Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravance Biopharma Second Quarter 2022 Conference Call. During the presentation, all participants will be in a listen-only mode. A question-and-answer session will follow the Company's formal remarks. Also, today's conference call is being recorded. And now I would like to turn the call over to Gail Cohen with Corporate Communications. Please go ahead.

Good afternoon, and thank you for joining the Theravance Biopharma second quarter 2022 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. I would direct your attention to Slide 3. Joining us are Rick Winningham, Chief Executive Officer; followed by Rhonda Farnum, Senior Vice President, Chief Business Officer; Rick Graham, Senior Vice President, Research and Development; and Andrew Hindman, Chief Financial Officer. Now I will hand the call to Rick Winningham for opening remarks.

Thanks, Gail. Turning to Slide 4. Theravance Biopharma's purpose is to create medicines that make a difference. Last September, we announced a restructuring of the Company to optimize our business while staying true to our purpose. This quarter, the transformation continues. I couldn't be prouder of the team that's focused and persevering to deliver the strongest sales quarter for YUPELRI since its launch. Rhonda will review the performance details. The successful Type C meeting for ampreloxetine, getting alignment with the FDA on a path to NDA filing with one additional Phase 3 study in multiple systems atrophy patients with symptomatic neurogenic orthostatic hypotension. Rick will give you an update as to where we are today. And the recently announced sale of our TRELEGY royalty interest to Royalty Pharma for approximately $1.1 billion in upfront cash and a total potential value of over $1.5 billion. Furthermore, as we shared when we announced the TRELEGY royalty transaction, it delivers strategic value in the near, medium and long-term. Upon receipt of the $1.1 billion upfront, we immediately initiated a multistep process to eliminate all outstanding Theravance Biopharma debt. The tender offer to redeem our 2023 convertible notes is ongoing and should close later this month. After that, we'll announce the final details on our return of capital plan for shareholders. Later, Andrew will review the specifics of the TRELEGY transaction and speak to the overall Theravance Biopharma Q2 financials. All of these actions drive towards our goal to maximize shareholder value. I'll now turn the call over to Rhonda Farnum to review YUPELRI.

Thanks, Rick. I’m pleased to once again have the opportunity to share our latest performance update on YUPELRI, which is the first and only once-daily nebulized long-acting muscarinic antagonist that provides a full 24 hours of control for patients and is indicated for the maintenance treatment of patients with COPD. Turning to Slide 6. This quarter, YUPELRI had its strongest quarter-to-date. As a reminder, Theravance Biopharma and Viatris co-promote in the U.S. with their combined sales infrastructure targeting health care professionals who treat COPD patients suitable for YUPELRI. Theravance Biopharma's commercial and medical teams cover the hospital segment. Viatris is responsible for outpatient-based community health care professionals. From a financial perspective, we share profits on YUPELRI in the U.S. with 65% going to Viatris and 35% to Theravance Biopharma. Looking at Slide 7. This shows Theravance Biopharma's implied 35% share of net sales for YUPELRI during the second quarter of 2022 of $17.2 million. I'm also pleased to highlight that YUPELRI's year-over-year net sales have increased by 17% comparing Q2 of 2022 versus Q2 of 2021. Overall, Q2 2022 demand increased 9% from Q1 and increased by 18% year-over-year. Looking specifically at the Theravance Hospital segment deployment efforts on Slide 8. In Q2 of 2022, doses sold exclusively in the hospital setting represented a year-over-year increase of 54% from Q2 of 2021 and an increase of 10.4% from the previous quarter, demonstrating the highest quarter volume launched to-date. As we have previously stated, the respiratory pandemic impacted the launch phase of YUPELRI's growth in 2020. But we have seen YUPELRI's hospital volume return to growth in the second half of 2021, and this momentum has continued through the first half of 2022. As the environment for pulmonologists continues to normalize, we believe we will continue to see upside for the brand as the team continues to execute against our strategy, leveraging a hybrid mix of in-person virtual and digital education and promotional efforts that effectively communicate the core benefits and value proposition for YUPELRI. With the continued achievement of new key hospital system formulary placements and the continued addition of new purchasing accounts, we believe these wins will yield significant growth through the remainder of 2022 and beyond, as YUPELRI will be the first LAMA of choice in many hospital systems.

Thanks, Rhonda. As Rick mentioned, today, I'm going to focus on ampreloxetine, an internally discovered once-daily norepinephrine reuptake inhibitor for symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy, also referred to as MSA. Moving to Slide 12. MSA is a rare disease affecting approximately 50,000 Americans, including men and women of all racial groups. Symptoms tend to appear in a person around the age of 50 and advance rapidly over the course of 5 to 10 years with progressive loss of motor function, and patients eventually become bedridden. While some of the symptoms of MSA can be treated, there is no cure for the disease, and currently, there are no therapeutics that are able to slow disease progression. 70% to 90% of people with MSA have symptomatic neurogenic orthostatic hypotension. In MSA patients with neurogenic orthostatic hypotension, blood pressure falls when upright, owing to impaired release of norepinephrine, which leads to symptoms that include dizziness. There's no approved therapy shown to provide sustained efficacy in mitigating the debilitating symptoms for the MSA patient with neurogenic orthostatic hypotension. Both of the currently available therapeutic treatment options have complex dosing regimens with three times daily administration. They have been shown to have limited durability of symptomatic treatment effect and have a black box warning for supine hypertension. With the unique mechanism of action, a once-daily dosing regimen, a durable symptom effect demonstrated in MSA patients in the Phase 3 study 170 and no signal of supine hypertension in a safety database of greater than 800 patients and healthy subjects, Ampreloxetine has the potential to markedly differentiate from other treatment options. Moving to Slide 13. The top panel shows the situation when neurogenic orthostatic hypotension is untreated at the cellular, vascular, and patient level. In the untreated MSA patient, norepinephrine available for action is impacted through uptake by the norepinephrine transporter. In patients with MSA, low norepinephrine leads to vasodilation associated with a decrease in blood pressure. This decrease in vascular tone can result in symptoms that are associated with tissue hypoperfusion. In contrast, the bottom panel shows what happens when the norepinephrine transporter action is blocked by ampreloxetine. Inhibition of this transporter leads to an increase in norepinephrine thereby increasing blood pressure, increasing organ perfusion and reducing the symptoms in MSA patients with neurogenic orthostatic hypotension. Moving to Slide 14. We released Phase 3 study results from Study 170 in April, which demonstrated a clear benefit in study patients with MSA and symptomatic neurogenic orthostatic hypotension. You may recall that Study 170 included patients with Parkinson's disease, pure autonomic failure, and MSA. It's important to note that our hypothesis has always been that patients with MSA were most likely to respond as these patients have a central lesion with intact peripheral nerves that innervate blood vessels. That's why we prespecified in the protocol that 20% of the study population was to include MSA patients. The benefit to patients with MSA was observed in multiple endpoints in Study 170, including a statistically significant effect on the orthostatic hypotension symptom assessment score, also referred to as the OHSA composite score. This effect on the OHSA composite score was driven by all six symptom scores favoring ampreloxetine on the questionnaire. These include dizziness, vision, fatigue, weakness, trouble concentrating, and head and neck discomfort. Today, I'd like to share some additional data supporting the totality of evidence that ampreloxetine is effective in treating patients with MSA. Starting with the figure on the left. Treatment with ampreloxetine results in an increase in norepinephrine and an associated decrease in DHPG, the metabolite of norepinephrine. This magnitude of change in norepinephrine is consistent with our Phase 2 study published in clinical autonomic research, and there's a level of change that has been associated with symptom improvement. Moving to the middle panel, continued treatment with ampreloxetine prevents a drop in blood pressure as demonstrated in the randomized withdrawal period from Study 170. Note that in the placebo group, blood pressure decreased by 12 millimeters of mercury relative to baseline after ampreloxetine was withdrawn. As we reported previously, and consistent with an increase in norepinephrine and sustained blood pressure, ampreloxetine treatment prevented a worsening of symptoms as assessed by the OHSA composite score. In contrast, patients in the placebo group experienced a 1.54 point worsening in the OHSA composite score on average. The impact of ampreloxetine on norepinephrine level on blood pressure and symptom scores is considered clinically meaningful. As we shared in our press release on July 13, during a recent Type C meeting with the FDA, we aligned on the path forward to an NDA filing with one additional Phase 3 study in MSA patients with symptomatic neurogenic orthostatic hypotension. Results from Study 170 will provide supportive data for the NDA filing. The primary endpoint of this new Phase 3 study will be the change in OHSA composite score, and the study will be similar to Study 170 with a randomized withdrawal design. We aim to start the new Phase 3 study in the first quarter of 2023 and plan to provide additional details as the protocol is finalized. We've gained tremendous operational and technical experience from our recently completed Phase 3 program. With this knowledge and experience, we will streamline the protocol, optimize trial site selection, and with support from key opinion leaders, trialists, and advocacy organizations, we're confident that we'll be able to deliver substantial time and cost savings for the new Phase 3 study relative to the previous Phase 3 program. We reiterate that we expect the $25 million investment received from Royalty Pharma to cover the majority of these Phase 3 costs. I look forward to updating you on the details once we finalize the study protocol.

Thanks, Rick. And before turning to our second quarter financials, I'd like to comment on the TRELEGY ELLIPTA transaction with Royalty Pharma as it is transformational for Theravance Biopharma. I'd like to start by recognizing the extraordinary efforts of and extending my sincerest gratitude to the entire Theravance Biopharma team who brought this transaction to completion. Additionally, I'd like to thank Royalty Pharma and GSK for their engagement and support throughout what was a competitive and thorough process. Today, we are almost complete with deleveraging Theravance's balance sheet, and we look forward to unlocking substantial value for our equity holders in the future. On Slide 16 summarizes the key components of our deal and of over $1.5 billion in potential total value. We closed the deal on July 20, 2022, and the transaction was carefully structured with Royalty Pharma to deliver three components of value to Theravance Biopharma. First, upfront value in which we received a cash payment of approximately $1.1 billion in exchange for all of our units in Theravance Respiratory Company, LLC, representing our 85% economic interest in the sales-based royalty rights on worldwide net sales of TRELEGY. Secondly, in medium-term value in the form of potential milestone payments up to an aggregate of $250 million, which will be paid upon the achievement of TRELEGY revenue thresholds throughout calendar years 2023 through 2026. In 2023, we are eligible to receive a milestone payment equal to $50 million if TRELEGY's global net sales exceed $2.863 billion. As a recent point of reference, during the second quarter of 2022, global net sales of TRELEGY were $591 million, up 46% from Q2 2021, and significantly exceeding GSK's sell-side consensus estimates by 23%. Third and finally, we've retained long-term value in the form of the return to Theravance Biopharma of our 85% interest in the TRELEGY royalties in what we are calling the outer year royalties or OYR in some of our documentation. The outer year royalties begin in 2029 and will remain until our contractually defined royalty term expires on a country-by-country basis thereafter. We calculate the net present value of the outer year royalties as approximately $200 million derived from GSK Bloomberg analyst consensus forecast for TRELEGY through 2032 for U.S. sales and through 2034 for ex-U.S. sales. As we discussed when announcing the deal, this creative transaction structure monetizes our equity—our economic interest in TRELEGY royalties and allows Theravance Biopharma to benefit from significant near-term cash as well as retaining medium- and long-term value in TRELEGY royalties, which we expect will continue to benefit from GSK's global commercial execution and lead to the continued strong performance of TRELEGY over time. Finally, as a reminder, this monetization also removes uncertainty with the receipt of TRELEGY royalties as the outer year royalties will be paid directly from Royalty Pharma to Theravance Biopharma, removing the role of Innoviva as the manager of TRC LLC. Now moving to Slide 17, we show our second quarter 2022 financial highlights compared to the second quarter of 2021. R&D expenses for the second quarter of 2022 were $12 million compared to $43.8 million in the same period in 2021. SG&A expenses for the second quarter of 2022 were $11.2 million compared to $18.3 million in the same period in 2021. These quarterly figures exclude share-based compensation, one-time restructuring, and transaction-related expenses. We ended the second quarter of 2022 with $133 million in cash and cash equivalents. On Slide 18, we are reiterating our financial guidance for the full year 2022. For R&D expenses, we expect to invest between $45 million and $55 million relative to actuals of $168 million in 2021. Of this expense range, approximately $10 million is nonrecurring spend that was incurred in Q1 2022 to support the wind down of the izencitinib and ampreloxetine clinical programs. R&D spend in Q3 and beyond will normalize and reflect recurring measured investments in our pipeline. For SG&A expenses, we expect to spend between $35 million and $45 million relative to actuals of $71 million in 2021. Again, our operating expense guidance excludes share-based compensation, one-time restructuring, and transaction-related expenses. As a result of our reduced spending and improved cash flow generation from YUPELRI, we expect to approach breakeven cash flow in the second half of 2022 and become sustainably cash flow positive going forward on an annual basis.

Thanks, Andrew. Turning to Slide 19. Theravance Biopharma is in the midst of its transformation, and this quarter has been pivotal as we reported key progress and we continue to demonstrate focus on our goals. Our sale of 85% of the TRELEGY ELLIPTA royalty interest to Royalty Pharma for over $1.5 billion and potential total values deliver significant value to the company with, again, an upfront, as Andrew mentioned, of $1.1 billion and midterm value of $250 million in contingent milestone payments and then downstream long-term value and outer year royalties estimated to be approximately $200 million. Royalty Pharma's strategic investment of up to $40 million in ampreloxetine allows us to proceed expeditiously and retain a greater share of value of ampreloxetine moving forward. We expect the overall capital infusion of the company to enable us to restructure the Theravance balance sheet in which we're in the midst of and return capital to shareholders and operate from a position of financial strength going forward. In closing, I'd like to thank GSK for their marketing excellence around TRELEGY, Royalty Pharma for their investment and conviction to move TRELEGY royalty transaction deal forward and invest in ampreloxetine, and to the internal Theravance Biopharma team that worked tirelessly to close the deal and meet the needs of the patient communities we serve, the COPD community with YUPELRI's highest sales performance to date and the MSA community by offering them hope that a more effective and safe option to manage their symptomatic neurogenic orthostatic hypotension has a path ahead. We're driving forward, and we're well positioned to deliver medicines that make a difference and ongoing shareholder value. Thank you, everyone, for your time and participation. I'll now hand the call back to the operator for questions.

Thank you, sir. Our first question from Eva Privitera from Cowen.

Congrats on all of the progress. So I had a question about ampreloxetine—what is the onset of the mechanism of action? When are you seeing the norepinephrine become elevated? And how quickly is that translating to the blood pressure response?

That's a great question, Eva. Rick, do you want to take that?

Yes. So Eva, we—because it was a Phase 3 trial, we were measuring norepinephrine relatively sporadically. So we're not measuring it day 1, 2, 3 and 4. But early on, within a couple of weeks' time point, we do see norepinephrine levels change, and that's expected because that's sort of a direct effect of the drug action on the transporter. We also see a relatively quick effect on blood pressure as well. Where there's a little bit of a gap is with regard to symptoms. And as we speak to our KOLs and the physicians and understand what these patients are dealing with, it does make sense that there can be a little bit of a lag between a change in norepinephrine, a change in blood pressure, which are direct effects, and then the symptom response because it takes patients a little bit of time to understand the effectiveness that they're seeing on symptoms.

Great. That's very helpful. And my second question is on YUPELRI. So the growth in the hospital setting is very impressive. How do you expect that performance to translate to overall sales? And is the trajectory you're seeing so far kind of lining up with your expectations?

Rhonda?

So I'll start with the latter component. Is it in line with our expectations? Yes. And given how we have organized around the potential and really see the role of YUPELRI having the ability to support the very sizable niche of the COPD market, we do anticipate continued growth in the hospital setting. And I think the other important piece of this to understand, which I think you do quite well already, is we consider this hospital volume channel growth as a leading indicator for the community volumes. So seeing that contribution over time, recognizing there is a difference in duration of therapy in the inpatient setting, approximately 3.5 days, versus what is treatment in the outpatient setting, we do anticipate that growth to continue.

How long is that lag between the hospital growth and the community growth?

I still think that's hard to be that precise, Eva, because I still think of the performance of this brand is in launch mode. We basically had our launch halted with the pandemic in Q1 of 2020, and getting back to that trajectory and seeing that uptake, it's a little hard to be able to transcribe that to a very precise time contribution of the hospital business to the outpatient side.

What we do see in recent market research is that 50% of the hospital visits and discharges are accompanied by a prescription. The other key point is that we've just now in the past quarter, gotten back to the pre-pandemic levels with regard to patient visits in the pulmonologist sort of normalized for seeing respiratory-oriented care. The hospital was hit harder than the community in the pandemic. Both were hit, but the hospital is hit a little bit harder. So the growth rates that you're seeing in the hospital are higher than the growth rates currently that you're seeing in the community, but you do have this element of a leading indicator as Rhonda said. And it's really up to the Viatris and the Theravance Biopharma teams to maximize the opportunity that we're seeing with the terrific hospital growth that we have and the ongoing momentum that we see in the community.

Great, thank you so much for taking the question.

Our next question comes from Vikram from Morgan Stanley.

This is Gospel on for Vikram. We have one question. So for ampreloxetine, assuming the Phase 3 study you are planning in MSA is positive, what are all the data sets and study that you would include in the NDA filing? And how large of a study do you expect the Phase 3 program to be in terms of patients enrolled and sites activated?

Rick, you want to take that?

Sure. So thanks for the question. So the first question, if the Phase 3 study is positive, what data sets would be included in the filing? With our recent Type C meeting with the FDA, we had several important agreements that were reached. One was we would do one new study in patients with MSA, and that would be supplemented by the MSA results from Study 170. The other agreement was we agreed on the primary endpoint for that new study, which is the OHSA composite. That's the endpoint for which we saw a statistically significant effect in the Phase 2 study in—sorry, in the Phase 3 study of 170, and then we also agreed on general study design elements, namely that it will be a similar study to 170 with a randomized withdrawal design. The data sets, therefore, would be the new study, Study 170, safety data from our Phase 2 study, our 169 study, and then our clinical pharmacology program as well, which we've previously had conversations with FDA and aligned on that approach. With regard to the second question, it's too early to comment on the number of patients that we're going to include and site selection. We just recently came out of this important meeting with the FDA. So now that we have an alignment, we'll be working on finalizing the protocol. We'll be doing site feasibility. We have tremendous experience already from running a large global Phase 3 program. And we're going to take the learnings from that and conduct a very efficient study in this new study. I'd also just in the meantime refer you to what we had put out on I think it was around—it was in April, what we had put out on our slides that in the 170 study, we saw a statistically significant effect on OHSA composite with 38 patients.

Awesome. Thank you very much.

Our next question comes from Joseph Stringer from Needham & Company.

This is Ben on for Joe. Thanks for taking our questions. Just one question, kind of similar related to—just to clarify. For the planned Phase 3 MSA trial, what type of MSA patients are you considering including—in terms of inclusion criteria, will this be similar or different to the previous MSA patients enrolled in the Phase 3 trial? Thanks.

Rick, go ahead.

Yes. Hi Ben, thanks for the question. Based on what we saw in Study 170 with MSA patients, and we're very excited about the totality of data. Everything that we look at holds up and makes good scientific sense. We're going to try to keep things as consistent as possible to Study 170. We don't want to change any variables because we believe there's a good effect in these patients that we had selected. You might remember, we did things like included an enrollment steering committee to make sure that we're trying—that we're able to decrease signal from noise and enroll the right patients. We'll have certain other criteria at baseline, making sure that these are patients that have MSA and that may respond and really just trying to find the best ways to minimize signal from noise, which we did a pretty good job of in Study 170. The team has taken an extremely careful data-driven approach though to look at those elements, perhaps in the 170 study that we might want to make some modifications to, and we're really threading the needle on that new study design. So largely similar to 170 with regard to patient selection, but taking a data-driven approach to optimize this next study.

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.

Thank you, operator. I'd like to thank everyone for joining us on this call today. We're extremely proud of the accomplishments of the Theravance Biopharma team in the second quarter and everyone who's participated in achieving the transformative goals that we've achieved in the second quarter, and we look forward to bringing news of continued progress against the company's objectives in the third quarter and fourth quarter of this year. Please have a great day. And again, thank you for joining us.

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