Theravance Biopharma, Inc.

Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the TheraVance Biopharma third quarter 2025 conference call. During the presentation, all participants will be in a listen-only mode. A question and answer session will follow the company's formal remarks. To ask a question, press star 11 on your telephone. If listening via webcast, please mute audio on your webcast device before asking a question over the phone. I will repeat these instructions after management completes their prepared remarks. Also, today's conference call is being recorded. And now I'd like to turn the call over to Rick Winningham, Chief Executive Officer. Please go ahead, sir.

Good afternoon, and welcome to Theravance Biopharma's third quarter 2025 earnings results conference call. On slide two, you'll find our forward-looking statements disclaimer, which covers certain risk factors which could cause actual results to differ materially from any forward-looking statements we might make in today's call and which are described further in our filings with the SEC. Moving to slide three, I'm joined today by Rhonda Farnham, Chief Business Officer, Anya Miller, Head of Development, and Aziz Sawaf, Chief Financial Officer. Turning to slide four, TheraVance delivered strong results in the third quarter, reflecting continued execution across the business and notable progress toward our strategic objectives. We achieved several key accomplishments, including solid upelry net sales growth and record brand profitability, leading to the achievement of non-gap break-evens. underscoring the strength of our business model and commitment to financial discipline. In parallel, we continue to advance the pivotal Phase III Cypress trial of Amproloxatine towards a data readout in early 2026, a milestone we believe could represent a material value inflection point for the company. Starting with our commercial business, UPelry, our durable cash-generating asset continues to the deliver strong results. Net sales and, importantly, profitability for the quarter reached all-time highs, driven by continued demand growth and favorable net pricing. This performance puts Upelri year-to-date sales on track to trigger a $25 million milestone from Beatrice. With Amproloxatine, we are excited as we approach a critical moment for Theravance. We remain on track to deliver top-line results from the pivotal Phase III Cypher study in the first quarter of 2026. We believe this readout has the potential to be transformational for both patients and the company, as we hope amproloxetine will become the first precision therapy for symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy, a rare debilitating disease. In preparation for the data, we will host a KOL event for investors on December the 8th to highlight the significant unmet medical need of these patients and how Amproloxatine aims to address it. We ended the quarter with approximately $333 million in cash and no debt. And importantly, we remain on track to achieve near-term milestones totaling $75 million in the fourth quarter. $50 million for Trilogy and $25 million for Eucalyptus. In addition, the strong growth trends for Trilogy bode well for the achievement of the $100 million milestone in 2026. Lastly, in October, we launched a new disease education campaign for healthcare professionals to raise awareness and deepen scientific understanding of NOH associated with MSA. This initiative reflects our continued commitment to the MSA community and to advancing education on the complex mechanisms underlying NOH and MSA. TheraVance today stands on a foundation of financial strength with significant upside opportunity, anchored by a robust balance sheet, continued cash generation from UPelbry, and highly probable near-term milestone payments. We enter the final quarter of 2025 with confidence and growing excitement for the rapidly approaching transformational potential of the Cypress data readout. With that, I'll turn the call over to Rhonda to provide additional detail on UPelRI's performance. Rhonda?

Thanks, Rick. If you turn to slide six, you'll see that the TheraVance-Theatris Commercial Partnership delivered a record quarter for UPelRI. Third quarter net sales increased 15% year over year to 71.4 million. This was driven by two main factors. First, strong demand growth up 6% year over year versus Q3 of 2024. And second, continued net price improvement due to a more favorable channel mix, which is the result of a close collaboration with our partners at Beatrice as exemplified by effective field sales execution with a focus on fulfillment optimization efforts. Importantly, following these results, only 54 million of net sales are required in the fourth quarter for us to achieve the $250 million calendar year sales threshold required to trigger a $25 million milestone payment from Vietris. Turning to slide seven, in addition to our solid net sales growth, UPelry continued to experience expanding profit margins reaching record levels and positive momentum across both hospital and community outpatient channels. The hospital channel continues to be a key driver of prescribing with hospital volume increasing 29% versus Q3 of 2024, illustrating our team's sustained success in securing formulary wins and implementing therapeutic interchange protocols. This quarter, UPelRe's share in the long-acting nebulized hospital market reached a new launch-to-date high of approximately 21%. Moving forward, our goal is to continue to secure institutional access and further expand the hospital channel as a foundational component of our brand strategy, functioning as a critical entry point for transitioning patients to community outpatient maintenance therapy. Beyond the encouraging growth trends in Q3 with net sales, demand, and hospital volume, UPelry is positioned for continued expansion with a sizable, addressable population remaining in the U.S. Our aligned strategies with Beatrice continue to deliver strong results, specifically the adoption of concomitant use with LABA therapies and switches from handheld-only regimens, as well as further diversification of product fulfillment. We were also excited to share two analyses presented at the recent 2025 CHEST meeting. First, we presented new post hoc analyses from a phase three safety study showing that patients treated with upelry experienced a lower incidence and severity of moderate to severe exacerbations compared to those taking teatropium. The second presentation was a new retrospective cohort study of claims data. which demonstrated that following hospital discharge, patients adherent to upelry experienced significantly fewer and less severe exacerbations and lower health system costs than non-adherent patients. These findings reinforce upelry's differentiated clinical profile and highlight its potential to improve both clinical and economic outcomes for appropriate COPD patients, further reinforcing the scientific foundation of upelry. In summary, UPelri's profit margin continues to expand, supported by disciplined execution and patent protection in the U.S. into 2039. As a result, we are confident that UPelri will continue to deliver long-term sustainable value for TheraVance and its shareholders. With that, I'll turn the call over to Anya to provide an update on the Amprolox team development program. Anya? Thanks, Rhonda.

Turning to slide nine, before providing an update on the CyPRS study, I'd like to highlight some recent ampryloxidine publications and presentations. First, we submitted a manuscript detailing the results of the prior phase three Redwood study in the MSA subgroup, where ampryloxidine demonstrated durable improvement in symptoms of NOH. I will take the opportunity to provide a quick recap of this data shortly, as it reinforces our confidence in ampryloxidine's mechanism of action and its potential to deliver meaningful benefit to patients with NSA, a community that remains underserved by current treatment options. A preprint version of this manuscript has been posted online to MedArchive. Second, a publication establishing the minimally clinically important difference for the orthostatic hypertension questionnaire was published in a peer-reviewed journal, Clinical Autonomic Research. an important tool to support interpretation of clinical benefit as we head into the phase three Cypress readout. Additionally, we had a strong presence at the recent International Symposium of Autonomic Nervous System, organized by the American Autonomic Society, or AAS, where we had one platform presentation and three posters. The platform presentation highlighted the results from the prior phase three Redwood study in the MSA subgroup analysis. along with a poster reviewing the impact of amperloxidine and supine hypertension in the Phase III sequoia study, which showed no worsening of supine hypertension, an important potential differentiator for the product. The two other poster presentations detail the rigorous recruitment and retention methodologies used to address challenges in conducting a trial in rare disease with severely ill patients. By applying these insights in the CYPR study, we were well positioned to successfully address the executional challenges associated with clinical studies in rare and severe neurodegenerative diseases. As I mentioned earlier, I'd like to recap the results from the subgroup analysis of patients with MSA from the Redwood study shown here on slide 10. The top graph shows the standing systolic blood pressure throughout the Redwood trial, where a pressure effect was observed in the open-label phase of the trial with blood pressure at three minutes of standing increasing compared to baseline. At the end of the randomized withdrawal, compared to the open label, blood pressure at three minutes of standing dropped in the group withdrawn to placebo while remaining stable in patients that stayed on amproloxidine. This increase in standing blood pressure observed with amproloxidine translated to a meaningful impact on patient symptoms and daily activities. However, the benefits seen in symptoms and short-term daily living activities shown in the two bottom graphs were only maintained in patients who remained on Amproloxidine in the randomized withdrawal portion, but worsened in those withdrawn to placebo. Moving to slide 11, we continue to make strong progress towards our pivotal phase three Cypress readout. At this stage, the open-label portion of the study is now complete, and a small subset of patients are now completing the randomized withdrawal portion an important step towards completion of the trial. The team continues to demonstrate excellent operational execution, and we are highly encouraged by the level of engagement across our study sites and the broader MSA community. We remain on track to deliver top-line results in the first quarter of 2026, and we view this as a significant milestone for Theravans as we advance our efforts to bring ampryloxidine to patients with NSA-related NOH. We've also made substantial progress on NDA preparation, particularly across the non-clinical, CMC, and clinical pharmacology components of the application. Much of this work has already been completed, positioning us to incorporate the Cypress data quickly once available and move efficiently towards an expedited NDA submission, should the results be positive. We also intend to request priority review if the data are supportive. Lastly, in preparation for the upcoming readout, we will host a virtual KOL event for our investors on December 8th, which will feature Dr. Horatio Kauffman, professor and director of the Dysautonomia Center at NYU, one of the world's leading experts in autonomic disorders. During this event, Dr. Kauffman will provide an overview of the unmet need for patients with MSA-related NOH and will highlight why we believe amperloxidine is uniquely positioned to address this rare and debilitating condition. In addition, we will review the ongoing Cypress study and outline the commercial opportunity for ampryloxidine as a potential new treatment option. We are excited and well prepared as we approach the Cypress data readout in the first quarter of 2026. With that, I'll turn the call over to Aziz to walk through the financials. Aziz?

Thanks, Anya. Turning to slide 13, I'll start with an update on our trilogy milestones. GSK reported $1 billion in sales for the quarter ahead of consensus and $2.9 billion year-to-date. Given the $3.4 billion threshold required to trigger the $50 million milestone in 2025, we need only $470 million in Q4 sales to hit this milestone, which is roughly 50% below the current run rate. Looking ahead, the $100 million milestone in 2026 is also well within reach, with a $3.5 billion sales requirement. a level that both current run rate and consensus comfortably exceed. With Trilogy continuing to pose strong above expectation performance, we have clear visibility into achieving these milestones, which together represent $150 million in expected cash inflow over the next 15 months, further strengthening our financial position. Turning to slide 17, I'll summarize our Q3 financial performance, where we delivered another strong quarter. Collaboration revenue increased to $20 million, up 19% year-over-year, reflecting UPelry's strong operating leverage, which drove record brand-level profitability. Operating expenses, excluding share-based comp, were $22 million, as R&D costs began to decline following completion of Cypress enrollment while we progressed towards data readout in the first quarter of next year. Share-based comp decreased 8% year-over-year, reflecting continued cost discipline. Our GAAP net income was positive in the quarter, aided by a non-recurring benefit due to a favorable true-up related to taxes from the trilogy royalty sale in Q2. However, driven by UPOL REACH profit contribution and continued expense discipline, we also achieved non-GAAP profit break-even in the quarter. Given that this metric excludes one-time items, such as the income tax benefit, it more accurately reflects the underlying performance of our operations. We ended the quarter with $333 million of cash and no debt. Lastly, turning to slide 18, I'll cover our 2025 financial guidance. First, we are reiterating all expense guidance ranges. Second, given that we achieved breakeven on a non-GAAP basis in Q3, again, excluding one-time items, we now expect results to remain broadly consistent in Q4. So, there can always be normal quarterly variability. This guidance reflects our continued focus on operating leverage and cost discipline. Importantly, this outlook excludes the $75 million of milestones expected to be earned in Q4, $25 million for upel rate, which will be recognized as revenue, and $50 million for trilogy, which will be recognized as other income, not revenue. Note that while we expect these milestones will be earned in Q4, we will receive the cash in Q1 of 2026. In summary, Q3 was another step forward for TheraVans. We delivered record upellary performance, achieved breakeven on a non-gap basis, and further strengthened our balance sheet, setting the stage for a potentially transformational 2026 with continued financial discipline and a clear focus on value creation. With that, I'll turn it back to Rick to conclude. Rick?

Thanks, Aziz. To summarize on slide 19, TheraVance enters the final stretch of 2025 with strong momentum, driven by a profitable commercial business, a robust balance sheet, and clear visibility into near-term milestones that will further strengthen our financial profile. Upelri continues to be a key driver of that performance, with sustained growth and increased profitability highlighting the durability and long-term value of the franchise. We remain confident in the execution of the Cypress study and in Amproloxatine's potential to become the first precision therapy for patients with MSA who suffer from NOH. With Cypress results expected in the first quarter of 2026, we are now approaching a significant moment for the company. This readout represents a transformational catalyst with meaningful upside potential Our profitable upel re-franchise and strong financial position provides downside protection, creating a compelling risk-reward profile as we approach the data. As we move into 2026, we do so with focus, financial strength, and confidence in the opportunities ahead. And with that, we'll open the line for questions. Operator?

Thank you, sir. Once again, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our first question for today comes from the line of Douglas Howe from HC Wainwright. Your question, please.

Hi, good afternoon. Thanks for taking the question. I guess, Rick, just given, you know, sort of the continued outperformance we've seen in Centrology and, you know, the likelihood of some additional cash coming in, How are you thinking about right now, you know, you've talked about the special committee being committed to returning capital to shareholders, but, you know, how much do you potentially need to sort of keep in-house for the potential launch of Ample Oxygen?

Good question, Doug. I think that obviously the financial strength of the company is one of the one of its key elements of value. We, you know, continue to view the cash on the balance sheet and the strategic review committee looks at the timing and the optimum amount of returning capital. And if we do return capital again, you know, how much and when. The, obviously, Amproloxatine's launch will be a fairly efficient launch in a rare disease, not creating, you know, a substantial burden on the P&L, but nonetheless triggering up expenses. I think for the company and the board, what we're focused on right now, because we are so close, is in fact the execution of the Cypress study, through the top line results and getting those top line results and then making future decisions, future decisions for the company, you know, on capital and capital return, et cetera, because of the, as was stressed in this call, the very important nature, you know, of that data. But importantly, we're in a position of financial strength, giving us terrific opportunities going forward to, you know, you know, to return capital to shareholders if that's what the board desires to do.

And I guess as a follow-up, when we think about the company over the last several years, you've obviously sort of narrowed your focus. Obviously, you know, we're sort of almost, you know, sort of dual goals of, of, of maximizing the opportunity, but as well as executing on the study, I guess when we think about the company over the long term, um, you know, are there pipeline assets? I mean, there were several assets, which I think some people were, you know, were, were interesting, um, but sort of we'll put on pause. And I guess, is that, ever sort of come back into the equation, just given, you know, you noted the sort of operational as per sort of the efficiency and launching that philosophy, and that could just bring significant capital into the company and sort of change your position.

Yeah, I think that's, you know, I'm, again, kind of go back to my central theme, and I think the central theme for the management and the board is which is the focus on Cypress and the focus on ampryloxetine clinical success that sets up a successful launch of the product. At that point in time, you know, once we get post-ampryloxetine and post-success, we'll evaluate options. I think, you know, we not only need ampryloxetine success clinically, but a pathway which we believe we have as long as we you know, hit a clinically meaningful result in the Cypress study to approval. And I think as we're going through that, we'll obviously look at the options and the alternatives to maximize shareholder value. But again, I'd say right now, given the relatively small organization that we've got, you know, 110% of our focus, as you rightly pointed, point out is on growing upelry, growing upelry in an effective way to drive additional profitability and finishing amproloxatine clinical study and setting it up for commercial success. I think once we achieve those objectives, then we have time or intellectual space to work on other things that may increase the value, increase shareholder value. Because I do believe you're right in that ampyloxine being a rare, targeting a rare disease, it has the opportunity for, you know, a significant value inflection for the company. Okay, great. Thank you.

Thank you. And our next question comes from the line of Julian Harrison from BTIG. Your question, please.

Hi, congrats on the quarter, and thank you for taking the questions. First, I'm curious to what extent that recently published manuscript detailing the MCID for the OHSA composite score informs your expectations for top-line Cypress data first quarter of next year. Any other comments on what you think a win on data would be would be helpful as well. And then the EOPELRI data at CHESS looked fantastic. You know, thinking about that some more, I'm wondering if you could talk more about how these results are supportive of pupillary new patient starts at the hospital call point.

Hey, Rhonda, do you want to take the chest presentations, and then we'll come back to Anya and myself for ampyloxetine?

Absolutely. Thanks, Julian, for the question, and thanks for recognizing the data that were recently presented. Certainly, having data of this nature relative to to both highlighting a clinical outcome, which is quite meaningful, as well as reduction in healthcare and health system costs are crucial knowledge points for the brand. I would say the team is first focused on ensuring we get those new data into manuscript form, and then we'll be able to think about other communications and educational efforts around these data. They certainly help further substantiate what is already an element of how and why we sell into the hospital space. So they are very nicely kind of putting a bow on top of the package we already use promotionally. So we'll see in the future if these are used in kind of more expanded fashion, if that makes sense.

So that's the exacerbation data.

Yeah, very important. And again, you know, versus teatropium to, you know, add to really the medical education efforts that we've got ongoing with upelry in both the community and the hospital. And that on ampryloxetine, the minimally clinically important difference. And yeah, this publication is important to us because you know, effectively a one-point difference for us will be in the composite score will be this kind of the minimally important difference that we need to see in Cypress. We obviously saw that in 170, and Anya can touch on the steps we've taken to make sure 170 is replicated by Cypress. So, Anya.

Yeah, so thanks, Julian. I would encourage you to take a look at the publication. It is available online. There is open access to the article. The article was based on the data that we had previously seen in 170 and 169, looking at changes in the OHSA questionnaire, which is central, obviously, also to the cipher study. And really, it was based on an anchoring analysis between changes on the scale to how patients actually felt using other scales that we've included in the study, PGIG and PGIS. We've proactively built this analysis into the CYPR study. And from what we have seen in our previous analysis, and you'll see in this publication, as Rick said, at one point change on the scale is considered clinically meaningful. You know, and our objective with the Cypress study is obviously to replicate the previous benefits that we had seen in the 170 study where we did see that level of change and believe that's clinically significant. And obviously this information is important to the overall outcome of the study and will be part of the regulatory submission. We've also had FDA review our analysis plan around the study and this anchoring analysis and feel like we're in a really good position as we move into the Cypress readout in the first quarter of next year.

Very helpful. Thank you. Thank you. And our next question comes from the line of Ellen Horst from TD Cowan. Your question, please.

Hi, guys. Thanks for taking the question and congrats on the exciting quarter and the progress in the Cypress study. My question is about Cypress. So with the open label portion complete, can you share how many patients have ultimately enrolled in the randomized withdrawal portion? And if not, can you confirm that this number is sufficient for the powering according to the original trial design? Thank you.

So as I said in my remarks, we're really encouraged with how the study has progressed and where we've landed in terms of overall enrollment numbers. While we're not sharing specific enrollment numbers today, I will say that we remain very confident in the operational execution and pleased with where we have landed in terms of accrual, but most importantly, also progression into the randomized withdrawal portion of the study. We do believe that we have randomized a sufficient number of patients for us to be able to detect a treatment difference between the two arms. Just as a reminder, the study design and the analysis plan for the CIPR study has been aligned with FDA, and we believe that we have an adequately powered study. And we'll be disclosing all the specific numbers in the context of our data readout, which is coming really soon. And we are excited about what's to come in quarter one, 2026.

And then, Ellen, just the schematics that we've outlined as part of our ongoing investor presentation on the study remains accurate relative to what we needed to achieve and what we are achieving with the study design and execution.

Thank you. That's really helpful. Okay, operator, do we have any further questions?

It appears that we do not have any further questions coming in from the operator, so I will just take this opportunity to thank you for joining on our call. Third quarter call. We're very pleased with the results this year. To date, we look forward to a very good fourth quarter and then the exciting first quarter in 2026, headlined by the Cypress data. So thank you again very much for joining and please have a good day.