Theravance, Inc. (THRX)

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Theravance, Inc. (THRX)

Q3 2008 Earnings Call

October 23, 2008 5:00 pm ET


Rick E. Winningham - CEO

Michael W. Aguiar - SVP and CFO


Analyst for May-Kin Ho - Goldman Sachs

Rachel McMinn - Cowen & Co.

Michael Aberman - Credit Suisse

Ian Somaiya - Thomas Weisel Partners

Biren Amin - Stanford Group

Jim Birchenough - Barclays Capital

Bryan Skorney - SIG

Tom Russo - Robert W. Baird

Matt Duffy - BDR Research Group, LLC



Ladies and gentlemen good afternoon. At this time, I would like to welcome everyone to the Theravance conference call to review results for the quarter ended September 30, 2008. During the presentation, all participants will be in a listen-only mode. A question-and-answer session will follow the Company’s formal remarks. (Operator instructions) Today’s conference is being recorded.

And now, I would like to turn the call over to Mike Aguiar, Senior Vice President and Chief Financial Officer. Please go ahead, sir.

Michael W. Aguiar

Good afternoon everyone and thank you for joining us. With me on the call today is Rick Winningham, our Chief Executive Officer. Today's call will be in three parts. First, Rick will review the highlights in the quarter and provide an update on our clinical programs, and then I will review our financial results and finally we will open up the call for questions.

Earlier today, Theravance issued a press release detailing third quarter 2008 financial results and recent corporate developments. A copy of the press release can be downloaded from our web site or you can call Investor Relations at 650-808-4100, and we will be happy to assist you.

Before we get started, we would like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Theravance. Forward-looking statements include anticipated results and other statements regarding Theravance's goals, expectations, strategies, and beliefs. These statements are based upon information available to the Company today and Theravance assumes no obligation to update these statements as circumstances change. Future events, financial result could differ materially from those projected in the Company's forward-looking statements. Additional information concerning factors that could cause these results to differ materially from our forward-looking statements are described in greater detail in the Company's most recent 10-Q filed with the SEC.

I will now turn the call over to Rick Winningham, our Chief Executive officer.

Rick E. Winningham

Thanks, Mike. Good afternoon everyone.

During the third quarter, we made progress on our clinical and regulatory activities, particularly progress with the US Telavancin program where we believe the FDA complicated skin and skin structure cited inspection issues have been successfully resolved and we are now scheduled to attend the upcoming advisory committee meeting in November. The next US regulatory activity for Telavancin is with the submission of the HAP NDA.

Due to the preparation of the resource shift required to support the complicated skin advisory committee in November, it is possible that the HAP filing may slip from the fourth quarter 2008 to early 2009. Today, we reported that Astellas and Theravance decided to voluntarily withdraw the European application for Telavancin for complicated skin and soft tissue infections and we also noted that Astellas intends to prepare a new MAA with expanded clinical trial data including data from the HAP-base three programs. Finally the Horizon program in collaboration with GSK has now completed enrollment in all the Phase IIb programs with '444 and '698.

I will provide more details on these developments; then Michael will walk you through the financials later in the call. First let me turn to Telavancin. A substantial amount of activity has occurred during the quarter. As previously announced the Anti-Infective Drug Advisory Committee to the FDA will convene on the morning of November 19 to review the NDA for Telavancin for complicated skin and skin structure infections. This is an important positive development for Telavancin program. Based on discussions with the FDA after completion of both Theravance's and the FDA's ATLAS site-audit inspections, we believe the site inspection issues in the ATLAS program have been successfully resolved.

In addition, there will be approximately 50 patient sites the FDA previously requested to be removed from the ATLAS data set, Theravance has identified two additional sites totaling approximately 20 patients where they may have been an ineffective CRO oversight. We believe that this potential oversight did not endanger patient’s safety, there was no evidence of fraud, nor was there any indication of systemic issues in the overall conduct of the study. The FDA requested the data from these three clinical sites out of more than 100 sites to be removed from the ATLAS efficacy analysis.

These sites included a total of 73 patients out of 1867 enrolled in the study. Overall, the removal of these data from the efficacy analysis had no impact on the conclusions of the studies. We remain confident in the quality of the data generated in the ATLAS Telavancin program and as a reminder, we submitted our complete response to the approval letter back in January where we submitted all safety data associated with the hospital-acquired pneumonia program. With regard to the manufacturing issues, the FDA raised in the approvable letter, we believe based on communications with our supplier that the status of the facility has been changed by the FDA to allow approval of NDA's and ANDA's for products that are manufactured by our supplier.

Additionally, we will become aware of the number of products manufactured at the facility that have been approved by the FDA. Astellas and Theravance have decided to voluntarily withdraw the European marketing authorization application for Telavancin for complicated skin and soft tissue infections. We decided to withdraw the MAA based on communications from the committee from additional products for human use of the EMEA but the data provided are not sufficient to allow the committee to conclude a positive benefit risk balance for Telavancin for the sole indication of complicated skin and soft tissue infections at this time.

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