Theravance Biopharma Inc (TBPH) 2014 Q4 法說會逐字稿

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to the Theravance Biopharma 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.

(Operator Instructions)

I'll repeat these instructions after management completes their prepared remarks.

Today's conference call is being recorded.

And now, I would like to turn the call over to Renee Gala, Chief Financial Officer. Please go ahead.

Good afternoon, everyone. And thank you for joining our Fourth Quarter and Full Year 2014 Financial Results Call and Webcast. Following our prepared remarks, we will open the call for questions.

Joining me on the call today is Rick Winningham, Chief Executive Officer; and Dr. Brett K. Haumann, Senior Vice President of Clinical Development.

In addition, Dr. Mathai Mammen, Senior Vice President of Research and Development and Frank Pasqualone, Senior Vice President of VIBATIV Operations will be participating in the question-and-answer session later in the call.

A copy of the press release can be downloaded from our website and you can call Investor Relations at 650-808-4045 and we will be happy to assist you.

We would like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance Biopharma.

Forward-looking statements include anticipated results and other statements regarding the Company's goals, expectations, strategies and belief.

These statements are based upon the information available to the Company today and Theravance Biopharma assumes no obligation to update these statements if circumstances change. Future events and actual results could differ materially from those projected in the Company's forward-looking statements.

Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the Company's Form 10-Q filed with the Securities and Exchange Commission.

And now, I would like to hand the call over to Rick Winningham. Rick?

Thanks, Renee. Good afternoon, everyone, and thank you for joining us. 2014 was an important and productive year for our company. We created a new independent biopharmaceutical company with a mission to difference in the lives of patients and to create meaningful value for shareholders.

Theravance Biopharma's management has a strong track record of achievement in R&D both before and since the separation. We advanced our portfolio of internally discovered high-quality assets through key value inflection points. We established the strong foundation for continued value creation in our VIBATIV and 4208 programs, with Axelopran and Velusetrag and with additional candidates generated from our discovery engine which has focused on diseases of the lung and gastrointestinal tract.

I will start with VIBATIV. VIBATIV is an important antibiotic with a differentiated set of product attributes, including its dual-mechanism of action bactericidal activity and in-vivo potency.

About a year ago we reintroduced VIBATIV into the USmarket in a pilot commercial program with a small group of sales representatives. We were pleased with the results we saw in the pilot program including strong reorder patterns in those institutions where VIBATIV was being used. And at the end of 2014 we increased the number of sales reps in medical science liaison consistent with our strategy of a controlled market reintroduction.

We are positioning VIBATIV as the preferred anti-MRSA agent with patients not likely to respond or not responding currently to anti-MRSA therapies and improved indications. We are using a data-driven medical information based approach leveraging the large data base we have built on the product's activity and we are continuing to gain additional formulary approvals.

VIBATIV is a key strategic asset and you are investing and expanding its potential accordingly. The TOUR registry study was recently initiated and it's designed to collect data on about 1,000 patients and characterize the real world use of VIBATIV.

By broadly collecting and examining data related to VIBATIV treatment patterns as well as clinical and safety outcome in medical practice, our goal is to create an expensive knowledge based to guide optimal clinical use and future development of the drug.

The Phase 3 registrational study in Staph aure's bacteremia, which was also initiated in February, is design to support a regulatory filing for this indication. Currently, there are only two antibiotics approved in the United States for the treatment of Staph aure's bacteremia and treatment failure is common.

We have seen compelling data across multiple studies supporting a potential of telavancin in bacteremia particularly those with difficult to treat Gram-positive infections.

If we're successful with the Phase 3 study and the subsequent regulatory filing, VIBATIV will be the only branded antibiotic to be approved in Staph aure's bacteremia, HABP/VABP and complicated skin and skin structure infections, three difficult to treat Gram-positive infections.

And now I would like to ask Brett to discuss our TD-4208, Axelopran and Velusetrag programs. Brett?

Thanks, Rick. I will start with an overview of TD-4208 which is one of our company's major success stories. And with the Mylan collaboration we have strengthened our strategy for realizing both its therapeutic and commercial potential.

4208 is a novel investigational, once-daily long-acting muscarinic antagonist or LAMA for chronic obstructive pulmonary disease, COPD. 4208 has a potential to be the first once-daily nebulized bronchodilator for the treatment of COPD and to become the standard-of-care in nebulized bronchodilator therapy, which we view as a compelling market opportunity.

Muscarinic antagonist are the preferred mechanism for the single-agent bronchodilator treatment for patients with COPD. And once-daily long-acting muscarinic antagonist are currently the cornerstone of maintenance therapy for these patients.

In handheld products, the single most commonly prescribed maintenance therapy is once-daily LAMA, tiotropium which sales of approximately $5 billion in 2013. In contrast, for patients who require or prefer nebulized treatment there are no once-daily or even twice-daily long-acting muscarinic antagonist therapies available.

There is currently only one short-acting nebulized muscarinic antagonist ipratropium which is indicated for use every six to eight hours. In fact the only long-acting nebulized agents approved for in COPD are base antagonist and these are administered twice-daily.

According to our market research, 9% of treated COPD patients in the USstill prefer or require nebulized maintenance therapy over handheld inhalers despite these dosing schedule limitation.

In addition, we estimate that another 30% of COPD patients in the USuse nebulized therapy on an intimate and spaces. Today, these patients lack access to nebulized once-daily or even twice-daily LAMA as I mentioned earlier.

In January 2015, we established the strategic collaboration with Mylan for the development and subject to FDA approval, the commercialization of 4208. Mylan is an ideal partner for 4208. And this collaboration meets the objectives we identified earlier on in the program.

Partnering with a world leader in nebulized respiratory therapies enables 's to expand the breadth of our 4208 development program and draw on their extensive manufacturing expertise and if approved extend our commercial reach beyond the acute care setting where we currently market VIBATIV.

Both Mylan and Theravance Biopharma believe that 4208 has the potential to be the only FDA approved once-daily nebulized LAMA product for COPD patients in the near term and is may offer longer term opportunities for combination with other nebulized products.

In 2014 following the announcement of positive topline results for our Phase 2b program we had a productive end of Phase 2 interaction with the FDA concerning the design of a Phase 3 registrational program.

We plan to conduct two replicates three-month efficacy study and a single 12-month safety study, with total enrollment of approximately 2,200 patients. We are excited to start the Phase 3 program later this year.

Now turning to Axelopran or TD-1211. Axelopran is a once-daily, oral investigational peripherally active mu opioid receptor antagonist for opioid-induced constipation or OIC. The objective of this program is to normalize bowel function in OIC patients without impacting analgesia and to improve the GI symptoms associated with constipation.

The Phase 2 program demonstrated a clinically meaningful treatment effect in OIC patients compared to placebo.

We've developed a patient report outcome tool designed to measure patient symptoms which will be used in the Phase 3 registrational program and potentially generate data that would differentiate our product candidate from the competition.

We're preparing to meet with the FDA to discuss the patient reported outcome tool. We've successfully advanced through Phase 3 study and approved by regulatory authorities, Axelopran could have a competitive advantage in the OIC market.

We're also excited by our spray coating formulation of Axelopran, which could potentially be applied to broad range of abuse-resistance opioids as a fixed dose combination. In December 2014, we completed a Phase 1 study comparing the exposure of OxyContin alone -- OxyContin and Axelopran administered as two separate tablets and OxyContin spray coated with Axelopran.

We successfully demonstrated that Axelopran does not significantly alter the systemic exposure to OxyContin when delivered as a fixed dose combination. A fixed dose combination of Axelopran and an opioid could provide the additional market opportunity as it has a potential to provide pain relief without constipation in a single abuse deterrent pill for patient opioids on a chronic basis.

Lastly, I want to touch on Velusetrag or TD-5108. Velusetrag is an oral once-daily investigational medicine being developed for gastrointestinal motility disorders. It's a highly selective agonist with a high intrinsic activity at the human 5-HT4 receptor.

Velusetrag is being developed by 's in collaboration with Alfa Wassermann. We advance in Velusetrag into a Phase 2b study in gastroparesis which will largely be funded by our partner.

Now, I'll turn the call over to Renee to review the Company's financial results for the fourth quarter of 2014 and the financial guidance for 2015. Renee?

Thank you, Brett. Prior to reviewing the financial results, I'd like to remind you that the financial statements of Theravance Biopharma for periods prior to our spinoff from Theravance on June 2nd, 2014.

We derived from Theravance's historical consolidated financial statement and therefore may not necessarily reflect the financial profile of Theravance Biopharma in the future for what they would have been had Theravance Biopharma been an independent publically traded company during those periods.

As such my prepared remarks on our financial results will be limited to the fourth quarter of 2014. Revenue for the quarter ended December 31st, 2014 totaled $1.4 million, primarily resulting from the recognition of product sales for VIBATIV of $1.3 million.

Product sales for VIBATIV in Q4 were relatively flat compared to the prior quarter as we expanded our commercial infrastructure including the recruitment, training, and positioning of our expanded field force.

Cost of goods sold for the quarter ended December 31st, 2014 totaled $3.2 million. These costs include a charge of $2.9 million for the write-down of a portion of the inventory produced during the initial VIBATIV conformant slot due to dating of the product.

Research and development expenses for the quarter ended December 31st were $42.2 million compared to $32.5 million for the same period in 2013. The increase was primarily due to progression of our key program and long-term retention and incentive awards granted in 2011.

Program expenses in the fourth quarter included start-up cost associated with our telavancin Phase 3 registrational study in Staph aure's Bacteremia and our TOUR registry study with VIBATIV, as well as progression of early-stage program towards the clinic.

Selling, general and administrative expenses for the quarter ended December 31st were $21.8 million, compared with $11.8 million for the same period in 2013. The increase was primarily due to costs associated with VIBATIV commercialization and the long-term retention and incentive awards granted in 2011.

Cash, cash equivalent and marketable securities excluding restricted cash totaled $306 million as of December 31st, 2014.

I will now turn to our financial guidance for 2015. We're reiterating the guidance we provided at Analyst and Investor Day in December on last year. For 2015, we expect to incur an operating loss in the range of $150 million to $160 million, excluding share-based compensation. Embedded in this guidance is a VIBATIV net sales target of approximately $20 million.

We expect VIBATIV sales to be largely back-end loaded due to expansion into territories where VIBATIV was not previously sold. Hospital selling cycles and periodic formulary reviews.

Furthermore, we anticipate first quarter 2015 net sales to be relatively similar to those achieved in the fourth quarter of 2014 as our newly expanded field force establishes the products' position in their territory and as we gain additional formulary access.

As we noted when we announced the Mylan transaction for 4208, that collaboration is extremely valuable to our company in many respects, including reimbursement of the phase $3 program as well as $265 million in payments and potential payments for which we're eligible under the terms of the deal.

The Mylan transaction strengthens our company's capital position and enhances our financial flexibility to advance other high value assets in our pipeline alongside TD-4208, while maintaining our previously communicated financial guidance.

Our partnering strategy going forward will continue to foc's on opportunities that could enable 's to optimize our portfolio, reduce the overall risk to the Company and maximize return for our investors.

So, in summary, our 2015 investment in the business of $150 million to $160 million will foc's on the following: first, executing our commercial and lifecycle management plans for VIBATIV including conducting the patient registry study and the Phase 3 study in Bacteremia.

Also we planned to advance our key research program towards the clinic. And finally we plan to selectively invest in our mid to late-stage development pipeline t our advance programs forward towards commercialization.

Now, I'd like to turn the call back over to Rick for final comments. Rick?

Thanks Renee. Theravance Biopharma's achievements in 2014, early 2015 significantly strengthened our company. Our portfolio of assets includes multiple opportunities for future value creation.

With VIBATIV, as Renee said, we're targeting net sales of approximately $20 million. VIBATIV is supported by an established commercial infrastructure that we plan to further leverage over the long-term in the acute care setting.

We have a Phase 3 Bacteremia study underway that conventionally [ph] expands its label and include -- to include an important indication. Our registry study designed to guide future use and development of the drug in an overall lifecycle management plan to optimize its value.

In the respiratory area, we planned to initiate a Phase 3 program with 4208. This asset is partnered with Mylan, the world-leader in the field who is fully funding the Phase 3 program. If 4208 is approved, we will be entitled to receive 35% of US profits from this product. We anticipate data readouts from the two Phase 3 efficacy studies of 4208 in 2016.

Also in our respiratory portfolio, there's another valuable asset, namely our economic interest in the Closed Triple being developed by GSK and Theravance Incorporated. The Closed Triple seeks to provide the activity of an inhaled corticosteroid pl's two bronchodilators, namely a LAMA and a LABA in a single delivery device.

The Closed Triple has a potential to be a significant product in the COPD market segment. In the ongoing Phase 3 study, the Closed Triple is being evaluated in patients who have more severe symptoms and are at higher risk for exacerbation.

These patients represent more than 40% of the total LAMA pl's ICS LABA COPD US sales, which are estimated to be $2.1 billion out of $4.6 billion in total annual US sales of LAMA and LABA ICS products for COPD.

GSK and Theravance Incorporated have the only once-a-day Closed Triple in late-stage development and this program is a 100% paid for by GSK. Theravance Biopharma is entitled to an 85% economic interest in future royalty payments on a worldwide net sales of the Closed Triple that maybe made by GSK, pursuant to its agreements with Theravance. As a reminder, those royalty rates are upward tearing from 6.5% to 10%.

We are pleased to note that last month GSK and Theravance Incorporated announced initiation of the second global Phase 3 study to evaluate the effects of the Closed Triple in patients with COPD.

The study is in addition to the 10,000-patient Phase 3 study for the Closed Triple that GSK and Theravance Inc. announced in July of 2014. According to clinicaltrials.gov, the study initiated in February 2015 is estimated to complete in 2016 and the study initiated in July 2014 is expected to be complete in 2017.

To recap, across our respiratory assets, we have the potential for three Phase 3 completions in 2016 with two 4208 efficacy studies and the recently announced Phase 3 study of the Closed Triple. And in 2017 if the studies go according to plan, we will have three more Phase 3 completions with Telavancin and Bacteremia, the long-term safety study of 4208 and the larger 10,000-patient study of the Closed Triple.

Also in the near term we're working to initiate the Phase 2b Velusetrag study in gastroparesis which is largely funded by our partner Alfa Wassermann. We have a portfolio of additional valuable assets including Axelopran in the fixed dose combination as well as TD-8954, a program that focuses on improving nutritional absorption in ICU patients.

We also have plans to advance some of our earlier stage research programs to key decision points this year. Finally, with our strong balance sheet and efficient corporate structure, we've laid a strong foundation for future value creation here at Theravance Biopharma.

Now I would like to ask the operator to open the call for questions.

Thank you, sir.

(Operator Instructions)

And our first question comes from line of Steve Byrne of Bank of America.

Hi, thanks for taking my questions. For the VIBATIV Bacteremia study, are you specifying what the competitor is in the US, do you expect that to be primarily Cubicin?

The competitor arm is in open-label, so its whatever doctors and institutions use for the treatment for Bacteremia, Telavancin will be randomized against that regimen and those competitors are likely largely be daptomycin, vancomycin.

Okay. And it sounds like with your data expectations comments there, Rick that you are looking at two years to enroll that 250-patient study. Is that assuming there could be some challenges in getting patients to participate in such a study given you've got approved drugs and its -- and you've got a high mortality risk in that Bacteremia indication?

Yeah. Well, it's a good point, Steve. It's early on. We just enrolled the first patient, announced that not too long ago and we will have to see how the -- see how the study goes. It is an open-label study which should facilitate accrual and there are number of features of the design that I think should facilitate accrual. It's early on.

Right now our expectation is to conclude the study in 2017. I just donUt have any better perspective on the timeline on that right now.

And on 4208, you're going to have a couple of doses in it, is there not a competitor arm in that study and if not what will be the primary endpoint to achieve approvability for that drug?

Brett you want to take that question?

Yes. Thank you, Steve. We have a combination of approaches. Actually the FDA prefer 's to compare against placebo when we are looking at efficacy. So our two three-month studies will compare two doses of 4208 against placebo.

But to your point about a comparison, we've included TEV-TROPIN as competitor in our safety study and that will provide some measurability of the safety. But we will be looking at some measures of efficacy there too.

Bear in mind that that's primarily to look at the safety of the products and that we will compare the two across one year's treatment.

And will it be your intention to -- if approved to commercialize that product in the acute setting?

So today -- Steve, another good question, our plan is to work with Mylan to co-promote the product and to utilize our -- the acute care organization that we've set up in order to do that. I think it's important to understand, as we've pointed out in December, there are 800,000 admissions a year in the United States due to COPD exacerbations admissions into the hospital. And of that about half of those patients leave the hospital with a prescription for nebulized therapy, therefore, providing an excellent opportunity to catch those patients once they leave the hospital.

Then, of course, the acute care setting, you have home health and some promotion to other segments which -- well, again, was one of the strategic rationales for executing the transaction with Mylan.

Okay. Thank you.

Thank you. And our next question comes from line of Gena Wang of Leerink. Your line is now open.

Thank you for taking my questions. Maybe I will start question with 4208 following Steve's question. So I wonder, say, safety trial will take a longer time than the efficacy trial. Do you have to submit for NDA only when you have data from both efficacy and safety trials?

I can answer that. Gena....

Yeah, go ahead Brett.

That is correct. Yes. We will combine our efficacy and our safety data. You are right that the completion of the safety study will take longer. It's the reason why Rick has pointed to the fact that we will have -- our expectation is for efficacy readouts next year, 2016 and then the safety study competes a year later in 2017.

Okay. So then NDA filing will be end of 2016?

No, the assumption would be that we use the information from both the safety and efficacy studies to submit the NDA. So it's the safety study that sets that timeline.

Yeah, okay. So I will go back to a few housekeeping questions. So just wondering, since the Mylan partnership -- the deal, that will save the cost for 4208 trial. So wondering why the guidance is to the same, the cash burn guidance for 2016? I wonder what is the savings -- the extra cash that's saved will be used?

Well, Gena. This is Renee, that's a great question. And I think as we discussed at the call where we announced the Mylan transaction, we are evaluating other opportunities within our mid to late stage pipeline for investing some of that money.

At the end of the day we are not going to invest in our pipeline where we think we're not going to have an appropriate and attractive return on investments. And if we do make the decision to lower the guidance, we would be doing so at our future earnings call.

I see. Okay, so also for the inventory write-down, $2.9 million, due to the dating of the product. So wonder you also -- since you have $12.5 million in the inventory should we also expect similar -- also like future write-down as well in first quarter?

So let me take the first just so you understand the nature of the charge. The nature of the charge was really to write off essentially validation lots that were done to validate the current manufacturer of VIBATIV.

Many times those validation lots will be written off at the time of -- or shortly after manufacture. We chose not to do that. We chose to hold them in inventory and write them off now. But I think based on what we believe our -- the sales ramp for VIBATIV will be and the dating of the product that's been produced to-date, I think we feel comfortable in the reserve that we've taken today. Renee?

Yeah. And I would just say, since we did have an approved product that we received back from ESTALIS at the time we were doing those validation lots, while assumption is as Rick had said would have written that off. We were in a different situation because our product was already approved.

And it really wasnUt until we had laid out our final commercialization plans, have made the decision to the expand the field force and had a better field for what we were expecting in terms of our future sales ramp that gave 's more of the insights looking forward to be able to with certainty make a decision with regard to what we thought was an appropriate amount to write down here.

Now this inventory will continue to keep inventory and it's sellable. We are just looking forward; we tend to be rather conservative with respect to our financial statements. We are looking forward and making a decision to take this to you our income statement now in the future. If we end up selling this inventory, which we still could, than we would be able to do so, we just wouldn't be recognizing the cost of goods sold for the inventory at that time.

Yeah. So this is really -- this is a reserve, the inventory, in fact, is still within date to sell.

Yes.

I see. Okay. I think that makes sense. And then last question about the stock option. I think like that there is an increase, I think, at the incentive program. So how should we think about 2015 for the stock options?

So, it think if you look at the overall compensation expense, there was a long-term compensation plan that was put into effect in 2011 that had a series of targets that needed to be achieved which were the past proxy, so I won't go into them today.

A number of those objectives were achieved over time, which was altered and then the program was terminated at about the time of the separation, because Theravance was being split into two companies. So that program right now has finished, and completed paid out.

So I think relative to stock option expenses, depending upon a number of variable such as where the price of the stock is, the volatility and so forth, so that's little hard to predict going forward. But the expense related to 2011 program was largely been recognized. So Renee?

Yeah. We will continue to recognize some of the expense through 2015, Gena. But as Rick had said that the program has now been not fully paid out, but certainly recognized through all of 2014 and 2015. We wouldn't expect to be continuing to recognize much in the future period.

Okay. Last question on the Velusetrag. So the partner will fund 90% of the study, I wonder is that for Phase 2 only or would that also cover the future trial?

Gena, we haven't disclosed what we will be looking at for the future trials. We do have an agreement to proceed forward which would entail certain milestones. We haven't gone into that. But stay tuned. We will see how this study reads out and then it will entail future discussions with our partner.

I see.

Yeah. I think just to add on to what Renee is saying. Clearly, if we show that Velusetrag has a benefit in gastroparesis in the Phase 2b study, and that the improvement in the mortality that we saw in the Phase 2a study sort of continues through to the end of the Phase 2b with an improvement in symptoms.

I think this product has the potential to be a significant product, because the choices out there to treat idiopathic or diabetic gastroparesis are extremely narrow and should we get positive Phase 2b data out of the study that we are about to enter, I think we would be very excited about it and as with our partner and looking at a way to progress that forward into our Phase 3 program.

I see. So, will the Phase 3 trial decision be jointly made between you and partner?

Yes. I mean it's a collaboration we have -- that would just been a terrific collaboration to-date with Alfa Wassermann. We've -- they worked hand and drive with the design with -- design of a Phase 2b program and the endpoints were discussed and agreed to between the two parties.

And I think we believe if we hit the endpoints, which we'll talk about once we enroll the first patient, once we hit the endpoints then I think we would -- this is really designed to provide a level of confidence on the efficacy and safety of the medicine going into Phase 3.

But it would be a joint decision going in Phase 3, but I think the reasons its designed the way it is, is to provide both parties with a degree of confidence if the Phase 2b endpoints are here.

Great. Thank you.

Thank you. (Operator Instructions)

And our next question comes from the line of Brian Skorney of Robert W. Baird. Your line is now open.

Hey good afternoon everyone. Thanks for taking the question. Couple of quick ones. I guess first in terms of the VIBATIV franchise, can you give 's an estimate of what sales threshold you need to achieve to reach breakeven on an operational basis with the current infrastructure?

Well, I think probably the current infrastructure isn't -- because I'd say we're still in an expansion Phase with the 21 reps and the 10 MSLs that we have. So, the breakeven on that is relatively low.

I think as long as we continue to see what we've seen in the pilot -- what we saw in the pilot program in 2014, then we would evaluate improving the resource commitment to the product in the field which of course would mean more investment, but of course, we'd make that investment with confidence that we would get the return.

Frank, do you want to comment on just how we're thinking about the economics of the program?

Yeah. So, Rick thank you. Just a couple of other comments. I mean things continue to go as expected. We're getting our reps out there. They have now been trained, they are getting around in their territories, they are figuring out who the influencers are in the hospitals.

And it was mentioned earlier in the call that formulary wins are continuing and continuing actually this week. We continue to see adoption of the product both in the hospitals as well as in the out-patient settings and interestingly, we're seeing adoption and uptake of the product in areas where we don't have any sales representatives and its really supported there, but the product is being used by physicians, probably reading periodicals and medical journals and seeing advertisements and that sorts of things.

What we know from our marketing research is when people use the product, they get comfortable with the product and the majority of the time they become repeat users. So, all the signals are positive, but yes, we currently have a -- we're one expansion away from our pilot program. It continues to going as expected and we continue to build on our success.

Okay.

So, stay tuned Brian.

Okay. Thanks. And then going onto Axelopran, congrats on the spray formulation success. I guess just maybe kind of high level; maybe talk to 's about how in the context of variability of opioid dosing you envision being able to get a marketable fixed dose combination?

Sure. I don't know, Mathai or Brett want to -- Mathai you want to take that?

Yeah, I'll jump in and Brett you can elaborate as you see fit. I think that what we've shown is that properties of Axelopran are highly conducive to a very simple coating algorithm where we're putting a very precise dose on the top of what we believe eventually will be a range of presentations of opioids.

So, you're right Brian that opioids are prescribed over that of wide dynamic range and if fixed dose combination were a large endeavor, then we'd question whether we can actually cover all of that adequately, but given it is -- given what we've seen to-date, we think that is actually the advantage that we'll bring to table that we'll be able to conveniently make a wide range of fixed dose combinations.

Brett do you want elaborate?

Brian just one point to add and that's opioids -- certainly opioids are obviously designed to be -- to avoid abuse potential. And so they often integrated technology or other products which prevent abuse.

And of course we wouldn't want to manipulate those. We absolutely want to maintain the integrity of that opioids and its abuse deterrent. And that's where this spray coating becomes really powerful methodology for getting a fixed dose combination. It doesn't module in any way either the opioids or its abuse deterrent.

So, you're looking really at a pathway for the fixed dose combination that's sort of a 505 -- directionally 505(b)(2) like pathway with sample size adjusted for the variability of the opioid.

Got you. I mean I guess my question is more in terms of how the FDA would view the potential for patients to essentially make their own dosing on opioids. I mean obviously no one is prescribing -- there's more variability around patients individually dosing themselves. And I guess is there going to be a concern from the FDA going that pathway that you might have patients who are essentially taking more and more opioids to get the opioid effect, but running the risk of some sort of dosing above the therapeutic window for c.

Well, so that's interesting because Brett mentioned the abuse deterrents, I mean what we're -- so what we're dealing is we're actually coating the available abuse deterrent tablet. Then if you look at it through some very, very broad lenses, in a therapeutic -- within a therapeutic window, 1211 Axelopran does not achieve central penetration. But if you took a lot of Axelopran, you would get central penetration.

So, it does -- at the very upper end, probably does mitigate a bit further abuse deterrents, but the impact is that we -- the patients were taking these products today and simply living -- either living with the constipation or coming off their opioid to treat the constipation and then coming back on, which isn't very good for patient either. Mathai can further comments on that?

Yeah. I don't think I have anything to -- probably just one point you're making. There are going to be different dose strength of a given opioid and each of those dose strengths would be coated presumably as a fixed dose combination with Axelopran.

So if the patient were asked by the physician to titrate up the analgesic dose than they would be moved to not many, many tablets of a low dose strength that to a higher dose strength, so that might address maybe one element in your question.

Iwhich would then be coded by the same dose of Axelopran.

Got you. That makes sense. All right, thanks guys.

Yeah.

Thank you. And I'm showing no further questions on the phone lines at this time. We would like to turn the conference back to Mr. Winningham. Please go ahead, sir.

Okay. Thank you operator and I would like to thank everyone for participating on today's call. As we've emphasized in the discussion today, we're extremely pleased with where Theravance Biopharma is today. And we're also pleased about where we're headed.

The fact that we have the potential for three Phase 3 completions in 2016 and three Phase 2 completions in 2017, is -- I think would be an extraordinary achievement for the Company and that's really the baseline from which we are operating.

When we add to that the potential for VIBATIV as well as the other products in our portfolio to progress that really serves 's the basis for our excitement and optimism on the future of the Company.

So with that thank you very much for your attention and have a great day.

Ladies and gentlemen this does conclude today's conference. Thank you for your participation, you may all disconnect.