Theravance Biopharma Inc (TBPH) 2016 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.

(Operator Instructions)

Today's conference call is being recorded. Now, I would like to turn the call over to Mr. Alex Dobbin, Head of Investor Relations. Please go ahead.

Great, thank you. Thank you all for joining us for our fourth-quarter and full-year 2016 financial results conference call. With me today are Rick Winningham, Chief Executive Officer; Renee Gala, Chief Financial Officer; Brett Haumann, Chief Medical Officer.

Following our prepared remarks, we will open the call for questions. A copy of the press release and the accompanying slides are available on our website, or you can call Investor Relations at 650-808-4045, and we will be happy to assist.

I'll 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, 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, which are made with the Securities and Exchange Commission. I'll now hand the call over to Rick Winningham.

Thanks, Alex. Good afternoon, everyone, and thank you for joining us.

2016 was a year of significant progress for Theravance Biopharma. We made important clinical gains in multiple programs, which represent differentiated therapeutic options for patients with unmet needs, and we significantly strengthened our cash reserves, positioning us to drive key programs through important value inflection points.

On our call today, we will review our achievements in 2016 and discuss our key 2017 milestones. Brett will share more color in a moment, but first, I'd like to highlight recent progress in some of our key programs.

The revefenacin Phase 3 program in COPD has continued to progress according to plan. We announced in October positive readouts from the pivotal three month efficacy studies, the 12-month safety study, which enrolled more than 1,000 patients is ongoing and on schedule to read out in mid 2017. The efficacy studies and long-term safety study will support our NDA submission planned for later this year.

We're also working diligently with our partner, Mylan, on our commercial plan, and the launch strategy for revefenacin. As part of our strategy, we will conduct a Phase 3b study with revefenacin in 2017 to assess the effects of revefenacin in COPD patients with low peak inspiratory flow rate, or PIFR. These patients are not able to breathe in or inspire with enough force to use handheld products effectively, and have been shown to have poorer outcomes when discharged from hospitals with handheld COPD medicines, following a COPD exacerbation.

A once-a-day nebulized muscarinic antagonist may provide a unique benefit to these patients, because significant inspiratory effort is not required for a nebulized product to be effective. The PIFR study will not be required for the NDA submission later this year, but it will be completed by early 2018.

The velusetrag Phase 2b study in gastroparesis is now fully enrolled, with over 200 patients split between idiopathic and diabetic gastroparesis, and on track to read out in mid-2017.

In our Phase 2a study of TD-9855 in patients with neurogenic orthostatic hypotension, we are pleased to announce that 9855 is showing encouraging early results in patients, following a single dose. As a result, we are amending the protocol to allow those patients who respond to continue beyond a single dose. We expect data from the extended Phase 2a studies before the end of 2017.

Our Phase 1b study of TD-1473 in patients with active moderate to severe ulcerative colitis is ongoing, with enrollment at sites in both the US and Europe, and we expect data in mid 2017.

In our commercial organization, our acute care strategy is designed to drive growth from multiple markets and products over the long-term.

Today, VIBATIV is the basis of a strategy, and if approved, revefenacin will also be supported by the same acute care infrastructure. For VIBATIV, the branded antibiotic space remains challenging, and the outpatient setting has been particularly impacted by the availability of generic daptomycin. We have responded by scaling back the size of our sales force, and refocusing our resources on promotionally sensitive territories. In terms of the VIBATIV label expansion, we successfully added concurrent bacteremia to VIBATIV's label in May of 2016, and our ongoing Phase 3 study in primary bacteremia is progressing, with data expected in 2018.

Additionally, we recently completed the enrollment in the Telavancin Observational Use Registry, or TOUR. The study is providing valuable information about the use of VIBATIV in real world clinical settings. Initial data from TOUR show favorable clinical responses in patients with bacteremia, endocarditis, osteomyelitis, skin and respiratory infections. These data were presented at numerous infectious disease conferences in 2016, and we plan to present additional data over the course of this year at similar meetings.

Finally, we are very pleased by GSK and Innoviva's continue progress with the Closed Triple program, in which Theravance Biopharma has an economic interest. In 2016, the Phase 3 FULFIL showed positive results in COPD patients. The Phase 3 IMPACT study in approximately 10,000 patients with COPD is expected to complete in 2017.

This past December, GSK and Innoviva announced regulatory filings in the US and in the EU for COPD, and the initiation of the Phase 3 CAPTAIN study in asthma, with a potential US filing for asthma planned for 2018. Based on their communicated timelines, we expect potential approval of the Closed Triple for COPD in both the US and Europe later this year, and this would translate to Theravance Biopharma receiving royalties as early as 2018.

We are focused on continuing our momentum from 2016, and as noted on slide 3 of the accompanying presentation, we have an extensive lineup of milestones anticipated in 2017 and 2018. With our pipeline of proprietary and partnered assets, combined with our economic interests and strong balance sheet, we believe we are well-positioned to generate significant value for patients and shareholders in the near and long-term.

I'll now turn the call over to Brett for additional perspective. Then Renee will review our fourth-quarter and full-year financial results, and our economic interests, and then I'll conclude with a review of our upcoming milestones. Brett?

Thanks, Rick. I'll start with TD-1473, our novel potent early administered JAK inhibitor, designed to be intestinally restricted.

Our vision with the JAK inhibitor program is to develop a highly differentiated treatment option for inflammatory bowel diseases, including ulcerative colitis, Crohn's disease, and immune checkpoint inhibitor induced colitis. Our goal is to develop JAK inhibitors that remain localized, and only act within the gut wall, maximizing local anti-inflammatory efficacy and minimizing the systemic exposure, that would otherwise lead to immunosuppression.

We believe there's strong rationale for our locally-restrictive approach in IBD. First, the JAK mechanism is precedented. Tofacitinib has demonstrated in Phase 2 and Phase 3 studies, that JAK inhibition works in ulcerative colitis.

Importantly, however, tofacitinib was always designed to pass readily from the gut into the systemic circulation to treat systemic inflammation, including the joint inflammation seen in rheumatoid arthritis. An unfortunate consequence of this systemic exposure is that tofacitinib suppresses the immune system, increasing the risk of opportunistic infections like shingles and tuberculosis, and increasing the risk of some tumors, including lymphoma. The important difference with our program is that we are designing our JAK inhibitor specifically to treat the inflammation in the intestine, without getting into the systemic circulation.

We have designed our compounds to limit JAK inhibition to the gut wall. This has the potential for increase the therapeutic index in two ways: First, by improving the safety profile for a given level of JAK inhibition, and second, by increasing the potential to go to higher doses than could be achieved with a systemic JAK inhibitor, to achieve even greater efficacy.

We have confidence that this approach should work, based on our preclinical models, including a critically important study that compared the effects of oral tofacitinib versus tofacitinib given intracecally, that is, administered via a catheter directly into the first part of the colon in mice.

The study showed that intracecal tofacitinib produced the same degree of anti-inflammatory effect as an oral dose, but with much lower drug concentrations in the blood, and without suppressing the immune system. These results suggest it may not be necessary to have JAK inhibition working from the outside in, where the drug first enters the systemic circulation and then penetrates back to the colon. Rather, it is possible to be as effective from the inside out, effectively penetrating only into the colonic wall, where the inflammation is localized.

The same effect is seen with locally-administered steroids to treat patients with IBD. That's the key principle driving our JAK inhibitor program in IBD. A therapy with this profile offers the potential to be used in patients earlier in the course of their disease, ahead of injectable biological agents, and/or other treatments with systemic side effects.

Our Phase 1b trial of 1473 in patients with moderate to severe ulcerative colitis was initiated in the fourth quarter of 2016. This study follows the successful completion of the Phase 1 single and multiple ascending dose studies in healthy volunteers, studies which demonstrated 1473 to be generally well-tolerated as a single dose, up to 1,000 milligrams, and as a daily dose, up to 300 milligrams given for 14 days, and which exhibited a pharmacokinetic profile consistent with our goal of designing the compound to penetrate the intestinal wall with minimal systemic exposure.

The ongoing Phase 1b patient study will assess the effect of 1473 on a range of relevant markers of inflammation in the colon, as well as histological changes and measures of endoscopic and clinical improvement, and of course, safety and tolerability. The study will also measure drug levels in the blood and the colonic tissue.

It has an adaptive design with three dosing groups running in sequential fashion. The adaptive design provides flexibility in dosing, based on what is observed in each cohort, and our learnings about dosing in Phase 1b will inform future development of 1473. We expect data from the Phase 1b trial in mid-2017.

TD-3504, the second JAK inhibitor compound in development is clinically and chemically distinct from 1473. 3504 is an innovative pro-drug, specifically designed to release active tofacitinib directly into the large intestine, to target the inflammation in the wall of the colon. We plan to initiate a Phase 1 trial of 3504 in healthy volunteers and patients with ulcerative colitis in the first half of 2017.

Now, moving to our other programs. We are excited by progress in two of our mid-stage assets: TD-9855 in neurogenic orthostatic hypotension, and velusetrag in gastroparesis. I'll now describe where we are with these novel programs.

Neurogenic orthostatic hypotension, or nOH, is a disorder of the autonomic nervous system, characterized by the inability to regulate blood pressure when moving from a line to a sitting or standing position. It's an orphan condition affecting fewer than 200,000 patients in the US, including patients with autonomic disorders such as multiple system atrophy, Parkinson's disease, and pure autonomic failure.

Patients with nOH experience dizziness, lightheadedness, and a sense of being about to black out. In fact, patients do often faint and sustain injuries. The condition is very debilitating and confines patients to their beds, severely impacting mobility and quality of life. There are only limited treatment options available, requiring multiple doses during the day, and carrying the risk of supine hypertension when patients lie back down.

Our objective with 9855 is to develop a treatment for nOH that can reduce patients' symptoms by restoring autonomic nervous system function, offering the potential for meaningful improvements in quality of life. We believe 9855 has the potential to become a gold standard therapy for nOH. It is a reuptake inhibitor of both norepinephrine and serotonin, with norepinephrine dominance having being confirmed in a human imaging study.

9855 could offer the potential for once-daily dosing, and sustained durable treatment response. Human metabolism studies suggest a low probability of drug-drug interactions, which is an important consideration in this patient population. In addition, 9855 has demonstrated favorable tolerability in over 500 subjects dosed in previous clinical trials.

We are currently conducting a Phase 2a proof of concept study in patients with nOH, evaluating postural changes in blood pressure, symptom reduction, and safety and tolerability, following single ascending doses, and titrating the dose to clinical effects. As Rick mentioned earlier, based on encouraging early results in patients following a single dose, we are amending the study to allow those patients who respond to continue beyond a single dose.

We expect data from the extended Phase 2a study in 2017. We intend to seek an expedited development pathway.

Now, turning to velusetrag, I'm pleased to share that we've completed enrollment in our Phase 2b trial in patients with idiopathic or diabetic gastroparesis. Velusetrag is a highly selective 5-HT4 agonist for gastroparesis, a serious condition of delayed gastric emptying, affecting nearly 6 million patients in the US, and for which there are very few treatment options. Symptoms include nausea, bloating, loss of appetite, not being able to finish a meal, and feeling excessively full immediately after finishing a meal.

We've already confirmed that velusetrag reduces gastric emptying time patients with diabetic or idiopathic gastroparesis in a Phase 2a crossover study. In addition, FDA granted fast track designation for velusetrag in gastroparesis in December 2016. This program is partnered outside of the US with Alfa Wassermann, who has helped to shape the development strategy and paid for the majority of the costs in the Phase 2 program. We expect results from our Phase 2b study in mid-2017, and assuming a positive outcome, will confer with our partner on next steps that could lead to a pivotal Phase 3 registration program.

In 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. We are currently evaluating a pair of compounds, TD-714 and TD-1439. We previously reported favorable results for 714 in both the single and multiple ascending dose studies.

Today, we are also pleased to announce that we have completed a Phase 1, single ascending dose study of 1439 in healthy subjects, and results were in line with our target profile of 24-hour target engagement, non-renal clearance, and a favorable tolerability profile. The multiple ascending dose study of 1439 is underway, and we expect these results in the first half of this year. Now, I'd like to pass the call over to Renee to provide a financial update.

Thank you, Brett. I'll now cover the financial results for the fourth-quarter and full-year of 2016, and provide 2017 financial guidance. Revenue for the fourth-quarter of 2016 was $5.7 million, primarily related to US net product sales of VIBATIV of $5 million. Revenues for the full-year of 2016 totaled $48.6 million, and consisted of revenue from collaborative arrangements of $31 million, and net product sales of VIBATIV of $17.6 million.

R&D expenses for the fourth-quarter of 2016 were $42 million, representing an increase of $9.6 million, compared to the same period of 2015. The increase is primarily attributed to costs associated with the progression of our priority programs. Full-year R&D expenses were $141.7 million or $121.5 million, excluding share-based compensation.

SG&A expenses for the fourth-quarter of 2016 were $20.4 million, representing a decrease of $3.7 million, compared to the same period in 2015. The decrease is driven by lower costs associated with share-based compensation and lower external sales and marketing expenses. Full-year SG&A expenses were $84.5 million, or $63.5 million, excluding share-based compensation.

In the fourth-quarter of 2016, we completed concurrent public offerings of ordinary shares and convertible senior notes, resulting in total net proceeds to the Company of approximately $330 million. As a result of our financing activities, we ended the year in a well-capitalized position, with just over $600 million in liquid assets, consisting of cash, cash equivalents, and marketable securities totaling $592.7 million, and receivables from collaborative arrangements of $9.1 million. As we have noted previously, the objective of completing our fundraising activities in 2016 was to enable the Company to fund multiple potential pipeline advancements in 2017 and 2018.

Now I'll move on to our financial guidance. In 2016, we provided guidance of approximately $140 million in operating loss, excluding share-based compensation, and our actual full-year number was $139.3 million. As we continue to invest in the advancements across all stages of our development pipeline in 2017, we anticipate our operating loss in 2017, excluding share-based compensation, to be in the range of $195 million to $205 million.

We believe such investment in 2017 is appropriate to support the key program milestones that lie ahead of us. And with our strong balance sheet, we are well-capitalized to fund the set of opportunities. Our guidance does not include the impact of any potential new business development transactions, and we do not expect to receive milestones in 2017 related to existing collaborations.

We do anticipate reimbursements from collaboration partners for certain R&D expenses occurred in 2017, including reimbursements from Mylan for both external and internal costs associated with revefenacin's ongoing Phase 3 registrational program. In 2016, we recognized approximately $92 million in reductions to R&D expense, due to reimbursements received under our collaborative arrangements.

Finally, a brief reminder of our economic interests related to the GSK respiratory programs. As Rick noted, GSK submitted regulatory filings for the Closed Triple for COPD in the fourth-quarter of 2016 in both the US and the EU. Based on timelines provided publicly by GSK, and assuming first-cycle approvals, we can expect approvals in both regions before the end of the year.

Assuming success, we could begin receiving cash flows related to this program as early as 2018, which would provide an important funding source for the Company. GSK will pay upward-tiering royalties ranging from 6.5% to 10% on worldwide net sales of the Closed Triple, and Theravance Biopharma holds an 85% economic interest in those future potential cash flows. Importantly, GSK is responsible for all development and commercialization costs related to the Closed Triple, with no costs being borne by Theravance Biopharma. Now, I'll turn the call back over to Rick.

Thanks, Renee. We are very 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 patients' lives, and change how serious diseases are treated. These programs are expected to reach potentially transformative milestones in 2017 and 2018, strengthening our ability to generate value for patients and shareholders.

Turning your attention again to slide 3, for 2017, we expect readouts in every phase of clinical development. The Phase 1a multiple ascending dose study for our second NEP inhibitor, TD-1439. In our intestinally restricted JAK program, our Phase 1b study of TD-1473 in ulcerative colitis. In velusetrag, the Phase [2b study] (corrected by company after the call) in gastroparesis. For revefenacin, the Phase 3 12-month safety study, followed by the planned NDA filing before the end of the year. In TD-9855, the Phase 2a study in neurogenic orthostatic hypotension. In VIBATIV, the publication of data from the TOUR study. And in the Closed Triple, the Phase 3b IMPACT study and potential regulatory approval in the US and the EU for COPD.

In 2018, the Phase 3b study of revefenacin in patients with low peak inspiratory flow rate, or PIFR, intended to support commercialization. Our Phase 3 registrational study of VIBATIV in bacteremia. Our planned sNDA submission in the US for VIBATIV in bacteremia. Our potential regulatory approval of revefenacin the US for COPD, and finally in the Closed Triple the Phase 3a CAPTAIN study in asthma patients, and the potential for a supplementary regulatory submission for asthma.

We believe that these milestones comprise an impressive lineup of potential value-creating events. We are very proud of our entire Theravance Biopharma team for their achievements this past year, and we look forward to keeping you updated on our progress and continued success across our business in the future. Now, I would like to turn the call over to the operator for questions.

(Operator Instructions)

Geoffrey Porges of Leerink.

Congratulations on all the progress. We look forward to those milestones. Brett, could you talk first of all about the PD-1 induced colitis indication? First, what's the basis for your confidence in that as an opportunity, and then secondly, when might we see you being able to treat some patients with one of the locally active JAKs?

Renee, I just wanted ask about the guidance, and Rick as well. You're looking at the portfolio. You have a lot of programs that are advancing to Phase 1B or all the way through Phase 2, that are unpartnered. Rick, what is your thinking about the right time to partner some of these assets, that might have multiple indications that would be expensive to develop and pursue - independently, that is.

Brett, do you want to cover the ICI?

Yes, of course. Thanks, Geoff, thanks for your question. I think perhaps just to briefly summarize the backgrounds of this, we are aware of course that both PD-1 but also CTLA-4 inhibitors are used for the treatment of malignant melanoma, and increasingly for other tumor types, including non-small cell tumors in the lungs, and we're likely to see use in head and neck tumors in the future.

It's a remarkable advance in immunotherapy, obviously, in the treatment of patients with oncology. But unfortunately, up to one-third of patients, 30% of patients suffer from debilitating diarrhea. In fact, often it progresses to such a prominent form of colitis that patients interrupt their therapy and effectively then withdraw from a life-saving therapy for their tumor.

There are alternative therapies available right now that could be given systemically, in order to suppress that colitis. Unfortunately by using systemic agents, including anti-TNF agents, effectively you suppress the immune system, which is supposed to be augmented by these immune checkpoint inhibitors, so it's completely counter to the insertion of that therapy.

What would be ideal is the introduction of a therapy that deals with the colitis topically, but doesn't alter any of the body's immune responses in fighting the tumor, and really in doing so, allows these immune checkpoint inhibitors to remain effective. We believe that there is an opportunity here for a locally restricted therapy to be effective. You asked about the timing, and certainly part of our strategy is to pursue a development program that looks at immune checkpoint inhibitor-induced colitis, and that's part of our ongoing strategy, and our development plan.

Sorry, Brett, can I just follow-up? Do you know -- what do you know about the actual biology of that colitis, and what's going on in the gut? Where is it occurring? Do you have any sense yet that it would be amenable to local JAK inhibition?

I think we certainly do know that it's restricted to the lower part of the small intestine and to the colon itself, so it does look a lot like the manifestations of either ulcerative colitis, or in some cases, Crohn's. It is an inflammation of the mucosa, as opposed to a pan colitis, so it does look as if it would be amenable, as we have seen with IBD. But of course, the clinical program would evaluate that more thoroughly, and that was our intent to move forward, and indeed to enter into the study in the early part of next year.

Terrific. Thank you very much. Rick?

Thanks Geoff, it's a great question. So you look across our pipeline. Revefenacin, Mylan has supported the Phase 3 program with revefenacin and then the commercialization, 65/35 expenses, and expenses and income. Revefenacin, essentially we sorted the partnership there.

VIBATIV, we've got VIBATIV in the United States, and then it has a series of partnerships outside of the United States. Velusetrag, Alfa Wassermann is our partner. Alfa Wassermann has European rights, plus a few other countries, and in exchange for that, they have paid for most of the Phase 2a and the Phase 2b program, but we have the US rights.

I think one of the potential opportunities for us down the line is to partner Velusetrag potentially in the United States. Of course, us maintaining a sizable amount of the economics, but certainly partnering part of that for payment of the Phase 3 development program.

The NEP program, we've said for quite some time that when looking at it in, for a large either renal or chronic heart failure program, we would partner that program, and as Brett said, we are getting ready to finish up Phase 1 study in the second program fairly soon, and some of those discussions are ongoing now. In the JAK program, I think we believe that it's quite meaningful for us, and we've really got the capability of carrying JAK forward, together when you look at our existing cash position. Plus, the finances coming in, we would anticipate from the Closed Triple.

So I'll ask Renee to comment, but we look at the partnerships all the time, and try and look at which programs would benefit from helping us manage the financial risk, or potentially through the partner acquiring some technical capability or geographic reach that we might not have, entering into partnerships there. Finally, I'll close, and then turn it over to Renee.

9855 is a pretty exciting program. We like what we are seeing thus far as the Phase 2a study, and that's really a program that's an orphan-like program. We certainly could take that ourselves all the way through development and commercialization. Renee?

Sure. Thanks Rick. I would just add to that, because I think you've covered it quite nicely. I would just add to that, when we did the fundraising that we completed in 2016, we had multiple objectives.

First, we wanted to be in a position where we could finance all of these key program milestone readouts across 2017 and 2018. And second, we also wanted to be in a position where we wouldn't need to do a partnership unless we felt strategically it was quite important to improving the overall financial outcome for the program.

So if we had an opportunity to meaningfully accelerate and meaningfully enhance a program through a partnership, we would do that. But the financing was very important to our overall strategic objective, and led us to be in a position to be able to lay out the seven milestones we have in 2017 and 2018, which of course leads us to a higher guidance number in 2017.

Great. Thanks very much. Appreciate it.

Umer Raffat of Evercore ISI.

If you allow me to have a few today, in no particular order. Perhaps the first one on the JAK inhibitor. Can you help us understand on where you stand with the dose escalation?

And specifically my understanding was, the design of the trial would enable you to have flexibility in how you choose the doses. So where do we stand and what have what we learned so far? Perhaps that's the first one, and I have a couple of follow-ups.

Sorry, just if you could repeat that, Umer. You broke up mid-comment there. If you could just repeat your question?

Sure. My question really was, what have we learned so far with the dose escalations, based on the choice of doses used beyond the first one? My understanding was the flexibility in the trial design was basically enabling you to select the second and third dose, depending what you saw in the first one. What have we learned so far?

Thanks, Umer. That's as great question. As you know, it's an adaptive design, so we have sequential cohorts. We are actually not commenting on where we are in the clinical conduct of that, but is our intent to disclose data from the study by the middle of this year.

Okay. No worries. Moving on to the other ones then.

On revefenacin, my understanding was that you could file based on a long-term safety trial later this year. So I'm trying to understand the requirements for the low PIFR trial. Is that something that FDA asked for, and what's the timelines on that?

No. The PIFR study is not required for filing. That's really a study that we are executing to facilitate commercialization, and positioning the product post-approval in patients with low peak inspiratory flow rates, where we think a nebulized product, if you look at the data that's been published to date, where a nebulized product is going to provide the greatest benefit. Brett?

Agreed, and just reiterate, Umer, it's not required for the regulatory filing. Your original comment is exactly accurate. The safety study is going to be combined with the efficacy studies that have been already read out, and that forms the basis of our NDA submission later this year.

Got it. My last one on the 9855, so I want to zoom in on the trial design a little better. When I look at Clin Trials, it says both arms can take multiple doses, and based on the press release just now, I'm learning that it was limited to a single dose, and only the responders could move on?

So if you can clarify what the trial design was, whether patients were or weren't able to take more than one dose, as it stands today? And then secondly also, how do you define response? The press release says you can now take more than one dose if you a response.

How is that response defined? Is that defined, just that. Sorry. Thank you.

That's fine. Thanks, Umer. So again, with reference to the ClinicalTrials.gov registry or notes, I think in reading it ourselves, we recognized that what we were trying to describe was that those were multiple single doses in dose-ascending fashion.

That's a single ascending dose-type study, where patients are evaluated at a low, and then a higher and a higher dose. That's what we meant to describe, in terms of multiple doses. But to be clear, they are all discrete single doses, looking to titrate to a clinical response.

What we are now signaling is that in those patients who respond, we would like to take that dose and continue to treat those patients for more than one dose. So that, just to clarify. You had asked too about how that assessment is made.

Again, we don't go into too much detail, but this is a study that's conducted by experts in the field, who are highly specialized in treating patients with nOH, and they use number of parameters, both in terms of blood pressure and symptoms, to assess whether the patients have had a clinical response or not. So that is stipulated in the protocol, and it's only on the basis of meeting those criteria that patients are deemed to be responders or not.

Got it. But just to be clear, the way you those symptoms are being defined, is that consistent with the indication on Northera label?

It is, Umer. In fact, it's helpful to refer to an even more recent guidance document. I think when droxidopa was initially filed in 2012 and then approved in 2014, there was a recognition that there was some variability in the definition of endpoints.

We've been working with the experts in the field, who in fact define the recommendations for the treatment, and the diagnosis of nOH. And I would refer you to a journal article from January of this year, in the Journal of Neurology, which speaks to the updated guidelines on the diagnosis and treatment of nOH. And those are the parameters that we're testing in our current study.

Thank you so much, Brett. And if I may, and I really appreciate this. What would be the timeline of the pivotal study on this program?

An excellent question, Umer. I think what we want to do is to conduct this study, complete the existing study. Obviously our next steps will be informed by what we see in this clinical program. But you could envisage a step with obviously interactions with the agency, trying to move towards a pivotal program as the next step, because this is an orphan designation. Our intent here is to seek confidence from both single and repeat dose administration, and to use that to support motivating for a pivotal study as the next step in 2018.

Got it. I really appreciate you accommodating me. Thank you.

Brett, you might talk for just a moment about the decision to continue dosing in the patients that had the response.

I think again, we had appreciated, and a number of people had asked us whether it would be possible to gauge, fairly early in a program of this nature, whether patients might respond or not. Bear in mind, the study was initially designed to see whether there will be any treatment effect, and patients went through two phases of the study. Our sense, again early, because patients continue to be dosed in this study, but based on early encouraging data, we have observed that patients appear to have an effect after a single dose.

The purpose of this extension, of course, is to see whether that response is durable, and whether repeat dose administration continues to demonstrate benefit. That is a prerequisite for our opportunities to progress, and that's the focus of this next stage of the study.

Got it. Rick, since you took the conversation this direction, if I may, do you think the responses could be better than Northera?

I think we are early on, but I think I do believe that we have the potential, because of the mechanism, to have the gold standard, to have a gold standard therapy here. I think we are excited by what we've seen to date, with the caveat that Brett mentioned. We need to see that the responses are in fact durable, based on repeat dosing. We didn't choose the words in the presentation today, gold standard, lightly. I think we are encouraged by what we see, but we need to make sure that it's durable.

Thank you very much.

Josh Schimmer of Piper Jaffrey.

Just a couple on revefenacin and the new Phase 3 trial. First, what percent of the COPD population do you estimate have low peak inspiratory flow? And given that these patients probably can't generate enough inhalational force to use a metered dose inhaler, intuitively I would have expect this is the target, or at least part of the target population for revefenacin.

What is it that you're really trying to show incrementally in the Phase 3B trial, that can further drive adoption in these patients, what will the comparator be, and how do you envision it helping the message and positioning for those patients? Thank you.

Thanks, Josh. Great question. Actually, what may surprise you is that regardless of the severity of COPD, there are patients with poor inspiratory flow in every disease severity, including patients with moderate disease, as well as those with very severe.

I think what we recognize is there may be a prejudice and assumption that nebulized minimalist therapy is only reserved for those patients who have very severe, and have had frequent hospitalizations for exacerbations. Our focus on looking at the patients with low PIFR is to identify that there may be patients with more moderate disease, who have low PIFR, who would actually deserve and warrant treatment with a nebulized therapy.

There is some recent data which has been published to show that regardless of severity, patients who are discharged after COPD exacerbation, discharged from hospital, and given a handheld product, when they have low PIFR, are twice as likely to be readmitted, and the frequency with which they are readmitted is much worse than those who are discharged on nebulized therapy. The average is just over 40 days for patients discharged with a handheld product, versus more than 100 days for patients discharged with nebulized therapy.

So it's actually fairly important to describe this patient population. It is a larger segment than may be appreciated. Again to reiterate, it's not just the most severe patients who have these low PIFR rates. Rick?

I would just add that there's a new relatively new diagnostic tool that facilitates the diagnosis of these patients that have inspiratory issues. Brett, do you want to expand on that?

The device that Rick is referring to is freely available. It's called the inCheck device. It effectively measures the resistance that handheld products have, and then physicians in general practice are able to ask their patients to breathe in through this device, and it will give us a sense of how effectively they are able to use handheld products.

Through that, our expectation is that it would be easy to discern, easy to discriminate between those patients who have a handheld product, may suit the individual, versus those who would be suitable for nebulized therapy. That could include people who are currently on handheld products, but are just not benefiting from their use.

Can you elaborate then on the design of the Phase 3b, what the comparator may be?

Josh, we're not going into the details of that at the moment. We will put up a ClinicalTrials.gov posting, when the study starts to enroll. But for now, we're obviously pointing to the initiation, more details will follow as the study gets underway.

Got it. Thanks very much.

They keep our next question comes from the line of Alan Carr of Needham.

A couple of things here on your commercial organization. One, can you comment more of some of the changes that you have made around the sales force? Can you remind us how big was it before, and how big it is now?

And also, what role are you going to have in terms of commercializing revefenacin? Where do you stand in getting ready for that? Thanks.

Sure, Alan. Thanks for the question. We just trimmed the sales force, more or less, a bit around the edges, in territories that we found both were not that promotionally responsive, and those that were being substantially affected, I would say, by generic daptomycin given the concentration of outpatient therapy in a given territory.

We've still got between, if you look at managers, medic liaison - medical liaisons and sales reps, between 50 and 60 people in the field, and that provides us with a very good base, by which when we get to both the bacteremia data and filing, and the revefenacin filing, to be able to take that footprint and then scale up to support those launches. I think what we see as the role for that sales force, relative to revefenacin, is again about 800,000 patients a year in the United States are admitted to a hospital because of a sudden worsening of their COPD, or an exacerbation.

And today, without gold standard therapy available to them, and that being a long-acting muscarinic antagonist, today, about half of those patients are discharged on nebulized therapy, which is not gold standard. We think with the availability of revefenacin, the ability to have those patients discharged on a gold standard long-acting muscarinic antagonist nebulized therapy is a significant opportunity, as is the opportunity to start those patients on therapy in the hospital, because right now most of those patients are receiving three to four time a day ipratropium, and the ability for those patients to receive a once-a-day product like revefenacin, well that should save respiratory therapy time in the hospital, as well as providing patients with optimal therapy.

I should add just a couple of other points about revefenacin, is that unlike tiotropium, revefenacin is not renally cleared, and therefore if many of these COPD patients have co-morbid conditions, may have some sort of impaired renal function. Therefore a medicine like revefenacin would be quite appropriate for those patients, given its non-renal clearance when they are in the hospital.

We see the institution as a critical point in the launch and maintenance of the commercial presence of revefenacin. That's what we see our ability, is what really leveraging the ability in the institution, combined with Mylan's capability outside of institution, for a successful launch of revefenacin.

You're thinking around when you'll be building the sales force, getting ready for that launch?

So will have to look at that, but we are anticipating a filing of revefenacin later this year, second half of this year, likely the fourth quarter. So we will take a look, and then begin to build back the sales force sometime after that. We will also, of course, be paying attention to what the outpatient, how the outpatient market changes, and make any changes with regard to the sales force given any changes in the outpatient market for antibiotics. Those are really the two nearer-term market dynamics that would cause us to change allocation, capital allocation in terms of adding sales reps back into the field.

Thanks so much.

Louise Chen of Guggenheim.

It's Brandon Folkes on for Louise. I wonder if you could just help us, perhaps, can give us more color on the bacteremia opportunity for VIBATIV? And just following on from an earlier question, how do you think about commercializing assets outside the US? Do you have rights to them? Thank you.

Yes. So I'll take bacteremia. I think the bacteremia opportunity for VIBATIV is quite substantial. I think the opportunity is really driven by the type of drug that VIBATIV is, dual mechanism of action.

Being able to treat patients without the emergence of resistance for relatively long periods of time, and that's the one element, is that the number of treatment days for a bacteremic patient are greater than the number of treatment days that you see for either HABP/VABP or complicated skin. And the fact that VIBATIV is a once a day product, facilitating its use both in home health and infusion centers, facilitates the treatment of bacteremia in an outpatient setting, away from the away from the institution.

Now, relative to non-US commercial presence, today with VIBATIV, we've got a network of partners. We would anticipate in the future that the partnering strategy that we would employ with an individual product would be based on what the capabilities of the partner would be, and then what we would need.

Some programs like -- that could require simply a partner in Europe and perhaps another one in the Far East, or there might be other products that we would do strictly a non-US partnership deal. It just depends on the product and the capabilities of the individual partner. Renee?

Yes. I would agree with what you just said. If you look at revefenacin, Mylan has the worldwide rights for revefenacin excluding China, in nebulized form, and of course, we will co-promote that in the US. With respect to handheld therapies related to revefenacin, we have 100% of the rights there. For velusetrag, our partner, Alfa Wassermann, has the rights to Europe and a few other geographies outside the US.

And 9855 is currently wholly-owned. As Rick stated, today sitting here today, we don't have a plan of setting up a commercial organization outside the US. So we will be looking at each program on a program basis, to determine what is the best way to commercialize those products outside the US.

Great, thanks so much.

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

Yes, thank you very much, operator. Thanks everyone for joining us today, and for participating in our call. We look forward a very eventful and exciting 2017 and 2018.

And I'd like to wish you all the best day. Have a great day. Thank you.

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