Courtesy of Pharmboy of Phil's Stock World
Theravance (THRX) is a biopharmaceutical company that is involved in discovering, developing and commercializing small molecule medicines for respiratory diseases, bacterial infections and central nervous system [CNS] pain.
Figure 1. Theravance Stock Price the last year.
While THRX has a mixed product pipeline, a majority of its pipeline (and future) is tied up with GlaxosmithKline (GSK) in the treatment of asthma/COPD.
Asthma comes from a Greek word meaning "panting." It is a common chronic inflammatory disease of the airways characterized by variable and recurring symptoms including wheezing, coughing, chest tightness, and shortness of breath. Doctors clinically classify asthma according to the frequency of symptoms, forced expiratory volume in 1 second (FEV1), and peak expiratory flow rate. Asthma can also be classified as atopic (extrinsic) or non-atopic (intrinsic).
Figure 2. Normal vs. asthmatic lungs/bronchi.
The causes of asthma are thought to be a combination of genetic and environmental factors (e.g., allergens). Treatment of acute symptoms is usually with an inhaled short-acting beta-2 agonist (such as salbutamol). Recent global data estimate the asthma market to be valued at $12.4 billion in 2009. It is expected to grow with a compound annual growth rate [CAGR] of approximately 1.5% from $12.4 billion to $14 billion by 2017.
Figure 3. Overlap of Obstructive Pulmonary Disease: Asthma, COPD, Bronchitis, Emphysema.
A brief description of the players in the asthma/COPD field are noted below, with GSK's Advair and Merck's (MRK) Singulair owning a lion's share of the market.
I wrote about GSK here. GSK has owed its market-leading position in the global respiratory market to Ventolin for the treatment of asthma for over 30 years. In 1990, the company developed and launched Serevent and Flixotide. A combination of these two compounds is sold under the brand name Seretide (Advair). The Advair combination drug consists of a corticosteroid (fluticasone) and a long-acting beta antagonist (salmeterol). It is the dominant drug in the market, with 2010 sales of $7.94B billion. It will likely remain the market leader in the current generation of asthma medication.
AstraZeneca's (AZN) Symbicort (budesonide/formoterol) is a new asthma drug that was launched in the US in mid-2007. The sales in 2010 were $3.7B. It is also a combination drug that belongs to the same drug family as Advair (inhaled corticosteroids/long-acting beta-2 agonists), but its action is slightly faster. It comes off patent in 2012.
Merck's (MRK) Singulair (montelukast) is a leukotriene receptor antagonist that inhibits a specific inflammatory pathway. While it is less effective than ICSs, which inhibit many pathways, Merck has been able to market it in the US successfully by playing up fears of corticosteroids and promoting Singulair for use in children. Singulair is used to help maintain chronic asthma symptoms and cannot be used to treat acute asthma attacks. It is also the last branded drug for allergic rhinitis (hay fever). The drug is Merck's best-selling product, with 2010 sales of $4.99 billion, representing 10% of total sales.
Older single-therapy drugs include:
ICSs (inhaled corticosteroids) reduce airway hyper-responsiveness and bronchial mucosal inflammation, making them useful for prophylactic therapy. Sales have stagnated with the launch of more effective combination products. ICSs that have not gone generic include AstraZeneca's Pulmicort, GlaxoSmithKline's Flovent and Schering-Plough's Asmanex.
LABAs (long-acting beta-2 agonists) rapidly reduce bronchoconstriction, providing fast asthma relief during an attack. However, sales have declined steadily with the arrival of more effective combination drugs such as Advair and Symbicort.
SABAs (short-acting beta-2 agonists) are among the oldest asthma drugs that are similar to LABAs, but have shorter durations. The market belongs to the generics.
THRX and GSK hope their new compound vilanterol will provide a longer patent life for GSK's leading prescription product, Advair. Vilanterol is thought to be the biggest driver of THRX's future growth and many think that if it hits a home run, THRX will be absorbed into GSK. (See also: April 28, 2011 press release.) Vilanterol is in several Phase 3 clinical trials in patients for the treatment chronic obstructive pulmonary disease [COPD] and/or asthma. Vilanterol is a once a day treatment, verses 2X/day for previous inhalers - which gives it a distinct advantage over competitor compounds.
Note: Relovair, also in clinical trials, is a combination of fluticasone and vilanterol. It is a new ICS/LABA combination and is delivered via a new inhaler devise.
The Phase 3 trials include:
- In October 2009, a multinational, randomized, double-blind, parallel-group Phase 3 trial began, to assess the safety and efficacy of Relovair in patients with COPD (1000 patients). Patients were to receive either one of two doses of Relovair, vilanterol, fluticasone furoate, or placebo. The primary endpoints were weighted mean clinic visit FEV1 and change from baseline in clinic visit trough FEV1. The study was due to complete in April 2011. In June 2011, data from the trial was reported. Statistically significant improvements in 0 to 4 h weighted mean FEV1 and trough FEV1 were observed for Relovair compared with placebo. A statistically significant improvement in weighted mean FEV1 was observed for Relovair compared with fluticasone furoate. Additionally, an improvement in trough FEV1 were observed for Relovair compared with vilanterol, but this effect was not significant. Statistically significant improvements in 0 to 4 h weighted mean FEV1 and trough FEV1 were observed for fluticasone furoate compared with placebo.
- In September 2009 (patient enrollment complete as of June 2011), a multinational, randomized, double-blind, parallel-group, Phase 3 trial began, to assess the safety and efficacy of three doses of Relovair compared to vilanterol alone in patients with COPD (1560 patients). The primary endpoint was the annual rate of moderate and severe exacerbations, with secondary endpoints of time to first exacerbation, annual rate of exacerbations requiring corticosteroids and pre-dose FEV1. The study was due to complete in October 2011.
- In January 2010, a multicenter, randomized, double-blind, crossover-assignment Phase 3 study began in the US to assess the safety and efficacy of Relovair in patients with COPD (60 patients). The study completed in December 2010.
- In February 2011, an outcomes Phase 3b study involving 16,000 patients was initiated. The 4-arm, multicenter, randomized, double-blind, parallel-group trial would assess improvement in survival in patients with COPD and a history of or at risk from cardiovascular disease
- Spiriva (made by PFE/BI) is one of a few drugs given to treat COPD. GSK would like to run this arena, and it is trying to do that with its own GSK-573719 in combination with vilanterol. In February 2011, a Phase 3 trial enrolling about 5,000 COPD patients globally was initiated. The first trial was initiated and will assess the long-term safety and tolerability of GSK-573719 alone (125 mg) and in combination with vilanterol (125/25 mg) over 52 weeks. A further six trials were planned to start in the second quarter of 2011. Four studies would compare improvements in lung function in patients treated with the combination, its components, tiotropium or placebo. A further two studies would assess the combination's effect on exercise endurance. The trials would assess 62.5 and 125 mg doses of GSK-573719 plus 25 mg of vilanterol. By April 2011, recruitment had commenced for the remaining six trials and the company expects Phase 3 data to be available by 2012.
Here is a list of THRX's smaller development programs:
- In conjuntion with Astellas, THRX is selling telavancin (Vibativ) a semisynthetic lipoglycopeptide antibiotic for iv use. In the US, the product is indicated for the treatment of adults with complicated skin and skin structure infections (cSSSI). It is a relatively small money maker, looking at topping out in 2015 at about $100M.
- TD-1211 is a peripherally selective mu opioid receptor antagonist [PUMA] for the potential prevention of peripheral opioid-induced bowel dysfunction (think of it as counteracting the effects of morphine constipation without affecting the pain portion). In a proof-of-concept clinical trial (n = 50 patients), the drug met its primary endpoint of increasing spontaneous bowel movements [SBM] compared with placebo. I do not know the market size of this, but if opioids (morphine) are going to be standard of care for chronic pain management, especially in cancer, I can see a need for this.
- TD-9855 is a monoamine reuptake inhibitor (think Cymbalta). The company is looking at the target for chronic pain and it is in conjunction with GSK. This is a large market, but it must compete with Cymbalta and others like it. The program is too early on to evaluate.
- The various 5-HT4 agonists for GI motility and Alzheimer's (TD-5108 and TD-8954) are in Phase 2 and 1 trials, respectively. For GI motility (TD-5108), the drug works, but they have been stalled in development, and it could be due to an active metabolite of the parent drug, TD-5108. The Alzheimer's trials started in 2010 and are several years away.
- TD-4208, an inhaled muscarinic acetylcholine receptor [AChR] antagonist, for the potential treatment of chronic obstructive pulmonary disease (COPD; think Spiriva from PFE/BI). GSK had licensed it out, but returned to THRX as the drug did not have the appropriate properties for their Advair inhaler. THRX wants to out-license this program.
- GSK961081 is a single molecule functioning as both a muscarinic antagonist and a beta2 receptor agonist (OTCPK:MABA). A Phase 2 study was underway as of December 2010.
GSK is betting big with vilanterol (just look at the patient numbers above in red!!!). I like the idea of taking a stab at some good data as well. For an options strategy, I would go for the March $22.5/25 BCS (bull call spread) with the sale of the Sept 22.5 Put. Total outlay is 30 cents.