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Theravance (TBPH) Beats on Q3 Earnings, Inks Deal for Vibativ

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Theravance Biopharma, Inc. (TBPH - Free Report) incurred third-quarter 2018 loss of $1.10 per share, narrower than the Zacks Consensus Estimate of a loss of $1.18 and the year-ago loss of $1.27.

Total revenues in the quarter under review skyrocketed 200% year over year to $12.8 million, mainly on the back of an upfront payment received from Johnson & Johnson (JNJ - Free Report) in relation to a joint development agreement for Theravance’s pan-Janus kinase inhibitor, TD-1473. Moreover, the top line surpassed the Zacks Consensus Estimate of $10.8 million.

Shares of Theravance have lost 15.1% year to date, comparing unfavorably with the industry’s decline of 4.9%.

Quarter in Detail

Vibativ is a once-daily dual-mechanism antibiotic approved in the United States, Europe and certain other countries for specifically difficult-to-treat infections. The drug generated U.S. revenues of $3.8 million in the third quarter, down 7.3% from the year-ago period's figure. Revenues from collaborations were $8.9 million compared with $0.14 million in the year-earlier quarter.

Research and development expenses were $52.7 million, up 34.1% from the year-ago period, primarily due to higher cost regarding employees and share-based compensation.

Selling, general & administrative expenses rose 4.8% to $21.9 million.

To Divest Vibativ

In a separate press release, Theravance announced that it has signed an agreement with specialty pharma Cumberland Pharmaceuticals in order to sell its only marketed drug, Vibativ. Per the deal, Cumberland is entitled to pay $25 million to Theravance as well as tiered royalties of up to 20% on the product’s future net sales in the United States.

We believe, the sale is a strategic fit for Theravance as this will help the company solely focus on the upcoming launch of Yupelri, upon potential approval. The transaction is expected to be completed in mid-November, subject to customary closing conditions.

Pipeline and Other Updates

Currently, the new drug application (NDA) for Yupelri (revefenacin) is under review for the treatment of adults with chronic obstructive pulmonary disease (COPD). A response from the FDA is expected on Nov 13, 2018. Last month, Theravance along with partner Mylan (MYL - Free Report) announced positive new data from multiple studies of Yupelri on COPD patients. Theravance is preparing for the commercial launch of the drug upon potential approval.

If approved, Yupelri will be the first once daily nebulized long-acting muscarinic antagonist (LAMA) option for COPD patients.

In February 2018, Theravance entered into a global collaboration agreement with Janssen to jointly develop and commercialize its pan-Janus kinase inhibitor, TD-1473, for the treatment of inflammatory intestinal diseases.

TD-1473 is currently being evaluated in mid-stage studies, namely a phase Ib program on TD-1473 for treating patients with moderate-to-severe ulcerative colitis and a phase IIb/III analysis on patients with moderate to severely active ulcerative colitis.

Theravance is also screening patients in a phase II induction study to evaluate TD-1473 for Crohn's disease. The company expects to start dosing the first patient before the end of this year.

Another candidate in Theravance’s portfolio is TD-9855, currently under inspection for addressing symptomatic neurogenic orthostatic hypotension (nOH). In August, the company announced a positive top-line outcome from the phase II investigation on the candidate. Additionally, Theravance expects to initiate a phase III study in late 2018 or early 2019.

Both TD-1473 and TD-9855 will soon enter late-stage developmental studies.

Theravance is also prepping up for the first in-human study on TD-8236, a novel inhaled JAK inhibitor, evaluated for the treatment of serious respiratory diseases.

In September 2018, Theravance announced that the Committee for Medicinal Products for Human Use (CHMP) rendered a positive opinion on the label expansion of Glaxo’s (GSK - Free Report) COPD drug, Trelegy Ellipta, in Europe. Theravance has an economic interest in royalties paid by Glaxo on Trelegy Ellipta’s global sales.

Glaxo is seeking an approval for Trelegy Ellipta to cover a broader patient population, who are not adequately treated by a long-acting muscarinic antagonist (LAMA) and a long-acting beta2-agonist (“LABA”). Theravance has an economic interest in the drug and earns royalties on its sales.

Trelegy Ellipta, a triple combination therapy of inhaled corticosteroid (ICS)/LAMA/LABA (fluticasone furoate/umeclidinium/vilanterol 'FF/UMEC/VI'), is already approved as a maintenance treatment for COPD patients, who are not adequately treated by a combination of ICS and a LABA.

In the third quarter of 2018, Glaxo recorded sales of $56 million for Trelegy Ellipta. While Theravance is eligible to receive 5.5-8.5% (tiered) of the product's worldwide net sales.

Presently, Trelegy Ellipta is available across 16 countries with nine more expected over the course of 2019.

2018 Outlook Reiterated

Theravance persistently anticipates operating loss excluding non-cash share-based compensation for 2018 in the range of $180-$200 million.

Theravance Biopharma, Inc. Price, Consensus and EPS Surprise

Zacks Rank

Theravance Biopharma carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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