Published: April 27, 2006
Theravance Reports First Quarter 2006 Financial Results
Theravance, Inc. (NASDAQ: THRX)
reported today its financial results for the first quarter ended March 31,
2006. The net loss for the first quarter of 2006 was $49.0 million
compared to $31.5 million during the same period of 2005, an increase of
$17.5 million. The higher loss was primarily due to increased research and
development costs associated with telavancin Phase 3 clinical programs and
additional stock-based compensation expense associated with the adoption of
the Financial Accounting Standards Board's Statement No. 123 (revised
2004), "Share-Based Payment" (SFAS 123(R)).
"The Company continues to make progress with its clinical pipeline and
has strengthened its overall financial position," said Rick E
Winningham, Chief Executive Officer. "In particular, we recently initiated the Phase 2b program with 159797 in our Beyond Advair collaboration with GlaxoSmithKline. We are also nearing completion of enrollment in our Phase 3 telavancin complicated skin and skin structure infection program."
Program Highlights
Bacterial Infections Programs
Telavancin
Enrollment in our Phase 3 studies for the treatment of patients with
complicated skin and skin structure infections (cSSSI) recently exceeded
1,500 patients and enrollment is on track to be completed during the first
half of 2006. In our hospital-acquired pneumonia (HAP) program, we
continue to target completion of enrollment in late 2006, a challenging
goal.
At the recent 16th ECCMID (European Congress of Clinical Microbiology and
Infectious Diseases), Theravance and Astellas Pharma Inc. (Astellas)
presented seven posters containing data on susceptibility of bacterial
isolates in vitro and the results of in vivo models of endocarditis and
bacteremic peritonitis.
Heterodimer
We recently initiated Phase 1 studies of our unique heterodimer
antibiotic compound, TD-1792, that combines the antibacterial activities
of a glycopeptide and a beta-lactam in one molecule.
Respiratory Programs
Beyond Advair
On April 20, 2006, the Company announced that GlaxoSmithKline (GSK)
recently enrolled the first patient in the Beyond Advair Phase 2b clinical
program with our long-acting beta2 agonist (LABA) compound 159797 in
patients with mild to moderate asthma. Two additional compounds, 642444
and 159802, continue to progress in clinical development.
Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA)
Phase 1 studies were recently initiated with the lead compound, 961081
(formerly TD-5959), a bifunctional compound that has both muscarinic
antagonist as well as beta2 agonist activity.
Gastrointestinal Motility Dysfunction Program
TD-5108 has completed single dose Phase 1 studies and has moved into
multiple dose Phase 1 studies.
Financial Results
Revenue
Revenue was $4.3 million in the first quarter of 2006 compared to $2.8
million in the same period of 2005. This increase was due to higher
amortization of upfront and milestone payments received from the Company's
partnerships with GSK and Astellas. All payments received to date under
these agreements are being amortized over the relevant performance periods
rather than recognized when received.
Research and Development
Research and development spending for the first quarter of 2006 increased
to $48.7 million compared to $30.2 million for the same period of 2005.
This increase was primarily driven by higher external research and
development costs associated with our two Phase 3 programs for telavancin
and the impact of SFAS 123(R). Total research and development stock-based
compensation expense for the three months ended March 31, 2006 was $3.0
million compared to $0.8 million for the same period in 2005. Total
external research and development costs were $30.3 million in the first
quarter of 2006 compared to $16.1 million in the same period of 2005.
General and Administrative
General and administrative costs for the first quarter of 2006 increased to
$7.3 million compared to $5.6 million in the same period of 2005 primarily
driven by the adoption of SFAS 123(R) and higher employee costs. Total
general and administrative stock-based compensation expense for the first
quarter of 2006 was $2.0 million compared to $0.6 million for the same
period last year.
Cash and Cash Equivalents
Cash, cash equivalents and marketable securities totaled $298.8 million as
of March 31, 2006, an increase of $98.8 million during the quarter. This
increase was due to the receipt of approximately $139.8 million, net of
issuance costs, from our secondary public offering in February of 2006,
offset by net cash usage of approximately $41.0 million during the first
quarter.
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 Daylight Time
today. To participate in the live call by telephone, please dial
800-810-0924 from the U.S., or 913-981-4900 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 May 27, 2006. An audio replay will also be available
through 11:59 p.m. Eastern Daylight Time on May 27, 2006 by dialing
888-203-1112 from the U.S., or 719-457-0820 for international callers, and
entering confirmation code 7484051.
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. Of the five programs
in development, two are in late stage -- its telavancin program focusing on
treating serious Gram-positive bacterial infections with Astellas Pharma
Inc. and the Beyond Advair collaboration with GlaxoSmithKline. By
leveraging its proprietary insight of multivalency to drug discovery
focused on validated targets, Theravance is pursuing a next generation drug
discovery strategy designed to discover superior medicines in large
markets. 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 and
preclinical studies, statements regarding the potential benefits and
mechanisms of action of drug candidates, the enabling capabilities of
Theravance's approach to drug discovery and its proprietary insights,
statements concerning 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 and preclinical
studies, the potential that results of clinical or preclinical studies
indicate product candidates are unsafe, ineffective, inferior or not
superior, and delays or failure to achieve regulatory approvals, 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 Annual Report on Form
10-K/A filed with the Securities and Exchange Commission (SEC) on March 10,
2006, and the risks discussed in our other 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
March 31,
------------------------
2006 2005
----------- -----------
(unaudited) (unaudited)
Revenue (1) $ 4,296 $ 2,757
Operating expenses:
Research and development (2) 48,708 30,197
General and administrative (2) 7,274 5,636
----------- -----------
Total operating expenses 55,982 35,833
----------- -----------
Loss from operations (51,686) (33,076)
Interest and other income, net 2,885 1,818
Interest expense (151) (193)
----------- -----------
Net loss $ (48,952) $ (31,451)
=========== ===========
Net loss per share (3) $ (0.86) $ (0.59)
=========== ===========
Shares used in computing net loss per share (3) 56,871 52,888
=========== ===========
Shares outstanding at the end of the period (3) 59,432 53,128
=========== ===========
(1) Revenue includes amounts from GSK, a related party, of $3.0 million for
the three months ended March 31, 2006 and $2.8 million for the three
months ended March 31, 2005.
(2) Amounts include stock-based compensation expense for the three months
ended March 31 are as follows (in thousands):
2006 2005
----------- -----------
Research and development $ 3,046 $ 842
General and administrative $ 1,967 $ 566
----------- -----------
Total stock-based compensation expense $ 5,013 $ 1,408
(3) Shares used in computing net loss per share exclude approximately 10.6
million and 10.4 million shares issuable upon exercise of outstanding
stock options and warrants and shares subject to repurchase as of
March 31, 2006 and 2005, respectively, as their effect would be
antidilutive.
THERAVANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, December 31,
2006 2005
----------- -----------
(unaudited) (2)
Assets
Cash, cash equivalents and marketable securities $ 258,595 $ 161,925
Other current assets 8,321 4,893
Marketable securities - non-current 40,159 38,084
Property and equipment, net 13,419 13,180
Other assets 6,840 6,753
----------- -----------
Total assets $ 327,334 $ 224,835
=========== ===========
Liabilities and stockholders' equity
Current liabilities, net of current portion of
deferred revenue (1) $ 35,632 $ 31,179
Deferred revenue (1) 127,947 128,245
Other long-term liabilities 6,235 5,827
Stockholders' equity 157,520 59,584
----------- -----------
Total liabilities and stockholders' equity $ 327,334 $ 224,835
=========== ===========
(1) Deferred revenue includes the current portion of $17.5 million and
$17.0 million as of March 31, 2006 and December 31, 2005, respectively.
The net decrease in total deferred revenue is a result of the
amortization of deferred revenue partially offset by additional upfront
and milestone payments that were earned under the Company's strategic
alliance with GSK and its collaboration with Astellas.
(2) The condensed consolidated balance sheet amounts at December 31, 2005
are derived from audited financial statements.
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