of Anupam Rama from JPMorgan.

Can you give us an update on sort of the latest that's ongoing with the arbitration with Innoviva? I think most recently, you've kind of made a response back to the courts, and I think you may be in a waiting phase for a response back. Maybe you can just give us an update there.

We have completed the second arbitration period, and our view is that the arbitrator's ruling has clarified certain guidelines regarding the use of royalties. There are specific aspects of that ruling that we are currently seeking clarification on. At this time, I don't have any updates regarding that. We are closely monitoring Innoviva's management of the TRC royalty company to ensure that their actions are aligned with maximizing the value of the royalty stream for both the partnership and Theravance Biopharma. That's all I can share about the arbitration for now.

Our next question comes from the line of Vikram Purohit from Morgan Stanley. Your question please.

So I had one on the RHEA program. It seems that the highest dose you're evaluating in the Phase IIb portion here is a bit lower than the dose that was evaluated in the Phase Ib portion. I was wondering if you could just talk us through the thinking behind dose selection for the Phase IIb study.

Rick?

Yes. Sure, Vikram. The Phase Ib study that we conducted in patients with moderately to severely active ulcerative colitis was published in the Journal of Crohn's and Colitis recently. That study used doses of 20, 80, and 270 milligrams, but that study was done with a powder and capsule formulation. It was literally just the active pharmaceutical ingredient put in a capsule. When we moved on to later stages of development, we wanted to move into a tablet formulation to start getting close to a commercial formulation. This was just a practical matter. This wasn't with regard to a difference between 270 versus 200 milligram, which is our highest dose in the IIb. It was just that that was a capsule size that we chose that could accommodate that load of 200 milligrams. We don’t consider those to be markedly different.

And I had a follow-on question on ampreloxetine. I know that you mentioned that a 1-point difference is something you would consider clinically meaningful. But based on any conversations you've had with clinicians, what's your sense on durability? How much duration of response would be clinically meaningful over some of the options that are currently on the market?

Yes. Well, obviously, if we saw a change of that magnitude of 4 weeks versus placebo, that would be a meaningful difference for clinicians. I think showing it at 4 weeks would be greater than what's been shown by droxidopa. As Rick said, we're really shooting for two different objectives here. One of them is efficacy, both effect and duration of effect. The second is safety with regard to supine hypertension. Those objectives we expect to be able to meet with the study 169 and then complement with the 170 study. Rick?

Yes. Not really much to add other than unfortunately for these patients, there isn't anything that is good for their durability as it stands currently. While they have some options, if you look at the package insert for droxidopa, for example, there was a 1-point change approximately from placebo at 1 week after treatment in their pivotal study, but that went away after 1 week. The other point about durability is in the second study, which we'll report on later after we report on the SEQUOIA study. The second study really gets a bit at durability, which is the 16-week open-label followed by that 6-week randomized withdrawal. In totality, the data between both of these studies is really going to address both the 4-week efficacy and the longer-term durability. In that randomized withdrawal study, it's also a 1-point change in OHSA 1 coupled with an endpoint on what's called PGI, which is a patient global impression score. Those two together make up the endpoints for 170 or the REDWOOD study.

I think it's important to understand that the 169 and the 170 represent the largest data set that's been studied for symptomatic nOH in a randomized setting. We're very excited about completing 169 and taking a look at the 169 data sets regarding efficacy and safety.

Our next question comes from the line of Tazeen Ahmad from Bank of America. Your question please.

Most of them have already been answered, but regarding izencitinib, you'll have data in Q3 for ulcerative colitis and then more towards the end of the year and potentially early next year for Crohn's. So my question is, based on the results you show for ulcerative colitis, should we try to extrapolate what the data could look like for Crohn's? That's my first question. My second question is, for YUPELRI in relation to this Phase II study, could it increase your addressable patient population if unsuccessful, and if so, by how much?

Both questions are important. I believe the data from izencitinib for ulcerative colitis will offer some insights for Crohn's disease, although they are distinct conditions. Crohn's disease is more transmural and develops differently than ulcerative colitis, which is more localized to the intestinal tract. We think there will be useful information, especially for the ulcerative colitis study's perspective on Crohn's. However, as we approach the completion of the Crohn's program, we will analyze the data once it’s unblinded. Regarding YUPELRI, that's an excellent point to highlight since estimates suggest that about 20% of COPD patients experience low peak inspiratory flow. This has been an area of considerable focus for Theravance as we aim to assist that specific population with nebulized therapy. There are various reasons for using nebulizers, such as dexterity issues and the need for caregiver assistance, which can limit the use of metered-dose inhalers or dry powder inhalers. Some patients resort to nebulization due to low peak inspiratory flow. We're optimistic that our Phase IV program will build on earlier Phase II data demonstrating the benefits of YUPELRI for patients with low to very low peak inspiratory flow. Since that was a limited data set, conducting the Phase IV confirmatory trial is essential to potentially broaden the patient population that can benefit from a once-a-day nebulized medication like YUPELRI. Frank, do you have anything to add?

Yes. I think you hit most of the key points. There are a lot of patients that are on handheld agents that have dexterity issues. Beyond dexterity, they have coordination issues where they have to manipulate the handheld device and breathe in deeply at just the right time, as well as cognitive issues. The other thing is we're testing a bit of a hypothesis because previous nebulized agents may not have been optimal in this patient population. YUPELRI is the first once-a-day agent that provides a full 24 hours of control, and it takes about 8 minutes in the morning and then you're good for the rest of the day until the following morning. With a nebulized agent, you only have to execute tidal breathing as opposed to deep inhalations with a handheld device. We look at this as an opportunity well worth investing in, not only for the brand but particularly for the patients that potentially will be treated with YUPELRI with low peak inspiratory flow.

I understand it might be challenging to provide exact numbers, but could we expect the patient population to potentially increase by 50%, or possibly more or less?

About 9% to 10% of patients use nebulizers for maintenance therapy. There are indications that 1 in 5 patients have low peak inspiratory flow. We are seeing a significant increase, with around 900,000 patients using nebulizers for maintenance therapy with COPD, representing an important market segment. We are excited about the progress YUPELRI is making with our current marketing strategy and its focus on serving patients who are underserved by existing handheld therapies or short-acting agents that do not provide benefits throughout a full 24-hour period, unlike what YUPELRI can offer. This approach aims to expand the overall market for YUPELRI. We recognize that there is a considerable amount of work ahead, but we are confident in our ability to successfully position YUPELRI and grow its share within the existing market. Frank, do you have any comments on this?

No, no. I think that's it. I don't have anything to add, Rick.

Our final question for today comes from the line of Joseph Stringer from Needham & Company. Your question, please.

Two from us. One, sort of on ampreloxetine and nOH related to the questions that have been asked earlier. Just curious, in your discussions with clinicians, with the available options and therapies out there, what's really the main sort of concern or main drawback that you can point to? I know there are several, but is it really efficacy-based, sort of durability of effect? Or is it safety-related in terms of supine hypertension? Where I'm going is that if you had an efficacy result with ampreloxetine that's clinically relevant, but has lower safety such as lower supine hypertension, do you think that would still translate into majority market share given the current competitive dynamics? Second question is just beyond nOH and UC Crohn's, what's the top program that we can look for in terms of advancing in the clinic or we could see clinical data from?

Sure. I'll start with ampreloxetine. Market research indicates that physicians prefer a therapy that provides confidence in achieving durability of response without the risks associated with titration and its unknown consequences. Titration can, in some cases, increase the risk of supine hypertension. The studies related to 169 and 170 represent the most substantial evidence gathered for symptomatic nOH. There is no other compound, either on-label or off-label, that will have a data set comparable to that of ampreloxetine. Ultimately, it's about fulfilling the promise of a product by providing efficacy without significantly raising the risk of supine hypertension. I can relate this to another successful product, YUPELRI. Clinicians and patient feedback indicate that YUPELRI delivers as promised. That's the same goal we have for ampreloxetine. On the next significant clinical program, I think the significance of the ampreloxetine 169 and 170 study, ulcerative colitis and Crohn's for izencitinib, these are very, very significant programs for us. We've just announced another program, a Phase IV study in YUPELRI with low patients versus tiotropium. So that's likely to be the next, but we remain quite excited about the inhaled JAK program, both inhaled from a dry powder inhaler as well as for a certain segment of the population, along with the acute use of a JAK inhibitor for acute lung injury caused by viral illnesses as well as the promise that we might have in both acute and chronic lung allograft dysfunction. All these programs are moving forward. Our focus is on, right now, which is the data on ampreloxetine and the data in ulcerative colitis.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mr. Winningham for any further remarks.

Thank you, operator. I'd like to thank everyone for joining us today. Obviously, we're on the eve of some very important data readouts for us in ulcerative colitis as well as symptomatic neurogenic orthostatic hypotension. We're very excited by the continued strength that YUPELRI is showing even in the face of a continuing pandemic, and we look forward to updating you on these programs as the remainder of the year unfolds. So thank you very much for your time.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect.