) third quarter 2013 loss of 44 cents per share was narrower than
the Zacks Consensus Estimate of a loss of 79 cents per share. The
third quarter 2013 figure was wider the year-ago loss of 37 cents
per share. The wider year-over-year loss was due to lower
revenues and higher costs.
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Revenues in the third quarter of 2013 declined to $0.4 million
from $1.4 million a year ago. Revenues in the third quarter of
2013 were short of the Zacks Consensus Estimate of $2 million.
Research & development (R&D) expenses were up 23.7% to
$33.4 million in the third quarter of 2013. The increase in
R&D expenses was primarily attributable to the company's
efforts to develop its pipeline. General & administrative
(G&A) expenses for the reported quarter climbed 57.7% to
$12.3 million primarily due to higher legal and accounting costs
incurred by the company pertaining to its plan to split into 2
entities. Theravance now expects 2013 operating expenses
(excluding special items) at the upper end of its previously
guided range of $125-$135 million.
Theravance is working on completing its proposed separation into
2 separate entities. The process is expected to be completed by
year end/early 2014.
We remind investors that in Apr 2013, the board of directors at
Theravance approved its decision to split into two separate
publicly traded companies. While one company will manage the
late-stage partnered respiratory candidates and associated
potential royalty revenues, the other will focus on the
discovery, development and commercialization of small-molecule
therapies targeted towards areas of high unmet medical need.
The company responsible for the development of respiratory
candidates will be named Royalty Management Company. The entity
dealing with small-molecule therapies will be named Theravance
In May 2013, Theravance received a boost when the U.S. Food and
Drug Administration (FDA) approved the chronic obstructive
pulmonary disease (COPD) candidate, Breo Ellipta. Theravance has
co-developed the drug with
The FDA cleared Breo Ellipta as a long-term maintenance therapy
of airflow obstruction and for bringing down exacerbations in
patients suffering from COPD. Theravance announced in its press
release that Glaxo has commenced shipping the drug into the U.S.
Moreover, in Sep 2013 the drug was cleared in Japan for treating
patients suffering from bronchial asthma. We note that the
approval triggered a $10 million milestone payment from
Theravance to GlaxoSmithKline. The drug is expected to be
launched in Japan for the approved indication by Dec 31, 2013.
In the same month, the European Medicines Agency's (EMA)
Committee for Medicinal Products for Human Use (CHMP) issued a
favorable opinion on Relvar Ellipta's approval in the EU for the
asthma and COPD indications. A final decision from the European
Commission is expected by year end.
We note that Glaxo and Theravance are also looking to get another
COPD candidate approved. In Feb 2013, the FDA accepted the
regulatory application of Glaxo/Theravance's UMEC/VI (proposed
trade name: Anoro Ellipta). The companies are looking to get the
candidate approved in the U.S. as a once daily therapy for
treating patients suffering from COPD. We note that an advisory
panel of the FDA recommended the approval of Anoro Ellipta in the
COPD indication in Sep 2013. A final decision from the U.S.
regulatory body is expected by Dec 18, 2013.
Theravance currently carries a Zacks Rank #3 (Hold). Companies
Isis Pharmaceuticals, Inc.
) are well placed, each with a Zacks Rank #1 (Strong Buy).