Theravance Reports Second Quarter 2010
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Theravance Reports Second Quarter 2010 Financial Results
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Theravance Reports Second Quarter 2010 Financial Results

Theravance, Inc. (NASDAQ: THRX)reported today its financial results for the quarter ended June 30, 2010.Revenue for the second quarter of 2010 was $6.3 million. Net loss for thesecond quarter of 2010 was $20.8 million or $0

SOUTH SAN FRANCISCO, CA -- (Marketwire) -- 07/22/10 -- Theravance, Inc. (NASDAQ: THRX)reported today its financial results for the quarter ended June 30, 2010.Revenue for the second quarter of 2010 was $6.3 million. Net loss for thesecond quarter of 2010 was $20.8 million or $0.28 per share. Cash, cashequivalents and marketable securities totaled $210.7 million as of June 30,2010.

"I am pleased with the progress of our key programs in the second quarterof 2010," said Rick E Winningham, Chief Executive Officer. "Enrollment inthe RELOVAIR™ COPD and asthma programs continues to progress with tenPhase 3 studies now underway. Enrollment is also progressing in a Phase 2proof of concept study in our peripheral mu antagonist program with thelead compound TD-1211 for the treatment of opioid-induced constipation. Werecently completed a Phase 1 single-ascending dose study with TD-9855, thelead compound in our monoamine reuptake inhibitor program for the treatmentof pain, and we are planning to advance this compound into a Phase 1multiple-ascending dose study in the third quarter of 2010. The VIBATIV™launch is progressing in the US and VIBATIV is under review by the EuropeanMedicines Agency for the treatment of nosocomial pneumonia and complicatedskin and soft tissue infections in adults. This is an exciting time for thecompany and we look forward to a productive second half of the year withfurther development of our pipeline."

Program Highlights

RELOVAIR™ (previously Horizon) -- Asthma

Enrollment is progressing in the Phase 3 asthma program. In March 2010,GlaxoSmithKline (GSK) and Theravance announced that the first asthmapatient commenced treatment with RELOVAIR™ (fluticasonefuroate/vilanterol trifenatate) in an asthma exacerbation study, markingthe start of the Phase 3 asthma clinical development program with thisonce-daily therapy.

The Phase 3 asthma program consists of eight studies, five of which areunderway, to determine the safety and efficacy of RELOVAIR™ in asthmapatients who remain uncontrolled on current treatment. These studiesinclude an exacerbation study, a 12-month safety study (which also supportsthe chronic obstructive pulmonary disease (COPD) program), a 12-weeklow-dose combination and a 24-week high-dose combination efficacy study, a24-week head-to-head study of RELOVAIR™ versus Advair/Seretide, a24-week study of fluticasone furoate versus fluticasone propionate, a12-week study of vilanterol trifenatate versus salmeterol, and ahypothalamic-pituitary-adrenal (HPA) axis study.

In the Phase 3 asthma program, four studies are currently recruitingpatients:

-- Exacerbation Study -- ~2,000 patients
-- 24-Week High Dose Combination Efficacy Study -- ~1,000 patients
-- 24-Week Head-to-Head Study of RELOVAIR™ versus
Advair®/Seretide -- ~100 patients
-- Hypothalamic-Pituitary-Adrenal (HPA) Axis Study -- ~200 patients

Enrollment of approximately 500 patients in the 12-month safety study hasbeen completed and treatments are currently ongoing.

RELOVAIR™ (previously Horizon) -- Chronic Obstructive Pulmonary Disease(COPD)

The Phase 3 program in COPD was initiated in October 2009 and enrollment isprogressing. The overall program, which is comprised of five studiesencompassing more than 6,000 patients, includes two 12-month exacerbationstudies, two 6-month efficacy and safety studies, a detailed lung functionprofile study, and studies to assess the potential for superiority of thefixed combination of vilanterol trifenatate and fluticasone furoate versusother treatments for COPD.

All five Phase 3 studies in COPD are underway. Four of the five studies arecurrently recruiting patients; one has fully enrolled and is ongoing.

Patients across all of the RELOVAIR™ programs will be dosed using aunique single-step activation inhaler. This novel delivery device wasdeveloped utilizing GSK's expertise in device development and valuablepatient input.

VIBATIV™ (telavancin)

VIBATIV was launched in the United States (US) in the fourth quarter of2009 for the treatment of adult patients with complicated skin and skinstructure infections (cSSSI) caused by susceptible Gram-positive bacteria,including Staphylococcus aureus, both methicillin-resistant (MRSA) andmethicillin-susceptible (MSSA) strains. The VIBATIV launch is progressingin the US and VIBATIV is under review by the European Medicines Agency forthe treatment of nosocomial pneumonia and complicated skin and soft tissueinfections in adults.

Peripheral Mu Opioid Receptor Antagonist (PUMA) -- TD-1211

Enrollment is progressing in the Phase 2 clinical study with TD-1211, anorally-administered peripherally selective mu opioid receptor antagonist(PUMA), for the treatment of opioid-induced constipation (OIC). TD-1211 isa potent, multivalent inhibitor of the mu opioid receptor designed toalleviate gastrointestinal side effects of opioid analgesic therapy withoutaffecting analgesia. This "proof of concept" study is designed to assessthe efficacy, tolerability and safety of TD-1211 in patients with OIC. Weexpect to report top-line data from this study toward the end of 2010.

Financial Results


Revenue was $6.3 million for the second quarter of 2010 compared with $5.5million for the same period in 2009. Revenue for the second quarter 2010consisted of the amortization of deferred revenues from our collaborationswith GSK and Astellas of $5.7 million, net revenues recognized for the saleof VIBATIV inventory to Astellas of $0.5 million, and VIBATIV royaltiesearned of $0.1 million.

Research and Development

Research and development expense for the second quarter of 2010 decreasedto $18.7 million compared with $20.0 million for the same period in 2009.The decrease was primarily due to lower external costs from our new drugdiscovery programs and facilities costs. Results for the second quarter of2009 included a one-time reimbursement from Astellas that reduced expensesby $1.0 million. Total external research and development expense excludingthe reimbursement from Astellas was $3.3 million during the second quarterof 2010 compared with $4.0 million for the same period in 2009. Totalresearch and development stock-based compensation expense for the secondquarter of 2010 was $2.6 million compared with $3.1 million for the sameperiod in 2009.

General and Administrative

General and administrative expense for the second quarter of 2010 increasedto $7.0 million from $6.8 million for the same period in 2009. Totalgeneral and administrative stock-based compensation expense for the secondquarter of 2010 was $2.7 million compared with $2.2 million for the sameperiod in 2009.

Cash and Cash Equivalents

Cash, cash equivalents and marketable securities totaled $210.7 million asof June 30, 2010, a decrease of $14.7 million during the second quarter.The decrease was primarily due to cash used in operations.

Conference Call and Webcast Information

As previously announced, the company has scheduled a conference call todiscuss this announcement beginning at 5:00 p.m. Eastern Daylight Timetoday. To participate in the live call by telephone, please dial (877)837-3908 from the U.S., or (973) 890-8166 for international callers. Thoseinterested in listening to the conference call live via the internet may doso by visiting the company's web site at To listen tothe live call, please go to the web site 15 minutes prior to its start toregister, download, and install any necessary audio software.

A replay of the conference call will be available on the company's web sitefor 30 days through August 21, 2010. An audio replay will also be availablethrough 11:59 p.m. Eastern Daylight Time on July 29, 2010 by dialing (800)642-1687 from the US, or (706) 645-9291 for international callers, andentering confirmation code 82579723.

About Theravance

Theravance is a biopharmaceutical company with a pipeline of internallydiscovered product candidates. Theravance is focused on the discovery,development and commercialization of small molecule medicines across anumber of therapeutic areas including respiratory disease, bacterialinfections and gastrointestinal motility dysfunction. The company's keyprograms include: VIBATIV™ (telavancin) with Astellas Pharma Inc. andthe RELOVAIR™ program and Bifunctional Muscarinic Antagonist-Beta2Agonist (MABA) program with GlaxoSmithKline plc. By leveraging itsproprietary insight of multivalency toward drug discovery, Theravance ispursuing a best-in-class strategy designed to discover superior medicinesin areas of significant unmet medical need. For more information, pleasevisit the company's web site at

THERAVANCE®, the Theravance logo, and MEDICINES THAT MAKE A DIFFERENCE®are registered trademarks of Theravance, Inc.

VIBATIV is a trademark of Astellas Pharma Inc.

RELOVAIR is a trademark of Glaxo Group Limited. Mark is intended for U.S.and subject to FDA approval.


VIBATIV was discovered by Theravance in a research program dedicated tofinding new Antibiotics for serious infections due to Staphylococcus aureusand other Gram-positive bacteria, including MRSA. VIBATIV is abactericidal, once-daily, injectable lipoglycopeptide antibiotic with adual mechanism of action whereby VIBATIV both inhibits bacterial cell wallsynthesis and disrupts bacterial cell membrane function. VIBATIV isindicated for the treatment of adult patients with cSSSI caused bysusceptible isolates of the following Gram-positive microorganisms:Staphylococcus aureus (including methicillin-susceptible and -resistantisolates), Streptococcus pyogenes, Streptococcus agalactiae, Streptococcusanginosus group (includes S. anginosus, S. intermedius and S. constellatus)and Enterococcus faecalis (vancomycin-susceptible isolates only).

VIBATIV Important Safety Information

Fetal Risk

Women of childbearing potential should have a serum pregnancy test prior toadministration of VIBATIV. Avoid use of VIBATIV during pregnancy unless thepotential benefit to the patient outweighs the potential risk to the fetus.Adverse developmental outcomes observed in three animal species atclinically relevant doses raise concerns about potential adversedevelopmental outcomes in humans. If not already pregnant, women ofchildbearing potential should use effective contraception during VIBATIVtreatment.


New onset or worsening renal impairment occurred in patients who receivedVIBATIV. Renal adverse events were more likely to occur in patients withbaseline comorbidities known to predispose patients to kidney dysfunctionand in patients who received concomitant medications known to affect kidneyfunction. Monitor renal function in all patients receiving VIBATIV prior toinitiation of treatment, during treatment, and at the end of therapy. Ifrenal function decreases, the benefit of continuing VIBATIV versusdiscontinuing and initiating therapy with an alternative agent should beassessed. Clinical cure rates in telavancin-treated patients were lower inpatients with baseline CrCl less than or equal to 50 mL/min compared tothose with CrCl > 50 mL/min. Consider these data when selectingantibacterial therapy for use in patients with baseline moderate/severerenal impairment.

Geriatric Use

Telavancin is substantially excreted by the kidney, and the risk of adversereactions may be greater in patients with impaired renal function. Becauseelderly patients are more likely to have decreased renal function, careshould be taken in dose selection in this age group.

Infusion Related Reactions

VIBATIV is a lipoglycopeptide antibacterial agent and should beadministered over a period of 60 minutes to reduce the risk ofinfusion-related reactions. Rapid intravenous infusions of the glycopeptideclass of antimicrobial agents can cause "Red-man Syndrome"-like reactionsincluding: flushing of the upper body, urticaria, pruritus, or rash.

Clostridium difficile-Associated Diarrhea

Clostridium difficile-associated diarrhea (CDAD) has been reported withnearly all antibacterial agents and may range in severity from milddiarrhea to fatal colitis. CDAD must be considered in all patients whopresent with diarrhea following antibiotic use.

Development of Drug Resistant Bacteria

Prescribing VIBATIV in the absence of a proven or strongly suspectedbacterial infection is unlikely to provide benefit to the patient andincreases the risk of the development of drug-resistant bacteria. As withother antibacterial drugs, use of VIBATIV may result in overgrowth ofnonsusceptible organisms, including fungi.

QTc Prolongation

Caution is warranted when prescribing VIBATIV to patients taking drugsknown to prolong the QT interval. In a study involving healthy volunteers,VIBATIV prolonged the QTc interval. Use of VIBATIV should be avoided inpatients with congenital long QT syndrome, known prolongation of the QTcinterval, uncompensated heart failure, or severe left ventricularhypertrophy.

Coagulation Test Interference

VIBATIV does not interfere with coagulation, but does interfere withcertain tests used to monitor coagulation such as prothrombin time,international normalized ratio, activated partial thromboplastin time,activated clotting time, and coagulation based factor Xa tests. Bloodsamples for these coagulation tests should be collected as close aspossible prior to a patient's next dose of VIBATIV.

Adverse Reactions

The most common adverse reactions (greater than or equal to 10% of patientstreated with VIBATIV) observed in the Phase 3 cSSSI clinical trials weretaste disturbance, nausea, vomiting, and foamy urine.

In the Phase 3 cSSSI clinical trials, serious adverse events were reportedin 7% of patients treated with VIBATIV and most commonly included renal,respiratory, or cardiac events. Serious adverse events were reported in 5%of vancomycin-treated patients, and most commonly included cardiac,respiratory, or infectious events.

For full Prescribing Information, including Boxed Warning and MedicationGuide, please visit

This press release contains and the conference call will contain certain"forward-looking" statements as that term is defined in the PrivateSecurities 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 thesafe harbor provisions for forward-looking statements contained in Section21E of the Exchange Act and the Private Securities Litigation Reform Act of1995. Examples of such statements include statements relating to the goalsand timing of clinical studies and product commercialization, statementsregarding the potential benefits and mechanisms of action of drugcandidates, statements concerning the timing of seeking regulatory approvalof our product candidates, statements concerning enabling capabilities ofTheravance's approach to drug discovery and its proprietary insights, andstatements regarding expectations for product candidates throughdevelopment and commercialization and projections of revenue, expenses andother financial items. These statements are based on the current estimatesand assumptions of the management of Theravance as of the date of thispress release and the conference call and are subject to risks,uncertainties, changes in circumstances, assumptions and other factors thatmay cause the actual results of Theravance to be materially different fromthose reflected in its forward-looking statements. Important factors thatcould cause actual results to differ materially from those indicated bysuch forward-looking statements include, among others, risks related todelays or difficulties in commencing or completing clinical studies, thepotential that results of clinical or preclinical studies indicate productcandidates are unsafe or ineffective, our dependence on third parties inthe conduct of our clinical studies, delays or failure to achieveregulatory approvals for product candidates, risks of relying onthird-party manufacturers for the supply of our product candidates andrisks of collaborating with third parties to develop and commercializeproducts. These and other risks are described in greater detail under theheading "Risk Factors" contained in Theravance's Quarterly Report on Form10-Q filed with the Securities and Exchange Commission (SEC) on May 5, 2010and the risks discussed in our other period filings with SEC. Given theseuncertainties, you should not place undue reliance on these forward-lookingstatements. Theravance assumes no obligation to update its forward-lookingstatements.

                       THERAVANCE, INC.         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS              (In thousands, except per share data)                                 Three Months Ended     Six Months Ended                                      June 30,              June 30,                                --------------------  --------------------                                  2010       2009       2010       2009                                ---------  ---------  ---------  ---------                                    (unaudited)           (unaudited)Revenue                         $   6,264  $   5,493  $  11,979  $  15,037Operating expenses:  Research and development (1)     18,705     20,020     39,057     39,577  General and administrative   (1)                              6,991      6,796     13,467     13,848  Restructuring charges                --         30         --      1,313                                ---------  ---------  ---------  ---------Total operating expenses           25,696     26,846     52,524     54,738                                ---------  ---------  ---------  ---------Loss from operations              (19,432)   (21,353)   (40,545)   (39,701)Interest and other income             134      1,172        229      1,819Interest expense                   (1,508)    (1,511)    (3,025)    (3,027)                                ---------  ---------  ---------  ---------Net loss                        $ (20,806) $ (21,692) $ (43,341) $ (40,909)                                =========  =========  =========  =========Basic and diluted net loss per share                          $   (0.28) $   (0.35) $   (0.63) $   (0.65)                                =========  =========  =========  =========Shares used in computing basic and diluted net loss per share    73,282     62,842     69,124     62,567                                =========  =========  =========  =========(1) Amounts include stock-based compensation expense for the three months    and six months ended June 30 as follows (in thousands):                                Three Months Ended      Six Months Ended                                      June 30,              June 30,                                --------------------  --------------------                                  2010       2009       2010       2009                                ---------  ---------  ---------  ---------                                    (unaudited)           (unaudited)Research and development        $   2,618  $   3,055  $   5,145  $   6,062General and administrative          2,704      2,219      4,675      4,325                                ---------  ---------  ---------  ---------Total stock-based compensation expense                        $   5,322  $   5,274  $   9,820  $  10,387                                =========  =========  =========  =========                       THERAVANCE, INC.              CONDENSED CONSOLIDATED BALANCE SHEETS                        (In thousands)                                                  June 30,    December 31,                                                    2010          2009                                                ------------  ------------                                                (unaudited)       (2)                                                ------------  ------------Assets  Cash, cash equivalents and marketable   securities                                   $    210,693  $    155,390  Other current assets                                 5,530         6,652  Property and equipment, net                         11,049        12,927  Other assets                                         5,177         6,424                                                ------------  ------------     Total assets                               $    232,449  $    181,393                                                ============  ============Liabilities and stockholders' net capital deficiency  Current liabilities (1)                       $     36,004  $     38,946  Deferred revenue                                   147,946       157,426  Convertible subordinated notes                     172,500       172,500  Other long-term liabilities                          1,957         1,515  Stockholders' net capital deficiency              (125,958)     (188,994)                                                ------------  ------------     Total liabilities and stockholders' net      capital deficiency                        $    232,449  $    181,393                                                ============  ============(1) Amounts include current portion of deferred revenue of $22.8 million    and $23.7 million as of June 30, 2010 and December 31, 2009,    respectively.(2) The condensed consolidated balance sheet amounts at December 31, 2009    are derived from audited financial statements.

Contact Information:
Michael W. Aguiar
Senior Vice President and Chief Financial Officer
Email Contact



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