Theravance Reports Second Quarter 2007 Financial Results
SOUTH SAN FRANCISCO, CA -- 07/26/2007 -- Theravance, Inc. (NASDAQ: THRX)
reported today its financial results for the quarter ended June 30, 2007.
Net loss for the second quarter of 2007 was $45.1 million, compared with
$41.5 million for the same period of 2006, an increase of $3.6 million.
Net loss per share was $0.75 for the second quarter 2007 compared with a
net loss per share of $0.70 for the second quarter 2006.
"We have made significant progress in our pipeline in the last couple of
months," said Rick E Winningham, Chief Executive Officer. "We reported
positive results from two proof-of-concept studies: an approximately
400-patient study with TD-5108 for the treatment of chronic constipation
and an approximately 200-patient study with TD-1792 for the treatment of
complicated skin and skin structure infections caused by Gram-positive
bacteria. We also completed enrollment in our telavancin Phase 3 program
for the treatment of hospital-acquired pneumonia; this was the largest
Phase 3 program ever conducted in Gram-positive pneumonia. As a result of
our continued clinical success, Theravance now has four programs that have
achieved proof of concept. In addition, the telavancin NDA is currently
under review at the FDA, and the telavancin MAA is under review at the
EMEA."
Program Highlights
Bacterial Infections Programs
Telavancin
Our New Drug Application (NDA) for telavancin for the treatment of
complicated skin and skin structure infections (cSSSI) caused by
Gram-positive bacteria, including resistant pathogens such as
methicillin-resistant Staphylococcus aureus (MRSA), is under review at the
U.S. Food and Drug Administration (FDA). The FDA Prescription Drug User
Fee Act (PDUFA) target action date for telavancin is mid to late October
2007.
Our telavancin Phase 3 program for the treatment of hospital-acquired
pneumonia (HAP) caused by Gram-positive bacteria, including resistant
pathogens such as MRSA, has completed enrollment, with data expected by the
end of 2007.
TD-1792
We reported positive results from our Phase 2 cSSSI clinical study with
TD-1792, our next-generation antibiotic for the treatment of resistant
Gram-positive infections, including resistant pathogens such as MRSA. The
study met its primary endpoint of non-inferiority compared to vancomycin,
met key secondary endpoints, and TD-1792 demonstrated a favorable
tolerability profile.
Respiratory Programs
Beyond Advair
Our collaboration with GlaxoSmithKline plc (GSK) to develop and
commercialize a once-daily Long-Acting Beta2 Agonist (LABA) product
candidate for the treatment of asthma and chronic obstructive pulmonary
disease (COPD) continues to progress, with the lead compound, GSK642444,
expected to enter into larger Phase 2b clinical studies later this year and
the backup compound, GSK159797, expected to enter a dose-optimization study
later this year as well.
Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) Program
Our MABA program for the treatment of COPD continues to progress, with the
lead compound, GSK961081, expected to begin a Phase 2 clinical study later
this year.
Inhaled Long-Acting Muscarinic Antagonist (LAMA) Program
Our lead compound in the LAMA program for COPD continues to progress in
preclinical safety studies.
Gastrointestinal (GI) Motility Dysfunction Program
We reported positive results of our Phase 2 study with TD-5108 in patients
with chronic constipation. All three doses of TD-5108 achieved statistical
significance in the primary endpoint, achieved key secondary endpoints, and
at the two lowest doses, TD-5108 was well tolerated with a low incidence of
adverse events.
Financial Results
Revenue
Revenue was $5.3 million for the second quarter of 2007 compared with $4.8
million for the same period of 2006. This increase was due to higher
amortization of upfront and milestone payments received from the company's
partnerships with GSK and Astellas. All payments received to date under
these agreements are being amortized over the relevant performance periods
rather than being recognized when received.
Research and Development
Research and development costs for the second quarter of 2007 increased to
$43.5 million compared with $40.8 million for the same period of 2006.
This increase was primarily driven by higher costs of non-officer incentive
programs and costs of our two Phase 2 clinical programs with TD-1792 and
TD-5108, partially offset by lower external development costs associated
with telavancin. Total research and development stock-based compensation
expense for the second quarter of 2007 was $3.2 million compared with $3.3
million for the same period of 2006. Total external research and
development costs were $16.3 million in the second quarter of 2007 compared
with $22.9 million in the same period of 2006.
General and Administrative
General and administrative costs for the second quarter of 2007 were $9.5
million compared with $8.9 million for the same period in 2006. This
increase was primarily driven by higher employee costs, marketing expenses,
and costs associated with the GSK call/put provision preparation offset by
a decrease in stock-based compensation expenses. Total general and
administrative stock-based compensation expense for the second quarter of
2007 was $2.3 million compared with $3.5 million for the same period in
2006.
Cash and Cash Equivalents
Cash, cash equivalents and marketable securities totaled $177.7 million as
of June 30, 2007, a decrease of $42.0 million during the quarter. This
decrease was primarily due to cash used in operations.
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
877-502-9272 from the U.S., or 913-981-5581 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 August 25, 2007. An audio replay will also be available
through 11:59 p.m. Eastern Daylight Time on August 9, 2007 by dialing
888-203-1112 from the U.S., or 719-457-0820 for international callers, and
entering confirmation code 5470866.
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, four are in late stage -- our telavancin program focusing
on treating serious Gram-positive bacterial infections in collaboration
with Astellas Pharma Inc., our Gastrointestinal Motility Dysfunction
program, our Beyond Advair collaboration with GlaxoSmithKline plc, and
TD-1792 for the treatment of serious Gram-positive infections. 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 Form 10-Q filed with the
Securities and Exchange Commission (SEC) on May 8, 2007, 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 Six Months Ended
June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(unaudited) (unaudited)
Revenue (1) $ 5,305 $ 4,837 $ 10,703 $ 9,133
Operating expenses:
Research and development (2) 43,497 40,751 92,355 89,459
General and administrative
(2) 9,512 8,899 18,310 16,173
--------- --------- --------- ---------
Total operating expenses 53,009 49,650 110,665 105,632
--------- --------- --------- ---------
Loss from operations (47,704) (44,813) (99,962) (96,499)
Interest and other income, net 2,692 3,474 5,621 6,359
Interest expense (113) (136) (234) (287)
--------- --------- --------- ---------
Net loss $ (45,125) $ (41,475) $ (94,575) $ (90,427)
========= ========= ========= =========
Net loss per share (3) $ (0.75) $ (0.70) $ (1.57) $ (1.55)
========= ========= ========= =========
Shares used in computing
net loss per share (3) 60,341 59,440 60,222 58,185
========= ========= ========= =========
(1) Revenue includes amounts from GSK, a related party, of $2.8 million
and $5.6 million for the three and six months ended June 30, 2007,
respectively, and $3.3 million and $6.4 million for the three and
six months ended June 30, 2006, respectively.
(2) Amounts include stock-based compensation expense for the three and
six months ended June 30 as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(unaudited) (unaudited)
Research and development $ 3,196 $ 3,290 $ 6,564 $ 6,337
General and administrative 2,309 3,465 4,729 5,431
--------- --------- --------- ---------
Total stock-based compensation
expense $ 5,505 $ 6,755 $ 11,293 $ 11,768
========= ========= ========= =========
(3) Shares used in computing net loss per share exclude approximately 11.4
million and 10.6 million shares issuable upon exercise of outstanding
stock options and warrants and shares subject to repurchase as of June 30,
2007 and 2006, respectively, as their effect would be antidilutive.
THERAVANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
2007 2006
----------- ------------
(unaudited) (1)
Assets
Cash, cash equivalents and marketable
securities $ 150,652 $ 201,080
Other current assets 6,274 6,111
Marketable securities - non-current 27,028 34,490
Property and equipment, net 18,698 15,101
Other assets 5,356 5,642
----------- ------------
Total assets $ 208,008 $ 262,424
=========== ============
Liabilities and stockholders' equity (deficit)
Current liabilities, net of current portion of
deferred revenue (2) $ 38,581 $ 40,336
Deferred revenue (2) 174,954 153,656
Other long-term liabilities 10,270 5,122
Stockholders' equity (deficit) (15,797) 63,310
----------- ------------
Total liabilities and stockholders' equity
(deficit) $ 208,008 $ 262,424
=========== ============
(1) The condensed consolidated balance sheet amounts at December 31, 2006
are derived from audited financial statements.
(2) Deferred revenue includes the current portion of $21.2 million and
$19.3 million as of June 30, 2007 and December 31, 2006, respectively.
The net increase in total deferred revenue is a result of additional
milestone payments that were earned under the company's collaboration with
Astellas partially offset by the amortization of deferred revenue.