Theravance Biopharma - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 revenue was $26.2M, up 84% YoY and 70% QoQ, driven by Viatris collaboration revenue ($18.7M, +31% YoY) and a $7.5M China approval milestone; GAAP diluted EPS was $1.08 due to a $75.1M gain on the sale of Trelegy royalty interests to GSK.
• YUPELRI U.S. net sales (recognized by Viatris) reached $66.3M (+22% YoY), with hospital doses +31% YoY and a one-time favorable net price adjustment; customer demand +4% YoY.
• Management reaffirmed 2025 guidance: R&D $32–$38M (ex-SBC), SG&A $50–$60M (ex-SBC), SBC $18–$20M; non-GAAP operating loss and cash burn similar to 2024; ended Q2 with $338.8M cash and no debt.
• Wall Street consensus (S&P Global) for Q2 2025: revenue $26.03M vs actual $26.20M (slight beat); Primary EPS $0.674 vs actual Primary EPS -$0.084 (normalized miss, driven by exclusion of non-recurring items)*.
• Near-term catalysts: completion of Phase 3 CYPRESS enrollment “late summer” with topline ~6 months later, and potential Trelegy milestones ($50M in 2025, $100M in 2026) from Royalty Pharma.

What Went Well and What Went Wrong

What Went Well

• YUPELRI momentum: U.S. net sales $66.3M (+22% YoY); hospital doses +31% YoY; pricing/channel mix improvements, plus one-time favorable net price adjustment.
• Strategic balance sheet actions: $225M cash from sale of remaining Trelegy royalty interest; quarter-end cash $338.8M; no debt.
• Ampreloxetine execution: CYPRESS Phase 3 enrollment on track to complete late summer; advancing NDA modules and seeking priority review; quote: “We enter the second half of 2025 with momentum and a clear focus on ampreloxetine”.

What Went Wrong

• Normalized profitability remained negative on core operations: Q2 non-GAAP net loss from operations of $(4.2)M (improved YoY but still loss).
• SG&A increased YoY to $18.4M (from $17.1M) reflecting pre-launch medical/commercial spend on ampreloxetine; R&D increased to $10.5M with enrollment nearing completion.
• EPS normalization gap vs consensus: S&P “Primary EPS” actual -$0.084 vs consensus $0.674, reflecting exclusion of non-recurring licensing and Trelegy gain; potential for estimate confusion among investors*.

Transcript

Operator (participant)

Ladies and gentlemen, good afternoon. I'd like to welcome everyone to the Theravance Biopharma Second Quarter twenty twenty five 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. If listening via webcast, I will repeat these instructions after management completes their prepared remarks.

Also, today's conference is being recorded. And now I would like to turn the call over to Rick Winningham, Chief Executive Officer. Please go ahead, sir.

Rick Winningham (Director & CEO)

Good afternoon, and welcome to Theravance Biopharma's Second Quarter twenty twenty five 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 such 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 Farnam, Chief Business Officer, Anya Miller, Head of Development and Aziz Salaf, Chief Financial Officer. And turning to slide four, we delivered an excellent quarter underscored by disciplined execution across our commercial and development organizations, drove continued momentum in both YUPELRI and Ampreloxetine. In addition, we completed a high impact strategic transaction.

This performance reflects a team that sharply focused on delivering value to our stakeholders. Starting with our commercial business, YUPELRI, our durable cash generating product continues to perform. Net sales for the quarter reached approximately $66,000,000 driven by continued demand growth and favorable net pricing with strong pull through performance in the hospital channel. In addition, YUPELRI received approval in China, triggering a $7,500,000 milestone payment. We also completed the $225,000,000 sale of our remaining royalty interest in Trelegy to GSK, a transaction that significantly strengthens our balance sheet and represents the first major outcome from our strategic review committee's efforts to unlock shareholder value.

Trelegy's strong second quarter performance further increased the likelihood that we will receive the remaining $150,000,000 in milestones from Royalty Pharma over the next eighteen months. And turning to Ampreloxetine, I'm pleased to report that the Phase three Cyprus trial continues to progress well, designed specifically to replicate the study 170 MSA pre specified subgroup Cyprus remains on track to complete enrollment in the open label portion over the next couple of weeks. And we expect to report top line data approximately six months after. The quality of execution and engagement from investigators, patients and advocacy groups has been exceptional. Given that multiple system atrophy or MSA is a rare disease with no proven therapies specifically for neurogenic orthostatic hypotension or nOH, We believe this program has the potential to bring great value to patients and shareholders.

We ended the quarter with approximately $340,000,000 in cash and no debt. Our operations remain near cash neutral. Theravance has a clear and compelling profile, a strong balance sheet enhanced by visibility into significant near term milestone payments, a growing profitable commercial asset, and on top of that, the potential for a transformative near term catalyst based on the Cypress data readout. We enter the 2025 with clear momentum and look forward to completing enrollment in Cypress and sharing top line data. We're in a strong financial position and together with the strategic review committee, we continue to evaluate a range of opportunities to enhance shareholder value and remain committed to capital discipline and returning excess capital.

And with that, I'll turn the call over to Rhonda to provide additional detail on YUPELRI's performance.

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Thanks Rick. If you turn to slide six, you'll see that the Theravance Viatris commercial partnership delivered another strong quarter of YUPELRI performance. Second quarter net sales increased 22% year over year to $66,300,000 our highest Q2 results since launch. That growth was driven by three key elements. First, solid demand growth up 4% versus 2024 and five percent sequentially from 2025.

Second, continued net price improvement supported by pricing discipline and a favorable channel mix. And third, a one time favorable adjustment to net pricing in the quarter. It's worth noting that even without the non recurring pricing benefit, we would have still delivered a mid teen year over year net sales growth in Q2, underscoring the product's strong and sustained growth trajectory. Importantly, these results increase our confidence in achieving the $250,000,000 calendar year sales threshold required to trigger a $25,000,000 milestone payment. Turning to slide seven.

In addition to the strong net sales growth in the quarter, YUPELRI continued to experience expanding profit margins and strong momentum across both hospital and community outpatient channels. The hospital channel remains a critical differentiator and a key driver of prescribing for the brand. Notably, hospital volume increased 31% versus 2024, reflecting our team's sustained success in securing formulary wins and implementing therapeutic interchange protocols. In Q2, YUPELRI's long acting nebulized market share in the hospital reached a new launch to date high of approximately 20%. Hospital performance continues to serve as a foundational component of our strategy functioning as a key entry point for transitioning patients to community outpatient maintenance therapy care.

I would also like to call attention to the recent approval of YUPELRI by China's National Medical Products Administration in June. The approval triggered a $7,500,000 milestone payment and importantly, Beatrice will lead launch and commercialization efforts, meaning Theravance will incur no commercial cost. Given the recent approval and that Beatrice is still finalizing the commercialization plan, We will not be providing guidance on formal launch training, launch timing at this stage. We'll share additional updates in future calls as the addresses plans continue to take shape. Looking ahead, market research continues to point to a sizable remain addressable patient population in The U.

S. Our aligned strategies with the address promoting concomitant use with nebulized lavas and converting appropriate handheld patients are gaining traction. Enhancements and fulfillment, adherence and persistency further reinforce YUPELRI's durable growth profile. With the prospect of a $25,000,000 near term U. S.

Sales milestone for achieving $250,000,000 in calendar year net sales and patent protection into 02/1939, we believe YUPELRI is well positioned to deliver long term sustainable value for Theravance and our shareholders. With that, I'll turn the call over to Anya to provide an update on the Ampreloxetine development program. Anya?

Aine Miller (SVP - Development & Head of Ireland Office)

Thanks Rhonda.

Let me begin with an update on the PIPERES Phase three study. We are now very close to completing enrollment. With strong traction across our study sites over the last quarter, we are wrapping up screening activities and will close enrollment to the open label portion of the study in the next couple of weeks. This milestone will mark a pivotal moment in our development program, and we are incredibly encouraged by the high quality execution that has brought us here. As we approach the end of enrollment, we are energized by the momentum we have built and are optimistic about the potential of this trial to deliver a meaningful outcome for patients with multiple systems atrophy or MSA.

This optimism is rooted in two core strengths. Firstly, the precision of ampreloxetine's mechanism of action, and secondly, how we have designed and are executing this study. Moving to slide nine, I want to remind you why we believe this molecule is particularly well matched to the pathophysiology observed in patients with MSA who experience neurogenic orthostatic hypertension or nOH. Generally, these patients with autonomic dysfunction have a distinct profile. While their central autonomic pathways are impaired, their peripheral neurons remain relatively intact.

Ampreloxetine is a highly selective norepinephrine reuptake inhibitor designed to increase synaptic norepinephrine concentrations. By leveraging preserved peripheral sympathetic function, it is intended to enhance vasoconstriction, improve blood pressure, and alleviate symptoms of nOH. This tailored mechanism has been supported in our previous trials in the pre specified MSA subgroup analysis from our earlier REDWOOD study, also known as Study 170, patients on ampreloxetine demonstrated durable improvements in symptom burden and daily function, while those withdrawn to placebo experienced a clear loss of benefit, including a drop in standing blood pressure and worsening of symptoms. Importantly, ampreloxetine was not associated with worsening of supine hypertension, potentially a key differentiator versus existing therapies, thanks to its targeted and physiologically attuned mechanism. Moving now to slide 10.

Cyprus was designed in collaboration with FDA to confirm the benefits observed in Study 170 in a larger population of patients with MSH. Like Study 170, Cyprus uses a randomized withdrawal design and intentionally includes an enrichment strategy, allowing us to identify patients who show clear symptom benefits during the open label phase and progress only those individuals to the critical randomized withdrawal phase. This gives us high confidence that we are measuring the drug sustained efficacy in a population most likely to benefit and therefore optimize our ability to detect worsening of symptoms when they are taken off and proloxetine. We applied key learnings from Study 170 to refine the design of Cyprus, while ensuring consistency in enrollment and enrichment criteria in both studies. As a result, we believe we have optimized the probability of success for the PIPER study.

We also remain focused on strong and high quality execution. We partner closely with leading MSA centers of excellence and academic institutions known for their high touch approach to care and best equipped to manage patients through our study. Our teams have maintained an unwavering focus on ensuring we enroll the right patients at the right sites. As with Study 170, we are utilizing an external enrollment committee comprised of the same clinical neurologists to review every patient enrolled. This continuity ensures consistent application of the enrollment criteria across both studies and provides an independent review of a diagnosis of MSA.

Also, by managing this study directly, we are uniquely positioned to apply real time operational oversight and foster high levels of engagement with our sites. Additionally, we have taken a proactive approach to educate our sites about patient retention strategies through the randomised withdrawal period and managing variability throughout the duration of the study. Looking ahead now on slide 11, we're also executing on NDA readiness in parallel. With modules already in advanced stages of drafting, we are preparing for an expedited submission should the readout be positive. As filing, we intend to submit an application to support a full approval and also intend to request priority review to further accelerate potential approval and access.

In summary, we believe Sypris is positioned well to deliver Through its smart design, high quality execution, and a mechanism of action biologically tailored to NSA, we are advancing what we believe could be the first precision therapy in autonomic neurology for a community with high unmet need. I will now hand the call back over to Rhonda to discuss the commercial opportunity for ampreloxetine. Rhonda?

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Both Rick and Anya have emphasized, we're approaching a pivotal moment for Theravance as we anticipate the upcoming Cypress results. From a commercial perspective, our excitement comes not only from the potential impact of the data, but also from the substantial market opportunity with prelaunch activities already underway. We believe there is a meaningful commercial opportunity for Ampreloxetine to stand apart in the space with high unmet need. Today, no approved treatments offer both meaningful efficacy and durable benefit for and patients with MSA. In fact, sixty five percent of patients remain symptomatic, despite currently available treatments such as Mitadrain and Droxydopa, which are often limited by a short duration of action, frequent dosing requirements and box warnings for supine hypertension.

Ampreloxetine is uniquely positioned to address these limitations, offering the potential for once daily oral dosing, durable symptom relief and a well tolerated safety profile is demonstrated in the Redwood study and now being further evaluated in the ongoing Cypress study. We estimate an addressable population of approximately forty thousand patients in The U. S. With a clear need for better options. In parallel with study completion, we're advancing key activities across stakeholder engagement, market access and launch readiness.

With focused execution across key commercial and medical work streams, we are preparing to deliver a transformational therapy for this patient community. And with that, I'll turn the call over to Aziz to walk through the financials. Aziz?

Aziz Sawaf (SVP - Operations & Strategy and CFO)

Thanks Rhonda. Starting on slide 14, I'll begin with an update on our Trelegy milestones. With GSK delivering another strong quarter, our outlook on achieving these milestones is stronger than ever. In Q2, GSK reported an all time high of $1,100,000,000 in sales, exceeding consensus and bringing year to date sales to approximately $2,000,000,000 an 8% increase year over year. This performance puts us firmly on track to exceed the $3,400,000,000 annual sales threshold in 2025, which would trigger a 50,000,000 milestone payment.

With the brand's annualized run rate now above 4,000,000,000, we remain confident in achieving this milestone as well as the additional 100,000,000 milestone in 2026 where 3,500,000,000.0 in annual sales is required. In total, that represents $150,000,000 in high probability milestones over the next eighteen months, further strengthening our financial profile. Turning to slide 18 and our Q2 financial highlights, where we came in favorable to expectations. Collaboration revenue grew 31% year over year driven by continued YUPELRI net sales growth, leading to improved brand level profit margins. Note that even excluding the one time benefit to pricing that Rhonda mentioned, collaboration revenue would have been over $17,000,000 still favorable to consensus.

We also recognized as part of license revenue a one time 7,500,000 milestone following YUPELRI's regulatory approval in China. R and D and SG and A operating expenses were in line with expectations. R and D reflected near complete Cypress enrollment and NDA related activities. SG and A increases were tied to ampreloxetine prelaunch commercial and medical affairs activities. Share based comp decreased 16% year over year reflecting continued cost discipline.

Related to the Trelegy royalty sale, we recognized $75,000,000 of other income. Note that under our accounting guidelines, the total $225,000,000 upfront was reduced by approximately $145,000,000 which was already recognized in prior periods. Non GAAP losses improved to $4,200,000 compared to $6,300,000 in prior year, excluding one time items. We ended the quarter with approximately $340,000,000 in cash. Excluding large one time items, cash burn for the quarter was approximately $3,000,000 highlighting strong cash management.

Looking ahead, we expect to pay approximately $27,000,000 in taxes related to the TRELEGY royalty sale in the second half of the year. These taxes were fully accrued in Q2 and will not impact the P and L going forward. On slide 19, we are reaffirming all elements of our 2025 financial guidance. That said, excluding the impact of one time milestones and taxes, in other words, focusing on recurring operations, we expect both non GAAP losses and cash burn to improve in the second half compared to 2024. This reflects improvements in underlying business performance and continued cost discipline.

To summarize, we delivered a strong quarter of financial results and now anticipate a stronger second half than previously expected, creating a solid financial foundation as we approach the upcoming Cypress data readout. With that, I'll turn it back to Rick to conclude. Rick?

Rick Winningham (Director & CEO)

Thanks Aziz. In summary, Theravance enters the second half of the year with clear momentum approaching a transformational catalyst in the Sypris data readout. We're operating from a position of financial strength and executing at a high level across both our R and D and commercial organizations. YUPELRI continues its profitable growth. The sale of our remaining Trelegy royalty interest significantly bolstered our financial position and with up to $175,000,000 in potential milestones remaining between TRELEGY and VUPELRI, we continue to see substantial value ahead.

Ampreloxetine remains our most important driver of potential upside and we are now a couple of weeks away from completing enrollment in the open label portion of the Cyprus study. We are confident that Cyprus is well positioned to confirm the meaningful benefit observed in the pre specified MSA subgroup of our prior Redwood study. This program has been executed with discipline, quality and conviction. And if successful, we believe ampreloxetine could redefine standard of care in this rare neurogenic condition where no proven therapies exist today for patients with and MSA. In summary, Theravance is focused well capitalized and advancing towards a pivotal inflection point with a profitable commercial business, a strong balance sheet and a late stage rare disease neurology focused development program that is nearing a critical milestone.

We're excited and well positioned to drive meaningful value for patients and shareholders in the months ahead. With that, we'll open the line for questions. Operator?

Operator (participant)

Thank you, sir. Once again, if you would like to ask a question, you may do so by pressing 11 on your touch tone telephone. If listening via webcast, please mute audio on your webcast device before asking a question over the phone. If you're using a speakerphone for today's call, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one one if you would like to ask a question.

We will pause a moment to assemble our roster. Our first question is going to come from the line of Douglas Tsao with H. C. Wainwright. Your line is open. Please go ahead.

Douglas Tsao (Managing Director)

Hi, good afternoon and congrats on the progress. I guess starting with YUPELRI, I guess Rhonda, there were comments about sort of better pull through this quarter. I'm just curious what you attribute that to. And then also on YUPELRI, I'm just curious, you know, we've obviously made some progress in terms of sort of optimizing or improving the channel mix to improve pricing. I'm just curious if you think about what sort of a realistic optimal channel mix, how far away are you from that and how, you know, is it realistic to get there and how long might that take to get? Thank you.

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Thanks for the question, Doug. On the first note, continuing to improve the pull through that certainly is related to that move of volume that continues to move over to specialty pharmacy. And with that, I would say, why that continues to help the support of the pull through is certainly driven by two aspects. One, the pricing in that channel, but more importantly, the persistency and the support patients receive. So, not only is fulfillment improved, but also persistency is much greater when fulfillment occurs in that space as far as how much more to move and how quickly, we still continue to believe it's very important to ensure patients and healthcare providers have whatever option they feel is best for their individual needs.

So keeping that open network still remains a strategic focus. However, ensuring that there's proper education to help clinicians make the best decision based on the patient needs. That will be first and foremost the priority.

Douglas Tsao (Managing Director)

And Rhonda, I guess in terms of the specialty pharmacy and that sort of persistence, is that just sort of the typical services that specialty pharmacies provide in terms of reminders on refills and so forth?

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Yes. And dedicated outreach, dedicated personnel for follow-up. So as you can imagine, that certainly is far better served relative to conventional retail pharmacy.

Douglas Tsao (Managing Director)

Okay, great. Thanks. I'll stop by.

Rick Winningham (Director & CEO)

Yeah, just to kind of finalize Rhonda's comments, which I also think that the transition of care work hospital to home is also improving and certainly channel mix specialty pharmacy facilitates some of that work as well as the ability for patients to choose what works best for them.

Douglas Tsao (Managing Director)

Okay, great. Thank you very much.

Operator (participant)

Thank you. And one moment for our next question. Our next question comes from the line of Julian Harrison with BTIG. Your line is open. Please go ahead.

Julian Harrison (Managing Director)

Hi, thank you for taking my question. Let me add my congrats on all the recent progress. On YUPELRI in China, I'm curious if you could talk about the outlook for near term growth. Can you remind us of the longer term market opportunity there as well? And regarding Cypress, are you able to comment now on how U.

S. Versus ex U. S. Enrollment has been trending? And when open label enrollment is expected to be confirmed later this summer, should we expect any disclosure of baseline characteristics around that time or is that something being safe for top line disclosure?

Rick Winningham (Director & CEO)

Rhonda, you want to take YUPELRI and then we'll come back to Anya on the Cypress questions from Julian.

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Yes, thanks, Julian. As I highlighted in the earlier commentary with Beatrice taking the lead and frankly, the ownership of the China market, we're going to leave the additional comments based on the market plan, the full launch plan itself to when they unveil that. So my comments are really limited at this stage.

Rick Winningham (Director & CEO)

Anya, Cyprus?

Aine Miller (SVP - Development & Head of Ireland Office)

Julian, so to your first question in terms of ex US versus UX split, we have many of the same sites that we've included in the previous 170 study. So, overall, we expect the split in the profile to look very similar. And with regard to disclosure in advance of top line readers, obviously the pivotal data is on the endpoint is at the end of that randomized withdrawal period. So, our plan at the moment is to disclose all data as top line readout.

Rick Winningham (Director & CEO)

Very helpful. We will, Julian, a press release when we reach the full enrollment of the open label portion of the study.

Julian Harrison (Managing Director)

Got it. Thank you. That's helpful all around. Congrats again.

Operator (participant)

Thank you. One moment as we move on to our next question. Our next question comes from the line of Deepanjana Chatterjee with Jones. Your line is open. Please go ahead.

Debanjana Chatterjee (VP)

Hi, thanks for taking my question and congrats on the quarter. I had a question regarding on how you would think about pricing Ampreloxetine. I know we are still a little far from the top line data, but it would be helpful if you could share your thoughts on the pricing of the drug and if Northera and its usage, it's a good benchmark.

Rick Winningham (Director & CEO)

Rhonda, you take that?

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Thank you for the question and it's a very important one. To your point, it's still a little bit early to really reflect on a very narrowed view on what the price will be. But I will say, harkening back to some commentary from our last opinion leader event for Ampreloxetine. We did an analysis at looking at rare neuro drug launches and across the average of the most recent 10 launches to try to gauge what an average price would be. And that was roughly $380,000 per year.

So that can give you a sense of what is occurring and the rare disease space as a reference to and looking at their higher strength costs on an annual basis. That is roughly $280,000 a year. So hopefully that can help you appreciate some of the dynamics that will be taken into consideration for our pricing work that will occur once we have data from the Cypress study.

Debanjana Chatterjee (VP)

That's very helpful. And then a quick follow-up. On The US or an ex US dynamics, in terms of reimbursement and payer perspective, are there any differences between U. S. And ex U.

S? And do you expect any pushback given there are generics out there, although less effective and with peer side effects?

Rick Winningham (Director & CEO)

Rhonda, do you want to take that?

Rhonda Farnum (Chief Business Officer, SVP - Commercial & Medical Affairs)

Sure. I'll comment more so on their vast differences and to really even say U. S. Versus ex U. S.

I think that's even too broad. So I'll focus on US given that's where our launch focus is. We are already actively engaging payers and I think it's very important to ensure they appreciate the value of being educated about the disease itself as well as the very high unmet need. And they've reacted very enthusiastically to wanting to learn about this important underserved patient population. What's important to them is appreciating the data once we have the data and really what the durability will be offered for these patients given that is an unmet need currently with existing therapies as well as the safety profile, which will be critically important.

Rick Winningham (Director & CEO)

The other point would add to Rhonda's, points are simply the endpoint that we're using here, which is the, which is the OHSA composite score, which is an overall, endpoint, containing a number of different symptoms on the overall well-being of patients. And I think this is, you know, this is quite important for describing the impact, that the, that the product has on the overall life, the quality of life, of the patient and the patient's ability to interact and, you know, quite honestly live live a life that's not, restricted or as restricted by bad, time and bad. So we're very excited by the early, perspectives of payers. And then also, it's important to underscore, the endpoint here being the OHSA composite score as being very distinct from something like dizziness alone.

Debanjana Chatterjee (VP)

That's helpful. Thank you so much.

Operator (participant)

Thank you. And one moment for our next question. Our next question comes from the line of Ellen Horst with TD Cowen. Your line is open. Please go ahead.

Ellen Horste (Equity Research Associate)

Hi, guys. Thanks for taking the question and congrats on the quarter. I'm wondering if you can speak to the pace of SG and A increases that you expect would be associated with ampreloxetine sales build out between both now and the data, and then how that might change on the back end of the data if the data is positive?

Aziz Sawaf (SVP - Operations & Strategy and CFO)

Yeah, sure, I can take it. So I think if you're talking about this year, if you look into the second half relative to Q1 and Q2, I don't expect the SG and A number increase at all. It should be pretty stable versus at least Q2 and even Q1. So we have been spending a little bit on pre launch commercial and medical affairs related activities, as Rhonda was previously describing. Not a whole lot, but a little bit.

We expect that to be kind of stable throughout the year. So you will not see a meaningful increase in SG and A between now and the Cypress data readout. We are maintaining as much conservatism as possible while still pushing as much value into the brand as possible prior to the data readout. So stable through now until the data readout. Post data readout, we're still working through what that would look like.

Obviously, we don't provide guidance until next year, so you'll have to stay tuned in terms of the exact numbers. But obviously, if positive, there's inflection point, and we will be increasing SG and A spend through next year into launch. In terms of magnitude, as Rhonda and Rick have mentioned previously, we are looking at a targeted launch. So you're not talking about huge levels of incremental spend, but there will be incremental spend as part of the launch preparation.

Rick Winningham (Director & CEO)

Yeah, just to add to what Aziz has provided a nice summary as to where we are. I think it is very important to understand that with 40,000, patients with MSA and Oh and the targeting, that that this really permits us to do of understanding where those patients are and what we, need to do, in the in the advent of a Cypress, good Cypress data and approval to, support, the offices that treat, and the physicians that treat these patients. And I think, all the data that, that we have will allow us to be extremely focused on SG and A spend with regard to the marketing of Ampreloxetine.

Ellen Horste (Equity Research Associate)

Thanks. That's very helpful.

Operator (participant)

Thank you. And one moment for our next question. Our next question comes from the line of David Risinger with Leerink Partners. Your line is open. Please go ahead.

David Risinger (Senior Managing Director, Biopharma)

Yes, thanks very much. I have a few questions, please, and congrats on the very strong financial performance. So with respect to the Viatris collaboration, so the revenue grew 31% on a 22% YUPELRI net sales increase. Should we expect continued operating leverage in coming quarters with collaboration revenue growing higher than YUPELRI sales? So that's the first question.

And then with respect to ampreloxetine, I believe the Phase III trial's primary endpoint is a longer duration primary endpoint than previously studied. If you could just talk about that and whether you think that will or how that may impact the results versus results that have been previously reported. Meaning, as patients stay on drug longer, do they have any tachyphylaxis? Do they might improve more over an extended a more extended period of time? Any perspective would be helpful. Thank you.

Rick Winningham (Director & CEO)

Zees, you want to take on the, operating leverage question of YUPELRI and then we'll go to Anya for the Ampreloxetine analysis.

Aziz Sawaf (SVP - Operations & Strategy and CFO)

Yeah, thanks David for the question and good observation. Obviously, collaboration revenue growth was a good amount higher than the net sales growth, 31% versus 22%. As you probably know, the difference between the collaboration revenue and simply 35% of the profit is the netting of the reimbursement between the two companies related to the cost. But going forward, I don't expect it to kind of continue to be that significant of a gap between the collaboration revenue and the net sales growth, because I think that the costs are going to be relatively stable. The costs just do sometimes bounce around quarter to quarter.

So it just so happens this quarter was a little bit lighter. But I don't expect there to be a meaningful gap going forward between the collaboration revenue growth and the net sales growth?

Rick Winningham (Director & CEO)

David, we are able to get some leverage as you point out on the P and L from the nature of our work and efficiency. But I think continued increases in leverage as Aziz pointed out is one probably shouldn't expect that. So, ampreloxetine, Tanya?

Aziz Sawaf (SVP - Operations & Strategy and CFO)

Rick, just on the YUPELRI comments, what I was describing was just the difference in growth rate between the collaboration revenue and sales. If you're talking about a profitability perspective, we do expect increased profit margin as the net sales growth, because as the costs stay flat, but the net sales increase, the margin continues to expand. So from a profit margin perspective, I do expect continued increases to the profit margin as the net sales increase. Go ahead, Rick.

Rick Winningham (Director & CEO)

Yeah, Cyprus?

Aine Miller (SVP - Development & Head of Ireland Office)

David, Thanks for the question. So, you're correct in terms of the primary endpoint in Cyprus is the OHSA composite score and durability of effect is really central to the design of Cyprus. And what we've seen previously in 01/1970 was a durable benefit, which is very different to what others have seen in this space in terms of benefits. So, other approved drugs have not shown the benefits beyond two weeks. So, we're really hope that durability is gonna be a key differentiator for us.

And in the Cyprus study, what we hope to see randomized withdrawal for Cyprus is eight weeks long, is for the patients that stay on ampreloxetine that we continue to see stability in the benefits that we've seen over the open label period, and those then taken off ampreloxetine would worsen during that eight week period. So that's our expectations and rightly durability being the central theme to that randomized withdrawal design.

Rick Winningham (Director & CEO)

And then David, on your comment on tachyphlexes, it's important to important to understand as Anya sort of pointed out in terms of mechanism, know, ampreloxetine is a reuptake inhibitor. So we're blocking the reuptake of norepinephrine. It isn't an agonist per se, so we're not adding additional norepinephrine from an exogenous perspective into the system. We're just blocking the naturally occurring norepinephrine that occurs, you know, in the synapse. We're keeping it there longer So that in fact, the exertion enables increase in blood pressure that is measured overall by the individual symptom score of the composite.

David Risinger (Senior Managing Director, Biopharma)

Great, thank you.

Operator (participant)

Thank you. It appears we have no further questions. I would now like to hand the conference back to Mr. Winningham. Please go ahead, sir.

Rick Winningham (Director & CEO)

Yeah, operator, thank you very much. And I'd like to thank everyone for joining us today as we reported our second quarter results. We're obviously very excited about the performance in the second quarter, and we're very excited about, what the future brings for Theravance across our portfolio. So, thank you very much, and we look forward to bringing you further updates, as the year progresses.

Operator (participant)

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