Theravance Reports Fourth Quarter and Full Year 2007 Results
SOUTH SAN FRANCISCO, CA -- 02/14/2008 -- Theravance, Inc. (NASDAQ: THRX)
today reported financial results for the fourth quarter and full year ended
December 31, 2007. Net loss for the fourth quarter and full year of 2007
was $33.1 million and $160.0 million, respectively, compared with $37.8
million and $166.0 million during the same periods of 2006. Net loss per
share was $0.54 and $2.64 for the fourth quarter and full year of 2007,
respectively, compared with a net loss per share of $0.63 and $2.81 during
the same periods of 2006.
"In 2007, Theravance continued to make progress toward our goal of
discovering, developing and commercializing medicines," said Rick E
Winningham, Chief Executive Officer. "During the fourth quarter, GSK
initiated four large Phase 2b studies in our Horizon collaboration. GSK
also initiated a Phase 2 study in COPD with our MABA compound. Further, we
reported positive results from our telavancin Phase 3 program in
hospital-acquired pneumonia."
Program Highlights
Respiratory Programs
Horizon (formerly Beyond Advair)
In December our collaboration with GlaxoSmithKline plc (GSK) initiated
three large Phase 2b asthma dose-optimization studies with the lead inhaled
corticosteroid (ICS) GW685698 ('698) and one large Phase 2b asthma
dose-optimization study with the lead long-acting beta agonist (LABA)
GW642444 ('444) in the Horizon program to develop a next-generation
combination product. In parallel, enabling studies involving '444 and '698
given in combination will be undertaken prior to commencing large-scale
Phase 3 combination studies. A large Phase 2b study with '444 in chronic
obstructive pulmonary disease (COPD) is expected to start during the first
half of 2008.
Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) Program
In October GSK initiated a Phase 2 clinical study of GSK961081, our lead
compound in the MABA program for the treatment of COPD.
Inhaled Long-Acting Muscarinic Antagonist (LAMA) Program
In December GSK initiated a Phase 1 study of GSK1160724, our lead compound
in the LAMA program for the treatment of COPD.
Bacterial Infections Programs
Telavancin
In December we announced positive results from our telavancin Phase 3
program in hospital-acquired pneumonia caused by Gram-positive bacteria
including resistant pathogens such as methicillin-resistant Staphylococcus
aureus (MRSA), and we plan to file a new drug application (NDA) with the
Food & Drug Administration (FDA) mid-year.
The FDA's Anti-Infective Drugs Advisory Committee is scheduled to review on
February 27th the NDA for telavancin for the treatment of complicated skin
and skin structure infections (cSSSI) caused by Gram-positive bacteria,
including resistant pathogens such as MRSA.
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.
TD-1792
We continue to evaluate the potential of this compound in more serious
infections such as bacteremia.
Gastrointestinal (GI) Motility Dysfunction Program
We recently completed enrollment in a thorough QTc study of TD-5108. Our
preliminary review of the electrocardiogram data from the study suggests
that there were problems with the conduct of the study and, therefore, the
study will need to be repeated in order to generate scientifically valid
results. We intend to initiate a repeat of the study as well as conduct
additional Phase 3-enabling studies later this year.
Financial Results
Revenue
Revenue was $5.6 million for the fourth quarter of 2007 compared with $4.9
million for the same period of 2006. This increase was due to higher
amortization of milestone payments received from the company's
collaboration with Astellas. For the full year of 2007, revenue was $22.0
million, up from $19.6 million during the full year of 2006. All payments
received to date under our agreements are being amortized over the relevant
performance periods rather than being recognized when received.
Research and Development
Research and development costs for the fourth quarter of 2007 decreased to
$30.9 million compared with $38.0 million for the same period of 2006.
This lower fourth quarter spending was due primarily to decreased external
costs associated with telavancin, TD-5108, and TD-1792. For the full year
of 2007, research and development costs were $155.3 million compared with
$166.6 million during the full year of 2006. The decreased full year 2007
expenses were primarily driven by lower external costs associated with
telavancin development. Total external research and development costs for
the fourth quarter and full year of 2007 was $12.0 million and $68.3
million, respectively, compared with $20.1 million and $94.0 million,
respectively, for the fourth quarter and full year of 2006. Total research
and development stock-based compensation expense for the fourth quarter and
full year of 2007 was $3.1 million and $13.1 million, respectively,
compared with $3.3 million and $12.6 million, respectively, for the fourth
quarter and full year of 2006.
General and Administrative
General and administrative costs for the fourth quarter of 2007 were $8.5
million compared with $8.2 million for the same period of 2006. This
increase was primarily driven by higher employee costs. For the full year
of 2007, general and administrative costs were $35.3 million compared with
$32.2 million during the full year of 2006. This increase was primarily
driven by higher employee costs and costs associated with preparation for
the potential call by GSK or shareholder put in mid-2007. Total general
and administrative stock-based compensation expense for the fourth quarter
and full year of 2007 was $2.3 million and $9.4 million, respectively,
compared with $2.1 million and $9.2 million, respectively, for the fourth
quarter and full year of 2006.
Cash, Cash Equivalents and Marketable Securities
Cash, cash equivalents and marketable securities totaled $129.3 million as
of December 31, 2007, a decrease of $37.2 million during the fourth
quarter. On January 23, 2008, we announced the closing of a convertible
subordinated notes offering with net proceeds of approximately $166.7
million which are not reflected in the December 31, 2007 cash, cash
equivalents, and marketable securities balance.
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 Standard Time
today. To participate in the live call by telephone, please dial
888-656-7429 from the U.S., or 913-312-6691 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 March 15, 2008. An audio replay will also be available
through 11:59 p.m. Eastern Standard Time on February 28, 2008 by dialing
888-203-1112 from the U.S., or 719-457-0820 for international callers, and
entering confirmation code 6008047.
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 six programs
in development, four are in late stage -- its telavancin program focusing
on treating serious Gram-positive bacterial infections with Astellas Pharma
Inc., the Horizon program with GlaxoSmithKline plc, the Gastrointestinal
Motility Dysfunction program, and TD-1792, an investigational antibiotic
for the treatment of serious Gram-positive bacterial 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 areas of significant
unmet medical need. 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 (i) that we will be able to
respond fully or adequately to FDA's requests using currently existing
clinical data, (ii) that the third-party manufacturer will successfully
address the cGMP issues the FDA has noted, (iii) regarding the outcome of
the review of the telavancin NDA by the FDA's Anti-Infective Drugs Advisory
Committee and (iv) 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, 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 Theravance's prospectus filed with the Securities and Exchange
Commission (SEC) pursuant to Rule 424(b)(5) of the Securities Act of 1933
on January 17, 2008 and the risks discussed in our other periodic 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 Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(unaudited) (unaudited) (3)
Revenue (1) $ 5,630 $ 4,930 $ 22,002 $ 19,587
Operating expenses:
Research and
development (2) 30,935 38,002 155,254 166,564
General and
administrative (2) 8,541 8,152 35,313 32,193
----------- ----------- ----------- -----------
Total operating expenses 39,476 46,154 190,567 198,757
----------- ----------- ----------- -----------
Loss from operations (33,846) (41,224) (168,565) (179,170)
Interest and other
income, net 807 3,448 8,661 13,319
Interest expense (19) (61) (93) (193)
----------- ----------- ----------- -----------
Net loss $ (33,058) $ (37,837) $ (159,997) $ (166,044)
=========== =========== =========== ===========
Net loss per share $ (0.54) $ (0.63) $ (2.64) $ (2.81)
=========== =========== =========== ===========
Shares used in computing
net loss per share 60,877 59,932 60,498 59,013
=========== =========== =========== ===========
(1) Revenue includes amounts from GSK, a related party, of $2.8 million and
$11.3 million for the three months and twelve months ended December 31,
2007, respectively, and $2.8 million and $12.6 million for the three
months and twelve months ended December 31, 2006, respectively.
(2) 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,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(unaudited) (unaudited) (3)
Research and
development $ 3,054 $ 3,257 $ 13,133 $ 12,635
General and
administrative 2,273 2,090 9,361 9,196
----------- ----------- ----------- -----------
Total stock-based
compensation expense $ 5,327 $ 5,347 $ 22,494 $ 21,831
=========== =========== =========== ===========
(3) The condensed consolidated statement of operations amounts for the year
ended December 31, 2006 are derived from audited financial statements.
THERAVANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2007 2006
-------------- --------------
(unaudited) (2)
Assets
Cash, cash equivalents and marketable
securities $ 126,816 $ 201,080
Other current assets 7,271 6,111
Marketable securities - non-current 2,456 34,490
Property and equipment, net 20,091 15,101
Other assets 5,349 5,642
-------------- --------------
Total assets $ 161,983 $ 262,424
============== ==============
Liabilities and stockholders' equity (net
capital deficiency)
Current liabilities, net of current
portion of deferred revenue (1) $ 33,014 $ 40,336
Deferred revenue (1) 188,655 153,656
Other long-term liabilities 6,578 5,122
Stockholders' equity (net capital
deficiency) (66,264) 63,310
-------------- --------------
Total liabilities and stockholders'
equity (net capital deficiency) $ 161,983 $ 262,424
============== ==============
(1) Deferred revenue includes the current portion of $22.5 million and
$19.3 million as of December 31, 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.
(2) The condensed consolidated balance sheet amounts at December 31, 2006
are derived from audited financial statements.