Okay, I think we'll get started with our next presentation. Okay, I think we'll get started with our next presentation. So I'm Doug Tsao , Senior Analyst at HC Wainwright. We are thrilled to have with us Theravance Biopharma, represented by the company's CEO, Rick Winningham. A lot to ground to cover, and maybe we'll start with YUPELRI, which is your approved on-market treatment for COPD. You know, this is a product that has had sort of what I would characterize as really strong, consistent growth over the last few years, recovered very nicely coming out of the COVID pandemic, where we've seen incredibly strong performance recently, and execution on your part of your team is in the hospital channel, which you as a company are responsible for.
I think part of, you know, and obviously I think sort of really unlocking the value for the product is on the outpatient side, which your partner, Viatris, is responsible for. Obviously you both work closely. How does improving that execution around transition of care and capturing the long-term value of the patient, you know, and how can this be accomplished? What's underway? What are you thinking about? Ultimately, what do you think it would mean if you were successful?
Yeah, it's a great—it's a great question. I think, you know, the last several quarters, the hospital business has been quite strong. We've—the total YUPELRI business has also grown, but the hospital business has been growing unit volume at a faster rate, really driven by something that Rhonda Farnum highlighted in the second quarter of last year, that we were picking up more and more formulary wins. For those formulary wins, with therapeutic interchange, it really translated into strong volume growth, you know, in particular in the third quarter, fourth quarter, and then the first quarter of this year. One of the important points of the hospital growth is just the overall scale and volume of the hospital growth. There are more Viatris sales representatives, obviously, than Theravance sales representatives.
Now with the, you know, you can sort of take the unit volume of the hospital divi business, divide it by four or five, and you get an approximate number of patients really coming out of the hospital, with about 80% of those coming out of the hospital with a prescription for YUPELRI.
Now, the number of patients coming out of the hospital are getting larger and larger that really feed more directly into the Viatris commercial organization, such that the sales reps of the Viatris organization are realizing that they can grow their business by picking up these patients and making sure that the pulmonologists in that area where we have achieved, you know, a level of success with major hospitals, those pulmonologists are aware of the significant number of patients that are coming out of the hospital with prescriptions for YUPELRI, and we can transition them better. The other thing that's working better, honestly, is the sales rep to sales rep work between Theravance and the Viatris reps, even though there's a lot more Viatris reps than there are Theravance reps.
You know, our business, our representatives understand that their job is not only to be successful in the hospital, but it's to be successful in transition of care, because that's what drives the overall business long- term. You know, the data on YUPELRI in terms of its level of bronchodilation is really, it's just excellent. I mean, patients really can breathe better, whether it's in the first 30 minutes, whether it's over the day, in peak measure, as measured by peak, whether it's measured by trough, or whether it's measured by area under the curve. Regardless of the measure that you look at, you're looking at YUPELRI either as a single agent or being added to a LABA, that for the nebulized LABA for these patients, the patients being able to breathe better. That's the message that's coming across in the hospital.
That's the message that, that's coming across, that's got to come across in a stronger way in the community.
Rick, you mentioned, I think you said 80% of patients leave the hospital with a script. Are you losing that patient, for lack of a better word, on getting that initial script filled, or is it the refill, meaning that they're maybe getting that first script filled, but then at some point that continuity of care is breaking down?
Yeah, I think that, I think we, I think honestly we lose both. We lose some of them at first fill. And then, while they might get their first fill at the hospital pharmacy as they're being discharged, you know, the follow- up, you know, the follow- up through, you know, regional pulmonologists, we lose some patients there. Again, I think the two organizations are working better together in the field, such because you see the opportunity. You know, one in 10 COPD patients use nebulized care. And that's the way it's been for the last 20 or 30 years. Those patients can't use a handheld. They need a level of bronchodilation. LAMA therapy is foundational.
It's just being able to get those patients on therapy, keep them on therapy, provide the offices the necessary reimbursement support services that they need, because, you know, this product has got a long way to grow. I still think we're in the early innings, the early innings of growth. We can continue working with our partner to capitalize on the opportunity.
You know, I'm just curious when you see that breakdown, you know, what are patients ultimately getting treated? Because it's not as if they leave the hospital and their COPD goes away. Most of these patients are symptomatic. Are they going on products like Tudorza? I'm just curious, what have you seen from Ensifentrine's entry into the market, and has that had sort of any impact on the COPD landscape for you?
Yeah, I'll take Enzofentran first. The answer is really no. We don't see in general switches, you know, from YUPELRI to Enzofentran, because Enzofentran is largely being added to existing therapy for patients that really don't, you know, they don't think they have anything else to go after triple therapy. I think what do you, what do you see patients from YUPELRI, if we're losing the prescription, what are they going on? You know, they're probably going back on triple therapy. They're probably not being able to use the handheld therapy, and they're likely being round-tripped back to the hospital. I think the hospital is becoming more and more sensitive to it. Clearly, that's one of the reasons we've been successful with discharges on YUPELRI is they're trying to eliminate the round trippers.
If you, you know, if you're a COPD patient and you end up in the hospital because you've got a COPD exacerbation, you've likely had some sort of insult, or many times you're not only did, if you had an insult, like a viral insult, you're just not using your inhaler properly. Some of these patients just won't ever use a handheld inhaler properly. That's the benefit of a nebulizer. That shows up in market research is that physicians and patients are confident that the patient is getting the medicine that's prescribed, you know, not only from the pharmacy, but all the way through into their lungs.
You know, one of the things that you've talked about is sort of channel optimization and sort of how that would affect net pricing, because that was something that was disruptive probably in the second and third quarters of last year. Maybe how much progress have you made there? What do you think ultimately how long it will take to get to your end game?
Yeah, I think that we, we've slowly been working on optimizing the channel. I think our partner gets a great, a great deal of credit for that, as well as the collaboration of the two companies working to optimize price overall. I think, you know, is there still work to do? Can we still improve the general fulfillment process? And by improving the fulfillment process, potentially capture a greater price, obviously capture greater volume, but capture on the margin greater price. Yes, I think there's more work to do there. I think what you've seen coming out of the second quarter of last year is that we have been able to move price up a little bit. You know, I wouldn't, you know, it's not going to continue to go up, but at least it'll stabilize to move up slightly.
I think that's very encouraging and is the result of both the work of Viatris as well as the collaboration of Viatris and Theravance.
Rick, given the effectiveness of your, of the Theravance Salesforce in the hospital, does there come a point when you think that they are perhaps underutilized and there'd be value to have another product in their bag?
Yeah, that's a great question, Doug. We think about that, you know, all the time. I think right now that the opportunity cost of taking the focus away from YUPELRI, given the opportunity that we have, is so significant. You know, we haven't chosen to exercise that option. We still see a terrific opportunity for YUPELRI going forward in the hospital because we're really, you know, even though we've been working at this for some time, we're still slowly, we're still lowly penetrated in the hospital, and we can continue to grow the hospital business, which in turn will continue to drive the outpatient business. Right now, the opportunity cost is too great for us to turn away from YUPELRI when we're having the success that we're having and when we have the opportunity ahead of us that we have.
Perhaps sometime in the future it may be, but that isn't today.
Okay. I did want to turn to Ampreloxetine, right, which is your lead developmental stage asset, which is in phase III for treating neurogenic orthostatic hypotension in MSA patients. You had a number of presentations at the AAN meeting and the IMSA meeting. You know, how does this maybe provide your perspective on sort of what were the most significant updates and, you know, feedback that you got from clinicians in terms of how this might advance the treatment of MSA patients?
Yeah, I think a great question. The development of Ampreloxetine obviously is important, you know, to the future of Theravance. What we've seen at both the American Academy presentations as well as the International MSA Symposium of last week is just an incredible level of excitement and interest in a therapy to treat neurogenic orthostatic hypotension in MSA patients because nothing really works.
I think the, you know, what the, the opinion leaders really view Ampreloxetine as a precision medicine, a medicine that's really engineered to work in the peripheral nerves, right where the problem is to increase norepinephrine in the peripheral nerves and postganglionic nerves and to apply pressure, use that to apply pressure and increase pressure on the blood vessels to drive blood perfusion into the organ systems and improve the symptoms of nOH because for these patients, nothing really works now. I think that's the, the most exciting thing is that if we can show an improvement in the composite score, with, with Ampreloxetine, we're going to be in a market in MSA where there is no product today. There's 40,000 patients. It's a rare disease. There's not a product that treats these patients well today.
The opportunity to prescribe Ampreloxetine to these patients and make a dramatic difference in their quality of life is just terrifically exciting. I think that's what we've, that's what we've heard and that's what we've seen coming out of these presentations. Now, you know, what were the most important presentations? I think namely that, you know, in the American Academy presentation is that we didn't see an increase overall of treatment emergent supine hypertension. That makes sense. These patients at baseline have supine hypertension. They have dysautonomia, but the treatment of Ampreloxetine didn't make that supine hypertension worse. We didn't see a shift, as presented at the American Academy meeting. That makes biological sense because if the patients are laying down, there isn't that drive, neurogenic drive on to increase norepinephrine levels in the synapse.
It's just once they sit up or stand that they get that drive and they require that pressure on the blood vessels to drive perfusion into the organ system. I think clearly to, you know, reconfirm that in the, you know, in the ongoing Cipher study will be important, but it's certainly encouraging. We haven't seen it in the earlier 169, 170 study.
This lack of supine hypertension is something that distinguishes Ampreloxetine from some of the therapies that are often used off label in patients.
That's correct. The challenge with the existing therapies is that effectively you're treating them that adds endogenous norepinephrine into the system. That endogenous norepinephrine doesn't go away when the patient lays down or exogenous norepinephrine doesn't go away. It's there. That exogenous norepinephrine that's been added has no place to go. It increases the supine hypertension of these patients, putting them at further risk. You know, this is terrifically exciting for us, but the overwhelming bit of excitement, I think, is the ability to deliver a medicine with sustained efficacy as demonstrated by the composite score. We do that. We will do something that no other drug has done and provide a benefit that no other drug has provided to these MSA patients.
You know, with the phase three program, I think with the update, you're sort of getting close to the finish line on completing enrollment. You know, maybe provide some perspective on how enrollment has gone, and what I mean by that in terms of patient enrichment as well as powering for the study.
Yeah, it's a great, great question. It's a rare disease. MSA, with patients with nOH, about 40,000 in the US, similar numbers in Europe. What is particularly important for us in the execution of this study is that we, in fact, select the patients and the sites that can care for these patients all the way through the study, you know, through not only the open label portion of the study, but also the randomized withdrawal, because these patients are, you know, they have multiple system atrophy. They're not well.
We've got to get the right patients treated by the right clinicians to care for them all the way through the study such that we retain them, as many as we can, through the open label, but in particular by the time they get to the randomized withdrawal, because it's coming out of the randomized withdrawal period that in fact is where the measure of the primary endpoint is made. I'd say, you know, at least I've been developing medicines for a long time. We've paid more attention to the quality and the care of the investigators and the patients in this study than we have in any study I've ever been involved with because it's a rare disease and because it's a serious underlying condition that causes all sorts of medical issues for these patients.
You know, to the point that you're making, we've continued to refine the quality of the patients entering the study such that we can get them through the open label. There's an enrichment period at the fourth office visit where they need to show a two-point improvement in dizziness to retain in the study. That enrichment design is what you see with randomized withdrawal studies because it's not just that you want to see a patient improve, you want to make sure in this particular disease that they've got the, you know, effectively the consciousness to identify the improvement. They may be improving. Their caregivers may see them improving, but the patient, the patient by themselves may not pick it up because of an underlying condition. That's the critical element of the enrichment.
We get a lot of pain. Obviously, most of the patients go through enrichment and then into the randomized withdrawal.
I guess, you know, you've sort of significantly reduced your cash burn, right? Which has been accomplished through sort of some restructurings engaged by the company as well as, you know, YUPELRI growing. How should we think about the launch of Ampreloxetine and the near-term impact on your P&L and maybe help people understand the scale of the commercial investment that will be needed?
Yeah, the benefit, you know, a lot of benefits of the commercialization of rare disease products and, and in particular in a condition MSA with nOH is we know today, based on analysis of claims data where the patients are for commercialization, we know how to design and structure an integrated team of sales, medical reimbursement support. We will be able to do this in a very efficient way. We've got the cash flow today from YUPELRI that is, you know, that's right now funding the, funding the Ampreloxetine phase III program. We've got $130 million on the balance sheet. We've got a potential for another $150 million of Trelegy milestones coming in, as well as a potential for a $25 million milestone if we hit $250 million on YUPELRI this year.
We're very well capitalized, but at the same time, we're very, very focused on designing a commercialization plan for Ampreloxetine that is highly efficient, that makes the most use out of every dollar that we have. Right now we're spending a minimal amount of money on pre-commercial activities. Obviously, once we have data, that will begin to go up a little bit. Obviously, once we get approval, you know, we'll go from there. I think if I had to underscore one point about the launch of Ampreloxetine, it would be efficiency because we know where the patients are.
I did want to touch on Trelegy because, you know, it has become a great source of capital to you, given the fact that the product has just, you know, continued to exceed expectations. You know, how should we think about the sort of long-term potential and your perspectives and how you're thinking about when royalties sort of revert back to the company? And how should we think about the tail? Just because I think, you know, oftentimes investors are sort of quick to sort of think about a product at LOE and sort of its rapid decline, but I think there's reason to be skeptical whether that will occur with a triple combination like Trelegy.
Yeah, I think it'll be very difficult to recreate Trelegy as a, you know, as a multi-source product because the Ellipta device itself is complex and, you know, the ability to design a device and commercialize it at scale is just an incredible order. The fact of what you're seeing now with Trelegy, you know, it, the product has just performed incredibly well in both asthma and COPD. I think what was largely probably underappreciated is how well this product could do in asthma. It's been continuing to grow. The royalties, as you say, come back to us, Doug, in 2029 outside the United States in the middle of 2029 and the beginning of 2031 in the U.S.. You know, the product is pretty heavily discounted now.
The impact of, you know, any further discounts from the IRA certainly could be, you know, they may be there, but they could be modest given the level of discounting. We continue to see a pretty bright future for YUPELRI, yes, but Trelegy, for a long period of time because there just does not look like there is going to be anything that really comes in and replaces the Trelegy product as a product in both asthma and COPD.
Just one final one, you know, the company between Ampreloxetine, Trelegy, as well as YUPELRI sort of have the potential for bringing in significant cash flows. I'm just curious how you're thinking about returning excess cash to shareholders. You've done some, you've done share buybacks versus perhaps starting to reinvest in the pipeline again, just because you are a biotech company. People often evaluate you through sort of your ability to innovate.
Yeah, I think, you know, another good question. I think our focus today is on the Ampreloxetine program for future growth because quite, you know, that changes the entire perspective of the company. I think the ability to get the product approved, to execute successfully a commercial strategy with Ampreloxetine can drive, you know, drive the value of the company. We are in a position where we have more opportunity for choices than we do today. We have said today that we are going to return excess capital to shareholders if we have it. We intend to do that. You know, to the extent right now, our focus is on the success of YUPELRI, continuing to drive the partnership with Viatris and the successful development of Ampreloxetine.
That is where our focus, that is where our resources are going. And with success with Ampreloxetine, that creates a lot of opportunity for us.
Okay, great. Rick, I think that is it. We're out of time. We'll wrap it there. Thank you very much.
Thanks so much, Doug. Thank you, HC Wainwright, for inviting us to the conference. Appreciate it.