Zacks_Analysts' Blog : Theravance Misses Estimates - Analyst Blog

During the fourth quarter of 2009, Theravance’s (THRX) loss per share came in at 35 cents, missing the Zacks Consensus Estimate by two cents and worse than the loss of 26 cents reported in the year-ago period. Revenues were $3.8 million during the quarter compared with $5.9 million in the fourth quarter of 2008. For the full year of 2009, Theravance reported revenues and loss per share of $24.4 million and $1.35, respectively.

Theravance earns revenues in the form of milestone payments from its collaborating partners including GlaxoSmithKline (GSK) and Astellas Pharma.

Operating expenses for the quarter increased 15.8% year-over-year at $24.8 million. R&D expenses were 21% higher primarily due to a $4.9 million reimbursement of development expenses received from Astellas Pharma in the fourth quarter of 2008, partially offset by lower costs related to the regulatory process for telavancin (Vibativ). G&A expenses increased 8.5% due to higher employee-related costs.

The reported quarter was quite significant for Theravance with the U.S. launch of its long-awaited product Vibativ for the treatment of complicated skin and skin structure infections (cSSSI) caused by Gram-positive bacteria. While the drug will be marketed and sold by Astellas, Theravance will receive royalties on global sales. In the U.S., the company will help Astellas in marketing the drug for the first three years post approval.

Apart from cSSSI, telavancin is also being studied for hospital-acquired pneumonia (HAP) and has already submitted a New Drug Application (NDA) for this indication.

Although the original Prescription Drug User Fee Act (PDUFA) date was November 26, 2009, the U.S. Food and Drug Administration (FDA) had issued a complete response letter (CRL) asking for additional data. However, the agency is not satisfied with the response provided by Theravance and stated that the review process will not begin until the company completes the data submission.

Another promising pipeline candidate at Theravance is a next-generation combination treatment for patients with chronic obstructive pulmonary disease (COPD). The company has initiated patient enrollment in its phase III trial of the program (RELOVAIR), which is being developed under a partnership with GlaxoSmithKline.

We have a Neutral rating on THRX stock.