Theravance Biopharma Inc (TBPH) 2018 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 would like to turn the call over to Alex Dobbin, Head of Investor Relations.

Please go ahead.

Thanks, Chelsey.

Good afternoon, everyone.

Thanks for joining our conference call and webcast to discuss our third quarter 2018 financial results.

With us on the call today are Rick Winningham, Chief Executive Officer; Renee Gala, Chief Financial Officer; and Brett Haumann, Chief Medical Officer.

Following some prepared remarks, we'll open the call for questions.

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

As always, 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 is described further in the company's filings with the SEC.

And now I'd like to direct your attention to Slide 3 and hand the call to Rick.

Thanks, Alex.

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

As we move towards the end of 2018, this has been a year of great progress on our key strategic priorities including TD-1473, our gut-selective pan-JAK inhibitor partnered with Janssen; TD-9855, our NSRI for symptomatic nOH; and YUPELRI, our once-daily nebulized LAMA for COPD partnered with Mylan.

Both 1473 and 9855 are advancing into late-stage development, and YUPELRI is on the cusp of a potential approval with a PDUFA date scheduled for next week.

We believe each program represents a significant opportunity to create a transformational medicine.

In addition, we view our economic interest in GSK's Trelegy Ellipta which is on a terrific sales trajectory in its first full year on the market as an important source of funding for these programs.

Before we offer updates on our key programs, I'd like to briefly comment on our recent decision pertaining to VIBATIV and resource allocation within our commercial business.

In a separate press release this morning, we announced the signing of an agreement for the sale of VIBATIV to Cumberland Pharmaceuticals, a specialty pharmaceutical company focused on the delivery of high-quality prescription brands to improve patient care.

We're executing this transaction to enable us to focus on our most important strategic priorities and those therapeutic areas that align with our strategy.

While VIBATIV continues to play an important role in the growing battle against antibiotic resistance, we've determined that VIBATIV would be best supported by another party.

Cumberland's track record of successfully marketing and selling hospital-based products, combined with VIBATIV's existing base of hospital formulary inclusions, positions Cumberland well to market the product.

VIBATIV will be a flagship product for Cumberland, helping ensure that VIBATIV continues to reach as many patients as possible.

For us, the transaction allows a sharpened focus on our key programs, and following a brief transition period between the teams of Theravance and Cumberland, our commercial focus will shift exclusively to exclusively support the potential launch of YUPELRI, our once-daily nebulized LAMA as a first of its kind therapy for COPD.

Over the last year with VIBATIV, we've been able to retain and train an experienced institutional field infrastructure which will enable the institutional success of YUPELRI.

We have continued calling on pulmonologists and hospitalists with VIBATIV, and these specialties are central to the success of YUPELRI in the institution.

On the margin, we'll be able to heavy-up on certain high COPD treating hospitals.

As we prepare for the launch of YUPELRI with the resources we have, the sole focus on YUPELRI in the hospital will pay performance dividends for us while the upfront plus the royalty flow from Cumberland will enhance our economic performance.

We and our partner, Mylan, are eagerly anticipating the scheduled PDUFA date of November 13th for YUPELRI.

We've made significant progress to finalize our commercial strategy, and we recently reported additional findings from our Phase III program at 2 major respiratory conferences as Brett will review in a few minutes.

For our gut-selective JAK inhibitor, TD-1473, we were very pleased that detailed results from the Phase Ib trial in patients with moderate to severely active ulcerative colitis were featured in October as a late-breaker oral presentation at UEGW 2018.

Data from the Ib study have provided us with the basis to advance 1473 into larger studies in ulcerative colitis and Crohn's disease.

Our principal objective in the 1473 program is to achieve higher concentrations at steady state in the intestinal tissue without the high level of exposure in the rest of the body that is the hallmark of currently available systemic JAK inhibitors.

1473 is a potent pan-JAK inhibitor designed to modulate all 4 JAK enzymes, JAK1, 2, 3 as well as TYK2, and thus achieve a level of efficacy that is greater than an enzyme-specific systemic agent.

1473 is designed to provide potent JAK inhibition selectively in the gut without suppression of the immune system.

By achieving a higher therapeutics with -- higher therapeutic index with 1473 than what it is possible with a systemic JAK inhibitor, our intention is to improve the benefit/risk ratio versus any product that's currently on the market or in development for ulcerative colitis and Crohn's Disease.

For TD-9855, our norepinephrine serotonin reuptake inhibitor, or NSRI, in development as treatment for symptomatic nOH, we are actively engaged in the startup of the Phase III program.

The progression of the -- into the pivotal program is based on positive results from the Phase II trial and nOH reported in August, plus successful discussions with the FDA on the design of the registrational program.

For Theravance Biopharma, 9855, 1473 and YUPELRI represent strategic priorities.

Each is an example of the unique research approach at Theravance Biopharma translating to differentiated late-stage programs which have the potential to offer meaningful benefit to patients, caregivers and payors.

The expertise we have gained in the discovery of localized medicine and our integration of functions in research and development have provided an important differentiating asset at Theravance Biopharma, and we're looking forward to hosting our R&D Day on December 12 in New York City.

This will be a moment to showcase our next-generation R&D portfolio where we leverage our deep institutional knowledge and expertise in respiratory, GI and immunology.

Included in the lineup will be TD-8236, our novel inhaled JAK inhibitor for serious respiratory diseases which is on track to advance into first-in-human studies before the end of this year.

Now I'd like to ask Brett to provide some additional color on our strategic priorities.

Thanks, Rick.

I'll begin on Slide 4 with 9855, an NSRI in development as a treatment for symptomatic, neurogenic orthostatic hypertension, or nOH.

In August, we reported highly encouraging 4-week results from the ongoing Phase II trial in patients with nOH.

As background, using insight specific to multivalent chemistry, we designed an NSRI which had a preference for NET over search, predictable Pk and a long half-life.

In both the research and clinical phase of that program, we observed robust 9855 mediated effects on blood pressure via a NET-dependent mechanism.

Coupled with our understanding of the disease biology, we recognized a strong rationale to test the hypothesis that 9855 would have an effect on symptoms of nOH, a disease space with a significant unmet need.

The Phase II study consisted of 3 parts.

In Part A, we observed the effect of ascending single doses of 9855 on blood pressure and standing time.

In Part B, we evaluated a subset of patients in a placebo-controlled manner to evaluate blood pressure over 24 hours following a single dose.

9855 increased systolic blood pressure from low baseline levels with statistically significant improvements over placebo, and there was no evidence of supine hypertension overnight.

In the repeat dose extension portion, Part C, we focused on patients' symptoms and observed a durable 4-week improvement in symptom severity as measured by OHSA Question 1, a measure of dizziness that FDA has accepted as the primary end point in nOH.

The improvements from baseline were most notable in patients with clinically meaningful dizziness at baseline.

We also saw clinically meaningful mean increases in standing blood pressure at all visits and all time points out to day 29.

The response from the community of physicians treating dysautonomia since announcing the 4-week results has been very encouraging.

Furthermore, the FDA has been very supportive of the Phase III design.

The positive feedback has reinforced our excitement about the potential of 9855 in this patient population.

We are in advanced planning for the start of the registrational program, and the first sites will be initiated shortly.

Depending on when the first screened patients meet the study eligibility criteria, we expect to begin dosing patients in late 2018 or early 2019, testing the 10-milligram dose.

We'll provide more details on the program and its constituent studies in a future business update.

Now turning to 1473 on Slide 5. As Rick mentioned, we presented detailed data from the Phase Ib trial in a late-breaker oral presentation at UEGW 2018 in Vienna 2 weeks ago.

The presentation highlighted key results from this study, including that after only 4 weeks of 1473 treatment, there was evidence of biological activity and localized target engagement with low systemic exposures and no evidence of systemic immunosuppression or opportunistic infections.

Rectal bleeding scores improved above placebo at the 2 highest doses after 4 weeks of dosing, and there was evidence of endoscopic improvement and mucosal healing in all active treatment arms versus none in the placebo arm.

Rates of clinical response as measured by the Mayo score were also higher for all active doses compared to placebo.

This exploratory study provided us with confidence of a favorable benefit-to-risk ratio and, we believe, bodes well for further improvements in both ulcerative colitis and Crohn's Disease over longer-term treatment.

In Crohn's Disease, we're currently screening patients for enrollment in the Phase II induction study, and we expect to dose our first patients before the end of this year.

This proof-of-concept study will assess 2 doses of 1473, 80 and 200 milligrams, given once daily for 12 weeks versus placebo.

In parallel, we're in the advanced stages of preparing to initiate a Phase IIb/III induction and maintenance study in patients with moderate to severely active ulcerative colitis.

Patients will receive 1 of 3 doses of 1473, 20, 80 or 200 milligrams or placebo once daily for 8 weeks in the Phase IIb induction study.

Responders will then be rerandomized directly into the 44-week Phase III maintenance study to accelerate the clinical program.

FDA and EMA have both agreed to the study design features, and we're currently working through regulatory and IRB approvals and on initiating sites in multiple countries with the aim of screening patients into the induction portion of the program in the next few weeks.

Patients undergo a month-long run-in including washout from existing therapy and detailed endoscopy so we anticipate being able to dose patients in very late 2018 or early 2019, depending on their eligibility during the run-in.

We and our partner Janssen are very excited to be advancing the 1473 program and its potential to transform the treatment of gastrointestinal diseases.

Turning now to Slide 6 and YUPELRI, a once-daily nebulized LAMA for the treatment of COPD.

In the past 2 months, we presented new findings from YUPELRI's Phase III clinical program at the ERS and CHEST 2018 meetings.

The first data set presented in an oral presentation at ERS showed reductions in the rates of COPD exacerbations ranging from 15% to 18% in moderate to very severe COPD patients administered once daily with YUPELRI for up to 52 weeks as compared to placebo and tiotropium.

While the YUPELRI Phase III Program was not designed or powered to achieve statistical significance on differences in COPD exacerbation rates, these additional analyses of the data have been used to identify trends that may warrant further research as COPD exacerbations have a damaging impact on patients' overall health, long-term disease status and quality of life and significant cost to the health care system.

The second data set presented at the CHEST annual meeting included results from a new study comparing YUPELRI and tiotropium in a subset of COPD patients with suboptimal peak inspiratory flow rates or PIFR.

Of note, the data showed statistically significant improvements in trop FEV1 and FEC for YUPELRI as compared to tiotropium in the severe to very severe subpopulation of patients, i.e., those with FEV1 less than 50% predicted.

This was the first head-to-head study conducted between tiotropium dry powder via Handihaler and a nebulized treatment such as YUPELRI.

Further, by focusing on COPD patients with suboptimal PIFR, we gained important insight into a patient subgroup, we believe, is well suited to benefit from a once-daily, long-acting nebulized therapy.

We and Mylan see significant commercial opportunity within the hospital and outpatient settings, and we remain on track for the PDUFA date of November 13.

If approved, YUPELRI will be the first once-daily nebulized LAMA for COPD patients, an attractive proposition over current standard of care based on the market research we've completed.

Now I'll pass the call over to Renee for a financial update.

Thank you, Brett.

Starting on Slide 7, revenue for the third quarter of 2018 was $12.8 million comprised of revenue from collaborative arrangements of $9 million and product sales of VIBATIV of $3.8 million.

Revenue in the third quarter represents an increase of approximately $9 million over the same period in 2017, primarily related to revenue recognized from the $100 million upfront payment received from Janssen associated with the 1473 global collaboration agreement.

R&D expenses for the third quarter of 2018 were $52.7 million compared to $39.3 million in the same period in 2017.

The increase is primarily due to higher external and employee-related expenses to support our key programs and higher share-based compensation expense.

Third quarter R&D expenses include noncash share-based compensation of $6.3 million.

SG&A expenses for the third quarter of 2018 were $21.9 million compared to $20.9 million in the same period in 2017.

Third quarter SG&A expense includes noncash share-based compensation of $5.5 million.

We remain in a well-capitalized position with approximately $321 million in cash, cash equivalents and marketable securities as of September 30.

Our 2018 financial guidance remains unchanged.

We expect our full year operating loss, excluding noncash share-based compensation, to be in the range of $180 million to $200 million.

Our guidance excludes expected proceeds related to the sale of VIBATIV to Cumberland Pharmaceuticals as well as income related to our economic interest in Trelegy Ellipta.

As a reminder, we recognize Trelegy-related income below the operating line as income from investment in TRC, which is Theravance Respiratory Company.

I'll close on Slide 8 with an update on our economic interest in Trelegy Ellipta, the first and only once-daily single inhaler triple therapy.

Trelegy continues to perform well since its approval late last year with script uptake supported by an expanded U.S. label and recent initiation of DTC.

The product is now available in 16 countries with another 9 countries expected over the course of 2019 and recent regulatory filings completed in China and Japan.

In addition, the Phase III pivotal CAPTAIN study in asthma is expected to complete in early 2019 with a regulatory submission planned in the second half of 2019.

Success in asthma could lead to a meaningful expansion in the use of Trelegy over time.

For the third full quarter since the product's approval, GSK reported Trelegy net sales of $56 million, reflecting growth of approximately 55% over the prior quarter net sales of $36 million.

Theravance Biopharma holds an economic interest in Trelegy that equates to upward tiering royalties of approximately 5.5% to 8.5% of worldwide net sales.

This economic interest represents an important strategic asset to the company as both an emerging future contributor of growth and an alternative source of funding for our pipeline.

We believe Trelegy has the potential to deliver significant value to Theravance Biopharma over time, and we look forward to seeing GSK's continued progress with this important medicine for patients suffering from COPD.

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

Thanks, Renee.

Moving to Slide 9. The steps we have taken over the course of 2018 reflect a focus on our strategic priorities, placing us in an optimal position as we approach 2019.

The decision to sell VIBATIV to Cumberland Pharmaceuticals allows our commercial organization to concentrate exclusively on the potential launch of YUPELRI which, if approved, will be the first once-daily nebulized LAMA for the treatment of COPD.

We are eager to bring this potential medicine to patients, and we remain on track with an assigned PDUFA date of November 13.

Meanwhile, the rapid uptake in scripts for GSK's Trelegy Ellipta in its first full year on the market remains extremely impressive.

Our economic interest in the first and only once-daily single inhaler triple therapy represents an important strategic asset to the company.

Earlier this year, we established proof of concept in patients with highly encouraging clinical results in 1473 in ulcerative colitis and 9855 in nOH, and we're driving both programs to begin late-stage studies in the near term.

We also approached the first-in-human studies of 8236, our novel inhaled JAK inhibitor for serious respiratory diseases.

Finally, we look forward to discussing the insight and innovation in our early stage assets at our 2018 R&D Day next month.

Now before I open the call for questions, I'd like to say a few words about the extraordinary contribution that Renee has made to Theravance Biopharma.

Over her 12 years with the company, Renee has been instrumental in transforming Theravance Biopharma from a concept to corporate spinout and then ultimately to a successful standalone entity it is today.

But beyond the significant operational successes, Renee's most lasting impact on our company is her leadership towards establishing a strong finance organization, and importantly, corporate culture built upon hard work, dedication, partnership and inclusion.

We're particularly proud of her cofounding Women's Leadership Network to foster equality and individual development at the company.

While she'll be deeply missed, we all wish Renee great success in all her future endeavors.

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

(Operator Instructions) We'll have our first question from Geoffrey Porges with Leerink.

Congratulations to Renee and thanks for all your help as we have continued to learn more and more about Theravance.

Congratulations on the new position.

A few questions, Renee.

First of all, where is the Trelegy Ellipta royalty in your current financial results?

Or is there a threshold above which you start to report that royalty?

Because even though it's early days, 5.5% to 8% should be showing up.

And then secondly, I'm wondering if you can talk, Rick, about the commercialization of YUPELRI, particularly what's the latest information on the number of patients who are on short-term and then product or maintenance use of the nebulizer for COPD and what medications they're on are and then how that splits between the hospital and the community setting and then a little bit about who is going to be executing what in the launch.

That would be really helpful.

So Geoff, I'll start with where Trelegy is on the income statement, where we're reporting that.

So under our loss from operations, you'll see a line which is income from investment in TRC, LLC.

We recognize this below the operating line, and so that's where you will see that going forward.

Geoff, on the follow-up on the YUPELRI, if you look at the sort of total number of patients, you've really got between 8% and 9% of patients that are on nebulized therapy, COPD patients that are on nebulized therapy, some form, chronically.

Now there hasn't been an answer or a simple answer to nebulized therapy because the only thing that's available to them are medicines that you must use 3 to 4 times a day.

And each use, of course, requires several minutes of therapy.

So for us, the key in looking at the market has been overall your 800,000, 900,000 patients rotating through the hospital every year with COPD.

And capturing a portion of those patients, currently, about 400,000 of those patients are discharged on some form of nebulized therapy.

So the hospital, I distinguish this quite a bit from dry powder inhalers, whereas the hospital becomes a dynamic place in which to catch patients as they go through the health care system as opposed to potentially dry powder inhalers where you're really targeting patients to get them to switch either as they come into the office or to motivate them in their home to come into the office to get a new prescription.

So the hospital becomes a critical place to catch patients as they come through the health care system.

Then you've got home, hospital to home that's important.

Then finally, success in the community setting.

Really for us, we're responsible in the relationship with Mylan for the hospital and Mylan is largely responsible for the community.

And then we'll work together obviously on other segments.

We'll have our next question from Tyler Van Buren with Piper Jaffray.

Wanted to say thanks to Renee and I wish you well as well.

I guess the first question would be with respect to the nOH data that's been presented over the summer.

When will we see a full data presentation?

Should we still expect that update at a future medical conference?

Or could we potentially see more data at the R&D Day?

Thanks, Tyler.

This is Brett.

Our intention is to put this into a scientific forum.

So we are scheduling for a future scientific meeting where we will be presenting the data including the completion of the patients who have been running through Part C. You may recall that beyond the 1-month evaluation point, patients were allowed to continue for up to 5 months.

So we'll be consolidating all of that information.

The last of those patients, in fact, will be completing their dosing this month and we'll be consolidating all of that and reporting it in a future scientific meeting.

Are there any meetings in particular that could make sense as forums or that you guys would be targeting say in the first half of next year?

Yes, there are some.

In fact, we aren't in a position today to confirm them only because they are subject of course to the acceptance of that submission.

But certainly, as we progress through the early part of next year, I think we'll be able to give you more granularity on that.

Got it.

So for the CAPTAIN study, can you help us define what success is there when it reads out?

Obviously, the asthma market is potentially very large.

There's a lot of patients.

But when you think about triple therapy, you traditionally think about COPD.

So can you, I guess, speak about how you would define success in that study or how Glaxo would and then also how you think about the market opportunity in asthma?

Tyler, this is Brett.

Perhaps just upfront, I should state that we don't know anything beyond what's in the public domain with CAPTAIN.

This is obviously a program that is managed by GSK, and so we observe what you observe in the markets.

But I think looking at clinicaltrials.gov and other public records of that study, it's clear that what they're having to demonstrate is improvements in exacerbation rates for asthma above and beyond what's being observed for products like Breo, for example.

What's interesting with Breo and indeed Trelegy is that there are 2 doses being tested in asthma as opposed to the one dose that's approved in COPD.

So they will be looking for discrimination in a, we presume, a broad base of patients with asthma.

But I think it will be the additional improvements both in lung function and COPD -- or sorry, in asthma exacerbations that will be important in CAPTAIN.

And I think -- this is Rick.

If you go back and look at a bit of the history of treatment in the market, at first, you had Boehringer Ingelheim that looked at, with Spiriva, looked at the addition of long-acting muscarinic antagonists to LABA ICS therapy.

And they, in fact, showed a benefit in their studies to adding a long-acting muscarinic antagonist to LABA ICS therapy.

So that's really the reason to believe.

And I think if you look at least at some of the audited data that's come out, that Boehringer has been somewhat successful actually in promoting, in fact, the use of a long-acting muscarinic antagonist on top of LABA ICS therapy in asthma patients.

So clearly, there's really a base of information that's there on the triple mechanism to treat an asthma, and I think GSK is really seeking to replicate that as a part of the CAPTAIN study.

I just might also add, and we called it out and Renee called it out in her remarks, is that there are a series of different growth drivers, it seems, in looking from the outside to Trelegy.

Obviously, the improved label and direct-to-consumer advertising is one.

Continued approvals in other market submissions in Japan as well as China.

And then on top of that, you have the potential for positive CAPTAIN results and eventual use in asthma for Trelegy.

So there really are a number of growth drivers that are more or less set up it seems sequentially with Trelegy for GSK and can accrue to the benefit of Theravance Biopharma through the royalty.

And we'll have our next question from Louise Chen with Cantor Fitzgerald.

This is Jennifer Kim on for Louise.

I had a couple of questions.

The first one is regarding the $9 million in revenue from collaborative arrangements.

Could you tell us how much of that is from the Janssen upfront?

And do you still expect less than $25 million related to that upfront in 2018?

And my second question is just on the VIBATIV agreement.

Could you break down the -- sort of the steps in between that 20% royalties range and how we should model out the $25 million total?

And then finally, if you could give us an updated outlook on what you expect the launch trajectory for YUPELRI to look like, that would be great.

Jennifer, this is Renee.

I'll take the first one on the collaborative revenue.

So the vast majority of the $9 million was related to revenue that we recognized related to that Janssen $100 million upfront payment.

And as we've stated previously, we do expect to recognize that revenue over the course of conducting both the Phase II study in Crohn's Disease as well as the Phase IIb portion of the ulcerative colitis study.

And that's just based on the revenue recognition that we go into a lot of detail on in our quarterly statements.

With respect to the VIBATIV transaction that we announced today, $20 million of the $25 million in proceeds would be received shortly after the closing of the transaction, and then the remaining $5 million will be received before the beginning of April, in the first quarter of 2019.

And then in terms of our guidance, just to reiterate, we do expect our guidance to be within $180 million and $200 million.

We haven't provided a specific update of exactly how much of the Janssen revenue we expect to recognize over the course of this year, but certainly, we expect it to -- to still be within the $180 million and $200 million, and we should be within a reasonable range of the guidance we provided previously with respect to the full amount to be recognized in 2018.

And then a comment just briefly on the -- I think you asked about the YUPELRI trajectory.

I think I'll refrain from making any comments on the launch trajectory of the product.

Again, PDUFA date is next week, and we'll obviously be providing a number of different updates on YUPELRI, probably between now and the end of the year as well as early next year as we -- if we're fortunate enough to get positive news on the PDUFA data and prepare to launch the product.

Could I ask -- for the up to 20% royalties on VIBATIV, can you break down maybe what goes into that?

Do you start at like 10% and go up to 12.5%?

We'll delineate those royalties in greater detail after the closing, but we'd expect the majority of the royalties to accrue over the length of the agreement at 20%.

(Operator Instructions) We'll have our next question from Brian Skorney with Baird.

Just thinking about the VIBATIV transaction, I think one of the reasons you guys had VIBATIV sticking around for a while was that you felt the sales effort already in place would help with YUPELRI in the hospital.

I'm just trying to understand the strategy on the eve of its approval.

Do you not think that there's an overlap in terms of detailing between VIBATIV and YUPELRI and that the calling efforts can be multiplied by having more than one product for your salespeople?

Or do you think that it's just easier to transition your sales force to just one primary product?

And how should we be thinking about the SG&A impact?

I know you don't want to probably give guidance for next year, but just kind of numerically, did you expect that no longer marketing VIBATIV and beginning to market YUPELRI?

Does one just offset the other?

Or how should we kind of consider that for next year?

Yes.

Thanks, Brian, for the questions.

I mean, I think we'll give greater clarity in early 2019 about the expenses.

But clearly, we're going to be managing the expenses and allocating the capital that we've got across the strategic priorities that we've outlined.

If you look at sort of the rationale here, and importantly, over the last year with VIBATIV, we've been able to retain and train an experienced institutional field sales force, which I think the ability to have that sales force in place and trained upon the approval of YUPELRI will enable the institutional success of YUPELRI.

We have continued over the past year to call on pulmonologists and hospitalists with VIBATIV and develop those relationships.

And these specialties are central to the success of YUPELRI in the institution.

We've been quite successful over time of getting VIBATIV on a number of formularies.

On the margin, we'll be able to heavy-up on certain high COPD treating hospitals.

And by that, I mean those hospitals that experience treating a high level of patients that have exacerbations of COPD.

As we prepare to launch YUPELRI with the resources that we have, I think the sole focus on YULPERI of a well-trained institutional field force that has relationships with key specialties that have been enhanced over the past year because of promoting VIBATIV in the institution, should pay performance dividends for us.

And we'll have our next question from Joseph Stringer with Needham.

This is Joey on for Alan.

Two questions.

One is around the Trelegy royalty stream.

Maybe could you give us your thoughts on a potential monetization of that or what would be the pros and cons on either side of that, either side of that sort of topic?

This is Renee.

I'll take that question.

I didn't hear the very last bit of what you said, so why don't I address the first part of your question and then if we've missed anything, you can let us know.

So we do see, as you would have seen in both our comments as well as our slides, that we see the Trelegy economic interest as an important strategic asset for us.

Not only because it provides us with cash flow, but it does also provide us with a source of future funding for the programs that we have noted as being of strategic importance to us, particularly 1473, YUPELRI and then 9855.

In terms of monetizing that asset, that's certainly a great option for the company.

I would say at this stage of Trelegy's trajectory, if we were to pursue an option of that nature, it would most likely be in the form of a financing versus selling the asset because we do think that Trelegy has a fantastic uptake right now in scripts.

And we also think it has a lot of room to grow based on the comments that we've made.

And just to reiterate some of the comments Rick made with respect to the asthma study and the potential that can come from that and the earlier comments we also made regarding the availability in multiple countries now where GSK is just getting started as well as 9 additional countries we expect the drug to be available in over the course of 2019, so as a result of the uptake and the curve there, it probably wouldn't make a lot of sense for us to sell that asset, but certainly monetizing it would be a great option to be able to provide the company with a source of nondilutive financing.

Okay, great.

That's very helpful.

And one last quick question on the inhaled JAK.

I think right now in the Phase I, it's going to be in healthy volunteers and patients with, I think, mild asthma.

Now thinking towards a potential Phase II, I know that's getting a little bit ahead of ourselves here, but what types of indications or patient populations would you guys be thinking about for this therapy?

Thanks, Joe.

I think you're absolutely right.

You probably will have seen by now the disclosures on clinicaltrials.gov relating to this program.

You're right that we are starting with single ascending doses in healthy volunteers but, quite quickly, moving into patients with asthma.

And often for inhaled products, the reason for doing so is to just give ourselves assurances around the safety in that particular patient population, particularly with inhaled formulations of the medicine.

But it is our intent to move quite rapidly then into proof-of-concept type work.

I don't think we're in a position today to disclose that, but we certainly will in the future.

But it is our intention to focus in on patients with asthma, particularly those with more severe disease and to explore this novel therapeutic mechanism.

As you know, we've had experience both in the respiratory field for many years, initially with our collaboration with GSK, but more recently in our work on YUPELRI.

So we do understand what it takes to formulate and then evaluate products for treatment of lung diseases.

The other real advantage of course and leverage here is that we've also been evaluating JAK inhibition and most recently in the GI Program looking at inflammatory bowel disease.

So we think this is a really good complement of those 2 insights, those 2 areas of expertise.

And we're really excited about this particular program moving forward into the clinic.

Thank you.

It appears we have no further questions on the phone.

I'd now like to turn the conference back to Mr. Winningham.

Please go ahead, Sir.

Thank you very much, operator.

Thanks, everyone, for participating.

I look forward to our R&D Day in December in New York City and have a great day.

This concludes today's conference call.

We thank you for your participation.

You may now disconnect.