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Theravance Narrows Loss

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Theravance, Inc.’s second quarter 2013 loss of 37 cents per share was narrower than the Zacks Consensus Estimate of a loss of 59 cents per share. The second quarter 2013 was also narrower the year-ago loss of 42 cents per share.

Revenues in the second quarter of 2013 declined marginally to $1.3 million from $1.4 million a year ago. Revenues in the second quarter of 2013 were short of the Zacks Consensus Estimate of $4 million.

Research & development (R&D) expenses were up 7.4% to $31.7 million in the second quarter of 2013. The increase in R&D expenses was primarily attributable to the company’s efforts to develop its pipeline. General & administrative (G&A) expenses for the reported quarter climbed 50% to $11.4 million primarily due to higher legal and accounting costs incurred by the company. Theravance still expects operating expenses (excluding special items) in the range of $125-$135 million in 2013.

We remind investors that in Apr 2013, the board of directors at Theravance approved its decision to split into two separate publicly traded companies. While one company will manage the late-stage partnered respiratory candidates and associated potential royalty revenues, the other will focus on the discovery, development and commercialization of small-molecule therapies targeted towards areas of high unmet medical need.

The company responsible for the development of respiratory candidates will be named Royalty Management Company. The entity dealing with small-molecule therapies will be named Theravance Biopharma.

In May 2013, Theravance received a boost when the U.S. Food and Drug Administration (FDA) approved the chronic obstructive pulmonary disease (COPD) candidate, Breo Ellipta. Theravance has co-developed the drug with GlaxoSmithKline (GSK - Free Report) .

The FDA cleared Breo Ellipta as a long-term maintenance therapy of airflow obstruction and for bringing down exacerbations in patients suffering from COPD. Breo Ellipta is expected to be available from the third/fourth quarter of 2013.

Theravance, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Companies like Actelion Ltd. and Sarepta Therapeutics, Inc. (SRPT - Free Report) appear to be more attractive in the biopharma space with a Zacks Rank #1 (Strong Buy).

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