Theravance Preps For Separation As Breo Hits The U.S. Market
This article was originally published in The Pink Sheet Daily
Executive Summary
The San Francisco-based biotech is going through with a company spin-out that will put all of its royalty revenues in one entity and R&D work into another, as its lead respiratory product is being prepared for a global commercial launch.
Innoviva Inc. is on track to complete its separation into two publicly traded companies by the end of the year, the biotech’s CEO Rick Winningham confirmed on its Oct. 24 third quarter conference call. This strategy will “unlock potential value” and provide investors with “two highly focused businesses with unique strategies and risk profiles,” he noted.
Theravance announced plans to create a royalty company to return capital to shareholders, Royalty Management Co., and another devoted to pipeline development, Theravance Biopharma, in April (Also see "Theravance To Split Into A Royalty Play and An R&D Company" - Pink Sheet, 26 Apr, 2013.). Those plans were thrown into question briefly when the company failed to secure a new partner for its antibiotic Vibativ (telavancin)and a royalty deal with Elan Corp. PLC fell through .
“The result will be two independent, publicly traded companies with different business models, again, enabling investors to align their investment philosophies with the strategic opportunities and financial objectives of the two independent entities. A Form 10 for Theravance Biopharma has been filed with the SEC. We are dedicating significant effort towards the successful completion of the separation,” said Winningham. “We are still on track, and expect to complete the separation late this year or early 2014.”
Breathing Easy
The separation comes on the heels of progress made in the biotech’s respiratory franchise, which is partnered with GlaxoSmithKline PLC. The British pharma revealed this week that it had started shipping supply of Breo Ellipta (fluticasone furoate/vilanterol inhalation powder), the pair’s combined inhaled corticosteroid (ICS) and long-acting beta agonist (LABA), to the U.S.
The global launch of the drug is set to begin now that it has gotten a positive opinion in the EU, Canada and the U.S. for the treatment of chronic obstructive pulmonary disease (COPD), as well as approval in Japan for asthma.
The collaborators’ LABA/long-acting muscarinic antagonist (LAMA) combination, Anora Ellipta (umeclidinium bromide/vilanterol), also is expected to launch as early as next year, now that it has received a positive opinion from an advisory committee to FDA; its PDUFA date is Dec. 18.
“The respiratory markets we are targeting with our GSK collaboration represent a very significant commercial opportunity,” noted Winningham, who puts the combined market for LABAs and ICS at $11 billion and $4.5 billion for LAMAs.
Theravance is eligible to receive a 15% royalty on all sales of Breo Ellipta up to $3 billion and then another 5% over that sales threshold. The royalty rate for Anoro is tiered, beginning in the mid-single digits.
The two companies also have two early-stage combination therapies in the works, but late-stage clinical data are not expected until after 2014.
Theravance is developing several programs on its own, including a LAMA delivered via a once-a-day nebulizer for COPD, as well as a norepinephrine-serotonin re-uptake inhibitor for the treatment of attention-deficit hyperactivity disorder (ADHD) and fibromyalgia.
The biotech reported a loss of $47 million, or 44 cents per share, for the third quarter. Revenues during the quarter came in at $400,000, down from $1.4 million in the year-prior quarter. The sales discrepancy largely was due to the termination of the Vibativ agreement with Astellas Pharma Inc. The company ended the Sept. 30 period with cash and equivalents of $594.5 million.