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Theravance Biopharma Inc (TBPH -3.36%)
Q4Â 2018 Earnings Conference Call
Feb. 26, 2019, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to the Theravance Biopharma 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. (Operator Instructions) Today's conference call is being recorded. And now, I'd like to turn the call over to Alex Dobbin, Head of Investor Relations. Please go ahead.
Alexander Dobbin -- Head of Investor Relations
Great. Thanks, Jonathan. Good afternoon, everyone. Thank you for joining our conference call and webcast to discuss our fourth quarter and full-year 2018 financial results and business outlook. Joining us are Rick Winningham, Chief Executive Officer; Brett Haumann, Chief Medical Officer; and Jessica Stitt, Vice President of Finance.
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'll direct your attention to Slide 3 and hand the call to Rick.
Rick E Winningham -- Chairman and Chief Executive Officer
Thanks, Alex. Good afternoon everyone and thank you for joining us. We entered 2019 with great momentum in pursuit of our strategy to discover, develop and commercialize, transformational organ-selective medicines with the potential to optimize both safety and efficacy in patients with single organ diseases. This represents a highly differentiated approach versus systemic agents.
2018 was a very productive year on all fronts. In February of last year, we entered into a global collaboration with Janssen for TD-1473, our oral gut-selective pan-JAK inhibitor in development for the treatment of inflammatory intestinal diseases. Following completion of the Phase 1b study in patients with active ulcerative colitis and after consultation with regulators on study designs, 1473 progressed toward a registrational Phase 2b/3 study in ulcerative colitis and a Phase 2 study in Crohn's disease.
In August, we announced positive four-week results for ampreloxetine in treating patients with neurogenic orthostatic hypotension including evidence of durable improvements in their key symptoms, laying the groundwork to engage with regulators on the design of the registrational Phase 3 program and that Phase 3 program is now under way.
In November, we and our partner, Mylan, achieved FDA approval for YUPELRI, the first and only approved once-daily, nebulized bronchodilator as maintenance treatment for patients with COPD and formal launch efforts are now under way. 1473, ampreloxetine and YUPELRI are our priority programs in 2019. 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 benefits to patients, caregivers and payers.
At our R&D Day in December, we shared our innovative research and development strategy of organ-selective medicines. Our approach is designed to enhance the therapeutic index beyond that of conventional therapies in diseases that affect single organs. As shown on Slide 4, we address the value of organ-selective medicines in targeting the organ of interest while avoiding the potential pitfalls of systemic distribution of a potent medicine throughout the body.
Specific to the JAK-STAT pathway as noted on Slide 5, we highlighted the significant challenge of designing JAK inhibitors truly selective to sub-type because of the pairing of Janus kinase sub-types that occurs within the system. We described our expertise in the discovery of organ-selective medicines and our integrated R&D function which leverage deep institutional knowledge and expertise in respiratory GI, medicinal chemistry, drug metabolism and immunology.
Using 1473 as an example on Slide 6, our research vision of organ-selective medicine seeks to target the organ of interest, optimize the local activity of the molecule, and minimize its systemic effect, potentially allowing us to provide higher local tissue concentrations and efficacy than what might otherwise be possible via systemic delivery. Another of these potential medicines, TD-8236 are novel, lung-selective inhaled pan-JAK inhibitor is currently in Phase 1 studies that includes patients with asthma and has the potential to be the first inhaled non-steroidal anti-inflammatory for moderate to severe asthma regardless of Th2 phenotype.
Turning to Slide 7, individually, each 2018 accomplishment represents an important step in accomplishing the goal of delivering transformational medicines. Taken together, we seek to advance Theravance Biopharma as a strong patient-focused biopharmaceutical company, creating and advancing a portfolio of therapeutically differentiated and commercially compelling medicines, reaching key inflection points and delivering on our milestones. Contributing to the progress of our own business is the royalty stream flowing from GSK's trilogy TRELEGY ELLIPTA, which continues its impressive sales trajectory as the only approved once-daily triple therapy in COPD and we await the results of the Phase 3 CAPTAIN study in asthma in the first half of 2019.
Following the recently completed non-dilutive, non-recourse note financing tied to our economic interest in TRELEGY ELLIPTA, we entered 2019 in a strong cash position. Looking ahead, we remain focused on ensuring that the commercial efforts of Theravance Biopharma and Mylan on YUPELRI continue to gain traction, accelerating our enrollment rates in the ampreloxetine and 1473 clinical programs as more countries and sites are approved for participation and advancing earlier stage programs into the clinic. We are looking forward to an exciting and productive period over the next 12 months to 24 months in delivering value to our stakeholders. And now I'd like to ask Brett to provide some additional color on our priority programs.
Brett K. Haumann -- Senior Vice President, Clinical Development and Chief Medical Officer
Thanks, Rick. I'll begin on Slide 8 with YUPELRI inhalation solution, a once-daily nebulized LAMA for the treatment of COPD. YUPELRI was approved by the FDA at the end of last year for the maintenance treatment of patients with COPD. YUPELRI is the first and only once-daily nebulized bronchodilator approved for the treatment of COPD in the US. For the first time, COPD patients who require or prefer nebulized therapy can access a once-daily nebulized bronchodilator for the first time and benefit from consistent 24-hour lung function improvement with the convenience of once-daily dosing delivered through any standard jet nebulizer.
YUPELRI achieved first cycle approval prior to the PDUFA date and without any requirement for an advisory committee review. We were also pleased to have the higher of two doses approved on the basis of a more favorable therapeutic index aligned with our strategic goals for organ-selective therapy. The data from our pivotal registrational program was presented at a number of key scientific meetings in 2018 including ATS, ERS and CHEST. And the publication manuscripts for the Phase 3 studies remain on track to be published this year.
Turning to Slide 9, we estimate that approximately one in 10 COPD patients currently use nebulizers for ongoing maintenance therapy with an additional 40% (ph) of COPD patients using nebulizers at least occasionally for bronchodilator therapy. We also know that there are about 800,000 patients admitted each year to US hospitals for worsening of their COPD and about half of these patients leave the hospital with a prescription for a nebulized therapy.
All of these elements shape our commercial strategy and partnership with Mylan. Theravance Biopharma already has an established commercial presence in and around acute care centers, which gives us the opportunity to focus on patients in the hospital setting and as they are discharged from hospital, with Mylan supporting the discharge transition and ensuring that patients are able to continue their therapy on a maintenance basis in the home setting. We also continue to evaluate COPD patients whose disease may make them particularly well suited to nebulized therapy including patients with low peak inspiratory flow rate or PIFR. These patients are not able to breathe in or inspire with enough force to use handheld products effectively and have been shown to have higher readmission rates when discharged from hospital with handheld COPD medicines, following a COPD exacerbation.
In a Phase 3b clinical study of YUPELRI in patients with low PIFR, we saw encouraging results on improving trough FEV1 to a greater extent with nebulized YUPELRI compared to Spiriva Handihaler in the severe and very severe sub-population of patients with FEV1 less than 50% predicted.
Now turning to Slide 10, TD-1473 is our oral gut-selective pan-JAK inhibitor designed to treat inflammatory intestinal diseases locally at the site of inflammation with minimal systemic exposure or corresponding immunosuppressive effects. Our objective is to enhance both efficacy and safety over conventional systemic therapies, optimizing the therapeutic index. Following the completion and positive readout from our Phase 1b clinical trial of 1473 in 40 patients with active ulcerative colitis, we and our partner, Janssen, agreed to progress 1473 into larger clinical trials in Crohn's disease and ulcerative colitis.
The RHEA program in ulcerative colitis includes a Phase 2b induction study of eight weeks duration, following which patients who respond to therapy will move directly into a Phase 3 maintenance study for a further 44 weeks. This design has been approved by US and EU regulatory agencies and allows us to optimize patient enrollment so the patients have the potential to receive 1473 for one year. This study is currently being initiated in more than 25 countries across the globe with patients currently going through the one month screening phase of the protocol.
The DIONE study is a Phase 2 study in Crohn's disease where the convention is to treat patients for a longer induction phase of 12 weeks. Patients will then have the option of going into an extension phase of 24 weeks to continue to collect safety information. This study is being conducted in 20 countries around the world and patients are currently being dosed in this study. We're very excited about 1473's potential to transform the treatment of inflammatory intestinal diseases. We are hopeful that findings from these trials in ulcerative colitis and Crohn's disease will demonstrate the desired efficacy results with a favorable safety profile to further affirm our strategic objectives of discovering and developing transformational organ-selective medicines.
Turning now to Slide 11 and ampreloxetine, our investigational once-daily norepinephrine reuptake inhibitor or NRI in development for the treatment of patients with symptomatic nOH. We begin ampreloxetine's pivotal program with a sense of confidence based on the encouraging clinical data generated in the Phase 2 study in patients with nOH. Here we observed improvements in blood pressure versus placebo following a single dose in Part B of the study with the effects most pronounced during the active part of the day when patients have the lowest blood pressure. We also observed positive improvements in dizziness, the cardinal endpoint for this disease, over four weeks of open label treatment with ampreloxetine at a median dose of 10 milligrams in Part C of the study. The improvements were greatest in patients who were symptomatic at baseline and these are the patients we are enrolling in the current Phase 3 program.
There were no drug-related serious adverse events reported and ampreloxetine was generally well tolerated in the study. Patients were permitted to continue taking therapy beyond four weeks up to a maximum of five months and the emerging data from this open label study suggests that improvements in dizziness continued till the end of the treatment period with a 10 milligram dose and then revert to pre-dose levels in the one-month period following the end of the study.
We are currently submitting detailed results from the Phase 2 study for presentation at an upcoming scientific meeting in mid-2019. The Phase 3 program includes two studies. The first is a four-week randomized, double-blind, placebo-controlled study designed to evaluate the efficacy, safety and tolerability of ampreloxetine in patients with symptomatic nOH. We dosed the first patient in this study in January. Patients will be randomized to receive a single 10 milligram dose of ampreloxetine or placebo once daily for four weeks. The primary endpoint of the study is change from baseline in dizziness severity as measured by the OHSA question one at four weeks for ampreloxetine as compared to placebo. The study will evaluate additional efficacy assessments as well as safety and tolerability measures.
The second study will evaluate the durability of response to ampreloxetine in a randomized withdrawal design in which all patients will receive open label ampreloxetine for a period of four months. At that point, half the patients will be randomized to placebo and all patients will be followed for a further six weeks to assess treatment response against placebo. We are pleased today to share that we've just enrolled the first patient in this study. Given the limitations of currently available therapeutic options, we believe there's a significant opportunity for a durable, effective and safe treatment for symptomatic nOH. Over the course of 2019, we'll be focused on accruing patients in the Phase 3 program.
Now to Slide 12. As Rick mentioned, we hosted an R&D Day in December where we highlighted our innovative strategy to discover and develop organ-selective medicines. We introduced several new research programs that we plan to advance toward clinical developments each specifically tailored to an organ of interest. One of these is TD-8236, our lung-selective inhaled pan-JAK inhibitor. Here, our goal is to develop the first inhaled non-steroidal anti-inflammatory to treat a broad population of patients with moderate to severe asthma including those not controlled by inhaled corticosteroids.
Steroids are known to have less effect in patients with Th2-low disease than in Th2-high disease and most of the therapies that are being developed as alternatives to steroids have focused on the patients with Th2-high disease including anti-IL-5 anti-IgE therapy. In addition, focusing on only one JAK/STAT cytokine such as IL-4 or IL-13 has not been successful leading to combined efforts such as blocking both IL-4 and IL-13 as is achieved with products like dupilumab.
8236 is a pan-JAK inhibitor designed to be optimally delivered via dry powder inhaler directly to the lung as a once-daily therapy. Once again, the objective is to target and treat the inflammation in the lung without exposing the rest of the body to pan-JAK inhibition optimizing the therapeutic index versus the systemically active alternatives that are in development. 8236 is currently in a Phase 1 trial designed to evaluate safety and provide biomarker data in healthy volunteers and asthma patients and is expected to complete in the middle of this year.
Other projects we highlighted represent unique opportunities with compounds designed to work specifically in the lung, guts or eye. All of these programs are the result of our team applying organ-selective expertise to biologically compelling targets and we look forward to keeping you apprised of additional progress as milestones warrants. Now, I'll pass the call over to Jessica for a financial update.
Jessica Stitt -- Vice President and Assistant Treasurer
Thank you, Brett. I'll begin with our financial results for 2018, then cover our financial guidance for 2019 and close with a brief update on our economic interests related to TRELEGY ELLIPTA. Starting on Slide 13, revenue for the fourth quarter of 2018 was $15.7 million comprised of collaboration revenue primarily related to our global collaboration agreement with Janssen for TD-1473 of $10 million, profit sharing revenue related to YUPELRI of $3.3 million and product sales for VIBATIV of $2.4 million.
Revenue for the fourth quarter of 2018 represents an increase of approximately $11.2 million over the same period in 2017. The increase was primarily related to revenue recognized from the upfront payment associated with the global collaboration agreement with Janssen for 1473. The increase was partially offset as a full quarter of product sales was not recognized due to the sale of VIBATIV to Cumberland Pharmaceuticals in November of 2018. Revenue for the full-year of 2018 was $60.4 million comprised of collaboration revenue of $41.8 million primarily associated with the upfront payment from Janssen for 1473 and product sales for VIBATIV of $15.3 million.
R&D expenses for the fourth quarter of 2018 were $52.3 million compared to $51.1 million in the same period in 2017. The increase was primarily due to higher external expenses to support our key programs and was partially offset by lower employee-related and share-based compensation expenses. Full-year 2018 R&D expenses were $201.3 million or $175.8 million, excluding share-based compensation.
SG&A expenses for the fourth quarter of 2018 were $25.5 million compared to $29.5 million in the same period in 2017. The decrease was primarily due to lower expenses related to share-based compensation. Full-year 2018 SG&A expenses were $97.1 million or $71.3 million excluding share-based compensation.
We ended 2018 in a well-capitalized position with approximately $517 million in cash, cash equivalents and marketable securities. Our year-end cash balance includes net proceeds resulting from a non-dilutive private placement of $250 million in non-recourse notes secured by a portion of the future payments we expect to receive related to royalties due on net sales of TRELEGY ELLIPTA. While the notes are outstanding, 75% of our TRELEGY ELLIPTA related cash flows will be used to satisfy the debt obligations and the remaining 25% will be directed to benefit the Company on an ongoing basis.
Following repayment of the notes, all TRELEGY ELLIPTA related cash flows will revert back to Theravance Biopharma. Proceeds of the transaction were approximately $229 million, net of debt issuance costs and a 5% retention of the notes by the Company. This transaction provided a strategic infusion of cash while allowing us to retain economics over TRELEGY ELLIPTA's commercial lifespan and each will provide funding to support our key programs going forward.
I'll now turn to our financial guidance. For the full-year of 2018, we incurred an operating loss excluding share-based compensation of approximately $187 million within our stated guidance of $180 million to $200 million. In 2019, we expect full-year operating loss excluding share-based compensation of $210 million to $230 million. Our operating loss guidance includes estimated revenue recognition associated with the Janssen collaboration, our share of US profits and losses related to the commercialization of YUPELRI, R&D expenses including our ongoing late-stage clinical programs for ampreloxetine and 1473 as well as costs related to our infrastructure. Our operating loss guidance does not include royalty income for TRELEGY ELLIPTA, which we recognize in our statement of operations as income from investment in TRC LLC, our share of US profits and losses related to the commercialization of YUPELRI, potential future business development collaborations as well as the timing and cost of clinical studies associated with our key programs, among other factors, could impact our financial guidance.
I'll close on Slide 14 with an update on our economic interest in GSK's TRELEGY ELLIPTA, the first and only once-daily single inhaler triple therapy approved for the treatment of COPD. TRELEGY ELLIPTA's commercial performance continues to accelerate. Script uptake in the second part of 2018 was supported by an expanded label in the US based on results from the landmark IMPACT study and GSK's introduction of DTC advertising. The product is now available in 26 countries with additional geographies expected over the course of 2019. Also noteworthy, our recent regulatory filings completed in China and Japan as well as label expansion in Europe recognizing TRELEGY ELLIPTA's effect on exacerbations. Lastly, data from the Phase 3 CAPTAIN study of TRELEGY ELLIPTA in asthma is expected in the first half of 2019, which if positive may lead to the submission of a supplemental NDA in the second half of the year. Success in asthma could result in a meaningful expansion for the use of TRELEGY ELLIPTA over time. As a reminder, Theravance Biopharma holds an economic interest in TRELEGY ELLIPTA that equates to upward tiering royalties of approximately 5.5% to 8.5% of worldwide net sales. This economic interest represents an important future contributor of growth to the Company. And now, I'll turn the call back over to Rick for closing remarks.
Rick E Winningham -- Chairman and Chief Executive Officer
Thanks, Jessica. As I noted in my earlier comments, in 2018 we generated significant forward momentum, which we plan to enhance as we move through 2019. As shown on Slide 15, over the next several months we anticipate multiple clinical readouts and milestones including Phase 3 results for TRELEGY ELLIPTA in asthma and if successful, potential supplemental NDA submission to regulatory authorities by GSK later in 2019, initial commercial metrics for YUPELRI in COPD, completing and reporting data from our Phase 1 study in our lung-selective inhaled pan-JAK inhibitor TD-8236 in both healthy volunteers as well as asthma patients, supplemental data from the Phase 1b study of TD-1473 in ulcerative colitis will be presented at the DDW meeting in May of 2019 and detailed results from the Phase 2 study of ampreloxetine in nOH will be presented at an upcoming medical meeting around mid-year as well as providing further updates on further progression of our late-stage studies for both ampreloxetine and 1473.
Closing on Slide 16, our focus will continue to be on advancing our pipeline and reaching multiple additional value creating milestones. This is an exciting and energetic time at Theravance Biopharma and we're pleased to share our accomplishments and outlook with you today. Thank you and now I'd like to turn the call over to the operator for questions.
Questions and Answers:
Operator
(Operator Instructions) Our first question comes from the line of Louise Chen from Cantor, your question please.
Louise Chen -- Cantor Fitzgerald -- Analyst
Okay, thank you for taking my questions. I have three here. So first question I had was, how much revenue is expected to be recognized in 2019 from upfront payments associated with your global collaboration with Janssen for TD-1473. Second question I had is that we've seen some safety issues with pan-JAKs and just wondering if this changes your mind about the market opportunity for your products. And the last question I had is, what is your cash runway and if you can't give that sort of guidance, what are some of the big puts and takes that would impact your current cash balance? Thank you.
Rick E Winningham -- Chairman and Chief Executive Officer
I'll take the first question on the payments associated with Janssen and I'll provide a little bit of information. Then also, Louise, direct you when we file our 10-K to look in the 10-K. There is a line on the P&L that says collaboration revenue. The most significant piece of collaboration revenue on the P&L is the amortization of the upfront $100 million payment of Janssen that's amortized more or less along with progress on clinical studies that we make. So you'll be able to see this more definitively once we issue the 10-K, but that looking at the $100 million relative to what we've recognized thus far in 2018 will more or less tell you how much more we will recognize and that will depend on progress associated with clinical trials and really clinical expense. So the faster we accrue, the greater expense that we will have that in fact than (ph) the greater level of revenue that will amortize into the P&L from Janssen upfront. So then I'll actually -- this is a very important question. Turn it over to Brett to really talk about pan-JAK inhibitors and why we began several years ago along the path of designing JAK inhibitors to be in fact organ-selective as opposed to systemic. So Brett?
Brett K. Haumann -- Senior Vice President, Clinical Development and Chief Medical Officer
Thanks, Rick and thanks Louise for your question. I think your question was around safety issues that have recently been brought to light with pan-JAK inhibitors. I believe you're referring to the announcement from Pfizer actually which was made on February 19th and they had confirmed that in a post-marketing study that they were conducting in patients with rheumatoid arthritis that the DSMB, the Data Safety Monitoring Committee had advised them to drop the higher of the two doses assessed in that study. They had a 5 milligram and 10 milligram dose being assessed and it was based on observations of the 10 milligram dose, particularly relating to pulmonary embolism and to an increased frequency in overall mortality, that their recommendation was to remove that arm, not to stop the study, but to remove the higher of the two arms.
We were certainly aware of that information as it came to light. Does it have a bearing on our view on the class. Well, I think it reiterates the importance for us of focusing on JAK inhibitors that by design are organ-selective and organ specific rather than focusing on the alternative such as tofacitinib that depends actually for its action on systemic exposure. And so in contrast to other systemically available JAK inhibitors, the full portfolio of JAK inhibitors that we are looking at including those for the gut or for the eye or for the lung are organ-selective by design. In other words, they have both physical and chemical characteristics that limit their ability to be able to move outside of that organ. They are actually retained within the organ of interest and they exert their anti-inflammatory effect only in the organ of interest for the very small amounts of drug that does move into the bloodstream, that is effectively and rapidly eliminated again through features of the molecules that we've designed in.
So that has a number of consequences. We believe that by design this should allow us to achieve the concentrations that are required for anti-inflammatory effect in the organ of interest, but also importantly, they completely limit the opportunity for systemic exposure. Now, it probably is unfair for us to speculate on Pfizer's behalf, it would be premature to make conclusions about the mechanism that may be driving pulmonary embolism, but we believe it could be reasonable to infer that, that's a consequence of systemic pharmacology and again our programs and our products are intended and designed not to have systemic pharmacology. So we believe that the mechanisms remain highly relevant to treating inflammatory disease. We also believe that our organ-selective approach actually becomes even more relevant in the setting of these findings with alternative systemic therapies.
Rick E Winningham -- Chairman and Chief Executive Officer
And Louise, just to add, the one objective or one potential path that people have followed is to try and design very JAK selective molecules to try and modulate unwanted activity, potentially of JAK2 or JAK1 because and we described this in some detail at R&D Day, it's because of the way that JAK's payer in a biological system in humans, it is very challenging to design selective JAK inhibitors. You can as as we have at Theravance as an example, designed an irreversible inhibitor of JAK3 by targeting a specific piece -- binding piece of the binding pocket of JAK3, but other than that because of the pairing that occurs with the JAK's that's demonstrated on one of the slides that we presented both at R&D Day and today, it's very difficult to get true selectivity designed into a JAK inhibitor.
Now cash runway, we finished the year with well over $500 million of cash. We have inflows coming in from the 25% of the TRELEGY royalties that don't go toward the repayment of debt. So I think we're in a very strong position and then as I've said a number of times, our expectation while not in 2019, sometime after 2019 is that YUPELRI actually moves from a cash consuming portion of its life cycle to a cash contributing portion of its life cycle and that should happen just because of the financial dynamics of the product relatively quickly.
Louise Chen -- Cantor Fitzgerald -- Analyst
Thank you.
Operator
Thank you. (Operator Instructions) Our next question comes from the line of Geoffrey Porges from SVB Leerink. Your question please.
Geoffrey Craig Porges -- SVB Leerink -- Analyst
Thank you very much and congratulations on all the progress. Rick, couple of questions, first on YUPELRI. You are in the middle of a launch now, but it is the end of February, could you give us a sense of the number of prescribers, patients, what the access is trending toward? And secondly, on the RHEA study, could you remind us who is actually conducting the Phase 2b? I believe it is Theravance and could you give us a sense of when you're scoping the patients and then most importantly when you will be doing the interims and be able to provide us with some information about how they are performing? Thanks.
Rick E Winningham -- Chairman and Chief Executive Officer
Okay, thanks Geoff. I'll handle YUPELRI and then I'll turn it over to Brett to discuss the RHEA study. So access YUPELRI of the launch, I think the launch is going well. We're in full promotional mode now with Mylan for the first period of time, post approval, you know, month of December and effectively all of January. Sales representatives were in the field with an enlarged package insert, but now the full promotional activity is ongoing by both the Mylan sales force and the Theravance Biopharma sales force.
Theravance Biopharma focusing on the hospital and then also focusing on the discharge of patients, out of the hospital and then we're working with Mylan in that to transition these patients back to the home and then of course Mylan focuses on community and pulmonologists in the community. I think by and large, while it's very early, I would say, I think the reception is good, the feedback that we're hearing from the patients that have been put on the drug through their physicians, the experience that the patients are having is good. Now, just as a reminder, this is -- YUPELRI has reimbursed primarily through Part B as in boy. The very small percentage of YUPELRI will be reimbursed through Part D as in dog and what do I mean by very small, well 60% to 70% of YUPELRI will likely be reimbursed through Part B (ph) mechanism of medicare. That sort of goes hand in glove with distribution with 50% to 60% likely of YUPELRI distribution will come through durable medical equipment manufacturers and a smaller percent of distribution going through retail.
Of course, hand in glove with reimbursement are the various codes that are established. Right now, we're obviously working -- we have a miscellaneous J Code that's supporting reimbursement. We hope to transition to that into a Q Code over the next several months and then finally get probably early next year, get a permanent J Code for the product, but I think the fact that we're dealing with a once a day nebulized product, it's in a standard jet nebulizer that's easy for the hospital to use and in fact in patients when they get home, it's easy because many of these patients have a nebulizer at home. The ease of use is there, we're encouraged, but again I'd say it's very early and I think by the time we get to our second quarter, end of the second quarter and have our next call, I'll be able to give you quite a bit more granularity in terms of metrics of how it's going. So that's YUPELRI. I'll have Brett address your second question.
Brett K. Haumann -- Senior Vice President, Clinical Development and Chief Medical Officer
Thanks, Jeff. You'd asked about the conduct of the ulcerative colitis study, the RHEA study. I can confirm that Theravance Biopharma is accountable for the conduct of both the ulcerative colitis and the Crohn study. I have to say that our collaboration with Janssen has really been in my experience one of the best partnerships we've had. We've had highly collaborative interactions. Janssen have been supportive, not only in the design features and the engagement with the regulators, but supporting us also in identifying high enrolling sites for both ulcerative colitis and Crohn's based on their own experiences, but we are accountable for running the study.
You asked when we're scoping patients, I think you're referring to the endoscopy scopings and those are done in two intervals. The first is during screening as a baseline prior to any therapy and then it's repeated at the end of the eight-week induction portion for ulcerative colitis. It's repeated at the end of the 12 week induction period for the Crohn's patients. We tend to hold the endoscopy assessment until fairly late in screening partly because it's an invasive procedure, partly because we want to eliminate other reasons why patients may not be eligible. So it's done fairly close to the introduction of the drug within a week of them commencing therapy.
You'd asked about the interim analysis. As reflected on the slide, our plan here is in the first instance with the RHEA study to run a forearm study and there are 240 patients being enrolled, so 60 per arm. That's to evaluate three active doses under placebo and the plan is once those 240 patients have gone through the induction period of eight weeks, then we'll conduct what could be construed or considered as an interim because it's part of a larger program of work, but that will be the point at which we evaluate which of these doses is optimal and that we use to inform dose selection for the next part of the induction study. Patients who've gone into the maintenance study will continue to be assessed for safety regardless of which dose they were dosed on in the pre-interim phase.
In terms of timing, Jeff, I think we're really trying to get a sense of how enrollment is going. I'd say it's early days for us, but certainly 2019 is all about execution and about enrolling patients and so I'd like to be able to update you during the course of this year as to when we think this will converge to support readout on that study. At this stage, we're really focused on ensuring that we get the study up and running as quickly as possible.
Geoffrey Craig Porges -- SVB Leerink -- Analyst
Great, thanks very much, Brett.
Operator
Thank you. Our next question comes from the line of Alan Carr from Needham. Your question please.
Joey -- Needham & Company -- Analyst
Hi, this is Joey (ph) on for Alan. Thanks for taking my question. For 8236, the Phase 1 data you mentioned that results would be sometime this year, would you have any plans to present that at a conference or would that be a press release? And could you provide any further information on what type of biomarkers you're looking at in that study and also looking a little bit ahead, what would a sneak preview of a potential Phase 2 trial look like? Thanks.
Brett K. Haumann -- Senior Vice President, Clinical Development and Chief Medical Officer
Thank you. Thanks for the question. So, as you rightly say, 8236 is under way and in fact this is in the public domain and it's a reference we can certainly point you to on clinicaltrials.gov, but what you'll see in that is that our design was to fairly quickly escalate our doses, single-ascending doses in healthy volunteers to get an assessment of the initial tolerability, but to move quickly to patients and in fact our multiple-ascending dose portion of this study is being conducted entirely in patients with asthma. One of the key reasons for that is we wanted to make sure early on that there isn't any propensity or any potential for this drug to cause irritation in the airways particularly in patients with the disease that we're interested in asthma and at this early stage, being able to exclude or eliminate the possibility of bronchoconstriction, a narrowing of the airways, is an important step. So we're in that phase of development right now evaluating patients. You asked about biomarkers and we are indeed collecting biomarkers, some of them are called out in the clinicaltrials.gov posting. I would say one of the most relevant for us is exhaled nitric oxide, which has been used historically to evaluate in asthmatics the level of inflammation that they may have a patient with asthma that's not controlled has an elevated nitric oxide level in their breath and that can be measured fairly easily and routinely by commercial products that evaluates nitric oxide.
That is being done in patients in this study. The patients require or are obliged to come in with higher levels of nitric oxide than you or I would have as normal people and so we're able to see whether 8236 reduces nitric oxide. That's one of the endpoints that we'll be focusing on this year. We do hope to be in a position to be able to report out on that study in the middle of this year. You'd asked about communication, I'm not sure we've necessarily settled at this stage on a press release, but certainly, it would be our intent to point this in the direction of a meaningful Congress, but I would say in terms of press release, it's probably something that we'll consider as the year goes through.
Rick E Winningham -- Chairman and Chief Executive Officer
Yes, I think depending on the timing, we would probably issue some sort of high level press release on the results from the study, but more than likely keep the detail to a meeting, a medical meeting, but it will depend on the timing when the specific late breakers are due as well. Now to Brett's point, we're right now in a pretty good position in that we've worked our way through the healthy volunteer section and we're in the asthma patients right now and so we look forward to getting through the rest of the dose escalation in the asthma patients and evaluating the data.
Joey -- Needham & Company -- Analyst
All right, thank you.
Operator
Thank you. Our next question comes from the line of Alexander Duncan from Piper Jaffray. Your question please.
Alexander Duncan -- Piper Jaffray -- Analyst
Hi, good evening. Thanks for taking the questions and congratulations on the progress. Related to the Xeljanz news given the 10 milligram dose as used in ulcerative colitis induction do you now see a bigger opportunity here and if so, by how much. And then giving the Xeljanz news, do you think there is a chance that a longer safety follow-up for 1473 will be necessary prior to submission for approval? Thanks.
Rick E Winningham -- Chairman and Chief Executive Officer
Yes, I think Brett and I will sort of tag team on that. I think relative to opportunity, I don't know that it necessarily increases the opportunity that we see simply because we saw a significant opportunity for this product prior to the Xeljanz news. I think the very basis for the turn really of the research strategy a number of years ago to organ-selective medicines and in fact targeting JAK specifically was that we believe that the potential of JAK inhibition could be best harnessed through an organ-selective strategy, whether it be in the lung, the gut or potentially the eye and so this week, I'd have to say for all of us, the fact that there are today certain adverse events that are being highlighted with Xeljanz and in the future, you know what, we would expect other systemic JAK inhibitors to potentially have similar mechanism potentially mechanism related adverse events and our objective at it's very core here with the design of organ-selective medicines is to avoid the concentration systemically that in fact could lead to those adverse events. So with that, I'll turn it over to Brett.
Brett K. Haumann -- Senior Vice President, Clinical Development and Chief Medical Officer
Thank you. Just a few points to add actually I think our own experience with our program to date suggests that we're able to achieve anti-inflammatory effect in the organs of interest at levels or concentrations of JAK inhibition drug levels that are much, much lower than what is achieved with Xeljanz particularly at the 10 milligram dose. I think it's also fair to point to the fact that at least based on the Phase 2b data with Xeljanz, there was evidence that even the 15 milligram dose had greater efficacy than the 10 milligram and of course what that pointed to is that more efficacy could be achieved provided the risk, the systemic liability could be managed.
Now clearly it would be unfair for us to speculate on the implications for the 10 milligram dose of Xeljanz for UC. I think that's Pfizer's judgment to make, but I do believe that again it reiterates for us the importance of being able to achieve high concentrations of JAK inhibition in the organ of interest to maximize or optimize efficacy, but always paying attention to reducing systemic liability, always with an eye on reducing systemic risk and as I mentioned before, it's been through design that we've been able to focus in on that with our own program. To date, particularly for our GI program, we've not observed any concerns related either to blood flow or vascular impairment or coagulation abnormalities in our pre-clinical animal models even after six and nine months of administration and nor have we seen any evidence in our human studies to date of any increased risk.
Now, of course, we have to remain vigilant that the reason that we continue to do observations on safety throughout development including Phase 2b and 3, but to close I think really by design we believe that our approach here significantly reduces the risk of the unwanted side effects of JAK inhibition that might be seen with systemically available therapies while still being able to achieve optimal efficacy through this organ-selective approach.
Alexander Duncan -- Piper Jaffray -- Analyst
Great, thanks so much.
Operator
Thank you. It appears that we have no further questions on the phone. I'd now like to turn the conference back to Mr. Winningham. Please go ahead, sir.
Rick E Winningham -- Chairman and Chief Executive Officer
Thank you very much operator. Thanks everyone. We're looking forward to an eventful and exciting 2019 and into 2020. Thanks for participating and have a great day.
Operator
This concludes today's conference call. We thank you for your participation, you may now disconnect.
Duration: 51 minutes
Call participants:
Alexander Dobbin -- Head of Investor Relations
Rick E Winningham -- Chairman and Chief Executive Officer
Brett K. Haumann -- Senior Vice President, Clinical Development and Chief Medical Officer
Jessica Stitt -- Vice President and Assistant Treasurer
Louise Chen -- Cantor Fitzgerald -- Analyst
Geoffrey Craig Porges -- SVB Leerink -- Analyst
Joey -- Needham & Company -- Analyst
Alexander Duncan -- Piper Jaffray -- Analyst
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