Business Overview and History
Theravance Biopharma, Inc. is a biopharmaceutical company primarily focused on the development and commercialization of medicines. The company's strategic initiatives and operational execution have positioned it for long-term success, despite navigating a dynamic industry landscape.
Theravance Biopharma was founded in 1997 as part of Innoviva, Inc. (formerly known as Theravance, Inc.) and was spun off as a separate publicly traded company on June 2, 2014. The company is headquartered in Dublin, Ireland and maintains subsidiaries in the United States, United Kingdom, and Ireland.
Since its inception, Theravance Biopharma has been engaged in the discovery and development of compounds and product candidates. One of the company's key accomplishments was the development and FDA approval of YUPELRI® (revefenacin) inhalation solution in 2018. YUPELRI is a once-daily, nebulized long-acting muscarinic antagonist (LAMA) indicated for the maintenance treatment of chronic obstructive pulmonary disease (COPD). YUPELRI is commercialized in the U.S. through a collaboration with Viatris Inc., with Viatris leading the commercialization efforts.
In 2022, Theravance Biopharma completed the sale of its equity interests in Theravance Respiratory Company, LLC to Royalty Pharma for approximately $1.11 billion in upfront cash. This transaction allowed the company to retain future value through the right to receive contingent milestone payments and certain outer year-royalties related to TRELEGY ELLIPTA, a respiratory medicine marketed by GlaxoSmithKline (GSK).
The company has faced some challenges in recent years, including the failure of its Phase 2b study of izencitinib in ulcerative colitis in 2021 and the Phase 3 SEQUOIA study of ampreloxetine not meeting its primary endpoint. In response to these setbacks, Theravance Biopharma has implemented cost-saving measures, including a corporate restructuring in 2021 and additional headcount reductions in 2023, to preserve its financial resources while continuing to develop its product candidates.
The company's late-stage pipeline is anchored by ampreloxetine, an investigational once-daily norepinephrine reuptake inhibitor (NRI) in development for the treatment of symptomatic neurogenic orthostatic hypotension (nOH) in patients with Multiple System Atrophy (MSA). Ampreloxetine has received Orphan Drug Designation from the FDA for this indication.
In addition to its internal programs, Theravance Biopharma has an economic interest in the commercialization of TRELEGY ELLIPTA by GlaxoSmithKline (GSK). TRELEGY, a once-daily single inhaler triple therapy for COPD and asthma, has seen robust global sales growth in recent years.
Financial Performance and Condition
Theravance Biopharma's financial performance has been characterized by steady revenue growth from its YUPELRI collaboration with Viatris, and potential milestone payments and royalties from the TRELEGY program. However, the company has historically reported net losses as it continues to invest in its clinical development pipeline.
For the full year 2024, Theravance Biopharma reported total revenues of $XXX million, up X% year-over-year. YUPELRI net sales, recognized by partner Viatris, reached a record $238.6 million, an 8% increase compared to 2023. The company's net loss for the year was $XX million, or $X per share.
As of September 30, 2024, Theravance Biopharma had $88 million in cash, cash equivalents and marketable securities, excluding a $50 million milestone payment from Royalty Pharma received in February 2025. The company maintains a debt-free balance sheet, providing financial flexibility to advance its strategic priorities.
In the most recent quarter, Theravance Biopharma reported revenue of $16.87 million, representing an 8% year-over-year increase. This growth was primarily attributed to increased collaboration revenue from partner Viatris. The company's net loss for the quarter was $12.70 million, with operating cash flow of -$5.20 million and free cash flow of -$5.21 million.
As of the latest reported quarter, Theravance Biopharma had $23.38 million in cash. The company's current ratio and quick ratio both stand at 4.97, indicating a strong short-term liquidity position. It's worth noting that Theravance Biopharma is a small-cap company that currently only sells in the United States market.
Key Developments and Catalysts
YUPELRI Commercialization: Theravance Biopharma and partner Viatris have continued to drive strong uptake of YUPELRI in the U.S. market. In the fourth quarter of 2024, YUPELRI net sales reached an all-time high of $66.7 million, up 10% year-over-year, driven by a 49% increase in hospital doses. The companies are also preparing for potential milestones and royalties from the anticipated launch of YUPELRI in China.
YUPELRI is a once-daily, nebulized LAMA approved for the maintenance treatment of COPD in the United States. LAMAs are recognized as a cornerstone of maintenance therapy for COPD by international treatment guidelines, regardless of disease severity. Under the terms of the Viatris Agreement, Theravance Biopharma led the US Phase 3 development program for YUPELRI, with Viatris responsible for reimbursement of development costs up until the first new drug application approval in November 2018.
In the US, Viatris leads the commercialization of YUPELRI, with Theravance Biopharma co-promoting the product under a profit and loss sharing arrangement (65% to Viatris, 35% to Theravance Biopharma). Outside the US, excluding China and adjacent territories, Viatris is responsible for development and commercialization and will pay Theravance Biopharma a tiered royalty on net sales at percentage royalty rates ranging from low double-digits to mid-teens.
For the three and nine months ended September 30, 2024, Theravance Biopharma recognized $16.87 million and $45.63 million, respectively, in revenue from the Viatris collaboration agreement, representing an 8% and 15% increase compared to the prior year periods. During the third quarter of 2024, YUPELRI customer demand increased by 14% and market share increased to nearly 19% in the hospital setting and reached 32% in the community setting.
Ampreloxetine Development: The company's pivotal CYPRESS study evaluating ampreloxetine in patients with MSA and symptomatic nOH remains on track, with plans to complete enrollment in the open-label portion by mid-2025. Theravance is preparing for an expedited NDA filing and has requested priority review from the FDA to potentially bring this novel treatment to patients as quickly as possible.
Ampreloxetine is an investigational, once-daily norepinephrine reuptake inhibitor (NRI) being developed for the treatment of MSA patients with symptomatic nOH. Based on positive results from a small exploratory Phase 2 study and discussions with the FDA, Theravance Biopharma advanced ampreloxetine into a Phase 3 program. Although initial Phase 3 studies did not meet their primary endpoints for the overall patient population, pre-specified subgroup analysis suggested a statistically significant average benefit in MSA patients receiving ampreloxetine.
In June 2022, Theravance Biopharma aligned with the FDA on a path to a New Drug Application filing with one additional Phase 3 clinical study, CYPRESS, in MSA patients with symptomatic nOH. The company anticipates that the final patient will be enrolled in the open label period of the study in mid-2025, with top-line data available approximately six months thereafter.
In July 2022, Royalty Pharma agreed to invest up to $40 million to advance the development of ampreloxetine in MSA in exchange for unsecured low single-digit royalties on annual global net sales of ampreloxetine up to $500 million and 4.5% on annual global net sales over $500 million.
TRELEGY Royalties and Milestones: Theravance Biopharma is eligible to receive up to $150 million in additional milestones from Royalty Pharma based on TRELEGY's global net sales performance over the next two years. Additionally, the company retains the right to receive royalties on TRELEGY sales starting in 2029 internationally and 2031 in the U.S., representing a significant long-term revenue stream.
For the next potential milestone payment, Theravance Biopharma is eligible to receive either $25 million if Royalty Pharma receives $240 million or more in royalty payments from GSK with respect to 2024 TRELEGY global net sales, or $50 million if Royalty Pharma receives $275 million or more in royalty payments from GSK with respect to 2024 TRELEGY global net sales. TRELEGY global net sales for the three and nine months ended September 30, 2024 were $789 million and $2.60 billion, respectively, representing 17% and 30% year-over-year growth, respectively.
Strategic Initiatives: In late 2024, Theravance Biopharma's Board of Directors announced initiatives to unlock shareholder value and enhance corporate governance. This includes the formation of a Strategic Review Committee to assess all strategic alternatives for the company's assets.
Risks and Challenges
Theravance Biopharma faces several risks and challenges that could impact its future performance:
1. Regulatory Uncertainties: The company's ability to successfully obtain regulatory approvals for its product candidates, such as ampreloxetine, remains a key risk. Delays or setbacks in the regulatory process could significantly impact the company's timeline and financial projections.
2. Competitive Landscape: YUPELRI and any future product approvals by Theravance Biopharma will compete in highly competitive therapeutic areas. The company's ability to maintain and grow market share will be critical to its long-term success.
3. Reliance on Collaborations: The company's business model relies heavily on successful partnerships, such as the one with Viatris for YUPELRI. Any disruptions or changes in these collaborations could adversely affect Theravance Biopharma's financial performance and operations.
4. Liquidity and Funding Needs: As Theravance Biopharma continues to invest in its pipeline and commercial activities, the company's ability to effectively manage its cash resources and secure additional funding, if needed, will be crucial.
5. Intellectual Property Challenges: The company's ability to protect its intellectual property rights related to its products and product candidates is essential to maintaining a competitive advantage. Any successful challenges to Theravance Biopharma's patents could negatively impact its business.
Outlook and Conclusion
Theravance Biopharma enters 2025 in a strong financial position, with a compelling outlook for shareholders. The company's focus on executing its key value drivers, including the continued growth of YUPELRI, the advancement of ampreloxetine, and the potential for TRELEGY milestones and royalties, positions it for long-term success.
For 2025, Theravance Biopharma has provided specific guidance on several key financial metrics. R&D expense (excluding share-based compensation) is expected to be between $32 million and $38 million, reflecting the completion of the CYPRESS study with clinical trial costs decreasing in the second half of the year, offset by one-time incremental spend to facilitate completion of the majority of the NDA prior to the data readout.
SG&A expense (excluding share-based compensation) is projected to be between $50 million and $60 million, reflecting measured investments for ampreloxetine in areas such as market research, market access, and medical affairs in preparation for potential NDA filing. Share-based compensation expense is expected to decrease year-over-year to a range of $18 million to $20 million, driven by continued cost-cutting initiatives.
The company anticipates that non-GAAP losses and cash burn will be similar to 2024 levels, with higher levels in the first half of 2025 and improvements in the second half. It's worth noting that the accounting treatment for TRELEGY milestones has been updated, such that only $6 million of other income would be recognized in 2026 if the remaining $150 million in milestones are achieved, with no other income recognized in 2024 and 2025. This accounting change has no impact on cash receipts.
Despite the challenges inherent in the biopharmaceutical industry, Theravance Biopharma's strategic initiatives, operational execution, and commitment to innovation suggest that the company is well-equipped to navigate the dynamic market landscape and deliver value to its shareholders. The company's strong liquidity position, debt-free balance sheet, and potential for significant milestone payments and royalties from its partnerships provide a solid foundation for future growth and development.
As Theravance Biopharma continues to advance its pipeline, particularly the ampreloxetine program for MSA patients with symptomatic nOH, investors should closely monitor the progress of the CYPRESS study and potential regulatory milestones. The company's ability to successfully bring ampreloxetine to market could represent a significant value driver in the coming years.
Furthermore, the ongoing success of YUPELRI in the U.S. market and its potential expansion into international markets, such as China, offer additional growth opportunities. The continued strong performance of TRELEGY ELLIPTA and the associated milestone payments and future royalties provide a valuable source of non-dilutive funding to support Theravance Biopharma's operations and development programs.
In conclusion, while Theravance Biopharma faces the typical risks associated with clinical-stage biopharmaceutical companies, its focused strategy, strong partnerships, and potential near-term catalysts position the company for potential value creation in the coming years. Investors should weigh the risks and potential rewards as they evaluate Theravance Biopharma's prospects in the dynamic and competitive pharmaceutical landscape.