Ladies and gentlemen, good afternoon. I would like to welcome everyone to the Theravance Biopharma Second Quarter 2024 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 is being recorded. And now I'd like to turn the call over to Rick Winningham, Chief Executive Officer. Please go ahead, sir.

Good afternoon, and welcome to the Theravance Biopharma’s second quarter 2024 earnings results conference call. Slide 2 is our forward-looking statement slide, which I would encourage you to read. Our call today will include forward-looking statements involving risks and uncertainties, information concerning factors that could cause results to differ materially from these forward-looking statements as described further in filings with the SEC. As you can see on Slide 3, members of the Theravance leadership team joining me on today's call include Rhonda Farnum, Theravance’s Chief Business Officer; Aine Miller, Theravance’s Head of Development; and Aziz Sawaf, Chief Financial Officer. Turning to Slide 4, we have a number of updates to cover, which either impacted our quarterly results or are tied to future financial and operational guidance. Beginning on the left-hand side of the slide, we reported $54.5 million in net sales from YUPELRI. This reflects another strong quarter of volume growth and demand generation with hospital doses up 43% and overall customer demand up 13% versus the prior year, offset by a reduction in net realized price resulting in net sales decreasing 1% year-over-year. Given the current mix and resulting ASP coupled with the nature of Medicare Part B, where reimbursement limits are set with a two-quarter lag, we were only expecting the lower net price in Q2 to improve slightly during the second half of the year. For 2025 and beyond, we anticipate a more stable pricing environment with continued YUPELRI demand growth across all patient fulfillment channels. In line with our prior guidance, Viatris filed an NDA for YUPELRI in China in June, which puts us on the path to achieve meaningful economics in that territory. And finally, in July, we were granted a new YUPELRI method of use patent with a 2039 expiration date. This new patent has been listed in the FDA Orange Book. Moving to Ampreloxetine, we are updating when we expect to achieve key milestones in the pivotal CYPRESS study. Aine will provide more details in her portion of today's presentation, but we now expect to enroll the last patient into the open-label portion of the study sometime in mid-2025, where we had previously been guiding the second half of 2024. One of the main reasons for this is longer lead times between initial site engagement and activation, particularly at large U.S. centers of excellence, which are core to our strategy of delivering a high-quality result. We have recently brought on a number of larger sites and our enrollment rate per active site is now at or above our internal projections, which gives us confidence in our updated timeline. We expect to report top-line results from CYPRESS approximately six months after we enroll the final patient in the open-label portion of the study. Turning to the right-hand side of the slide, we limited cash use in the quarter, finishing the period with $96 million in cash and no debt. While our second-half financial performance will depend partly on YUPELRI’s performance, we no longer expect to approach non-GAAP breakeven and instead expect to report losses in the second half of 2024, similar to what we experienced during the first half of the year. We expect cash utilization in the second half of the year to be similar to or slightly above first-half levels. Finally, moving to trilogy, GSK reported another outstanding performance this quarter with reported sales up 40%. This achievement brings year-to-date sales to $1.8 billion, up 37%, and increases our confidence in achieving the higher $50 million sales milestone for 2024 as well as additional potential milestones in 2025 and 2026. With that, I'll turn it over to Rhonda to cover YUPELRI's performance in the quarter and our strategy to deliver future growth. Rhonda?

Thanks, Rick. Let's begin the overview on Slide 6, with a snapshot of the product's net sales performance. As Rick highlighted in his opening comments, we reported total YUPELRI net sales of $54.5 million in the quarter, which represents a 1% decline quarter-on-quarter and year-on-year. This result was driven by a lower than anticipated realized net price in the quarter, reflective of the brand's evolved channel mix. Our strategy with YUPELRI has been to present patients and healthcare providers with flexibility of choice in fulfillment options that best meet their individual needs. Although we are limited in terms of the detail we can provide today, we have taken proactive steps during the quarter to reposition YUPELRI for improved performance across a range of distribution channels over the long term. While we do not expect to realize the full effect of these improvements on net price for a couple of quarters, we may see modest sequential improvements in price during the remainder of the year. While the second quarter net sales performance is disappointing, we believe that the effect of one factor should not overshadow our continuous success in demand generation and our ability to position YUPELRI for sustained long-term growth. This quarter, our combined team was able to drive a 13% year-on-year increase in customer demand volume, and we remain confident in YUPELRI's bright future based on its highly differentiated profile and the strategies we are implementing to drive increased awareness and adoption. On Slide 7, you can see our strong hospital performance in the quarter. We are quite pleased with not only the growth we delivered but also with the KPIs that tie this performance to potential future growth in our ability to drive outpatient community utilization. Doses shipped during the quarter increased 43% year-on-year, reaching a new all-time high. We made continued progress in terms of new formulary approvals, and our year-to-date performance is essentially already on par with the entirety of 2023. In addition, the team continues to focus on the implementation of therapeutic interchanges. This adoption is core to our commercial strategy and is fundamental not only to increasing adoption and volume growth of YUPELRI in the hospital setting but also contributing to establishing discharge processes that best support patients for continued use on YUPELRI as they return to the community care setting. Shifting to our market share trends on Slide 8, I'm pleased to report that our share of the long-acting net market once again increased during the quarter in both the hospital and community segments. Our hospital share surpassed 18% and our community share reached 32%, both new launch-to-date highs. This performance is consistent with our expectations, given the strong momentum we've generated in terms of formulary wins and therapeutic interchange in the hospital setting, coupled with the success of our concomitant therapy messaging strategy in both the hospital and community settings. We are temporarily pausing the provision of our retail script and new product view due to underreported prescriptions from a large specialty pharmacy in the mail order channel. In fact, if we exclude the underreported mail order volume, we did see another launch-to-date high in Q2. We have access to the individual pharmacy stream that was impacted, confirming the strong demand trends and the volume growth we are experiencing with YUPELRI. On Slide 9, I think it's important to revisit the roadmap from 2023 and the substantial long-term growth opportunity that remains for YUPELRI. As we've previously discussed, we estimate that there are approximately 200,000 patients receiving LAVA as maintenance therapy and that this population is central to our concomitant therapy messaging strategy. Since initiating, we have improved the ratio of LAVA use to YUPELRI in the hospital setting from 5:1 down to 3:1 as of Q2 2024, with the goal of getting this closer to 2:1. This metric, coupled with our growing long-acting neb market share in both the hospital and community, suggests that our strategy is working to continue increasing the YUPELRI patient population. Moving to Slide 10, I'll share some information relevant to the significant commercial opportunity that exists for YUPELRI in China. China is an important market for respiratory medications and pharmaceuticals overall. According to IQVIA data, it is the second largest market globally with spending approaching 1/4 that of the U.S. COPD represents a significant health problem in the territory, affecting nearly 100 million individuals, with nearly half of those experiencing moderate to severe disease. We have a strong partner in Viatris in China, which ranks as the country's eighth largest multinational pharmaceutical company with strong government and regulatory affairs capabilities, and over 4,000 sales representatives. We are excited about YUPELRI's potential introduction, noting that the economics to Theravance are substantial, with up to $45 million in regulatory and sales milestones plus upwardly tiered royalties ranging from 14% to 20% of net sales. Finally, I'll wrap my comments on Slide 11 by emphasizing that YUPELRI is a unique medicine offering a substantial and highly differentiated value proposition. It is the only nebulized LAMA for COPD maintenance treatment in the U.S., and we believe it is underutilized within the patient population to which it is best suited. We see long-term growth potential for the product, driving considerable value for Theravance shareholders. I will now hand it over to Aine to address further details on the progress of the Ampreloxetine program. Aine?

Thanks, Rhonda. I'll begin on Slide 13 with a quick recap of our approach to CYPRESS. As many of you know, we met with the FDA in June 2022 and aligned with the agency around conducting a small randomized withdrawal study in MSA patients to confirm the durable benefits we saw in study 170, amidst the FDA's requirement for full approval. Randomized withdrawal designs are well-established methods for demonstrating durable efficacy without exposing patients to undue time on placebo, and are often used when the endpoint is a patient-reported outcome, as is the case with the OHSA composite score. We knew that identifying the right sites to recruit the right patients would be crucial to CYPRESS's potential success for a rare and clinically complex disease like MSA, where making the differential diagnosis and addressing patient needs can be challenging. Identifying experts and training study personnel is of utmost importance. Thus, we are prioritizing working with academic institutions and MSA centers of excellence to deliver a high-quality result. These sites are best equipped not only to identify the most appropriate patients for the study but also to manage their experience in a way that positions CYPRESS for success. We also made a strategic decision to manage the CYPRESS study ourselves. Given our substantial experience working with MSA specialists and advocacy groups, we have strengthened relationships with decision-makers, deepened our understanding of unmet needs, and informed our go-to-market model with direct insights regarding how best to reach the patients and caregivers. While we have encountered longer timelines to site activations, we remain confident that our decision positions us for a high-quality study outcome and a differentiated message to support strong market access should CYPRESS read out as we hope and anticipate. Next, on Slide 14, I'd like to walk through the updated timing for achieving important milestones in the CYPRESS study and some factors that have led us to adjust the date. We now expect to enroll the last patient into the open-label portion of the study in mid-2025. As we first reported in our Q1 2023 earnings call, CYPRESS recruitment officially opened at the end of March 2023 with the first patient enrolled in June. Although we opened a number of centers early on, we encountered difficulty ramping site activations, primarily due to longer-than-anticipated contract completion timelines at larger academic centers, which are anticipated to significantly contribute to patient recruitment. We are also navigating a new centralized EU clinical trial application process that allows for several countries to secure regulatory and ethics approval in parallel, which demands a greater investment in time and resources. These factors impacted our ability to achieve a significant number of planned site activations. We have been responding in real-time to the evolving site activation and enrollment dynamics of the study. While these measures have been positive, we can no longer be confident that they are sufficient to return us to our previous enrollment forecast; this is why we are updating our projections today. However, with over 80% of our planned sites now activated, we are experiencing strong enrollment metrics. The majority of activated sites are screening patients, many have already enrolled patients, and our monthly cadence of patients enrolled into CYPRESS is robust. We also have a small number of academic centers remaining that will activate in the coming months. Overall, where we previously expected to enroll the last patient into the open-label portion of the study in the second half of this year, we now believe that milestone will likely occur in mid-2025. With that, we believe we'll be in a position to report top-line data approximately six months after having enrolled the last patient into the open-label portion of the study. Finally, turning to Slide 15, I'll add a few comments on the importance of the CYPRESS study design. We designed CYPRESS to demonstrate a durable, clinically important benefit with high probability. In doing so, we held many of the design elements constant from Study 170, where we achieved a clinically meaningful 1.6 point benefit on the OHSA composite score in MSA patients. We also sized CYPRESS appropriately. As a reminder, we achieved nominal significance on the OHSA composite with only 38 evaluable patients in Study 170 and are planning to enroll enough patients in CYPRESS to evaluate approximately 60 patients using the same composite as our primary endpoint. In order to do so, we need to account for both study design and factors that will impact the number of patients completing all 20 weeks of the study. These include both the enrichment criteria in the 12-week open-label period and potential discontinuations given the severity of the disease. Our firm plan is to enroll just over 100 patients into the open-label portion of CYPRESS, but the actual number will be driven by our ongoing study experience. Our updated forecast also accounts for the need to ensure we have sufficient patients progressing to the randomized withdrawal portion of the study. Overall, we believe we have designed a study that will support full approval by the FDA and differentiate Ampreloxetine from pharmacological treatments currently offered to MSA patients suffering from symptomatic nOH, if successful. First, CYPRESS should highlight the broad symptom benefits of Ampreloxetine in MSA. Clinical experts developed the OHSA composite to measure global symptom burden, capturing the most frequent, debilitating aspects of organ hypoperfusion across a broader patient population. Last year at the American Autonomic Society Conference, we presented data supporting a 1-point change on the OHSA composite as a clinically meaningful location, which is something that currently approved therapies have not demonstrated. Our MSA data from Study 170 supports Ampreloxetine's potential to deliver such a benefit, and CYPRESS is designed to provide confirmation. Second, CYPRESS is designed to demonstrate Ampreloxetine's ability to deliver durable clinical benefit. We believe this is supported by its mechanism of action, selectivity for norepinephrine at 10 milligrams, attractive tolerability profile, and convenient once-daily dosing. Lastly, along with the results from Study 170, a positive CYPRESS outcome would position Ampreloxetine to be the first therapy with a full approval specifically indicated for nOH patients with MSA. Taken collectively, we believe these attributes would make a strong case for Ampreloxetine's differentiated efficacy when contrasted to the clinical track record and real-world experience of commonly used therapies in this underserved patient population. At this point, I'd like to turn the call over to Aziz to cover our financial results. Aziz?

Thanks, Aine. Starting off with the results for the quarter. Slide 17 and 18 cover the detailed financials. I'll cover the highlights on Slide 19. Beginning with collaboration revenue, we reported $14.3 million, representing year-over-year growth of 4%. This was below our internal expectations due to the YUPELRI pricing dynamics described earlier, which impacted net sales. However, while sales decreased versus the prior year, we were still able to deliver collaboration revenue growth by managing expenses to achieve improved profitability. Turning to the rest of the P&L, we reported operating expenses and cash burn metrics in line with our expectations, reflecting slight improvement compared with Q2 of 2023 net of one-time items. During the quarter, we incurred a $3 million non-cash impairment charge due to the write-down in the value of our operating lease assets related to our excess lab space, which we are currently attempting to sublease. The impairment charge is expected to be one-time unless there are further changes to the leasing market conditions. We closed the period with $96 million of cash and approximately 49 million shares outstanding. We remain debt-free. Turning to our updated financial guidance, I'll cover three areas: First, for R&D, we are trending towards the higher end of our guided range of between $30 million and $36 million and expect R&D spending to increase in the second half of the year. This is driven by incremental spending associated with the CYPRESS study, including support for additional high-quality sites to be activated in the second half. We expect these sites will help contribute towards the completion of enrollment by mid-2025. For SG&A, we expect to be within our guided range of $45 million to $55 million. For non-GAAP earnings and cash burn, we are updating our guidance to reflect the combination of lower-than-expected collaboration revenue due to the near-term YUPELRI pricing dynamics described earlier and incremental spending to support the CYPRESS study. As a result, we now expect to approach breakeven in the second half and now expect non-GAAP losses and cash burn in the second half to be similar to first-half actuals, with cash burn possibly being slightly higher. Importantly, this guidance excludes any potential milestone payments that may be earned in 2024 and received in early 2025. Despite the revision to our near-term financial goals, we remain confident in our capital allocation strategy with no debt, limited near-term cash needs, and the potential to achieve several significant milestones in the near term. We are well positioned to continue executing on our plan to maximize shareholder value. Finally, on Slide 21, I'll discuss our potential third milestones for Trelegy. Q2 net sales grew 40% year-over-year and reached nearly $1.1 billion, beating consensus by approximately 20%. Year-to-date, this brings Trelegy sales to $1.8 billion. In 2024, we stand to earn a $25 million milestone payment as sales reach approximately $2.9 billion and a total of $50 million if sales reach approximately $3.2 billion. Based on year-to-date results, we are increasingly optimistic we will achieve at least the lower-end milestone in 2024, if not the full $50 million. To achieve the $50 million, we estimate that net sales in the second half would need to be around $1.4 billion, a target which looks increasingly attainable given the current trend. Further in 2025 and 2026, we stand to receive a total of up to another $150 million in milestones. As depicted here, Trelegy's sales trajectory and consensus estimates point to an improving picture with Bloomberg consensus for the first time ever, exceeding the higher-end milestone threshold in 2024, 2025, and 2026. With that, I'll pass it back to Rick to conclude. Rick?

Thanks, Aziz. I'll keep my closing comments brief to preserve as much time as possible for Q&A. On Slide 22, you can see the elements of our company's strategic focus, which remain unchanged. We plan to grow YUPELRI in the U.S. and see a clear path forward for doing so. Our hospital strategy is an undeniable success, and we see strong support for our concomitant messaging strategy, both in the hospital and in the community. We believe our efforts will translate into considerable value creation over time, potentially including several milestones and important economics in China, which represent another meaningful near-term opportunity. We are executing a well-designed development regulatory strategy in support of Ampreloxetine and look forward to sharing the results of CYPRESS. While we now expect to take slightly longer to do so, we do believe that it's imperative to manage the study with high quality to maximize its potential for success. We will continue to adapt our regulatory and commercial preparations in a fashion that utilizes resources judiciously to maximize potential returns to our shareholders while minimizing new financial risk. Finally, we continue to evaluate novel ways in which we can deliver value to shareholders as we've done historically. With that, we're ready for questions.

And our first question comes from the line of Douglas Tsao from H.C. Wainright.

Just maybe starting with YUPELRI. I guess, Rick and Rhonda, I'm just curious how it seems that they came on sort of so unexpectedly. Was this due to sort of competitive dynamics? And I think you noted that it will take – I guess I'm curious what specific actions are being taken by you or Viatris to correct these over time.

Rhonda?

First, just to reiterate, the interest manages the pricing and contracting for the brand, so I'm going to be limited in how much detail I can provide. As we've mentioned, the channel mix for the brand has shifted, which has put some pressure on gross to net through the first two quarters of the year. Speaking specifically to Q2 of 2024, some factors led to what we believe were one-time gross to net adjustments. As for the second half, we would anticipate some slight increase in that price over Q2, depending on the evolving channel mix. Looking to the medium and longer term, Viatris has taken corrective measures to hopefully change that trajectory of the brand's realized net price. We expect to see more significant pricing improvement in 2025 and beyond. Lastly, I want to flag that given the continued demand growth and slight improvement expected to pricing in the second half, we believe we would still see an increase in net sales in the second half relative to the Q2 actual.

I am curious if you could share details about how the channel mix impacts time.

So again, limited commentary I can provide. But if you think about the channel mix, there is a varied discounting range across the various channels. And that's about all I can say to that.

And so Rhonda, I guess just to clarify, as the hospital channel grows versus the retail channel. I mean, I guess is that how we should think about it just sort of the balance between those two? Or are there other channels that we're missing?

There are other channels, whether it's a matter of varied elements within retail, long-term care hospital, which also contribute to hospital, not only being a discounted channel, there is full WAC pricing purchasing within the hospital and then where the DME distribution occurs. It’s the element of where fulfillment occurs for these patients.

So I'll say, Doug, just obviously, a majority of the volume flows through the different community channels; the hospital channel is a smaller amount in total of the entire brand. The key to the hospital is us achieving penetration in hospital use, which allows us to maintain a high level of discharge rate of patients on YUPELRI going into the community.

And our next question comes from the line of Julian Harrison from BTIG.

This is Ryan on for Julian. We were just wondering if you could give us an update on the Paragraph IV litigations for YUPELRI.

Yes, I can. I’ll give you a brief update since we are in the middle of litigation. As we noted in the press release, we settled with four of the litigants that were originally there. We have a total of eight litigants in the existing litigation, seven in New Jersey, and one in Pennsylvania. Importantly, we announced that we did add another patent on YUPELRI into the Orange Book, which is the current status of the IP portfolio with Theravance and YUPELRI.

We did have a follow-up on the pricing dynamics in China. Do you have a sense of what that looks like, how should we be thinking about pricing or pricing parity or discount versus the U.S.?

Yes. I think Viatris will probably, as we approach approval in China and finish the regulatory process there, I would expect them to comment on that. We don't have any comments on that today.

And our next question comes from the line of David Risinger from Leerink Partners.

So in terms of the channel mix shift for YUPELRI, could you just help us understand whether Viatris drove that channel mix shift through promotional activities and is now reversing it, or whether Viatris was taken advantage of by some channel participants or just how the negative channel mix shift occurred and how Viatris could reverse it? And then separately, regarding the top line for CYPRESS, it seems like you're suggesting that Wall Street should expect a top-line press release in early '26. Is that correct?

Yes. Let's address CYPRESS first. The guidance will state that the data is about six months after we finish enrollment into the open-label. So I think when we finish enrollment into the open-label, we will start the clock for the data. We will have to see where we finished the open-label in the range around mid-2025. Rhonda, can you cover the YUPELRI channel?

Yes, David. As much as I want to get into granular detail on the dynamics of fulfillment, that's just not an area we can cover due to our partnership agreement. We try to ensure our patients have the best access possible and try to ensure we're appropriately and compliantly diversifying those fulfillment options, which contributes to the mix of where the brand is fulfilled.

And our next question comes from the line of Ernie Rodriguez from TD Cowen.

Just one for us. So we've seen YUPELRI has reported sales of around $55 million per quarter over the last eight quarters. And this has been despite some volume gains. Guidance seems to imply that sales of similar levels for the remainder of 2024. What gives you confidence that the revenue can grow in 2025? Is it going to be just the pricing issues that we disclosed? Or is there something more to it?

I would say there's more to it, Ernie. It's certainly all dependent on the continued demand growth, which we are seeing quarter-on-quarter.

As Rhonda mentioned in her remarks, Viatris has taken specific actions to improve the pricing dynamic. We think that while there might be a minor amount occurring in the second half of this year, it will happen in 2025. The brand in terms of volume is growing, so we've got to align that with stability and improvement in price to achieve overall net sales growth.

Our next question comes from Liisa Bayko from Evercore ISI.

You mentioned completing enrollment of the CYPRESS study at the end of this year and that was the timeline for data mid next year. But that’s predicated on, I think, patient number. Can you elaborate a bit on that? And what goes into feeding that patient number?

Aine, do you want to take that? Just with the revised guidance on the last patient in and the open-label?

Yes. To reiterate, we now hope to complete enrollment in the open-label portion of the study in mid-2025 and then report top-line data approximately six months later. In terms of patient flow through the study, remember we have a 12-week open-label period leading into an eight-week randomized withdrawal portion. We need to ensure that we have sufficient patients progressing from the open-label into the randomized withdrawal to end up with 60 evaluable patients at the end of that stage.

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

Thank you, operator, and I'd like to thank everyone who joined us today for the 2Q update. We look forward to updating you as the business evolves in the second half of the year. Thank you.

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