Theravance Reports Third Quarter 2007 Financial Results
SOUTH SAN FRANCISCO, CA -- 10/25/2007 -- Theravance, Inc. (NASDAQ: THRX)
today reported financial results for the third quarter ended September 30,
2007. Net loss for the third quarter of 2007 was $32.4 million, compared
with $37.8 million for the same period of 2006, a decrease of $5.4 million.
Net loss per share was $0.53 for the third quarter of 2007 compared with a
net loss per share of $0.63 for the third quarter of 2006.
"We continue to make progress across our major clinical programs," said
Rick E Winningham, Chief Executive Officer. "In particular, we are very
pleased that we successfully completed and achieved a positive outcome from
our end-of-Phase 2 meeting with the FDA for compound TD-5108 for the
treatment of chronic constipation. In July, we announced positive
proof-of-concept data from an approximately 200-patient study with TD-1792,
a novel antibiotic designed to treat resistant Gram-positive infections.
Finally, earlier this week we announced that Theravance received an
approvable letter from the FDA for telavancin, and we are working
diligently toward submission of a complete response to the FDA."
Program Highlights
Bacterial Infections Programs
Telavancin
Earlier this week we announced that the U.S. Food and Drug Administration
(FDA) issued an approvable letter 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). The FDA letter
indicated that the telavancin application is approvable, subject to:
resolution of current good manufacturing practices (cGMP) compliance issues
not specifically related to telavancin at a third-party manufacturer; and
submission of revised labeling or re-analyses of clinical data or
additional clinical data. Astellas Pharma Inc. (Astellas) and Theravance
believe that no additional clinical studies will need to be initiated to
respond to the approvable letter. Telavancin is also under review for its
safety and efficacy by regulatory authorities in Europe for the treatment
of complicated skin and soft tissue infections and in Canada for the
treatment of cSSSI.
Thirteen telavancin posters and a slide presentation on telavancin in cSSSI
associated with surgical procedures were presented at the 47th Interscience
Conference on Antimicrobial Agents and Chemotherapy (ICAAC) in September.
In addition, telavancin posters were presented at the 45th Annual Meeting
of the Infectious Diseases Society of America in October.
We are on track to report top-line data from our Phase 3 program in
hospital-acquired pneumonia by the end of 2007.
TD-1792
In July we announced positive results from an approximately 200-patient
study in cSSSI with TD-1792, our next-generation antibiotic for the
treatment of Gram-positive infections, including resistant pathogens such
as MRSA. We are evaluating the potential of this compound in more serious
infections such as bacteremia.
Fourteen posters on TD-1792 were presented at ICAAC in September.
Respiratory Programs
Beyond Advair
In 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), GSK has advised us that the development program for the
inhaled corticosteroid and LABA is progressing to plan.
Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) Program
Our lead compound in the MABA program for the treatment of COPD, GSK961081,
continues to progress and is expected to enter Phase 2 shortly.
Inhaled Long-Acting Muscarinic Antagonist (LAMA) Program
Our lead compound in the LAMA program for COPD has successfully completed
pre-Phase 1 safety studies.
Gastrointestinal (GI) Motility Dysfunction Program
We recently obtained a positive outcome from our end-of-Phase 2 meeting
with the FDA for TD-5108, our highly selective 5-HT4 receptor agonist for
the treatment of GI motility dysfunction such as chronic idiopathic
constipation (CIC) and constipation-predominant irritable bowel syndrome.
The FDA confirmed that the TD-5108 data package, including the results of
the approximately 400-patient Phase 2 ACCORD study reported by Theravance
in June 2007, was adequate to progress TD-5108 into Phase 3 efficacy and
safety studies in patients with CIC. The FDA also indicated that the size
of the clinical program should be consistent with the International
Conference on Harmonisation (ICH) guidelines for the development of drugs
for chronic use. Additionally, we began enrolling patients in a Phase 1
thorough QTc study during the third quarter.
Financial Results
Revenue
Revenue was $5.7 million for the third quarter of 2007 compared with $5.5
million for the same period of 2006. This increase was due to higher
amortization of upfront and milestone payments received from the company's
strategic alliance with GSK and collaboration with 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 third quarter of 2007 decreased to
$32.0 million compared with $39.1 million for the same period of 2006.
This decrease was primarily driven by lower external research and
development costs associated with telavancin. Total research and
development stock-based compensation expense for the third quarter of 2007
was $3.5 million compared with $3.0 million for the same period in 2006.
Total external research and development costs were $11.4 million in the
third quarter of 2007 compared with $20.6 million in the same period of
2006.
General and Administrative
General and administrative costs for the third quarter of 2007 were $8.5
million compared with $7.9 million for the same period of 2006. This
increase was primarily driven by higher stock-based compensation expense.
Total general and administrative stock-based compensation expense for the
third quarter of 2007 was $2.4 million compared with $1.7 million for the
same period in 2006.
Cash and Cash Equivalents
Cash, cash equivalents and marketable securities totaled $166.5 million as
of September 30, 2007, a decrease of $11.2 million during the quarter.
This decrease was due to cash used in operations partially offset by a
$25.0 million milestone payment received under our telavancin agreement
with Astellas.
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 November 24, 2007. An audio replay will also be
available through 11:59 p.m. Eastern Standard Time on November 8, 2007 by
dialing 888-203-1112 from the U.S., or 719-457-0820 for international
callers, and entering confirmation code 4891018.
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 -- its telavancin program focusing
on treating serious Gram-positive bacterial infections with Astellas Pharma
Inc., the Gastrointestinal Motility Dysfunction program, the Beyond Advair
collaboration with GlaxoSmithKline plc and TD-1792 for the treatment of
serious Gram-positive infections. By leveraging its proprietary insight of
multivalency toward drug discovery focused on validated targets, Theravance
is pursuing a next generation 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 (including with respect to
telavancin statements regarding any expectation that we will be able to
respond fully or adequately to FDA's requests using currently existing
clinical data, any expectation that the third-party manufacturer will
successfully address the cGMP issues the FDA has noted, and any expectation
that the FDA will approve the telavancin NDA on the basis of existing
preclinical and clinical data or at all), 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, risks of
collaborating with third parties to develop and commercialize products and
risks of relying on third-party manufacturers for the supply of our product
candidates. These and other risks are described in greater detail under the
heading "Risk Factors" contained in Item 1A of Theravance's Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission (SEC)
on August 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 Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Revenue (1) $ 5,669 $ 5,524 $ 16,372 $ 14,657
Operating expenses:
Research and development (2) 31,964 39,103 124,319 128,562
General and
administrative (2) 8,462 7,868 26,772 24,041
---------- ---------- ---------- ----------
Total operating expenses 40,426 46,971 151,091 152,603
---------- ---------- ---------- ----------
Loss from operations (34,757) (41,447) (134,719) (137,946)
Interest and other income, net 2,438 3,875 8,059 10,234
Interest expense (45) (208) (279) (495)
---------- ---------- ---------- ----------
Net loss $ (32,364) $ (37,780) $ (126,939) $ (128,207)
========== ========== ========== ==========
Net loss per share $ (0.53) $ (0.63) $ (2.10) $ (2.18)
========== ========== ========== ==========
Shares used in computing
net loss per share 60,664 59,762 60,384 58,702
========== ========== ========== ==========
(1) Revenue includes amounts from GSK, a related party, of $2.8 million
and $8.5 million for the three months and nine months ended
September 30, 2007, respectively, and $3.4 million and $9.7 million
for the three months and nine months ended September 30, 2006,
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,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Research and development $ 3,514 $ 3,042 $ 10,078 $ 9,378
General and administrative 2,359 1,674 7,089 7,106
---------- ---------- ---------- ----------
Total stock-based
compensation expense $ 5,873 $ 4,716 $ 17,167 $ 16,484
========== ========== ========== ==========
THERAVANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2007 2006
------------- --------------
(unaudited) (2)
Assets
Cash, cash equivalents and marketable
securities $ 137,538 $ 201,080
Other current assets 6,898 6,111
Marketable securities - non-current 28,983 34,490
Property and equipment, net 19,847 15,101
Other assets 5,357 5,642
------------- --------------
Total assets $ 198,623 $ 262,424
============= ==============
Liabilities and stockholders' equity (deficit)
Current liabilities, net of current portion
of deferred revenue (1) $ 34,396 $ 40,336
Deferred revenue (1) 194,284 153,656
Other long-term liabilities 10,828 5,122
Stockholders' equity (deficit) (40,885) 63,310
------------- --------------
Total liabilities and stockholders'
equity (deficit) $ 198,623 $ 262,424
============= ==============
(1) Deferred revenue includes the current portion of $22.7 million and
$19.3 million as of September 30, 2007 and December 31, 2006,
respectively. The net increase in total deferred revenue is a result
of additional upfront and milestone payments that were earned under
the company's collaboration with Astellas partially offset by the
amortization of deferred revenue.
(2) The condensed consolidated balance sheet amounts at December 31, 2006
are derived from audited financial statements.