Theravance Biopharma Inc (TBPH) 2016 Q3 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. (Operator Instructions) Today's conference call is being recorded.

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

Good afternoon, everyone and thank you for joining our third quarter 2016 financial results conference call and webcast. With me on the call today are Rick Winningham, Chief Executive Officer; and Brett Haumann, Chief Medical Officer. Following our prepared remarks, we will open the call for questions.

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

Before we get started, we'd like to remind you that this conference call will contain forward-looking statements, which involve certain risks and uncertainties including statements about our product pipeline, expected benefits of our products and the anticipated timing of trial results and regulatory filings, and expected financial results. Information concerning factors that could cause results to differ materially from our forward-looking statements are described further in the company's filings made with the Securities and Exchange Commission.

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

Thanks, Renee. Good afternoon, everyone and thank you for joining us. 2016 continues to unfold as an important year for Theravance Biopharma. We were extremely pleased to announce in October positive results from two pivotal Phase 3 efficacy studies of revefenacin for the treatment of COPD. The revefenacin program exemplifies our strategy of discovering and developing localized medicines for localized diseases and as a testament to our ability to execute on our goals and milestones.

We're also excited by the progress of our two early-stage programs, TD-1473, our intestinally restricted JAK inhibitor for which we initiated a Phase 1b study in ulcerative colitis patients; and TD-0714, our potential best-in-class neprilysin inhibitor, which successfully completed a Phase 1 multiple-ascending dose study, clearing the way for further development.

We remain focused on executing our commercial and label expansion strategies for VIBATIV. We're also continuing to track real-world experience from our TOUR registry, which highlights the use of VIBATIV in a range of difficult to treat infections. Additionally, we have multiple programs progressing in mid-stage clinical development, including velusetrag in Phase 2b -- in a Phase 2b study for gastroparesis. TD-9855 in a Phase 2a proof-of-concept study in neurogenic orthostatic hypotension; and TD-8954 or TAK-954, which Takeda is advancing in patients with enteral feeding intolerance.

We believe our pipeline of proprietary and partnered assets and our economic interest in certain respiratory programs being developed by GSK and Innoviva, combined with a strong balance sheet and numerous upcoming milestones are enabling us to build a strong foundation for developing differentiated therapies and creating value for shareholders.

First, I will turn the call over to Brett, who will discuss our priority programs. Then Renee will review our third quarter financial results and our economic interests. And I'll conclude with a brief update on our commercial business and our upcoming milestones. Brett?

Thanks, Rick. I'll start with TD-1473, our novel, potent, early administered and intestinally restricted JAK inhibitor. 1473 is being developed to treat a range of inflammatory bowel diseases including ulcerative colitis, a debilitating disease of the lining of the colon that affects roughly 700,000 patients a year in the U.S. Our goal is to develop a treatment option for ulcerative colitis and other inflammatory bowel diseases with a highly favorable therapeutic index and a clinically meaningful benefit.

Our JAK inhibitors are designed to remain localized in the intestine to minimize exposure in the systemic circulation and to avoid immunosuppressive liabilities. This represents a potential novel approach to treating ulcerative colitis, including the potential to be used in patients earlier in the course of their disease, ahead of injectable biological agents.

In October, we dosed the first patients in our Phase 1b trial of 1473 in moderate to severe ulcerative colitis. This follows the successful completion of the Phase 1a single and multiple-ascending dose studies in healthy volunteers. The primary aim of the Phase 1b patient study is to evaluate the safety and tolerability of 1473, as well as to measure the drug levels in the blood following oral administration.

An important secondary objective of the trial is to evaluate the early effect of 1473 on a range of relevant ulcerative colitis biomarkers, histological improvements, and measures of both endoscopic and clinical improvement. The findings from this Phase 1b trial will inform our future clinical development plans for 1473. We expect data from the Phase 1b trial to be available in mid-2017.

The totality of the safety and PK data generated in the program to date provide support for our strategy of targeting JAK inhibition to inflamed tissues within the intestinal tract in order to achieve desired therapeutic results for the favorable safety and tolerability profile.

We're also developing TD-3504, a seconds JAK inhibitor compound that is chemically distinct from 1473. 3504 is an innovative prodrug that is specifically designed to release active tofacitinib directly into the large intestines to target the inflammation in the wall of the colon. Our plan is to initiate a Phase 1b trial of 3504, in ulcerative colitis patients in the first half of 2017.

Now turning to our NEP inhibitor program. Our goal is to develop a medicine that has broad potential to be combined with complementary mechanisms to treat chronic heart failure, as well as other serious cardiovascular and renal diseases. TD-0714 is the lead molecule in on NEP inhibitor program. This year we reported favorable safety, PK and biomarker data from Phase 1 single and multiple-ascending dose studies of 714 in healthy volunteers. The results demonstrated sustained target engagements, very low levels of renal elimination, a favorable safety and tolerability profile and the potential for once-daily dosing.

As we have noted, non-renal clearance is especially important because a significant number of patients with cardiac and renal disease who may benefit from NEP inhibition also have compromised renal function. And drugs that are renally cleared, such as the NEP inhibitor in Entresto, have the potential to accumulate, increasing the risk of unwanted side effects and/or requiring dose adjustment.

In our NEP inhibitor program, the strategy is to pursue development pathways where the clinical need and the commercial opportunity is the greatest. Given the potential therapeutic breadth of our NEP inhibitor program, including the ability to combine with complementary mechanisms of action, we intend to explore both acute and chronic indications.

With our existing focus and commercial expertise in the acute care market segments, we believe that acute heart failure is an indication for which we could develop and commercialize a first-in-class intravenous formulation of 714 as a monotherapy. To that end, we plan to initiate a Phase 1 IV study of 714 in healthy volunteers in early 2017. In the chronic setting, opportunities to treat chronic heart failure and chronic kidney disease are both mechanistically compelling. And for these indications, our objective is to partner the asset.

Consistent with our philosophy of evaluating more than one asset in Phase 1, we've also progressed to the second NEP inhibitor TD-1439 into Phase 1 single and multiple-ascending dose studies in healthy volunteers and data from these studies are expected in the first half of 2017.

Next, I'd like to touch on the positive data we recently announced from two pivotal Phase 3 efficacy studies of revefenacin. Our investigational nebulized once-daily long-acting muscarinic antagonist or LAMA for the treatment of COPD. Both Phase 3 studies met their primary efficacy endpoints, demonstrating statistically significant and clinically meaningful improvements in trough lung function for both doses of revefenacin after 12 weeks of dosing. The studies also demonstrated that the 88 microgram and 175 microgram doses of revefenacin were generally well tolerated with comparable rates of adverse events and serious adverse events across all treatment groups, active and placebo.

In pre-specified pooled analysis, revefenacin produced increases in trough FEV1 not only in subjects who were using revefenacin as their only maintenance therapy, but also in the 38% of patients who added revefenacin on to their existing LABA/ICS or LABA COPD therapy. As we noted in our conference call, discussing the results a few weeks ago, we were extremely impressed with the additional bronchodilation seen in the add-on subgroup, 90% of whom were really on LABA/ICS.

We included this group, and indeed we were encouraged to do so by the FDA, because revefenacin may play an important role as an add-on therapy. With patients continuing to experience additional benefits when LABA is added to either LABA or LABA/ICS as has been shown with dual and triple therapy in the handheld COPD markets. Equally important are the bronchodilator effects seen in those patients who do not use a background LABA or LABA/ICS. We're delighted with these impressive results, which underscore revefenacin's potential to benefit a range of suitable patients for whom a nebulized therapy is required or preferred regardless of whether this is their first long-acting bronchodilator or whether revefenacin is added to their existing maintenance treatment.

The next step in the revefenacin program is to complete our ongoing 12-month Phase 3 safety trial. That study has three arms, including the 88 microgram and 175 microgram doses of revefenacin, and tiotropium as a control arm. The safety study is fully enrolled and we expect to finish the one year dosing period and complete the study in 2017.

The combined benefits from all three studies will inform our final assessment of the efficacy and safety of each dose and provide the basis for our planned NDA submission by the end of 2017.

Now I'd like to turn the call over to Renee to provide a financial update.

Thank you, Brett. Revenue for the third quarter of 2016 was $19.1 million comprised of revenue from collaborative arrangements totaling $15.2 million and U.S. net product sales of VIBATIV of $3.9 million. Revenue from collaborative arrangements is principally due to the recognition of the $15 million upfront payment from Takeda for the license of TD-8954.

R&D expenses for the third quarter of 2016 were $32 million, representing an increase of $1.6 million compared to the same period in 2015. The increase is primarily attributed to costs associated with the progression of our priority programs.

SG&A expenses for the third quarter of 2016 were $20.3 million, representing a decrease of $2.6 million compared to the same period in 2015. The decrease is driven by lower costs associated with share-based compensation and timing of other expenses.

Cash, cash equivalents and marketable securities excluding restricted cash totaled $289.3 million as of September 30, 2016. The quarter end cash balance excludes $22.7 million in total receivables from collaborative arrangements, primarily associated with the Mylan collaboration and approximately $316 million in net proceeds from the Company's recent concurrent public offering of ordinary shares and convertible notes.

From a guidance perspective, we anticipate our operating loss excluding share-based compensation will be approximately $140 million for the full-year of 2016. The actual amount could be above or below our forecast as a result of a variety of factors including the rate of enrollment in our clinical studies, spending rates to prepare for planned clinical studies and fourth quarter revenue.

Now, I'll provide a brief update on our economic interests related to the GSK respiratory program. During their quarterly earnings call last month, GSK stated they are on track to file the Closed Triple for COPD in the fourth quarter in both the U.S and the EEU.

Based on their communicated timelines, we could begin receiving cash flows related to this program as early as 2018. GSK is investing in multiple clinical programs to support the success of this product in both COPD and asthma. The Phase 3 FULFIL study and approximately 1,800 COPD patients reported positive results earlier this year.

The Phase 3 IMPACT study evaluating the Closed Triple in approximately 10,000 COPD patients is expected to complete in 2017. In addition, GSK recently began recruiting for a 2,200 patient study of the Closed Triple and asthma. GSK disclosed this Phase 3 study is expected to complete in early 2018 to support a regulatory filing in the U.S also in 2018.

As a reminder, GSK will pay upward-tiering royalties ranging from 6.5% to 10% on worldwide net sales of the Closed Triple and Theravance Biopharma hold an 85% economic interest in those future potential cash flow. Importantly, GSK is responsible for all development and commercialization costs related to the Closed Triple with no cost being borne by Theravance Biopharma.

Now, I'll turn the call back over to Rick.

Thanks, Renee. Before reviewing our upcoming milestones, I'll provide a brief update on our acute care business. We continue to make progress in implementing our commercial strategy for VIBATIV. We are working to gain traction in all target acute care settings, including hospital and outpatient settings and infusion centers, which can serve as an important site of care post discharge.

Our TOUR registry is enrolling rapidly with over 600 of the 1,000 patients enrolled to date. Interim data from TOUR were presented at IDWeek at the end of October and highlighted the real-world experience with VIBATIV in a range of difficult to treat infections.

An initial review of the data from the first 200 patients enrolled in TOUR, showed VIBATIV to be generally well-tolerated and demonstrated a clinical response rate that were in line with our expectation and comparable to data included in our current label.

In addition, findings show that the most frequent primary infections treated with VIBATIV were complicated skin and skin structure infections, bone and joint infections, bacteremia and pneumonia. For these infections, the underlying pathogen was most often identified as methicillin-resistant Staphylococcus aureus or MRSA, methicillin-susceptible Staph aureus or MSSA, or coagulase negative staphylococci.

We are pleased with the progress of our TOUR study and look forward to generating additional data that can further inform the best use of VIBATIV in the clinical setting. As we've noted in the past, label expansion remains a key priority for VIBATIV with a goal of optimizing the product's commercial and therapeutic potential.

Our 250 patient Phase 3 registrational study in primary bacteremia is ongoing and is expected to complete in 2018. In addition to our commercial activities to support VIBATIV, we and our partner, Mylan, are collaborating on the detailed commercial planning for revefenacin. As the first once-daily nebulized bronchodilator for COPD, we believe there is a large commercial opportunity for revefenacin to be positioned as the standard of care. This market segment encompasses 9% of COPD patients who use nebulizers for ongoing maintenance therapy.

We're excited about the prospect of co-promoting revefenacin with Mylan as it aligns well with our commercial focus, capabilities and expertise in the acute care market segment where our sales reps are experienced in calling on pulmonologist and respiratory care physicians for VIBATIV.

There are about 800,000 patients admitted each year to U.S. hospitals for worsening of their COPD. About half of those patients leave the hospital with the prescription for nebulized therapy. This is important because having an established commercial presence in and around acute care centers gives us the opportunity to target large and addressable patient populations at pivotal times starting in the hospital and expanding into the outpatient treatment setting.

We're pleased with the accomplishments across our pipeline in 2016 and believe that our programs represent valuable and differentiated product opportunities with the potential to have a meaningful impact on patient's lives and change how serious diseases are treated. These programs are expected to generate potentially transformative milestones in 2017 and 2018, strengthening our ability to generate value for patients and shareholders.

For 2017:

Our intestinally restricted JAK program, data from our Phase 1b TD-1473 and initiation of the Phase 1b study of TD-3504 both in UC patients.

Also in 2017, our neprilysin program, the progression of 714 into Phase 1 IV studies and completion of the Phase 1 single and multiple-ascending dose studies of TD-1439.

In revefenacin, completion of the 12-month safety study in an NDA filing.

In Velusetrag, completion of the Phase 2b to be study in gastroparesis.

And in TD-9855, completion of the Phase 2a study in neurogenic orthostatic hypotension, a potential orphan indication.

And for 2018:

The completion of our Phase 3 registrational study of VIBATIV and bacteremia.

We believe that these milestones taken together with our economic interest in certain GSK respiratory programs, comprise an impressive lineup of potential value creating events. With the proceeds of our recent financing added to our current cash balance, we're well-positioned to achieve our goals which are focused on rapidly advancing our priority programs to the next value inflection points, as well as moving forward key additional pipeline programs, including the acceleration and expansion of our JAK inhibitor development program to include exploration of indications beyond ulcerative colitis, such as Crohn's disease and checkpoint inhibitor colitis.

We couldn't be more proud of our entire Theravance Biopharma team for their achievements this year. We look forward to keeping you updated on our progress and continued success across our business.

Now I'd like to turn the call over to the operator for questions.

Thank you, sir. (Operator Instructions) We will have our first question from Geoffrey Porges of Leerink Partners. Your line is now open.

Thank you very much and congratulations on all the progress this quarter. Rick, I just want to focus on the JAK program for a moment. Could you give us a little bit more color on what you're seeing as the difference between the two molecules that you're advancing 1473 and 714? And is there something that we should anticipate that should continue to take forward or do you think that will cleave off into different indications or is it sort of a way of hedging your bets in terms of having two shots on the opportunity? That would be helpful.

And then, could you just give a little bit more color -- I'm sorry, I joined the call late, a little bit more color on the timing for when you might be into Phase 1b or Phase 2 trial in the other indications that you alluded to, which of course other companies are pursuing?

Sure. I assume, Geoff, that second question is also related to the JAK program?

That's correct, yes.

Okay. So, just on the first question related to 1473 and then 3504. Of course, 1473 is a compound that has pan-JAK activity, JAK1, JAK2, JAK3, as well as TYK2. 3504 is a specially designed prodrug, tofacitinib that's designed to release only in the intestine, therefore minimizing the systemic exposure of tofacitinib. So the compounds are different. They've different activity. 3504 having less TYK2 activity, importantly because that TYK2 has been implicated in the treatment of Crohn's. So it may be important to have TYK2 activity to have a higher probability of success in the treatment of Crohn's disease.

Traditionally, at Theravance, we bring more than one compound into the clinic to of course aggressively manage the uncertainty that's inherent in any development program. Here, we have a little bit more special opportunity in the 3504, of course, is a - once the cap more or less -- the chemical cap is cleaved, you're dealing with a known JAK inhibitor tofacitinib, you're just dealing with that known JAK inhibitor in a space that's primarily restricted to the intestine. So -- and 1473 is a novel JAK inhibitor, so there's an inherent difference there in the drug and the body of knowledge around each compound.

I'll now turn it over to Brett to add to my comments. Brett?

Thanks, Rick. I think just one thing to add, Geoff. You may, if you follow the space, you'll know that tofacitinib has demonstrated success in ulcerative colitis and so that gives us confidence that the mechanism is precedented and that gives us confidence for both these molecules in ulcerative colitis 1473 and 3504.

As Rick has mentioned, there are mechanistic reasons, there is potency reasons why 1473 could also work in Crohn's disease, but there's also a reason why 3504 might work in Crohn's and that relates to the dose of tofacitinib that's being used. Tofacitinib dose has been limited, we believe, to try and avoid some of the systemic risks, the immunosuppressive effect that tofacitinib brings when higher doses are used. But indeed, the ulcerative colitis program tested doses above 10 milligrams twice-daily. And in ulcerative colitis, there was a suggestion that greater effect might be seen with higher doses. That same phenomena may play in Crohn's disease, and for that reason, we're still interested even though tofacitinib has failed in Crohn's, we're still interested in pursuing this with 3504 because with a broader therapeutic index we may see utility in a disease where tofacitinib has not been successful.

You asked about the timing for upcoming study?

Yes, that would be great, yes.

So the timing, we announced in our statements earlier on, the 1b study for 1473 is underway. We're dosing subjects. The 1b study for 3504 is planned for early in 2017 and obviously basing on -- based on what we see from those two, we'll then progress into larger longer studies.

One of the things that's important -- it's important as we lay out strategy for this program more broadly is as we accumulate information about the efficacy and the tolerability in the 1b is to be able to move quite rapidly into larger longer studies. And I think that's really what the first part of 2017, what we'll be doing is we'll be really laying the groundwork with the assumption that we'll be successful in the 1b for larger and longer studies in ulcerative colitis, potentially in Crohn's and then in checkpoint inhibitor colitis. And then we're also investigating a number of other inflammatory bowel diseases in special patient populations that may in fact benefit, because of the lack of systemic immunosuppression that is present in our molecules.

I'll just turn over to Brett one more time to add anything else.

Yes. Thank you, Rick. I think we remain compelled by the opportunities in some of these discrete populations of patients. Regrettably, there are patients who actually despite surgery to remove the colon, once they've had inflammation, continue to have residual inflammation in the pouch that's created from the small intestine to really replace what's been removed surgically. So there is a proportion of patients who have pouchitis and we think that that is a particular population that we could evaluate the use of this product in. But that's not to the exclusion of other indications as well. So we continue to evaluate a broad range of opportunities and we're really excited about the prospects for both molecules.

Thank you. And our next question comes from the line of Joshua Schimmer of Piper Jaffray. Your line is now open.

Maybe first to continue on 3504, do you freedom to operate with tofacitinib prodrug or that requires some collaboration with Pfizer?

Yes. So I don't want to get too deeply into the intellectual property, but of course Pfizer, there is a company Pfizer that does own -- does have a patent on tofacitinib and clearly that would be something that we would have to take into account regarding the eventual commercialization of the product. But clearly given the length of time that we're talking about broadly with both 1473 and 3504, in progressing forward, we still believe that it's prudent to investigate the potential of 3504 in different inflammatory bowel diseases. Brett?

And just to add that or reiterate that this is a distinct and separate entity, so it releases active tofacitinib but the prodrug itself is a novel chemical entity.

Okay. And maybe just a couple of other quick questions. On VIBATIV, is there seasonality to that franchise, I'm kind of new to tracking it along, maybe you can explain the quarter-over-quarter decline?

Yes, great point. There is a bit of seasonality. We saw a bit last year of the third quarter, that weakness in the third quarter. I think seasonality is one and then I think the trends in surgical admissions probably comprise a bit of that variability from quarter-to-quarter.

Got it. And then, for other, I guess, velusetrag or 8954, I believe there are 5-HT4 receptors in the GI tract, and since one of your core competencies is topical therapies. Do you have any plans or thoughts on the topical 5-HT4 agonist or is that too paradoxical to consider in a gastroparesis setting?

Well, I don't know about it being paradoxical. I mean there could potentially be an element of the medicines of the fact that is in fact topical and then another element of the medicines in fact that is clearly driven by delivery of the drug through the bloodstream into the tissues in the GI tract.

I think our program in gastroparesis was really driven by not a topical approach, but really was driven by the systemic effects of -- that we felt we could have with velusetrag in gastroparesis and there are some precedents of 5-HT4 agonist contributing to treatment in this particular condition and as you know and have been widely reported, there are just not very many good options here for patients that have gastroparesis, whether they have diabetic gastroparesis or idiopathic.

And just one point to add, Josh, in the early stages of the disease of gastroparesis, unfortunately one of the dominant symptoms is vomiting. And so we actually in this setting topical application wouldn't be ideal, we want to have systemic levels really to maximize the opportunity for absorption and minimize the chances of the drug being expelled before it's working.

So a good question, but I think for velusetrag, the strategy isn't around topical application, it has been the motility of the gut that we've been focusing on.

Thank you. And our next question comes from the line of Umer Raffat of Evercore ISI. Your line is now open.

Rick, I have a few questions today, if I may, but before that just to follow-up on Josh's question on VIBATIV. So I'm just looking at Dalvance, Orbactiv, Teflaro, I don't see much seasonality on those franchises. So maybe just to get your perspective on what you're seeing with VIBATIV? Just so we understand it better and how we model it better?

Sure. So, the one distinction there with VIBATIV relative to the other products is in fact hospital acquired pneumonia as opposed to community acquired pneumonia or complicated skin and skin structure infections, which we are seeing with some of the very long-acting medicines like Dalvance, Orbactiv and then Teflaro, probably being used for more community acquired pneumonia as opposed to hospital acquired pneumonia.

Got it. That makes sense. Okay. So getting to my questions now, a few. Number one, Rick, just very curious, your thought process behind the recent financing and its timing relative to the last one. Just want to understand how you guys were thinking about the strategy and the timing? That's number one.

And secondly, on UC, my question is and perhaps this is for, Brett, but I'm wondering how do you make a decision on what dose you're going to choose for the next cohort? What data will you have to enable you to make that decision from the first cohort going into the second cohort?

And then, finally on NEP inhibitor, I haven't seen, maybe I missed it, but I haven't seen you guys put out an announcement for a Phase 2. So I just want to understand why is that and what should we be expecting there?

Sure. So I'll take the raise and also bring Renee into the conversation and then turn it over to Brett for the other two.

When you look at where we stand and the breadth and the depth, the pipeline of the Company, clearly we want to be in a position to move rapidly into longer, bigger studies particularly in the JAK program with -- with data we think -- important data reading out into the Phase 1b. We want to be in a position to make commitments to longer term studies at which the commitments would have -- probably have to be taking place in the third quarter, fourth quarter of next year, even if these studies were in fact initiating late this year or early next year.

We also, as Brett mentioned believe that there's an opportunity with the JAK program in smaller populations of inflammatory bowel disease that we'll be investigating through the course of this year and we want to put ourselves in a position to take advantage of those as the data from the program in the Phase 1b is reading out.

I think when you look at particularly the first half of next year, but really extending throughout the entirety of next year, when you look at the number of milestones that we have whether it's from data coming out in the JAK program, data coming out in the neprilysin program, particularly as we progress into the Phase 1 IV studies, the completion of the 12-month safety study with revefenacin, which we'd anticipate somewhere in the middle of next year and then an NDA filing in the latter part of next year, velusetrag completing the Phase 2b study in gastroparesis sometime likely in the first half of next year, and TD-9855 in neurogenic orthostatic hypotension is potential orphan indication also reading out potentially in the first half of next year.

You just -- and then as data from VIBATIV continues to roll in, and our publications continue to roll in on TOUR and public presentations of data with revefenacin, the number of financing windows that we really have in 2017 are very small. So we wanted to be in a position to have a sizable amount of capital to enable us to move the JAK program and others rapidly through development and to be able to push and when we committed to those studies to have the capital to complete those.

We are very excited about where we are with our pipeline, the data reading out and I think that a very well-capitalized Company, one that's not dependent upon capital markets, not dependent on partners to advance these programs rapidly, will put us in a much stronger position to realize the value from the portfolio. Renee?

Yes, I think you've covered nicely in terms of why, maybe what I'll do is also comment on the context of what we decided to go into the market with which was something that was the concurrent offering, leveraging the fact that there was very little supply in the convertible market and we felt that this was an instrument that we were pretty comfortable with being able to issue equity at a premium relative to what's built into the convert and being confident to be able to do that based on cash flows that we see being generated in the future, both from the Closed Triple and other programs within our portfolio.

And then I'll also just touch just briefly, Rick's comment with respect to business development. We also want to be in a position of strength whether it be in negotiation of business development transactions, to not have to rely on partnerships, because an ill-timed business development transaction can be in fact more dilutive than an equity offering. And also to be in a position where we could bring forward the breadth of the programs because if you followed our Company even prior at Theravance, Inc., we've never put the Company in a position where we had to go out and raise money. We really try to make sure that we're proactively thinking about the strategic objectives and ensuring that we can execute on those by being capitalized in a way that allows us to be able to simply go forward without having that risk hanging over the Company.

Brett?

Umer, you asked two questions. One on the JAK program, one on the NEP program. I'll answer the JAK program first. You asked how do you choose a dose from your first cohort? You may recall that the design of our Phase 1 study is for sequential cohort. So we're testing the first group, then we'll evaluate a series of parameters and that will decide or inform our selection for the next dose.

So what are those things? Well, they're the obvious ones, is the drug well-tolerated at that dose. Our predictions from our Phase 1 program would suggest that the dose we're evaluating, which is below a 100 milligrams is going to be well-tolerated. But of course, this is our first assessment in patients, so we're going to be confirming that. I'll remind you that we tested doses of up to 300 milligrams in our multiple dose study and up to a 1000 milligrams in our single dose study, so we think we have a lot to cover for safety.

One of the other important questions though is, does the drug get into the systemic circulation or not? And these are patients, there may be reasons why the drug moves into or through the colon definitely from healthy volunteers. That will determine our evaluation. And again inform whether we want to go up in dose or down.

The last element though is biomarkers. There is preclinical evidence we have and some evidence from tofacitinib as well that will give us a benchmark on what we should be seeing in terms of biomarker change. And again, if we see the effects that we are predicting, we may choose to go down and dose to see whether a lower dose achieves the same effect, we may choose to go up in dose to achieve a greater effect. So those are the sorts of parameters we'll consider.

You asked the question about the NEP inhibitor? I'll just -- I'll complete the answer to your question there too. So you asked about Phase 2 and why we haven't seen plans for Phase 2? I think even in today's communication we're signaling that for the intravenous formulation where we see a path to an intravenous monotherapy, it's actually a position that we can confidently progress into the next stage, which is to evaluate safety and tolerability in healthy volunteers with an eye to moving into patients.

The reason that we've not articulated the same strategy with the chronic indications is because as we've said that really depends on what we coupled the NEP inhibitor too. And so, having an articulate strongly held position for the chronic indications does depend on us bringing that together with the best complementary mechanism, either an ARB or some other mechanism and for that partnership is a key part of our strategy.

Got it. Thank you very much, Brett. And just a follow-up, Brett is partial Mayo score not one of your considerations when you decide the next dose?

It is. It's part of a series of things. I mentioned biomarkers, but as we alluded to in the call, we referenced endoscopy histological changes from biopsy and clinical measures as well.

We're hoping to really come through the Phase 1b, with a very rich data set around efficacy of the compound as both directly observed changes as well as tissue biopsy, as well as biomarkers, both biomarkers within the colon and biomarker systemically. And I think the -- it's sort of the triangulation of all of these data sets that are going to provide us with the confidence of a dose range to go into larger longer studies.

Thank you. And our next question comes from the line of Louise Chen of Guggenheim Financial. Your line is now open.

It's Brandon Folkes on for Louise. A number of questions have been answered, but perhaps if you could just elaborate more around the market opportunity for revefenacin and the market share you think you may be able to capture within that 9% nebulized market? Thank you.

Yes. So the opportunity here is really in that 9% of COPD patients that are on nebulizers for maintenance therapy. And keep in mind, that 9% is on nebulized for maintenance therapy without having a gold standard available to them in COPD, which is a long-acting muscarinic antagonist. So that we think we should be quite successful assuming that we see a continuation of the data that we saw in the efficacy studies come through in the 12-month safety study quite successful in the 9%. And then you sort of look at the market as a bit like layers outside of the 9% and can we -- because of what we've seen already of the efficacy of the drug on top of medicines that either a LABA or a LABA/ICS, can we in fact grow beyond that, beyond that core 9% because of the drug's ease-of-use of any standard jet nebulizer and the fact that it's only dosed once a day. Brett?

Just to add to that, Brandon, I think the key impact for me is, if you look in the handheld space and look at the dominance of LAMA and the use of that as a cornerstone treatment, recognizing that there's nothing in that -- nothing equivalent to that in the nebulized space and yet there's still 9% of patients who can only use nebulized therapy, our view is that as we introduce the LAMA, as we introduced that standard of care, there is every opportunity to see that size of market grow. Bear in mind too that it's defined mainly at the moment by either a very short acting agents or LABA. And our own Phase 3 data has demonstrated that the LAMA we are testing could be used on top of existing LABA therapy. So there's every opportunity not only to use the current base, but actually to grow it.

Thank you. (Operator Instructions) Our next question comes from a follow-up from Geoffrey Porges of Leerink Partners. Your line is now open. Mr. Porges, your line is now open. If your phone is on mute, please take it off mute. Thank you.

And it appears I'm showing no further questions on the phone. I'd now like to turn the conference back to Mr. Winningham. Please go ahead, sir.

Thank you very much, operator. And I'd like to thank everyone for joining us today. We're extremely excited about where we are as a Company and the opportunities that lie ahead for us and the opportunity to make a significant difference in -- to patients in a number of different diseases and also to make a difference for our shareholders. So have a great day. Thanks again for participating.

This concludes today's conference call. We thank you for your participation. You may now disconnect. Everyone, have a great day.