INVA - NASDAQ

Michael W. Aguiar – Chief Financial Officer, Senior VP & Head-Investor Relations Rick E. Winningham – Chairman & Chief Executive Officer Mathai Mammen – Senior Vice President of Research & Early Clinical Development

David Friedman – Morgan Stanley & Co. LLC Brian P. Skorney – Robert W. Baird & Co., Inc. Ronny Gal – Sanford Bernstein Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Ladies and gentlemen, good afternoon. At this time I would like to welcome everyone to the Theravance 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 would like to turn the call over to Mike Aguiar, Senior Vice President and Chief Financial Officer. Please go ahead, sir.

Good afternoon everyone and thank you for joining us. With me on the call today is Rick Winningham, our Chief Executive Officer and Mathai Mammen Senior Vice President of Research and Early Development. The focus of our prepared remarks will be announcement of May 15 record date f Theravance strategic separation and our intention to initiate a quarterly cash dividend to stockholders Theravance. While we will not be covering our programs or the quarterly financial result in depth during our prepared remarks, we will be happy to answer any questions on these topics during the Q&A session. Earlier today Theravance issued a press release announcing recent corporate development detailing and first quarter 2014 results. A copy of the press release can be downloaded from our website or you call Investor Relations at 650-808-4100 and we will be happy to assist you. Before we get started, we would like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance. Forward-looking statements include anticipated results and other statements regarding Theravance’s goals, expectations, strategies and beliefs. These statements are based upon the information available to the Company today and Theravance assumes no obligation to update these statements as circumstances change. Future events and actual results could differ materially from those projected in the Company’s forward-looking statements. Additional information concerning factors that could cause results to differ materially from our forward-looking statements is described in greater detail in the Company’s Form 10-Q filed with the SEC. I’ll now turn the call over to Rick Winningham, our Chief Executive Officer. Rick.

Thank you, Mike and good afternoon everyone. The past few months have been very exciting and an important time at Theravance on both the program and strategic level. Strategically we’ve made significant progress on our separation highlighted by the announcement of a May 15 record date for the dividend of ordinary shares of Theravance Biopharma to be paid to the Theravance’s stockholders to affect the separation. We also recently completed the $450 million, 9% non-correspondent note royalty financing. Additionally we are announcing today Theravance’s intention to initiate a $0.25 per share quarterly dividend for stockholders of Theravance following the separation. We’ve also had a number of positive program developments recently, which I will not be covering in detail on the call including the U.S. launch of the ANORO for the treatment of COPD. GSK’s intention to file BERO for the treatment of asthma in the U.S. later this year and two positive Phase II studies with our earlier stage assets, one with TD-9855 for the treatment of fibromyalgia second in our partnership with Alfa Wassermann with velusetrag for the treatment of gastroparesis. Overall, I am pleased that were poised to complete the separation in the coming weeks and more importantly that both companies are very well positioned financially and strategically for the future. I will begin my discussion with the separation. We are currently targeting a separation date of June 2, when shares of Theravance biopharma will be disrupted the stockholdes of Theravance. This is combination of the significant amount of work over the past year and final step in the separation. Over the next few weeks, we expect to make additional stockholder communication including the filing of final Form 10 with the SEC and mailing of stockholder information statement. After the May 15, record date we expect Theravance shares and trade ex dividend and Theravance biopharma shares to begin a one issue trading. The first company Theravance, royalty management company, which I will refer to simply is Theravance is targeting stockholders we see capital returns from dividend payouts which we intended to go over time. And potential future share repurchases. Theravance will be well capitalized with the net proceeds of approximately $434 million from our recently completed non-recourse royalty notes thus any approval on launch milestones pay to GSK prior to the separation. The respiratory products partner with GSK RELVAR BREO, ELLIPTA, and ANORO ELLIPTA, are in the process of the global launch into multi billion dollars respiratory market. The strategic objective of Theravance it’s managed all of the development and commercial responsibilities under its respiratory partnership agreements with GSK and associated royalty revenues with the intention of providing capital returns to stockholders. As a result of a strong cash position and confidence in the potential of these respiratory programs again we announced our intention to initiated $0.25 per share quarterly dividend following the separation which we intend to grow over time. Regarding RELVAR BREO as of April 25, 2014 this medicine is going to proved in 42 countries for marketing and there has been – then launched in 12 countries across North America, Europe and Asia. Total net revenue for RELVAR BREO during the first quarter with approximately $4.9 million with royalties payable to Theravance of approximately $730,000. GSK and Theravance remain very optimistic about BREO’s potential. Regarding the launch in the U.S. Andrew Witty noted last week in GSKs really call that while it is been a slow start the underlying trends look good the leading indicators look promising and significant progress on reimbursement has been accomplished since the beginning of the year. In particular GSK stated that they had 70% Medicare Part D coverage for BREO as April 30 up from low-single digits in January. And that 50% of patients are currently covered in commercial plans. Also direct to consumer advertising is now underway in the U.S. GSK announced its intention to file BREO for asthma in the United States in 2014. Needless to say the decision to proceed with the U.S. asthma filing is a very important milestone for the GSK Theravance respiratory collaboration. In progress continues with Salford studies as well as summit. Our second respiratory program with GSK ANORA ELLIPTA was launched in the U.S. last week and it’s now available in U.S. pharmacies. Although it is very early as GSK noted during its call we are in good position with a Part B book of business compared to where BREO was at this point in time and its launch phase. An EU and ANORA received a positive opinion from the European medicines agency committee for medicinal products for human use in February 2014 recommending marketing authorization for UMEC/VI under the proposed brand-name ANORA. As it once daily maintenance bronchodilators treatment to release symptoms and adult patients with COPD and we expect to hear a final decision from the EMA shortly. Now turning to the second company Theravance Biopharma which I will refer to simply as biopharma. Biopharma is targeting shareholders to seek capital appreciation associated with the progress in research development and commercialization activities in our pipeline. Biopharma will also be well-capitalized with approximately $400 million following the separation and we will be focus on small molecule product candidates and infectious disease central nervous system and pain, respiratory disease and gastrointestinal disease. Additionally Theravance biopharma will have rights to 85% of the economics, from UMEC/VI FF also know as diamond MABA FF and MABA monotherapy and any other product that maybe developed in the future under these agreements with GSK. We were very excited about the prospects of biopharma following the separation based on a robust pipeline and proven R&D capabilities. We’ve had a number of positive clinical events for the programs residing in biopharma including two recent positive to say studies one with 9855 our dual serotonin and norepinephrine reuptake inhibitor in the treatment of fibromyalgia in the second with Velusetrag with partnered with Alfa Wassermann gastroparetic. In addition we got two other product candidates currently in Phase II, TD-4208 nebulizer long acting Muscarinic Antagonist for the treatment of COPD and TD-8954 a 5-HT4 agonist delivered for the – feeling intolerance. And finally we are making good progress with Vibativ our commercialize antibiotic for the resistant Gram-positive infections which was reintroduced into the U.S. market late last year. in addition in February GSK communicated its intention to take the triple therapy, UMEC/VI, FF also known as diamond in the Phase III. The portfolio of programs provided number of potential catalyst for biopharma following a separation. Overall, I’m pleased with the execution of our previously communicated strategy, the distinct strategic opportunities for each company and a strong financial position for both entities. Since we announced our strategy to separate the companies a little over a year ago we’ve had three product approvals, multiple product launches, we’ve initiated a capital return strategy, we’ve adjusted our capital structure to facilitate the royalty monetization strategy and we’ve made significant across our pipeline with 9855, 4208, 8954, 5108 as well as BREO and Asna and diamond the close triple therapy. So with that I’ll turn it over to Mike our Chief Financial Officer. Mike.

Thank you Rick and good afternoon everyone. Today I’ll provide a very brief comments on the financial results for the quarter ended March 31, 2014. before discussing the results, however, I would like to note that due to upcoming separation of Theravance into two publically traded companies, we will not be providing financial guidance at this time. Our current expectation is each company will provide financial guidance following the separation. For the quarter ended March 31, 2014, Theravance had a net loss of $67.7 million or 52% per share. Total first quarter 2014 non-GAAP operating expenses were 449.3 million. As a reminder non-GAAP expenses include – exclude stock base compensation expense and cost associated with separation activities. Product sales data in the first quarter of 2014 were approximately $0.9 million which includes amount that were previously differed. Global sales of Bravo Brio totaled approximately $4.9 million, during the first quarter resulting in gross royalty revenue of approximately $730,000 from GSK. Of note royalty revenue was reduced by and amortization expense for intangible assets of $1.8 million, related to approval and launch milestones that we have paid GSK. Our cash, cash equivalents and marketable securities position totaled $430.8 million as of March 31, which is not include net proceeds of approximately $434 million related to the recent sale of non-recourse royalty notes. This cash balance represent a decreased of approximately $89.7 million during the quarter, primarily due to registration and launch related milestone payment to GSK of $55 million and cash using operations which will partially offset by net proceeds of $18.3 million received from issuance of our common stock. Now, I will turn the call back to Rick for final closing comments. Rick.

Thank you, Mike. It’s been a productive quarter for Theravance and with today’s announcements on the separation record date it will remain on track to complete the separation this quarter. Again, we believe the both Theravance and royalty management company and Theravance Biopharma are well-positioned in 2014 and beyond with adequate financial capitalization, strong product portfolios and significant strategic opportunities. Initially we believe both organizations will have strong Board of Directors, strong senior management teams and deep sets of key functional scales relevant for each business. Looking forward each company will have a number of important near-term catalysts. At Theravance further launches in major markets for RELVAR potential further approvals in launches for ANORO and the U.S. asthma filing for BREO as well as our capital return strategy, highlighted today by a commitment to pay a cash dividend with the objective to grow the dividend over time. Additional share repurchase maybe used opportunistically in the future. At Theravance biopharma we look forward to the Phase IIb results from TD-4208 and CPOD continued commercial progression [indiscernible]. GSK’s initiation of Phase III program with UMEC/VI FF, on the potential for additional partnership and progression of other programs in our pipeline. Before concluding I would like to thank the Theravance team for their extraordinary level of focus and commitments since our announcement of the separations slightly over a year ago. Given the significance in the change and operating structure and its going on administrative resources required to accomplish and separation, it would have been easy to become distracted with the project level. The various Theravance teams have remained extremely focused and delivered on key goals. From working closely with GSK on the various committees to ensuring long-term success the multiple GSK and Theravance respiratory programs to by that a team we achieved that approval and put by beta back on the U.S. market to the multiple development teams that delivered on clinical and regulatory milestones of the research organization this push forward into new one exciting areas from which compounds will enter the clinic in the coming months and years. We look forward to completing the separation over the next few weeks and most importantly we are very excited and energized about the future opportunities for both companies. And now I would like to turn the call over to the conference facilitator and open the call for questions.

Thanks Brian.

Well I would assume so, eventually, we need to file first and then but clearly the product, the data on the product is out there and part of all of the previous ANORO studies so everyone knows quite well how it will performance ones a day product and there may be certain patients with COPD that actually benefit as specifically from the long-acting beta agonist. I will turn the summit in the Salford study over to Mathai.

It has a data enrollment.

It will be he is talking about data it’s a big driven study so that’s for best gas for the timing of events.

I am not where of it so I think I where just looking at the historical question have been out there relative to the method FDA. I am not I don’t know whether we will be an issue and some level of question there. So that issued whether or not that issued can percolate around or whether it resolves and I don’t have any particular inside on that.

Okay, thank you very much gentlemen.

Yes, thanks Ronny.

Great, thanks Steve.

It appears we have no further questions on the phone. I would now like to turn the conference back to Mr. Winningham. Please go ahead sir.

All right, thank you very much operator and thanks everyone for participating. As I said we are very excited about the next steps in the evolution of each of the two companies. We look forward to bringing forward those next steps to you in future calls and have a great day.