Theravance Reports Third Quarter 2006 Results
SOUTH SAN FRANCISCO, CA -- 10/26/2006 -- Theravance, Inc. (NASDAQ: THRX)
reported today its financial results for the third quarter ended September
30, 2006. The net loss for the third quarter of 2006 was $37.8 million
compared to $37.8 million during the same period of 2005. The loss was
primarily due to research and development costs associated with telavancin
Phase 3 clinical programs and additional stock-based compensation expense
associated with the adoption of the Financial Accounting Standards Board's
Statement No. 123 (revised 2004), "Share-Based Payment" (SFAS 123(R)).
Research and development costs of $39.1 million during the third quarter
2006 were $1.7 million lower than the quarter ended June 30, 2006, due to
lower clinical trial enrollment costs.
"This was an important and exciting quarter for Theravance," said Rick E
Winningham, Chief Executive Officer. "We reported positive results from
the company's telavancin Phase 3 program in complicated skin and skin
structure infections, saw promising initial results in our Phase 1
resistant Gram-positive antibiotic program with our unique heterodimer
compound, TD-1792, and, in October, initiated a Phase 2 program in GI
motility. We are on track to submit the NDA for telavancin by the end of
the year."
Program Highlights
Bacterial Infections Programs
Telavancin
We reported positive results from our Phase 3 studies for the treatment of
patients with serious Gram-positive complicated skin and skin structure
infections (cSSSI), including those due to resistant pathogens such as
methicillin-resistant Staphylococcus aureus (MRSA), and plan to file a new
drug application with the Food & Drug Administration by the end of the
year.
Our Phase 3 program for the treatment of resistant Gram-positive
hospital-acquired pneumonia continues to progress. Completion of
enrollment in this program will likely occur during the first half of 2007.
Sixteen telavancin posters were presented at the Interscience Conference on
Antimicrobial Agents and Chemotherapy (ICAAC) in September. In addition,
data from our Phase 3 cSSSI program were presented at the Third
International Symposium on Resistant Gram-Positive Infections and the
Infectious Diseases Society of America (IDSA) in October.
Heterodimer
We recently completed multiple-dose Phase 1 studies of our unique
heterodimer antibiotic, TD-1792, which combines the antibacterial
activities of a glycopeptide and a beta-lactam in one molecule. The
initial results of these studies demonstrated that TD-1792 was generally
well tolerated and had a profile consistent with once-daily dosing.
Respiratory Programs
Beyond Advair
Our collaboration with GlaxoSmithKline (GSK) to develop and commercialize a
Long-Acting Beta2 Agonist (LABA) product candidate for the treatment of
asthma and chronic obstructive pulmonary disease (COPD) continues to
progress, with two compounds expected to generate Phase 2b data by
mid-2007.
Inhaled Long-Acting Muscarinic Antagonist (LAMA) and Bifunctional
Muscarinic Antagonist-Beta2 Agonist (MABA) Programs
The first compound in our MABA program for the treatment of COPD
successfully completed single-dose Phase 1 studies and has recently begun
multiple-dose Phase 1 studies. Our LAMA program, also for COPD, continues
to progress.
Gastrointestinal (GI) Motility Dysfunction Program
We recently initiated a Phase 2 clinical program in GI motility dysfunction
with TD-5108, an investigational compound for the treatment of chronic
constipation. The goal of this program is to develop a product with a
once-a-day oral dosing and prokinetic efficacy superior to existing
market-leading medicines.
Financial Results
Revenue
Revenue was $5.5 million in the third quarter of 2006 compared to $3.0
million in the same period of 2005. This increase was primarily due to
higher amortization of upfront and milestone payments received from the
company's partnerships with GSK and Astellas Pharma Inc. (Astellas). All
payments received to date under these agreements are being amortized over
the relevant performance periods rather than recognized when received.
Research and Development
Research and development spending for the third quarter of 2006 increased
to $39.1 million compared to $37.0 million for the same period of 2005 and
decreased by $1.7 million compared to $40.8 million in the second quarter
of 2006. The year-over-year increase was primarily driven by higher
stock-based compensation associated with SFAS 123(R) offset by lower
external research and development costs associated with our Phase 3
programs for telavancin. Total research and development stock-based
compensation expense for the three months ended September 30, 2006 was $3.0
million compared to $0.8 million for the same period in 2005. Total
external research and development costs were $20.6 million in the third
quarter of 2006 compared to $22.0 million in the same period of 2005.
General and Administrative
General and administrative costs for the third quarter of 2006 increased to
$7.9 million compared to $5.3 million in the same period of 2005 primarily
driven by the adoption of SFAS 123(R) and higher employee and consulting
costs. Total general and administrative stock-based compensation expense
for the third quarter of 2006 was $1.7 million compared to $0.3 million for
the same period of 2005.
Cash and Cash Equivalents
Cash, cash equivalents and marketable securities totaled $267.1 million as
of September 30, 2006, a decrease of $26.4 million during the quarter.
This decrease was primarily due to cash usage of approximately $36.4
million during the third quarter offset by the receipt of an upfront
payment of $10.0 million from Astellas for the addition of Japan to the
companies' telavancin collaboration.
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 Daylight Time
today. To participate in the live call by telephone, please dial
800-810-0924 from the U.S., or 913-981-4900 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. 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 November 25, 2006. An audio replay will also be
available through 11:59 p.m. Eastern Standard Time on November 25, 2006 by
dialing 888-203-1112 from the U.S., or 719-457-0820 for international
callers, and entering confirmation code 2291460.
About Theravance
Theravance is a biopharmaceutical company with a pipeline of internally
discovered product candidates. 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 gastrointestinal motility dysfunction. Of the five programs
in development, two are in late stage -- its telavancin program focusing on
treating serious Gram-positive bacterial infections with Astellas Pharma
Inc. and the Beyond Advair collaboration with GlaxoSmithKline. By
leveraging its proprietary insight of multivalency to drug discovery
focused on validated targets, Theravance is pursuing a next generation drug
discovery strategy designed to discover superior medicines in large
markets. For more information, please visit the company's web site at
www.theravance.com.
THERAVANCE®, the Theravance logo, and MEDICINES THAT MAKE A DIFFERENCE®
are registered trademarks 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 Exchange Act and the Private Securities Litigation
Reform Act of 1995. Examples of such statements include statements
relating to the goals, timing and expected results of clinical and
preclinical studies, statements regarding the potential benefits and
mechanisms of action of drug candidates, statements concerning the goals
and timing of seeking regulatory approval of our product candidates, the
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 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
preclinical studies, the potential that results of clinical or preclinical
studies indicate product candidates are unsafe, ineffective, inferior or
not superior, and delays or failure to achieve regulatory approvals, 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 10-Q filed with the
Securities and Exchange Commission (SEC) on August 4, 2006, and the risks
discussed in our other filings with the 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,
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Revenue (1) $ 5,524 $ 3,006 $ 14,657 $ 8,676
Operating expenses:
Research and development (2) 39,103 37,034 128,562 96,120
General and
administrative (2) 7,868 5,349 24,041 18,200
---------- ---------- ---------- ----------
Total operating expenses 46,971 42,383 152,603 114,320
---------- ---------- ---------- ----------
Loss from operations (41,447) (39,377) (137,946) (105,644)
Interest and other income, net 3,875 1,716 10,234 5,153
Interest expense (208) (125) (495) (462)
---------- ---------- ---------- ----------
Net loss $ (37,780) $ (37,786) $ (128,207) $ (100,953)
========== ========== ========== ==========
Net loss per share (3) $ (0.63) $ (0.71) $ (2.18) $ (1.90)
========== ========== ========== ==========
Shares used in computing
net loss per share (3) 59,762 53,416 58,702 53,155
========== ========== ========== ==========
(1) Revenue includes amounts from GSK, a related party, of $3.4 million and
$9.7 million for the three months and nine months ended September 30,
2006, respectively, and $3.0 million and $8.7 million for the three
months and nine months ended September 30, 2005, respectively.
(2) 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,
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
(unaudited) (unaudited)
Research and development $ 3,042 $ 785 $ 9,378 $ 2,466
General and administrative 1,674 307 7,106 1,468
-------- -------- -------- --------
Total stock-based compensation
expense $ 4,716 $ 1,092 $ 16,484 $ 3,934
======== ======== ======== ========
(3) Shares used in computing net loss per share exclude approximately 10.4
million and 10.0 million shares issuable upon exercise of outstanding
stock options and warrants and shares subject to repurchase as of
September 30, 2006 and 2005, respectively, as their effect would be
antidilutive.
THERAVANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, December 31,
2006 2005
------------- -------------
(unaudited) (2)
Assets
Cash, cash equivalents and marketable
securities $ 223,255 $ 161,925
Other current assets 4,130 4,893
Marketable securities non-current 43,800 38,084
Property and equipment, net 14,281 13,180
Other assets 6,884 6,753
------------- -------------
Total assets $ 292,350 $ 224,835
============= =============
Liabilities and stockholders equity
Current liabilities, net of current portion
of deferred revenue (1) $ 32,769 $ 31,179
Deferred revenue (1) 158,587 128,245
Other long-term liabilities 6,960 5,827
Stockholders equity 94,034 59,584
------------- -------------
Total liabilities and stockholders equity $ 292,350 $ 224,835
============= =============
(1) Deferred revenue includes the current portion of $22.0 million and
$17.0 million as of September 30, 2006 and December 31, 2005,
respectively. The net increase in total deferred revenue is a result
of additional upfront and milestone payments that were earned under the
companys strategic alliance with GSK and its collaboration with
Astellas partially offset by the amortization of deferred revenue.
(2) The condensed consolidated balance sheet amounts at December 31, 2005
are derived from audited financial statements.