Theravance Reports Fourth Quarter and Full Year 2008 Results
SOUTH SAN FRANCISCO, CA -- (Marketwire - February 12, 2009) - Theravance, Inc. (NASDAQ: THRX)
reported today its financial results for the fourth quarter and full year
ended December 31, 2008. Net loss for the fourth quarter and full year of
2008 was $15.9 million and $93.6 million, respectively, compared with $33.1
million and $160.0 million for the same periods of 2007. Net loss per
share was $0.26 and $1.53 for the fourth quarter and full year of 2008,
respectively, compared with a net loss per share of $0.54 and $2.64 for the
same periods of 2007.
"We ended the year with positive news in both the Horizon and telavancin
programs," said Rick E Winningham, Chief Executive Officer. "In December,
GSK and Theravance announced positive results from two '444 Phase 2b
studies in patients with asthma and COPD and, last week, we released
positive results from three Phase 2b studies in asthma with fluticasone
furoate. Based upon these data, GSK has requested End-of-Phase 2 meetings
with the FDA in the first half of 2009. In November, telavancin received a
favorable recommendation for the treatment of complicated skin and skin
structure infections caused by Gram-positive bacteria from the FDA
Anti-Infective Drugs Advisory Committee. In late January, we submitted a
telavancin NDA for the treatment of hospital-acquired pneumonia. We are
working closely with the FDA on both applications. We look forward to a
productive year ahead with a number of very important milestones for our
company."
Program Highlights
Respiratory Programs
Horizon
Last week, GlaxoSmithKline, plc (GSK) and Theravance reported positive
results from three, separate Phase 2b studies of GSK's inhaled
corticosteroid fluticasone furoate (FF) in patients with mild, moderate and
severe asthma. These studies were designed to assess efficacy and safety
across a range of eight doses from 25 mcg to 800 mcg in over 1,800
patients, aged 12 years and older. The primary endpoint to assess efficacy
was mean change from baseline in trough forced expiratory volume (FEV1)
measured 24 hours after the last dose at the end of the eight-week
treatment period. Once-daily FF produced statistically significant
improvements in patients' lung function (trough FEV1) compared to placebo
(p < 0.05) in each of the three populations and at all doses, with the
exception of the very lowest dose tested. The three dose-ranging studies
fully characterized FF's dose-response curve, with only the lowest dose (25
mcg) showing no statistically significant difference from placebo on the
primary efficacy endpoint (trough FEV1) and only the highest dose (800 mcg)
being associated with a statistically significant reduction in urinary
cortisol levels (a known side effect of inhaled corticosteroids). FF was
well tolerated throughout the course of the eight-week treatment period
across the three studies. Adverse events occurred at a similar or lower
frequency than fluticasone propionate (FP) in each study, with the most
common adverse event being headache. A low frequency of serious adverse
events occurred on all treatments, including placebo, FP and FF, and for FF
were not dose dependant.
In December, we announced with our partner, GSK, positive results from two
Phase 2b studies of the lead long-acting beta agonist (LABA), GW642444
('444), in patients with moderate-to-severe asthma and in patients with
moderate-to-severe chronic obstructive pulmonary disease (COPD). These
studies were designed to evaluate the dose response, efficacy and safety of
five doses of '444 (3, 6.25, 12.5, 25 and 50 mcg) administered once daily
for four weeks. In both studies, '444 demonstrated statistically
significant once-daily bronchodilation versus placebo. In addition,
favorable trends were seen in key secondary endpoints including time to
onset of action, improvements in peak expiratory flow both in the morning
and evening, and reduced use of rescue medication. '444 was well
tolerated at all doses and the frequency of adverse events was comparable
to placebo, with headache being the most frequently reported. In the
asthma study, no serious adverse events were reported. In the COPD study,
serious adverse events common in an elderly COPD population were reported
with low frequency, were not seen in either of the two high-dose groups,
and were not associated with beta2 agonist pharmacology. There was no
clinically or statistically significant change in heart rate in either the
asthma or COPD studies.
Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) Program
Based on the data released in the third quarter of 2008, GSK and Theravance
plan to progress GSK961081 ('081), the lead MABA compound, into a larger
Phase 2b study for the treatment of COPD in 2009.
Bacterial Infections Program
Telavancin
On January 26, 2009, we submitted a New Drug Application (NDA) to the U.S.
Food and Drug Administration (FDA) for telavancin for the treatment of
nosocomial pneumonia (also known as hospital-acquired pneumonia, or HAP)
caused by Gram-positive bacteria such as methicillin-resistant
Staphylococcus aureus (MRSA).
On November 19, 2008, we announced that telavancin received a favorable
recommendation from the Anti-Infective Drugs Advisory Committee of the FDA
for the treatment of complicated skin and skin structure infections (cSSSI)
caused by Gram-positive bacteria, including resistant pathogens such as
MRSA. The Committee voted 21 to 5 that the data presented demonstrate the
safety and effectiveness of telavancin for treatment of cSSSI. The
Committee also voted 18 to 5 (with 3 abstentions) that there are specific
clinical situations in which the benefits of telavancin use in pregnant
women with cSSSI would outweigh the risks, and 25 to 1 that a risk
management strategy is needed to prevent unintended use of telavancin in
pregnant women or women of child-bearing potential. Although it is not
binding, the Committee's recommendation will be considered by the FDA as it
completes its review of the cSSSI NDA for telavancin.
Gastrointestinal (GI) Motility Dysfunction Program
In the fourth quarter, we completed a Phase 1 drug-drug interaction study
with TD-5108, our lead compound in the program, with initial results of the
study in-line with our expectations. We intend to meet with the FDA during
the first half of 2009 to discuss the results of this and other studies.
Financial Results
Revenue
Revenue was $5.9 million for the fourth quarter of 2008 compared with $5.6
million for the same period of 2007. For the full year of 2008, revenue was
$23.1 million, compared with $22.0 million for the full year of 2007. The
increases for the fourth quarter and full year periods were due to
additional milestone payments received from the company's partnerships with
GSK and Astellas. All milestone 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 expense for the fourth quarter of 2008 decreased
to $15.2 million compared with $30.9 million for the same period of 2007.
For the full year of 2008, research and development expense was $82.0
million compared with $155.3 million for the full year of 2007. The
decreases for the fourth quarter and full year periods were primarily due
to decreased external development costs associated with telavancin, TD-5108
and TD-1792, lower employee related costs due to the reduction in force
initiated in April 2008, reduced bonus expense and a reimbursement of $4.9
million for certain development expenses under our telavancin license
agreement with Astellas. Total external research and development expense
for the fourth quarter and full year of 2008, excluding the Astellas
reimbursement, was $5.6 million and $22.8 million, respectively, compared
with $12.0 million and $68.2 million, respectively, for the fourth quarter
and full year of 2007. Total research and development stock-based
compensation expense for the fourth quarter and full year of 2008 was $2.7
million and $10.3 million, respectively, compared with $3.1 million and
$13.1 million, respectively, for the fourth quarter and full year of 2007.
General and Administrative
General and administrative expense for the fourth quarter of 2008 decreased
to $5.9 million from $8.5 million for the same period in 2007. For the full
year of 2008, general and administrative expense was $28.9 million compared
with $35.3 million for the full year of 2007. The decreases in the fourth
quarter and full year periods were primarily due to lower employee related
costs due to the reduction in force initiated in April 2008. Total general
and administrative stock-based compensation expense for the fourth quarter
and full year of 2008 was $1.9 million and $7.8 million, respectively,
compared with $2.3 million and $9.4 million, respectively, for the fourth
quarter and full year of 2007.
Restructuring Charges
The company incurred restructuring charges totaling $5.4 million for the
full year of 2008. The charges resulted from the reduction in force
initiated in April 2008 in response to the completion of the company's
Phase 3 development activities with telavancin and to reduce its overall
cash burn rate. The charges consisted primarily of employee severance and
benefits.
Cash and Cash Equivalents
Cash, cash equivalents and marketable securities totaled $200.6 million as
of December 31, 2008, a decrease of $18.2 million during the fourth
quarter. The decrease was primarily due to cash used in operations that was
partially offset by $4.9 million received from Astellas as reimbursement of
certain telavancin development expenses under our license agreement.
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
877-856-1969 from the U.S., or 719-325-4828 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 14, 2009. An audio replay will also be available
through 11:59 p.m. Eastern Standard Time on February 26, 2009 by dialing
888-203-1112 from the U.S., or 719-457-0820 for international callers, and
entering confirmation code 7402225.
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. The company's key
programs include: telavancin for the treatment of serious Gram-positive
bacterial infections with Astellas Pharma Inc., the Horizon program and
Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) program with
GlaxoSmithKline plc, and the Gastrointestinal Motility Dysfunction program.
By leveraging its proprietary insight of multivalency toward drug discovery
focused primarily 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 studies, statements regarding the
potential benefits 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
regulatory authorities will approve telavancin on the basis of existing
preclinical and clinical data or at all), statements concerning the
enabling capabilities of Theravance's approach to drug discovery and its
proprietary insights, 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 studies, the potential
that results of clinical or preclinical studies indicate product candidates
are unsafe or ineffective, our dependence on third parties in the conduct
of our clinical studies, delays or failure to achieve regulatory approvals,
risks of relying on third-party manufacturers for the supply of our product
candidates 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 Item 1A of
Theravance's Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission (SEC) on November 6, 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,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
(unaudited) (unaudited) (3)
------------------------ ----------- -----------
Revenue (1) $ 5,947 $ 5,630 $ 23,096 $ 22,002
Operating expenses:
Research and
development (2) 15,170 30,935 82,020 155,254
General and
administrative (2) 5,945 8,541 28,861 35,313
Restructuring charges 306 -- 5,419 --
----------- ----------- ----------- -----------
Total operating
expenses 21,421 39,476 116,300 190,567
----------- ----------- ----------- -----------
Loss from operations (15,474) (33,846) (93,204) (168,565)
Interest and other
income, net 1,066 807 5,242 8,661
Interest expense (1,517) (19) (5,681) (93)
----------- ----------- ----------- -----------
Net loss $ (15,925) $ (33,058) $ (93,643) $ (159,997)
=========== =========== =========== ===========
Net loss per share $ (0.26) $ (0.54) $ (1.53) $ (2.64)
=========== =========== =========== ===========
Shares used in
computing net loss
per share 61,810 60,877 61,390 60,498
=========== =========== =========== ===========
(1) Revenue includes amounts from GSK, a related party, of $3.3 million
and $12.3 million for the three months and twelve months ended December
31, 2008, respectively, and $2.8 million and $11.3 million for the three
months and twelve months ended December 31, 2007, 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,
------------------------- -------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
(unaudited) (unaudited) (3)
------------------------- ------------ ------------
Research and
development $ 2,725 $ 3,054 $ 10,264 $ 13,133
General and
administrative 1,892 2,273 7,755 9,361
------------ ------------ ------------ ------------
Total stock-based
compensation expense $ 4,617 $ 5,327 $ 18,019 $ 22,494
============ ============ ============ ============
(3) The condensed consolidated statement of operations amounts for the year
ended December 31, 2007 are derived from audited financial statements.
THERAVANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2008 2007
------------- -------------
(unaudited) (2)
Assets
Cash, cash equivalents and marketable
securities $ 200,605 $ 126,816
Other current assets 9,356 7,271
Marketable securities - non-current -- 2,456
Property and equipment, net 16,206 20,091
Other assets 9,989 5,349
------------- -------------
Total assets $ 236,156 $ 161,983
============= =============
Liabilities and stockholders' equity (net
capital deficiency)
Current liabilities, net of current portion
of deferred revenue (1) $ 20,167 $ 33,014
Deferred revenue (1) 176,559 188,655
Convertible subordinated notes 172,500 --
Other long-term liabilities 1,879 6,578
Stockholders' equity (net capital
deficiency) (134,949) (66,264)
------------- -------------
Total liabilities and stockholders'
equity (net capital deficiency) $ 236,156 $ 161,983
============= =============
(1) Deferred revenue includes the current portion of $23.8 million and
$22.5 million as of December 31, 2008 and December 31, 2007, respectively.
The net decrease in total deferred revenue is a result of amortization in
2008 that were partially offset by additional milestone payments that
were earned under the company's collaboration with Astellas and GSK.
(2) The condensed consolidated balance sheet amounts at December 31, 2007
are derived from audited financial statements.