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Split News Overshadows Theravance's 1Q Loss
Theravance Inc.’s first quarter 2013 loss of 39 cents per share was in line with the loss pegged by the Zacks Consensus Estimate. The first quarter 2013 loss compared unfavorably with the year-ago earnings of 93 cents per share. Results in the reported quarter were hurt by lower revenues and higher operating expenses.
Revenues in the first quarter of 2013 plummeted to $1.3 million from $127.1 million a year ago. We note that revenues in the year-ago quarter benefited from the accelerated recognition of deferred revenue of $125.7 million pertaining to Theravance’s erstwhile agreement with Astellas Pharma Inc. for the development and commercialization of the injectable antibiotic Vibativ. The amount was recognized by Theravance following the termination of the deal in Jan 2012. Revenues in the first quarter of 2013 were short of the Zacks Consensus Estimate of $3 million.
Research & development (R&D) expenses were down 20.4% to $26.4 million in the first quarter of 2013. The decline in R&D expenses was primarily attributable to the completion of the phase IIb study on TD-1211 (for the treatment of chronic, non-cancer pain patients with opioid-induced constipation). General & administrative (G&A) expenses for the reported quarter climbed 5.1% to $8.3 million primarily due to higher legal costs incurred by the company. Other Developments
Theravance and partner GlaxoSmithKline ( GSK - Analyst Report) received a boost earlier in the month when the Pulmonary-Allergy Drugs Advisory Committee of the US Food and Drug Administration (FDA) voted in favor of approving their candidate FF/VI (furoate/vilanterol, proposed brand name: Breo Ellipta).
The companies are looking to get the candidate approved as a long-term, maintenance therapy of airflow obstruction and for bringing down exacerbations in patients suffering from chronic obstructive pulmonary disease (COPD). Nine of the thirteen panel members voted in favor of approval of the candidate for the above indication. Moreover, the candidate was also recommended (by a similar majority) as a treatment for the reduction of COPD exacerbations in patients having a history of exacerbations.
A final decision from the US regulatory body is expected by May 12, 2013. We note that Glaxo and Theravance are also looking to get another COPD candidate approved. In Feb 2013, the FDA accepted the regulatory application of Glaxo/Theravance’s UMEC/VI (proposed trade name: Anoro). The companies are looking to get the candidate approved in the US as a once daily therapy for treating patients suffering from COPD. A decision from the US regulatory body on UMEC/VI is expected by Dec 18, 2013. Theravance to Split into Two Companies
Apart from announcing first quarter results, Theravance announced 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 retain the company’s name. The news of the impending spin-off impacted Theravance’s stock positively.
Theravance, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Celgene Corporation ( CELG - Analyst Report) appears to be more favorably placed in the biopharma space carrying a Zacks Rank #2 (Buy).