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Theravance Reports Fourth Quarter and Full Year 2011 Financial Results

Thu, 02/09/2012 - 11:45am
The Associated Press

(http://www.theravance.com)

Theravance, Inc. (NASDAQ: THRX) reported today its financial results

for the fourth quarter and full year ended December 31, 2011. Revenue

for the full year was $24.5 million. Net loss for the fourth quarter

and full year of 2011 was $37.0 million and $115.3 million,

respectively, compared with $19.3 million and $83.9 million for the

same periods of 2010. Net loss per share was $0.45 and $1.41 for the

fourth quarter and full year of 2011, respectively, compared with a

net loss per share of $0.25 and $1.16 for the same periods of 2010.

Cash, cash equivalents, and marketable securities totaled $240.9

million as of December 31, 2011, a decrease of $68.7 million since

December 31, 2010.

"I am very pleased with the progress Theravance has made since the

beginning of 2011 and I am excited by our potential milestones in

2012," said Rick E Winningham, Chief Executive Officer. "In our two

lead respiratory programs with GSK, we expect GSK to submit regulatory

filings for RELOVAIR in both COPD and asthma, and to complete the

Phase 3 registrational program with LAMA/LABA this year. Recently, GSK

announced the completion of a low-dose Phase 2b study in COPD with

'719 and that the results of this study support the doses and dosing

regimen being studied in Phase 3. Together, these programs provide the

opportunity to treat a wide range of patients suffering from these

serious diseases. We look forward to another productive and successful

year."

Program Highlights

Respiratory Programs with GlaxoSmithKline plc (GSK)

RELOVAIR

RELOVAIR is an investigational once-daily inhaled corticosteroid

(ICS)/long-acting beta2 agonist (LABA) combination treatment,

comprising fluticasone furoate and vilanterol (FF/VI), currently in

development for the treatment of patients with chronic obstructive

pulmonary disease (COPD) or asthma.

In January 2012, Theravance and GSK announced that GSK intends to

commence global regulatory filings in COPD and asthma beginning in

mid-2012 based upon the initial outcomes from pivotal Phase 3 studies

for once-daily RELOVAIR in COPD and asthma. For asthma, GSK will

continue discussions with the U.S. Food and Drug Administration (FDA)

on the regulatory requirements for a U.S. asthma indication.

LAMA/LABA Combination (GSK573719/Vilanterol or '719/VI)

Enrollment is complete for the seven ongoing studies in the Phase 3a

program for the once-daily LAMA/LABA dual bronchodilator '719/VI.

'719/VI combines two bronchodilators currently under development --

'719, a long-acting muscarinic antagonist (LAMA) and VI, a LABA. These

two molecules provide two mechanisms of bronchodilation for patients

with COPD: antagonism of acetylcholine muscarinic receptors and

agonism of beta2 adrenoreceptors.

The LAMA/LABA Phase 3a program, which will evaluate over 5,000

patients with COPD globally, consists of a 52-week study to evaluate

the long term safety and tolerability of '719 (125mcg) alone, as well

as the combination '719/VI (125/25mcg), two large 6-month pivotal

studies that will compare improvements in lung function between

'719/VI, its components and placebo, two 6-month studies to compare

the combination with its components and tiotropium and two studies to

assess the effect of '719/VI on exercise endurance. The Phase 3

program will investigate two doses of '719 (125mcg and 62.5mcg) and

two doses of the combination '719/VI (125/25mcg and 62.5/25mcg). The

LAMA/LABA Phase 3 program is expected to be completed in 2012.

In October 2011, data from a Phase 2b study of '719 was presented at

CHEST, the annual meeting of the American College of Chest Physicians

(ACCP), in Honolulu, Hawaii. Recently, GSK announced the completion of

a Phase 2b study evaluating lower doses of '719 in COPD. The results

of this study support the doses and dosing regimen being studied in

Phase 3.

Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA)

'081 is a single molecule bifunctional bronchodilator with both

muscarinic antagonist and beta2 receptor agonist activity. GSK

recently completed a Phase 2b study with '081 and Theravance expects

to report topline data during the first half of 2012. In addition, a

Phase 1 study with '081 in combination with fluticasone propionate

(FP), an ICS, has been completed, and a number of non-clinical studies

are ongoing.

In October 2011, Theravance and GSK amended the 2004 Strategic

Alliance Agreement to expand the MABA program. Theravance granted to

GSK an exclusive license to develop and commercialize additional

preclinical MABA compounds discovered by Theravance. Theravance

received an upfront payment of $1.0 million and has the potential to

receive clinical, regulatory and commercial milestone payments as well

as royalties on worldwide net sales if one of these MABA compounds is

successfully commercialized. In connection with this amendment,

Theravance regained full rights to its MonoAmine Reuptake INhibitor

(MARIN) program, which is currently in Phase 2 development, and its

Angiotensin Receptor-NEP Inhibitor (ARNI) program in preclinical

development.

Theravance Respiratory Program

Long-Acting Muscarinic Antagonist (LAMA) -- TD-4208

In November 2011, Theravance announced positive topline results from a

Phase 2a single-dose COPD study of TD-4208, an investigational inhaled

LAMA discovered by Theravance. In this study, TD-4208 met the primary

endpoint by demonstrating a statistically significant mean change from

baseline in peak forced expiratory volume in one second (FEV1)

compared to placebo, and was generally well-tolerated.

Bacterial Infections

VIBATIV@ (telavancin) for injection

On January 6, 2012, Theravance regained full global rights to

VIBATIV@, a bactericidal, once-daily injectable lipoglycopeptide

antibiotic discovered by Theravance and approved for use in the U.S.,

Canada and the European Union. Theravance is evaluating global

commercialization alternatives for VIBATIV@ either alone or with

partners.

Central Nervous System (CNS)/Pain Program

Oral Peripheral Mu Opioid Receptor Antagonist (P?MA) -- TD-1211

Enrollment is progressing in the Phase 2b program, which will assess

the safety, tolerability and clinical activity of TD-1211 in patients

with opioid-induced constipation (OIC). This program is evaluating

several doses and dosing regimens to provide information for the

design of the Phase 3 program. TD-1211 is an investigational

once-daily, orally-administered, peripherally selective, multivalent

inhibitor of the mu opioid receptor designed to alleviate

gastrointestinal side effects of opioid therapy without affecting

analgesia.

MonoAmine Reuptake INhibitor (MARIN) -- TD-9855

In December 2011, Theravance announced the initiation of an

Attention-Deficit/Hyperactivity Disorder (ADHD) Phase 2

proof-of-concept study with TD-9855, the lead compound in Theravance's

MARIN program. This Phase 2 study will evaluate the safety and

efficacy of two different doses of TD-9855 in adults with ADHD.

TD-9855 is an investigational norepinephrine and serotonin reuptake

inhibitor (NSRI) discovered by Theravance for the treatment of central

nervous system (CNS) conditions such as ADHD and chronic pain.

Financial Results

Revenue

Revenue was $5.4 million for the fourth quarter of 2011 compared with

$6.9 million for the same period in 2010, a decrease of $1.5 million.

During the fourth quarter, $0.3 million of royalty revenue was earned

from VIBATIV@ net sales of $1.6 million. For the full year of 2011,

revenue was $24.5 million, compared with $24.2 million for the full

year of 2010.

Research and Development

Research and development expense for the fourth quarter of 2011

increased to $32.5 million compared with $17.5 million for the same

period in 2010. For the full year of 2011, research and development

expense was $103.5 million compared with $75.1 million for the full

year 2010. The increase in the fourth quarter and the full year of

2011 was primarily due to clinical costs related to our P?MA and MARIN

programs and preclinical expenses related to our Hepatitis C virus

(HCV) and cardiovascular programs in late-stage discovery. Total

external research and development expense for the fourth quarter and

full year of 2011 was $12.9 million and $30.8 million, respectively,

compared with $1.3 million and $12.2 million, respectively, for the

fourth quarter and full year 2010. Total research and development

stock-based compensation expense for the fourth quarter and full year

2011 was $3.4 million and $13.4 million, respectively, compared with

$2.6 million and $10.3 million, respectively, for the fourth quarter

and full year 2010.

General and Administrative

General and administrative expense for the fourth quarter of 2011

increased to $8.5 million from $7.4 million for the same period in

2010. For the full year of 2011, general and administrative expense

was $30.7 million compared with $27.5 million for the full year of

2010. The increase in the fourth quarter and the full year of 2011 was

primarily due to higher employee-related and external expenses offset

by lower facilities-related costs. Total general and administrative

stock-based compensation expense for the fourth quarter and full year

of 2011 was $2.8 million and $11.5 million, respectively, compared

with $2.1 million and $8.7 million, respectively, for the fourth

quarter and full year of 2010.

Cash and Cash Equivalents

Cash, cash equivalents and marketable securities totaled $240.9

million as of December 31, 2011, a decrease of $24.3 million during

the fourth quarter. This decrease was primarily due to cash used in

operations offset by the $1.0 million upfront license fee received

from GSK upon licensing the preclinical MABAs in October 2011 and $1.3

million received from GSK for the purchase of common stock in November

2011.

Conference Call and Webcast Information

As previously announced, the Company has scheduled a conference call

to discuss this announcement beginning at 5:00 p.m. Eastern Standard

Time. To participate in the live call by telephone, please dial (877)

837-3908 from the U.S., or (973) 890-8166 for international callers.

Those interested in listening to the conference call live via the

internet may do so by visiting the company's web site at

www.theravance.com(http://ctt.marketwire.com/?release849975&id1250332&type1&urlhttp%3a%2f%2fwww.theravance.com%2f).

To listen to the live call, please go to the web site 15 minutes prior

to its start to register, download, and install any necessary audio

software.

A replay of the conference call will be available on the company's web

site for 30 days through March 10, 2012. An audio replay will also be

available through 11:59 p.m. Eastern Standard Time on February 16,

2012 by dialing (855) 859-2056 from the U.S., or (404) 537-3406 for

international callers, and entering confirmation code 43487593.

About Theravance

Theravance is a biopharmaceutical company with a pipeline of

internally discovered product candidates and strategic collaborations

with pharmaceutical companies. Theravance is focused on the discovery,

development and commercialization of small molecule medicines across a

number of therapeutic areas including respiratory disease, bacterial

infections, and central nervous system (CNS)/pain. The Company's key

programs include: RELOVAIR, LAMA/LABA ('719/vilanterol (VI)) and MABA

(Bifunctional Muscarinic Antagonist-Beta2 Agonist), each partnered

with GlaxoSmithKline plc, and its oral Peripheral Mu Opioid Receptor

Antagonist (P?MA) program. By leveraging its proprietary insight of

multivalency to drug discovery, Theravance is pursuing a best-in-class

strategy designed to discover superior medicines in areas of

significant unmet medical need. For more information, please visit the

company's web site at

www.theravance.com(http://ctt.marketwire.com/?release849975&id1250335&type1&urlhttp%3a%2f%2fwww.theravance.com%2f).

THERAVANCE@, the Theravance logo, and MEDICINES THAT MAKE A

DIFFERENCE@ are registered trademarks of Theravance, Inc.

RELOVAIR is a trademark of the GlaxoSmithKline group of companies.

VIBATIV@ is a registered trademark of Astellas Pharma Inc.

This press release contains and the conference call will contain

certain "forward-looking" statements as that term is defined in the

Private Securities Litigation Reform Act of 1995 regarding, among

other things, statements relating to goals, plans, objectives and

future events. Theravance intends such forward-looking statements to

be covered by the safe harbor provisions for forward-looking

statements contained in Section 21E of the Exchange Act and the

Private Securities Litigation Reform Act of 1995. Examples of such

statements include statements relating to the timing of clinical

studies, data analysis and communication, statements regarding the

potential benefits and mechanisms of action of drug candidates,

statements concerning the timing of seeking regulatory approval of our

product candidates, statements concerning enabling capabilities of

Theravance's approach to drug discovery and its proprietary insights,

statements concerning expectations for product candidates through

development and commercialization and projections of revenue, expenses

and other financial items. These statements are based on the current

estimates and assumptions of the management of Theravance as of the

date of this press release and the conference call and are subject to

risks, uncertainties, changes in circumstances, assumptions and other

factors that may cause the actual results of Theravance to be

materially different from those reflected in its forward-looking

statements. Important factors that could cause actual results to

differ materially from those indicated by such forward-looking

statements include, among others, risks related to delays or

difficulties in commencing or completing clinical studies, the

potential that results of clinical or non-clinical studies indicate

product candidates are unsafe or ineffective, our dependence on third

parties in the conduct of our clinical studies, delays or failure to

achieve regulatory approvals for product candidates, risks of relying

on third-party manufacturers for the supply of our product and product

candidates and risks of collaborating with third parties to develop

and commercialize products. These and other risks are described in

greater detail under the heading "Risk Factors" contained in

Theravance's Quarterly Report on Form 10-Q filed with the Securities

and Exchange Commission (SEC) on November 2, 2011 and the risks

discussed in our other period filings with SEC. Given these

uncertainties, you should not place undue reliance on these

forward-looking statements. Theravance assumes no obligation to update

its forward-looking statements.

THERAVANCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended Twelve Months Ended

December 31, December 31,

--------------------------------------------------

2011 2010 2011 2010

------------------------ ------------------------

(unaudited) (unaudited) (2)

------------------------ ------------------------

Revenue $ 5,361 $ 6,942 $ 24,512 $ 24,223

Operating expenses:

Research and

development (1) 32,468 17,476 103,568 75,070

General and

administrative (1) 8,469 7,400 30,681 27,476

----------- ----------- ----------- -----------

Total operating expenses 40,937 24,876 134,249 102,546

----------- ----------- ----------- -----------

Loss from operations (35,576) (17,934) (109,737) (78,323)

Interest and other

income 71 141 415 505

Interest expense (1,502) (1,506) (6,022) (6,044)

----------- ----------- ----------- -----------

Net loss $ (37,007) $ (19,299) $ (115,344) $ (83,862)

Basic and diluted net

loss per share $ (0.45) $ (0.25) $ (1.41) $ (1.16)

Shares used in computing

basic and diluted net

loss per share 82,862 76,210 82,051 72,070

(1) Amounts include stock-based compensation expense for the three months

and twelve months ended December 31 as follows (in thousands):

Three Months Ended Twelve Months

December 31, Ended December 31,

------------------------ ------------------------

2011 2010 2011 2010

------------------------ ------------------------

(unaudited) (unaudited)

Research and development $ 3,401 $ 2,613 $ 13,422 $ 10,322

General and

administrative 2,809 2,080 11,494 8,687

----------- ----------- ----------- -----------

Total stock-based

compensation expense $ 6,210 $ 4,693 $ 24,916 $ 19,009

(2) The condensed consolidated statement of operations amounts for the year

ended December 31, 2010 are derived from audited financial statements.

THERAVANCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

December 31, December 31,

2011 2010

------------ ------------

(unaudited) (2)

------------ ------------

Assets

Cash, cash equivalents and marketable

securities $ 240,915 $ 309,634

Other current assets 3,848 6,720

Property and equipment, net 10,372 10,215

Other assets 3,647 4,633

------------ ------------

Total assets $ 258,782 $ 331,202

Liabilities and stockholders' net capital

deficiency

Current liabilities (1) $ 45,496 $ 40,054

Deferred revenue 122,017 137,425

Convertible subordinated notes 172,500 172,500

Other long-term liabilities 5,821 3,643

Stockholders' net capital deficiency (87,052) (22,420)

------------ ------------

Total liabilities and stockholders' net

capital deficiency $ 258,782 $ 331,202

(1) Amounts include current portion of deferred revenue of $18.7 million and

$21.9 million as of December 31, 2011 and December 31, 2010, respectively.

(2) The condensed consolidated balance sheet amounts at December 31, 2010

are derived from audited financial statements.

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