Theravance Reports Third Quarter 2012 Financial Results

Theravance Reports Third Quarter 2012 Financial Results 
SOUTH SAN FRANCISCO, CA -- (Marketwire) -- 10/30/12 --  Theravance,
Inc. (NASDAQ: THRX) reported today its financial results for the
quarter ended September 30, 2012. Revenue for the third quarter of
2012 was $1.4 million. Net loss for the third quarter of 2012 was
$34.7 million or $0.37 per share. Cash, cash equivalents, and
marketable securities totaled $362.4 million as of September 30,
2012. 
"Theravance made substantial progress in our clinical programs as
well as corporate development during the third quarter," said Rick E
Winningham, Chief Executive Officer. "In our respiratory
collaborations with GSK, presentations were made at ERS for the FF/VI
Phase 3 programs, the review of the regulatory filings for FF/VI has
commenced in the US and Europe, and the UMEC/VI Phase 3 COPD
registration program for US and Europe was completed. For our
non-respiratory programs, we announced positive results in a Phase 2b
study with Theravance's peripheral mu opioid receptor antagonist,
TD-1211, and we recently entered into partnerships with Merck, Alfa
Wassermann, and R-Pharm." 
Program Highlights  
Respiratory Programs with GlaxoSmithKline plc (GSK) 
Fluticasone Furoate/Vilanterol (FF/VI) 
FF/VI is an investigational once-daily inhaled corticosteroid
(ICS)/long-acting beta2 agonist (LABA) combination treatment,
comprising fluticasone furoate and vilanterol, for the maintenance
treatment of patients with chronic obstructive pulmonary disease
(COPD) and patients with asthma. FF/VI is administered by a new dry
powder inhaler called Ellipta(TM). Relvar(TM) (FF/VI for the European
Union (EU) and Japan), Breo(TM) (FF/VI for the US), and Ellipta(TM)
(for the EU, US and Japan) are proposed brand names and use of these
brand names has not yet been approved by any regulatory authority.  
In September 2012, GSK and Theravance announced that that the New
Drug Application (NDA) for FF/VI for patients with COPD was accepted
by the US Food and Drug Administration (FDA), indicating that the
application is sufficiently complete to permit a substantive review.
The Prescription Drug User Fee Act (PDUFA) goal date was confirmed as
May 12, 2013. GSK and Theravance also reported that the Marketing
Authorization Application (MAA) for 
FF/VI for COPD and asthma was
validated by the European Medicines Agency (EMA). In addition, GSK
also submitted a Japanese New Drug Application (JNDA) for FF/VI for
patients with COPD and asthma on September 25, 2012.  
In September 2012, at the European Respiratory Society Annual
Congress (ERS) in Vienna, Austria, data from the FF/VI programs in
COPD and asthma were presented, including a majority of the FF/VI
Phase 3a studies. 
Umeclidinium Bromide/Vilanterol (UMEC/VI)  
UMEC/VI is a once-daily investigational medicine, combining a
long-acting muscarinic antagonist (LAMA) umeclidinium bromide (UMEC),
and a LABA, VI, for the maintenance treatment of patients with COPD.
UMEC/VI is administered by the Ellipta(TM) dry powder inhaler.  
In August 2012, GSK and Theravance announced the completion of the
Phase 3 program involving approximately 6,000 patients with COPD. The
pivotal program for UMEC/VI includes two 24-week efficacy studies
that compared the combination UMEC/VI, its components and placebo,
two 24-week active comparator studies that compared the combination
with tiotropium, a widely prescribed maintenance bronchodilator for
COPD, and a 52-week safety study. Two non-pivotal 12-week crossover
exercise studies will also be included in the registrational package.
These studies support GSK's plans to commence global regulatory
submissions for UMEC/VI from the end of 2012.  
In September 2012, at ERS in Vienna, Austria, GSK presented data from
Phase 1 and Phase 2b studies of UMEC. In addition, on October 24,
2012, GSK presented analyses of the UMEC dose-response curve in
patients with COPD at CHEST, the annual meeting of the American
College of Chest Physicians, in Atlanta, Georgia. 
Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA)  
GSK961081 ('081) is an investigational, single molecule bifunctional
bronchodilator with both muscarinic antagonist and beta2 receptor
agonist activities. In September 2012, at ERS in Vienna, Austria,
data from the Phase 2b study of '081 were presented. 
Central Nervous System (CNS)/Pain Program 
Oral Peripheral Mu Opioid Receptor Antagonist - TD-1211  
TD-1211 is an investigational once-daily, orally administered,
peripherally selective, multivalent inhibitor of the mu opioid
receptor designed with a goal of alleviating gastrointestinal side
effects of opioid therapy without affecting analgesia. In July 2012,
Theravance announced positive topline results from the Phase 2b Study
0084, the key study in the Phase 2b program evaluating TD-1211 as
potential treatment for chronic, non-cancer pain patients with
opioid-induced constipation. The Phase 2b program consists of three
studies (0074, 0076 and 0084) designed to evaluate doses and dosing
regimens for Phase 3. The results support progression into Phase 3
development.  
Monoamine Reuptake Inhibitor - TD-9855 
TD-9855 is an investigational norepinephrine and serotonin reuptake
inhibitor (NSRI) for the treatment of central nervous system (CNS)
conditions such as Attention-Deficit/Hyperactivity Disorder (ADHD)
and chronic pain. TD-9855 is being evaluated in an ongoing Phase 2
safety and efficacy study in adults with ADHD. In addition,
Theravance plans to initiate a Phase 2 study with TD-9855 in patients
with fibromyalgia in the next few months.  
Corporate Development 
Theravance recently entered into partnership agreements for four of
its programs: velusetrag (or TD-5108), cardiovascular research,
TD-1792 and telavancin. 
Alfa Wassermann
 In October 2012, Theravance and Alfa Wassermann
S.p.A. entered into a development and commercialization agreement for
velusetrag, Theravance's investigational 5-HT4 agonist in development
for gastrointestinal motility disorders. Alfa Wassermann has an
exclusive option to develop and commercialize velusetrag in the EU,
Russia, China, Mexico and certain other countries.  
Merck
 In
October 2012, Merck, known as MSD outside the US and Canada, and
Theravance signed a collaboration agreement to discover, develop and
commercialize novel small molecule therapeutics directed towards a
target being investigated for the treatment of hypertension and heart
failure on an exclusive worldwide basis. 
R-Pharm
 In October 2012,
Theravance entered into two separate development and
commercialization agreements with R-Pharm. The first was for TD-1792,
Theravance's investigational glycopeptide-cephalosporin heterodimer
antibiotic for the treatment of resistant Gram-positive infections,
which has completed a Phase 2 proof-of-concept study. The second was
for telavancin, Theravance's lipoglycopeptide antibiotic approved in
the US. In both of the agreements, Theravance granted R-Pharm
exclusive development and commercialization rights in the Russian
Federation, Ukraine, the other member countries of the Commonwealth
of Independent States, and Georgia. 
Financial Results 
Revenue 
Revenue was $1.4 million for the third quarter of 2012 compared with
$6.4 million for the same period in 2011, a decrease of $5.0 million
primarily due to the January 6, 2012 termination of our global
collaboration arrangement with Astellas Pharma Inc. for the
development and commercialization of VIBATIV(R). 
Research and Development 
Research and development expense for the 
third quarter of 2012
decreased to $27.0 million compared with $27.8 million for the same
period in 2011. The decrease in the third quarter of 2012 was
primarily due to the completion of Phase 2 clinical activities
related to TD-1211 partially offset by higher consulting costs. Total
external research and development expense was $8.8 million during the
third quarter of 2012 compared with $9.5 million for the same period
in 2011. Total research and development stock-based compensation
expense for the third quarter of 2012 was $3.3 million compared with
$3.5 million for the same period in 2011. 
General and Administrative 
General and administrative expense for the third quarter of 2012 was
$7.8 million which is approximately the same as the third quarter of
2011. Total general and administrative stock-based compensation
expense for the third quarter of 2012 was $2.6 million compared with
$3.4 million for the same period in 2011. 
Cash and Cash Equivalents 
Cash, cash equivalents and marketable securities totaled $362.4
million as of September 30, 2012, a decrease of $16.3 million during
the third quarter. This decrease was primarily due to cash used in
operations partially offset by $8.9 million received from GSK for its
purchase of common stock in August 2012. 
Conference Call and Webcast Information 
As previously announced, Theravance has scheduled a conference call
to discuss this announcement beginning at 5:00 p.m. Eastern Daylight
Time today. 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 Theravance's web site at
www.theravance.com. To listen to the live call via the internet,
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 Theravance's web
site for 30 days through November 29, 2012. An audio replay will also
be available through 11:59 p.m. Eastern Standard Time on November 6,
2012 by dialing (855) 859-2056 from the U.S., or (404) 537-3406 for
international callers, and entering confirmation code 33043909.  
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.
Theravance's key programs include: Relvar(TM) or Breo(TM) (FF/VI),
umeclidinium bromide/vilanterol (UMEC/VI) and MABA (Bifunctional
Muscarinic Antagonist-Beta2 Agonist), each partnered with
GlaxoSmithKline plc, and its oral Peripheral Mu Opioid Receptor
Antagonist 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 Theravance's web site at www.theravance.com. 
THERAVANCE(R), the Theravance logo, and MEDICINES THAT MAKE A
DIFFERENCE(R) are registered trademarks of Theravance, Inc.  
Relvar(TM) or Breo(TM) (FF/VI) is an investigational medicine and is
not currently approved anywhere in the world. Relvar(TM), Breo(TM)
and Ellipta(TM) are trademarks of the GlaxoSmithKline group of
companies. The use of these brand names has not yet been approved by
any regulatory authority.  
VIBATIV(R) is a registered trademark of Theravance, 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 Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995.
Examples of such statements include statements relating to the status
and timing of clinical studies, data analysis and communication of
results, 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 the enabling capabilities of Theravance's approach to drug
discovery and its proprietary insights, statements concerning
expectations for the discovery, development and commercialization of
product candidates 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 and non-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 discover, 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 August 1, 2012 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        Nine Months Ended    
                               September 30,             September 30,      
                          -----------------------   ----------------------- 
                             2012         2011         2012         2011    
                          ----------   ----------   ----------   ---------- 
                                (unaudited)               (unaudited)       
                                                 
                           
Revenue                   $    1,430   $    6,431   $  129,960   $   19,150 
                                                                            
Operating expenses:                                                         
  Research and                                                              
   development (1)            27,026       27,837       89,778       71,099 
  General and                                                               
   administrative (1)          7,754        7,796       23,201       22,213 
                          ----------   ----------   ----------   ---------- 
Total operating expenses      34,780       35,633      112,979       93,312 
                          ----------   ----------   ----------   ---------- 
                                                                            
Income (Loss) from                                                          
 operations                  (33,350)     (29,202)      16,981      (74,162)
                                                                            
Interest and other                                                          
 income                          158           81          304          344 
Interest expense              (1,500)      (1,505)      (4,503)      (4,519)
                          ----------   ----------   ----------   ---------- 
Net income (loss)         $  (34,692)  $  (30,626)  $   12,782   $  (78,337)
                          ==========   ==========   ==========   ========== 
                                                                            
Net income (loss) per                                                       
 share:                                                                     
Basic                     $    (0.37)  $    (0.37)  $     0.14   $    (0.96)
                          ==========   ==========   ==========   ========== 
Diluted                   $    (0.37)  $    (0.37)  $     0.18   $    (0.96)
                          ==========   ==========   ==========   ========== 
                                                                            
Weighted average shares:                                                    
Basic                         95,027       82,490       89,271       81,777 
                          ==========   ==========   ==========   ========== 
Diluted                       95,027       82,490       98,381       81,777 
                          ==========   ==========   ==========   ========== 

 
(1) Amounts include stock-based compensation expense for the three
months and nine months ended September 30 as follows (in thousands):  


 
                                                                            
                                                                            
                                Three Months Ended       Nine Months Ended  
                                   September 30,           September 30,    
                              ----------------------  ----------------------
                                 2012        2011        2012        2011   
                              ----------  ----------  ----------  ----------
                                    (unaudited)             (unaudited)     
                                                                            
Research and development      $    3,259  $    3,510  $   10,329  $   10,021
General and administrative         2,571       3,380       7,715       8,685
                              ----------  ----------  ----------  ----------
Total stock-based                                                           
 compensation expense         $    5,830  $    6,890  $   18,044  $   18,706
                              ==========  ==========  ==========  ==========
                                                                            
                                                                            
                              THERAVANCE, INC.                              
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                               (In thousands)                               
                                               September 30,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                (unaudited)        (1)      
                                               -------------  ------------- 
                                                                            
Assets                                                                      
  Cash, cash equivalents and marketable                                     
   securities                                  $     362,406  $     240,915 
  Other current assets                                 9,091          3,848 
  Property and equipment, net                          9,579         10,372 
  Other assets                                         2,867          3,647 
                                               -------------  ------------- 
Total assets                                   $     383,943  $     258,782 
                                               =============  ============= 
                                                                            
                                                                            
Liabilities and stockholders' equity (net                                   
 capital deficiency)                                                        
  Current liabilities (2)                      $      27,090  $      45,496 
  Deferred revenue, non-current                        5,790        122,017 
  Convertible subordinated notes                     172,500        172,500 
  Other long-term liabilities                          5,275          5,821 
  Stockholders' equity (net capital                                         
   deficiency)                                       173,288        (87,052)
                                               -------------  ------------- 
Total liabilities and stockholders' equity                                  
 (net capital deficiency)                      $     383,943  $     258,782 
                                               =============  ============= 

 
(1) The condensed consolidated balance sheet amounts at December 31,
2011 are derived from audited financial statements. 
(2) Amounts include current portion of deferred revenue of $4.9
million and $18.7 million as of September 30, 2012 and December 31,
2011, respectively. 
Contact Information:
Michael W. Aguiar 
Senior Vice President and Chief Financial Officer 
650-808-4100 
investor.relations@theravance.com 
 
 
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