Using scientific skills towards building pipelines of promising products does not guarantee a happy ending for a small biotech firm. Pipelines' breakthroughs need management capabilities and swiftness of actions, which would walk them through the safest and fastest road towards approvals. We believe Theravance (THRX) has benefited from both its scientists and management. The firm has come nearer than ever to reaching a happy beginning of substantial growth, or perhaps, a happy ending through acquisition, probably, by its partner GlaxoSmithKline (GSK).
Three years ago, the firm's antibiotic Vibativ (televancin) was approved for skin and skin structure infections (cSSSI) caused by susceptible Gram-positive bacteria. It was good news, but Vibativ has never gotten a grip in the antibiotic marketplace. In addition to the small market for skin infection, the drug encountered manufacturing shortages described by the firm itself as possibly significant. These disagreeable circumstances, added to the firm's progressive yearly losses and repeated financing with dilutions - all led to the stock's underperformance. On January 2012, Astellas Pharma walked away from the partnership, which caused the stock to lose around 25% of its average price at the end of 2011.
Recently, however, an FDA Anti-Infective Drug Advisory Committee (AIDAC) voted 13 -2 in favor of the approval of the drug for nosocomial pneumonia (NP) known also as hospital-acquired pneumonia due to susceptible isolates of Gram-positive microorganisms when other alternative treatments are not working. This recommendation is good news from the firm's bacterial infections program, but not the main reason for our decision to consider investing in this firm at this time.
In addition to the bacterial infection program, Theravance's pipeline has three other programs comprising the respiratory program, the CNS/pain program and the intestinal motility disfunction program. Currently, the most advanced and most promising of all the programs is the respiratory program. This program has the most advanced therapeutics in Theravance's pipeline. Two of the products are now waiting for the FDA's and other overseas authorities' approval.
Theravance Respiratory Program
Theravance has built three development programs directed toward chronic obstructive pulmonary diseases (COPD) and asthma. The franchise attracted GlaxoSmithKline, which decided to join on several programs. Theravance and its collaborator are speeding towards putting on the market breakthrough inhalers that add to the huge improvement already made in the management of COPD and asthma.
According to several studies, the treatments developed during the last ten years for these diseases and their delivery tools have significantly improved the management of COPD and asthma. As a result, asthmatic children are now much less dependent on oral steroids or on rescue treatments. Their lung function scores have also improved. Theravance partner, GSK has been a major contributor to the enhancement of inhaled steroids, improved combinations of steroids and long-acting bronchodilators plus steroids (Advair) and enhancement of the inhalers themselves.
The improvement, though, does not mean the battle against these diseases is over. People are still suffering and dying from COPD and asthma. Lack of compliance seems to play a significant role in offsetting the statistics of the new improvement.
Therapvance's and GSK's new drugs, we believe, offer therapeutic improvement and, in the meantime, address the compliance problem. One can fairly say that the treatments of respiratory distressing diseases are, indeed, better, but not best. We believe Theravance and its partner GSK are on the right track toward bringing into the clinic inhaled drugs and drug combinations that are longer-acting and more effective in helping patients comply.
Theravance/GSK Collaboration Programs
Relvar or Breo(FF/VI) - (waiting For approval): This is a Long-Acting Beta2 Agonist (LABA) vilanterol or VI,combined with inhaled corticosteroid (fluticasone furoate of FF) for a once daily treatment of COPD and asthma. The firms have already filed for approval for COPD in the EU, US and Japan and for approval for asthma in EU and Japan.
The FDA Accepted the New Drug Application (NDA) for this once-daily investigational medicine for COPD. The Prescription Drug User Fee Act (PDUFA) goal date has also been confirmed as May 23, 2013.
UMEC/VI (Umeclidinium bromide/vilanterol) - (waiting For approval): The dual bronchodilator consists of a LABA (vilanterol) combined with a LAMA (umeclidinium bromide or UMEC) for once-a-day inhalation for the treatment of COPD. The firms have recently filed for approval of this inhaler.
MABA (Bifunctional Muscarinic Antagonist-Beta2 Agonist): Both muscarinic antagonists and beta2 agonists cause bronchodilation by different mechanisms of action. This is a long-acting inhaled bronchodilator that is bifunctional, meaning it is a single molecule with both muscarinic antagonist and beta2 agonist activities.
Currently patients are using both inhaled muscarinic antagonists and inhaled beta2 agonists (either in two separate inhalers or via a product that combines short-acting agents from the two drug classes).
Combining bifunctional activity and high lung selectivity brings greater efficacy than single mechanism bronchodilators with an equal, or even better tolerability. The bifunctional bronchodilator could potentially serve as a basis for a co-delivery with an inhaled corticosteroid that could deliver three complementary therapeutic effects in a single product for patients with respiratory disease.
Theravance's Internal Program
Theravance kept a long-Acting Muscarinic Antagonist (LAMA), or TD-4208 for internal development. itself. The goal is to develop a once-daily inhaled medicine in a nebulizer that offers improved efficacy and tolerability relative to current therapies, and provides the basis for combination nebulized products with other medicines. To accomplish this task, Theravance is developing a chemically-stable inhaled LAMA that produces prolonged blockade of the relevant muscarinic receptor sub-types in the lung while also being highly selective for lung tissue over salivary gland tissue.
Positive Moves In Theravance's Other Programs
- Initiation of a dose ranging Phase 2b study with TD-4208 in patients with moderate to severe COPD. The drug is discovered using Theravance's multivalent approach to drug design.
- Initiation of a fibromyalgia Phase 2 study with TD-9855, the lead compound in Theravance's Monoamine Reuptake Inhibitor program. TD-9855 is an investigational norepinephrine and serotonin reuptake inhibitor (NSRI) for central nervous system (CNS) conditions such as chronic pain and Attention-Deficit/Hyperactivity Disorder (ADHD).
- Signing a collaboration agreement with Merck to discover, develop and commercialize novel small molecule therapeutics directed towards a target being investigated for the treatment of hypertension and heart failure.
- Announcement of positive results from 0084, the key study in the Phase 2b program evaluating TD‑1211 as a potential treatment for chronic, non-cancer pain patients with opioid-induced constipation (OIC).
TD‑1211 is an investigational, orally administered, peripherally selective, multivalent inhibitor of the mu opioid receptor designed to alleviate the gastrointestinal side effects of opioid therapy without affecting analgesia. These positive clinical results support progression into Phase 3 development for the treatment of patients with opioid-induced constipation.
Theravance has already proven itself, putting a first in class antibiotic VIBATIV (telavancin) on the market. However, we believe that the greater part of THRX's value currently resides in its partnered respiratory program. This franchise provides improved treatments through more balanced and longer-acting combinations. The products are moving rapidly toward approvals with GSK - an experienced partner that has the best selling long-acting inhaler, Advair.
Two products on the verge of approval demonstrating better efficacy than current inhalers are promising either substantial growth, or a takeover, probably by its partner GSK. As a matter of fact, GlaxoSmithKline has already completed the acquisition of 10,000,000 shares of Theravance common stock.
The respiratory market is huge and Theravance's drugs are demonstrating far-reaching efficacy. In MABA, combining bifunctional activity and high lung selectivity provides greater efficacy than single mechanism bronchodilators with equal or probably better tolerability. MABA could potentially serve as a basis for improved combination therapy by co-delivery with an inhaled corticosteroid - three complementary therapeutic effects in a single product for patients with respiratory disease.
These facts that attracted us would also be tempting to GSK.
Disclosure: Currently, we are long THRX.