Q1 2024 Earnings Summary
- YUPELRI is demonstrating significant operating leverage, with collaboration revenue growing 39% year-over-year while net sales grew 18%, indicating improved margins and profitability.
- Retail prescriptions of YUPELRI are rebounding after a temporary dip due to a cyber incident at Change Healthcare, with April data showing a rebound in total prescriptions and new starts, suggesting continued growth momentum.
- The company expects to approach non-GAAP breakeven in the second half of the year, driven by increasing YUPELRI net sales and collaboration revenue offsetting increased expenses, positioning the company well financially.
- Theravance Biopharma anticipates that operating expenses will increase slightly over the next couple of quarters due to accelerated enrollment in the CYPRESS study and pre-launch commercialization spending for ampreloxetine, which may offset the expected increase in YUPELRI net sales and delay improvements in operating margins.
- There is uncertainty regarding the sustainability of YUPELRI's retail prescription growth. The company noted that it's too early to determine if the rebound in prescriptions is due to underlying momentum or just a temporary catch-up after issues such as the Change Healthcare cyber incident.
- The company will not disclose interim data from the open-label segment of the CYPRESS study before the randomized controlled data is available, leaving investors without early indications of the trial's success and increasing uncertainty about ampreloxetine's prospects.
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Capital Allocation and Milestones
Q: How will you allocate capital as milestones come in?
A: The company is considering returning excess capital to shareholders as milestones are achieved, similar to past share repurchase programs. They are excited about YUPELRI's growth and the upcoming ampreloxetine data from CYPRESS. The board will assess capital needs, and excess capital may be returned to shareholders before ampreloxetine data, depending on business requirements. -
YUPELRI's Operating Leverage
Q: How does YUPELRI drive operating leverage for the company?
A: YUPELRI is expected to provide significant operating leverage as sales grow with a similar expense base. In the recent quarter, collaboration revenue grew 39% while net sales increased 18%, indicating improved margins due to efficiencies on the expense line. The company anticipates continued margin improvements from both sales growth and expense management. -
Approaching Breakeven
Q: When can we expect operating margins to expand from here?
A: The company expects to approach breakeven in the second half of the year. Increased YUPELRI net sales and collaboration revenue are anticipated to offset higher expenses from increased enrollment for CYPRESS and initial ampreloxetine prelaunch spending. The non-GAAP loss is expected to improve throughout the rest of the year. -
YUPELRI Script Rebound
Q: Are YUPELRI scripts rebounding after change health issues?
A: It's too early to determine definitively, but there are indications of a rebound in total prescriptions (TRx) and new starts in April. The company is monitoring the data closely to assess whether patients were lost or if it's an artifact of data capture. -
CYPRESS Data Disclosure
Q: Will you disclose CYPRESS data before randomized phase ends?
A: The company will wait until the randomized withdrawal period concludes to disclose data, as the primary endpoint is measured at the end of that phase. No interim data will be released from the open-label segment. -
Therapeutic Interchange Accounts
Q: What percentage of accounts have therapeutic interchanges?
A: Approximately 35% of accounts have therapeutic interchanges in place, primarily among nebulization accounts. The company continues to grow its base of purchasing accounts within this larger group.
Research analysts covering Theravance Biopharma.