Theravance Reports Fourth Quarter and Full Year 2012 Financial Results

Theravance Reports Fourth Quarter and Full Year 2012 Financial Results 
SOUTH SAN FRANCISCO, CA -- (Marketwire) -- 02/12/13 --  Theravance,
Inc. (NASDAQ: THRX) (the "Company") reported today its financial
results for the fourth quarter and full year ended December 31, 2012.
Revenue for the full year was $135.8 million. Net loss for the fourth
quarter and full year of 2012 was $31.3 million and $18.5 million,
respectively, compared with $37.0 million and $115.3 million for the
same periods of 2011. Net loss per share was $0.33 and $0.20 for the
fourth quarter and full year of 2012, respectively, compared with a
net loss per share of $0.45 and $1.41 for the same periods of 2011.
Cash, cash equivalents, and marketable securities totaled $343.7
million as of December 31, 2012, an increase of $102.8 million from
December 31, 2011.  
"Theravance made significant progress in 2012, particularly in our
lead respiratory programs partnered with GSK," said Rick E
Winningham, Chief Executive Officer. "Looking forward, 2013 will be
more significant for Theravance with potential regulatory events for
RELVAR(TM)/BREO(TM), ANORO(TM), and VIBATIV(R). In addition, we
continue to progress our internal programs, including Phase 2 studies
in fibromyalgia and ADHD with TD-9855, a Phase 2b study in COPD with
TD-4208, and a Phase 2 study in gastroparesis with velusetrag.
Overall, we are well positioned both strategically and financially." 
Program Highlights  
Respiratory Programs with GlaxoSmithKline plc (GSK) 
RELVAR(TM) or BREO(TM) (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 (FF) and vilanterol (VI), 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 United States
(U.S.)), and ELLIPTA(TM) (for the EU, U.S. 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 the New Drug
Application (NDA) f
or FF/VI for patients with COPD was accepted by
the U.S. Food and Drug Administration (FDA), indicating that the
application is sufficiently complete to permit a substantive review.
The Prescription Drug User Fee Act goal date was confirmed as May 12,
2013 and the FDA's Pulmonary-Allergy Drugs Advisory Committee is
scheduled to discuss the NDA for BREO(TM) for COPD at a meeting on
March 7, 2013. GSK and Theravance also reported that the Marketing
Authorization Application for FF/VI for COPD and asthma was validated
by the European Medicines Agency (EMA) and GSK also submitted a
Japanese New Drug Application for FF/VI for patients with COPD and
asthma in September 2012. 
ANORO(TM) (Umeclidinium Bromide/Vilanterol, UMEC/VI)  
UMEC/VI is a once-daily investigational medicine, combining a
long-acting muscarinic antagonist (LAMA), 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 December 2012, GSK and Theravance announced the submission to the
FDA of a NDA for UMEC/VI for patients with COPD. In January 2013, GSK
and Theravance announced the submission of a regulatory application
to the EMA for UMEC/VI for patients with COPD, which has now been
validated by the EMA. Regulatory submissions for UMEC/VI are planned
in other countries during the course of 2013. 
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. Based on the results from the Phase 2b study, GSK
and Theravance plan to advance '081 monotherapy into Phase 3 in 2013
and the '081/FF combination into Phase 3-enabling studies shortly. 
Bacterial Infections Program 
VIBATIV(R) (telavancin) 
In November, 2012, Theravance announced a favorable outcome of the
FDA's Anti-Infective Drugs Advisory Committee meeting on VIBATIV(R)
(telavancin) for the treatment of nosocomial pneumonia (NP) due to
susceptible isolates of Gram-positive microorganisms. Theravance
remains in dialogue with the FDA on the NP indication and is working
toward re-establishing consistent product supply.  
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 consisted of three
studies (0074, 0076 and 0084) designed to evaluate doses and dosing
regimens for Phase 3. We are currently evaluating our Phase 3
strategy due to potentially evolving FDA requirements for this class
of drug. 
Monoamine Reuptake Inhibitor - TD-9855 
TD-9855 is an investigational norepinephrine and serotonin reuptake
inhibitor for the treatment of central nervous system 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, we initiated a Phase 2 study
with TD-9855 in patients with fibromyalgia in December 2012. 
Theravance Respiratory Program  
Long-Acting Muscarinic Antagonist - TD-4208  
In November 2011, we 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. In December
2012, we initiated a Phase 2b study to evaluate the safety and
pharmacokinetics of multiple doses of TD-4208.  
GI Motility Dysfunction Program  
Velusetrag 
Velusetrag, an oral, investigational medicine dosed once daily, is a
highly selective agonist with high intri
nsic activity at the human
5-HT4 receptor. In October 2012, we entered into an exclusive
development and commercialization agreement with Alfa Wassermann for
velusetrag, our lead compound in the 5-HT4 program, covering the EU,
Russia, China, Mexico and certain other countries. In January 2013,
Theravance and Alfa Wassermann announced the initiation of a Phase 2
proof-of-concept study to evaluate the efficacy and safety of
velusetrag for the treatment of patients with diabetic or idiopathic
gastroparesis.  
Financial Results 
Revenue 
Revenue was $5.8 million for the fourth quarter of 2012 compared with
$5.4 million for the same period in 2011, an increase of $0.4
million. For the full year of 2012, revenue was $135.8 million,
compared with $24.5 million for the full year of 2011. The increase
for the fourth quarter of 2012 was primarily due to the recognition
of a portion of the upfront licensing fee from our collaboration
arrangement with Merck, partially offset by a decrease of royalty
revenue from sales of VIBATIV(R). The increase for the full year of
2012 reflected the accelerated recognition of deferred revenue of
$125.8 million from the global collaboration arrangement with
Astellas Pharma Inc. (Astellas) for the development and
commercialization of VIBATIV(R) in the first quarter of 2012. This
accelerated recognition was the result of the termination of the
Astellas agreement on January 6, 2
012. 
Research and Development 
Research and development expense for the fourth quarter of 2012
decreased to $28.1 million compared with $32.5 million for the same
period in 2011. For the full year of 2012, research and development
expense was $117.9 million compared with $103.6 million for the full
year 2011. The decrease in the fourth quarter over the same period
last year was primarily due to the completion of Phase 2 clinical
activities related to TD-1211, a reduction of research and
development costs due to funding the Company's research programs by
collaboration partners, partially offset by higher costs related to
clinical activities for TD-9855. The full year of 2012 increase was
primarily due to increases in outside services related the Phase 2
clinical activities for TD-1211, TD-9855, higher employee related
costs and costs related to VIBATIV(R) Advisory Committee activities.
Total external research and development expense for the fourth
quarter and full year of 2012 was $10.3 million and $43.1 million,
respectively, compared with $12.9 million and $30.8 million,
respectively, for the fourth quarter and the full year of 2011. Total
research and development stock-based compensation expense for the
fourth quarter and full year of 2012 was $3.3 million and $13.7
million, respectively, compared with $3.4 million and $13.4 million,
respectively, for the fourth quarter and full year of 2011. 
General and Administrative 
General and administrative expense for the fourth quarter of 2012
decreased to $7.7 million from $8.5 million for the same period in
2011. For the full year of 2012, general and administrative expense
was $30.9 million compared with $30.7 million for the full year of
2011. Total general and administrative stock-based compensation
expense for the fourth quarter and the full year of 2012 was $2.4
million and $10.1 million, respectively, compared with $2.8 million
and $11.5 million, respectively, for the fourth quarter and full year
of 2011. 
Cash and Cash Equivalents 
Cash, cash equivalents and marketable securities totaled $343.7
million as of December 31, 2012, an increase of $102.8 million from
December 31, 2011. This increase was primarily due to net proceeds of
$229.3 million received from the Company's private placements of
common stock to an affiliate of GSK, partially offset by cash used in
operations of $128.0 million. On January 24, 2013, we announced the
closing of a convertible subordinated notes offering with net
proceeds of approximately $244.4 million which are not reflected in
the December 31, 2012 cash, cash equivalents, and marketable
securities balance. 
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 Standard
Time today. To participa
te 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 March 14, 2013. An audio replay will also be
available through 11:59 p.m. Eastern Standard Time on February 19,
2013 by dialing (855) 859-2056 from the U.S., or (404) 537-3406 for
international callers, and entering confirmation code 85984300.  
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),
ANORO(TM) (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) and ANORO(TM) (UMEC/VI) are
investigational medicines and are not currently approved anywhere in
the world. RELVAR(TM), BREO(TM), ANORO(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.  
VIBATIV(R) Important Safety Information (U.S.) 
Fetal Risk 
Women of childbearing potential should have a serum pregnancy test
prior to administration of VIBATIV(R). Avoid use of VIBATIV(R) during
pregnancy unless the potential benefit to the patient outweighs the
potential risk to the fetus. Adverse developmental outcomes observed
in three animal species at clinically relevant doses raise concerns
about potential adverse developmental outcomes in humans. If not
already pregnant, women of childbearing potential should use
effective contraception during VIBATIV(R) treatment. 
Nephrotoxicity 
New onset or worsening renal impairment occurred in patients who
received VIBATIV(R). Renal adverse events were more likely to occur
in patients with baseline comorbidities known to predispose patients
to kidney dysfunction and in patients who received concomitant
medications known to affect kidney function. Monitor renal function
in all patients receiving VIBATIV(R) prior to initiation of
treatment, during treatment, and at the end of therapy. If renal
function decreases, the benefit of continuing VIBATIV(R) versus
discontinuing and initiating therapy with an alternative agent should
be assessed. Clinical cure rates in telavancin-treated patients were
lower in patients with baseline CrCl ≤ 50 mL/min compared to
those with CrCl > 50 mL/min. Consider these data when selecting
antibacterial therapy for use in patients with baseline
moderate/severe renal impairment.  
Geriatric Use  
Telavancin is substantially excreted by the kidney, and the risk of
adverse reactions may be greater in patients with impaired renal
function. Because elderly patients are more likely to have decreased
renal function, care should be taken in dose selection in this age
group. 
Infusion Related Reactions 
VIBATIV(R) is a lipoglycopeptide antibacterial agent and should be
administered over a period of 60 minutes to reduce the risk of
infusion-related reactions. Rapid intravenous infusions of the
glycopeptide class of antimicrobial agents can cause "Red-man
Syndrome" like reactions including: flushing of the upper body,
urticaria, pruritus, or rash.  
Clostridium difficile-Associated Diarrhea  
Clostridium difficile-associated diarrhea (CDAD) has been reported
with nearly all antibacterial agents and may range in severity from
mild diarrhea to fatal colitis. CDAD must be considered in all
patients who present with diarrhea following antibiotic use. 
Development of Drug-Resistant Bacteria 
Prescribing VIBATIV(R) in the absence of a proven or strongly
suspected bacterial infection is unlikely to provide benefit to the
patient and increases the risk of the development of drug-resistant
bacteria. As with other antibacterial drugs, use of VIBATIV(R) may
result in overgrowth of nonsusceptible organisms, including fungi.  
QTc Prolongation 
Caution is warranted when prescribing VIBATIV(R) to patients taking
drugs known to prolong the QT interval. In a study involving healthy
volunteers, VIBATIV(R) prolonged the QTc interval. Use of VIBATIV(R)
should be avoided in patients with congenital long QT syndrome, known
prolongation of the QTc interval, uncompensated heart failure, or
severe left ventricular hypertrophy. 
Coagulation Test Interference 
VIBATIV(R) does not interfere with coagulation, but does interfere
with certain tests used to monitor coagulation such as prothrombin
time, international normalized ratio, activ
ated partial
thromboplastin time, activated clotting time, and coagulation based
factor Xa tests. Blood samples for these coagulation tests should be
collected as close as possible prior to a patient's next dose of
VIBATIV(R).  
Adverse Reactions 
The most common adverse reactions (≥ 10% of patients treated
with VIBATIV(R)) observed in the Phase 3 cSSSI clinical trials were
taste disturbance, nausea, vomiting, and foamy urine.  
In the Phase 3 cSSSI clinical trials, serious adverse events were
reported in 7% of patients treated with VIBATIV(R) and most commonly
included renal, respiratory, or cardiac events. Serious adverse
events were reported in 5% of vancomycin-treated patients, and most
commonly included cardiac, respiratory, or infectious events. 
For full Prescribing Information, including Boxed Warning and
Medication Guide in the US, please visit www.VIBATIV.com. 
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 (including with
respect to VIBATIV(R) statements regarding any expectation that we
will be able to respond fully or adequately to FDA's requests using
currently existing clinical data and any expectation that the FDA
will approve the VIBATIV(R) nosocomial pneumonia NDA on the basis of
existing preclinical and clinical data or at all), 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
our 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 October 31, 2012 and in Theravance's
prospectus supplement filed with the SEC on January 18, 2013 pursuant
to Rule 424(b)(5). Given these uncertainties, you should not place
undue reliance on these forward-looking statements. Theravance
assumes no obligation to update its forward-looking statements. 
(THRX-F) 


 
                                                                            
                                                                            
                              THERAVANCE, INC.                              
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                   (In thousands, except per share data)                    
                                                                            
                              Three Months Ended      Twelve Months Ended   
                                 December 31,             December 31,      
                            ----------------------  ----------------------- 
                               2012        2011         2012        2011    
                            ----------  ----------  -----------  ---------- 
                                  (unaudited)       (unaudited)      (2)    
                            ----------------------  -----------  ---------- 
                                                                            
Revenue                     $    5,799  $    5,361  $   135,758  $   24,512 
                                                                            
Operating expenses:                                                         
  Research and development                                                  
   (1)                          28,120      32,468      117,898     103,568 
  General and                                                               
   administrative (1)            7,658       8,469       30,859      30,681 
                            ----------  ----------  -----------  ---------- 
Total operating expenses        35,778      40,937      148,757     134,249 
                            ----------  ----------  -----------  ---------- 
                                                                            
Loss from operations           (29,979)    (35,576)     (12,999)   (109,737)
                                                                            
Interest and other income          156          71          460         415 
Interest expense                (1,500)     (1,502)      (6,003)     (6,022)
                            ----------  ----------  -----------  ---------- 
Net loss                    $  (31,323) $  (37,007) $   (18,542) $ (115,344)
                            ==========  ==========  ===========  ========== 
Net loss per share:              
                                           
Basic and Diluted           $    (0.33) $    (0.45) $     (0.20) $    (1.41)
                            ==========  ==========  ===========  ========== 
Weighted average shares:                                                    
Basic and Diluted               95,787      82,862       90,909      82,051 
                            ==========  ==========  ===========  ========== 
                                                                            
(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 Ended  
                                  December 31,            December 31,      
                            ----------------------- ------------------------
                                2012        2011        2012         2011   
                            ----------- ----------- ------------ -----------
                                  (unaudited)              (unaudited)      
                                                                            
Research and development    $     3,338 $     3,401 $     13,667 $    13,422
General and administrative        2,401       2,809       10,116      11,494
                            ----------- ----------- ------------ -----------
Total stock-based                                                           
 compensation expense       $     5,739 $     6,210 $     23,783 $    24,916
                            =========== =========== ============ ===========
                                                                            
(2) The condensed consolidated statement of operations amounts for the year 
    ended December 31, 2011 are derived from audited financial statements.  
                                                                            
                                                                            
                                                                            
                              THERAVANCE, INC.                              
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                               (In thousands)                               
                                                  December 30, December 31, 
                                                      2012         2011     
                                                 ------------- ------------ 
                                                  (unaudited)       (1)     
                                                 ------------- ------------ 
                                                                            
Assets                                                                      
  Cash, cash equivalents and marketable                                     
   securities                                    $     343,683 $    240,915 
  Other current assets                                   5,130        3,848 
  Inventory                                              7,514           -- 
  Property and equipment, net                            9,154       10,372 
  Other assets                                           3,101        3,647 
                                                 ------------- ------------ 
  Total assets                                   $     368,582 $    258,782 
                                                 ============= ============ 
                                                                            
                                                                            
Liabilities and stockholders' equity (net                                   
 capital deficiency)                                                        
  Current liabilities (2)                        $      29,966 $     45,496 
  Deferred revenue, non-current                          6,014      122,017 
  Convertible subordinated notes                       172,500      172,500 
  Other long-term liabilities                            5,074        5,821 
  Stockholders' equity (net capital deficiency)        155,028      (87,052)
                                                 ------------- ------------ 
  Total liabilities and stockholders' equity                                
 (net capital deficiency)                        $     368,582 $    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 $4.6 million and 
    $18.7 million as of December 31, 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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