10-Q: Theravance Biopharma Reports Third Quarter 2024 Results, YUPELRI Sales Reach Record High

Theravance Biopharma's Q3 2024 results show a net loss of $12.7 million, but YUPELRI sales hit a record high, driven by increased demand and market share.

Summary

• Theravance Biopharma reported a net loss of $12.7 million for the third quarter of 2024, and a net loss of $40.9 million for the nine months ended September 30, 2024.
• Revenue from the Viatris collaboration agreement was $16.9 million for the quarter and $45.6 million for the nine months, representing increases of 8% and 15% respectively, compared to the prior year periods.
• YUPELRI net sales, as recorded by Viatris, reached $62.2 million in Q3 2024, a 7% increase year-over-year, with the company's implied 35% share at $21.8 million.
• The increase in YUPELRI sales was driven by a 14% increase in customer demand and market share gains in both hospital and community settings.
• Research and development expenses were $9.3 million for the quarter and $28.2 million for the nine months, a decrease of $4.1 million for the nine months ended September 30, 2024 compared to the prior year period.
• Selling, general, and administrative expenses were $16.9 million for the quarter and $50.7 million for the nine months.
• The company recognized non-cash impairment charges of $1.6 million for the quarter and $4.5 million for the nine months related to vacant laboratory space.
• The company completed its capital return program in January 2024, repurchasing a total of 31.412 million ordinary shares for approximately $325.3 million.
• The company expects its cash, cash equivalents, and marketable securities will be sufficient to fund its operations for at least the next twelve months.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While YUPELRI sales are strong and the company is progressing with ampreloxetine, the net losses and potential need for future capital raises temper the positive aspects. The ongoing litigation and competitive landscape also add uncertainty.

Positives

• YUPELRI sales reached a record high, indicating strong market acceptance and demand.
• The company's collaboration revenue increased by 8% in Q3 and 15% for the nine months, driven by YUPELRI sales.
• The company has completed its share repurchase program, returning capital to shareholders.
• The company expects its current cash and investments to fund operations for at least the next twelve months.
• The company is eligible for significant potential milestone payments from Viatris related to YUPELRI.
• The company has made progress in its ampreloxetine program, with the Phase 3 CYPRESS study underway.

Negatives

• The company reported a net loss of $12.7 million for the third quarter of 2024 and $40.9 million for the nine months ended September 30, 2024.
• The company recognized non-cash impairment charges of $1.6 million for the quarter and $4.5 million for the nine months related to vacant laboratory space.
• The company's cash, cash equivalents, and restricted cash decreased compared to the prior year period.
• The company's interest and other income decreased due to lower cash balances.
• The company's income tax expense increased due to uncertain tax positions.

Risks

• The company's strategic business plan is subject to uncertainties and risks, including clinical program outcomes and the sales levels of YUPELRI.
• The company faces competition from companies with more resources and experience.
• The company is subject to extensive and ongoing regulation by the FDA and other regulatory bodies.
• The company and its partners may face competition from companies seeking to market generic versions of approved products.
• The company's ability to receive Milestone Payments and Outer Years Royalty from TRELEGY depends on GSK's ability to commercialize the product.
• The company's operations are subject to risks related to information technology systems, security breaches, and global economic conditions.
• The company's US operating subsidiary's facility is located near known earthquake fault zones.
• The company may need to raise additional capital in the future, which may not be available on favorable terms.
• The company may be treated as a US corporation for US federal income tax purposes.
• The company may be subject to product liability and other lawsuits.
• The company may fail to comply with data protection laws and regulations.
• The company's relationships with customers and third party payors are subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations.
• The company's business and operations, including the use of hazardous and biological materials may result in liabilities with respect to environmental, health and safety matters.
• The market price for the company's shares has and may continue to fluctuate widely.
• Concentration of ownership will limit your ability to influence corporate matters.
• The company's shareholders may face difficulties in protecting their interests because the company is incorporated under Cayman Islands law.
• The company is a smaller reporting company, and any decision on its part to comply only with reduced reporting and disclosure requirements applicable to such companies could make its ordinary shares less attractive to investors.

Future Outlook

The company expects its cash, cash equivalents, and marketable securities will be sufficient to fund its operations for at least the next twelve months. The company anticipates continued YUPELRI demand growth in 2025 and beyond and is preparing for the potential commercial launch of ampreloxetine.

Management Comments

• The Board of Directors formed a Strategic Review Committee to assess all strategic alternatives available to the Company, including those related to YUPELRI, ampreloxetine and TRELEGY, with the objective of unlocking shareholder value.
• The company has separated the roles of Chair of the Board of Directors and Chief Executive Officer to allow management to sharpen its focus on operational goals.
• The company believes that there is an enduring population of COPD patients in the US that either need or prefer nebulized delivery for maintenance therapy.
• The company anticipates that the final patient will be enrolled in the open label period of the CYPRESS study in mid-2025 and top-line data will be available approximately six months thereafter.

Industry Context

The report highlights the competitive landscape for COPD treatments, noting the launch of Verona Pharma's ensifentrine and Sanofi/Regeneron's Dupixent as competitors to YUPELRI. The company also positions ampreloxetine as a potential first-in-class therapy for MSA patients with symptomatic nOH, a market with limited treatment options.

Comparison to Industry Standards

• The company's revenue growth from YUPELRI is a positive sign, but the net losses indicate that the company is still in a growth phase and not yet profitable.
• The company's R&D spending is decreasing, which is a result of the 2023 strategic actions, but the company is still investing in its ampreloxetine program.
• The company's SG&A expenses are also decreasing, which is a result of the company-wide cost savings initiative.
• The company's cash position is adequate to fund operations for the next twelve months, but the company may need to raise additional capital in the future.
• The company's ongoing litigation with generic companies seeking to market a generic version of YUPELRI is a common issue in the pharmaceutical industry, and the company has settled with some of the generic applicants.
• The company's reliance on third-party manufacturers and suppliers is also a common practice in the pharmaceutical industry, but it does expose the company to supply chain risks.
• The company's focus on developing novel small molecule medicines with superior efficacy, convenience, tolerability, and/or safety is a common strategy in the pharmaceutical industry.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in patent infringement litigation with several generic companies seeking to market a generic version of YUPELRI.
• The company has settled litigation with some of the generic applicants, granting them a royalty-free, non-exclusive license to manufacture and market their respective generic versions of YUPELRI inhalation solution in the US on or after the licensed launch date of April 23, 2039, subject to certain exceptions.
• The patent litigation against the three remaining generic companies, along with certain affiliates, remains pending.

Stakeholder Impact

• Shareholders may be impacted by the company's financial performance, strategic decisions, and potential capital raises.
• Employees may be impacted by changes in headcount, compensation, and benefits.
• Customers and patients may be impacted by the availability and pricing of the company's products.
• Suppliers and creditors may be impacted by the company's financial stability and ability to meet its obligations.

Next Steps

• The company will continue to execute its ampreloxetine registration Phase 3 study (CYPRESS) and prepare for the NDA filing process.
• The company will hold its 2025 Annual General Meeting of Shareholders on May 19, 2025 in Dublin, Ireland.
• The company will continue to monitor the evolving legislation relating to the withholding tax regulation and consider its impact on its condensed consolidated financial statements.
• The company will continue to monitor the implementation of the Drug Price Negotiation Program under the Inflation Reduction Act.

Key Dates

Keywords

YUPELRI, revefenacin, COPD, Ampreloxetine, Viatris, TRELEGY, Royalty Pharma, clinical trials, pharmaceutical, biopharma