We have maintained our Neutral recommendation on
) with a target price of $24.00 per share following appraisal of
third quarter 2011 financial results.
Theravance's third quarter 2011 loss per share of 37 cents was
wider than the Zacks Consensus Loss Estimate of 33 cents as well as
the year-ago loss of 29 cents per share. The wider loss was
attributable to a lukewarm top-line performance as well as
increased research and development (R&D) expenses. Revenue at
Theravance though up 20.8% over the prior year to $6.4 million was
below the Zacks Consensus Estimate of $7 million.
Theravance has active collaborations with
) for the Relovair, LAMA/LABA (also called 719/VI) and MABA
programs. The Relovair program holds the biggest potential in the
company's pipeline, which aims to replace one of Glaxo's best
selling drugs, Advair. It is being developed for the treatment of
chronic obstructive pulmonary diseases (COPD) and asthma.
The LAMA/LABA combination is also being developed for the
treatment of COPD. Under the MABA collaboration, Theravance is
making rapid progress with GSK961081, which could be another
important option for the treatment of COPD. In October 2011,
Theravance expanded this collaboration whereby Glaxo has been given
exclusive rights to develop and commercialize six additional
preclinical MABA compounds (discovered by Theravance) which will
progress simultaneously with GSK961081.
If successful, this portfolio of respiratory products could put
Theravance in a very competitive position. Theravance is entitled
to receive royalties on sales of drugs developed from the Relovair,
LABA/LAMA, and MABA studies without any added cost obligations. We
believe the revenue generated following the approval of any of the
programs will ultimately lead the company to profitability.
Theravance, on its own, has a deep pipeline consisting of
candidates like TD-5108 (chronic constipation), TD-4208 (COPD), and
TD-1211 (opioid-induced constipation), which could drive future
revenues. Theravance, the sole owner of all these promising
programs, is on the lookout of collaborative partners for the
development and commercialization of the compounds. With these
compounds progressing well and steadily reporting positive data,
partnering discussions around these programs could materialize
faster. Overall, we believe that 2012 will be an important year for
the company due to significant clinical catalysts.
Theravance's only commercialized drug, Vibativ (telavancin), is
an injectable antibiotic which is currently marketed by partner
Astellas Pharma in the US 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). Theravance receives royalties from
Astellas ranging from high teens to upper twenties depending on
sales volume. Vibativ is also marketed in Canada for cSSSI and is
under review in the EU for the disease.
Apart from cSSSI, Vibativ was also studied for hospital-acquired
) or nosocomial pneumonia (
). Vibativ received approval in the EU for NP in September 2011.
This marks the first approval for the treatment of NP, which is
associated with high mortality rates. It is also approved in Norway
and Switzerland for NP. Launch plans are under review. In the US,
however, Theravance received a complete response letter (
) for the NP indication stating certain shortcomings related to its
studies. Though we are encouraged by the approval of Vibativ for NP
in the EU, we are disappointed with the CRL received in the US for
the indication. We, therefore, prefer to remain on the sidelines on
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THERAVANCE INC (
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