Theravance's Loss Widens - Analyst Blog
Theravance (THRX) reported first quarter fiscal 2010 loss per share of 35 cents, 7 cents more than the Zacks Consensus Estimate and worse than the loss of 29 cents in the year-ago period.
Theravance earns revenues in the form of milestone payments from its partners including GlaxoSmithKline (GSK) and Astellas Pharma. Revenues were $5.7 million during the quarter compared with $9.5 million in the first quarter of 2009. Last year’s revenues included the recognition of deferred revenue of $4.2 million associated with the company's long-acting muscarinic antagonist program, the rights to which were returned by Glaxo.
Operating expenses for the quarter remained almost unchanged at $26.8 million. While R&D expenses increased 4%, G&A expenses came down 8.2% primarily due to lower employee-related costs. R&D expenses in the corresponding year-ago period included a one-time reimbursement from Astellas Pharma, which lowered expenses by $2.6 million.
Theravance exited the quarter with $225.4 million in cash, cash equivalents and marketable securities, more than $155.4 million at the end of December 2009. The primary reason for the increase was a public offering of common stock last month, which fetched the company $93.5 million.
Theravance also provided an update on its pipeline. We believe the company’s biggest potential lies with the Relovair program, which is being pursued in collaboration with GlaxoSmithKline. The program is aimed at evaluating treatment options for asthma and chronic obstructive pulmonary disease (COPD).
While enrollment in the phase III study for asthma patients began in March 2010, enrollment in the phase III study for COPD patients has been on since October 2009.
The company recently began a phase II “proof of concept" clinical trial with TD-1211. The drug − an orally administered peripherally selective mu opioid receptor antagonist (PUMA) − is being studied to evaluate its effectiveness, tolerability and safety in patients with opioid-induced constipation (OIC).
During the fourth quarter of 2009, Theravance launched Vibativ (telavancin), currently its only marketed product in the US for the treatment of complicated skin and skin structure infections (cSSSI) caused by gram-positive bacteria. While the drug will be marketed and sold by Astellas, Theravance will receive royalties on global sales. In the US, the company will help Astellas market the drug for the first three years post approval.
During the conference call, Theravance announced that Astellas has iplemented a price increase for the drug, from $50 to $52 for a 250 mg vial and from $150 to $155 for a 700 mg vial.
Theravance was also looking to get telavancin approved for the treatment of hospital-acquired pneumonia (HAP). Although the company submitted an application for the HAP indication in January 2009, the US Food and Drug Administration (FDA) issued a complete response letter (CRL) stating certain shortcomings related to its studies. To add to its problems, the FDA indicated that the additional data submitted by the company was incomplete and suggested a design for a new clinical trial. The agency also stated that the review process will not begin till it receives a complete response from the company. With respect to the application for HAP, the FDA requires data from an additional trial. However, Theravance does not have any plans to conduct additional trials at present. Hence, the approval of telavancin for HAP is not possible in the near future.
We are currently “Neutral" on the stock.
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