Theravance Biopharma Inc (NASDAQ:TBPH) just put out an announcement relating to its closed triple asset, and the company is trading flat-to-down despite the seemingly positive development. Whatever the market interpretation, an FDA green light could be a big revenue driver for the company, so here’s our take on the event, and what we expect come decision day.
First up, a bit of housekeeping.
Many will already be aware, but for those not yet familiar with Theravance, the company spun out a separate entity back 2014 called Theravance, Inc, which traded on the NASDAQ under the ticker THRX. Threavance Biopharma (the TBPH ticker) remains as the pharmaceutical and development company headquartered in Dublin, Ireland, and the then-new Theravance Inc was headquartered in California. It remains in California, although in January this year, the company changed its name to Innoviva, and its ticker to INVA. So, when we refer to Theravance Biopharma, we’re looking at the Irish parent (of sorts) of the newly named Innoviva Inc (NASDAQ:INVA).
That out of the way, let’s get to the drug.
It’s called Closed Triple, as mentioned, and it’s targeting a condition called chronic obstructive pulmonary disease (COPD). Innoviva has been developing the asset in collaboration with GlaxoSmithKline plc (ADR) (NYSE:GSK), and it’s designed to serve as what is essentially just a reformulation of the current standard of care, but wit ha more convenient delivery method.
COPD is a term used to describe a whole host of different progressive lung diseases, including emphysema, chronic bronchitis, refractory (non-reversible) asthma, and some forms of bronchiectasis, which is characterized by increasing breathlessness. The current SOC is another Glaxo drug, a double therapy of salmeterol and fluticasone, called Advair. It’s been a huge earner for the company, but there’s increasing pressure on its market share from companies like AstraZeneca plc (ADR) (NYSE:AZN), as well as bunch of generic entities.
With Closed Triple, Glaxo is trying to eliminate this pressure – it’s a triple combination of fluticasone furoate, umeclidinium, and vilanterol, and it’s delivered by way of one of the company’s proprietary powder inhalers, ELLIPTA. It’s a once daily administration, and if the company can get it to market, it would essentially set back AZN and others anywhere between 7-10 years in coming up with something that can compete, and put pressure on Glaxo to the same degree as they are currently doing with their double formulations.
Data from the trials that support the combination treatment looks good, and is based on both studies investigating the effectiveness and safety of the treatment in its combination form, as well as supporting data fro a host of studies investigating the components as monos, and in various combinations with one another.
So, when do we expect to hear more, and what are we looking for next?
Well, the filing will come as a surprise for many, since the initial schedule didn’t predict filing the NDA until some point mid-2018. That’s not a bad thing – necessarily – but it does throw the timeline out of the window. There’s some ongoing studies investigating the drug when compared to the dual offerings, and there’s an argument (and probably a valid one) that the NDA would have had a better chance of approval if Glaxo had waited for the results of those, and submitted them alongside the primary application. That said, with mounting competitive pressure, this early move gives the company a chance to get a real move on its competitors in this space, so if it goes through without a hitch, shareholders won’t have much to complain about.
We’re looking for a couple of key updates as indicative of a smooth ride.
First and foremost, we’re looking for the agency in the US to accept the submission for consideration. We expect this to happen some point during the first quarter of next year. Likely early first, but potentially a little bit later (Feb) depending on various unforeseeable factors.
Beyond that, we’re watching the data from the ongoing studies carefully as indicative of supporting the numbers already in the database. Submissions are scheduled to follow this one shortly in other countries, and it would be nice to have some back up data to bolster the campaign.
What does Theravance get out of the submission?
The company is entitled to receive an 85% economic interest in the royalties paid by Glaxo on worldwide net sales. The royalties are upward-tiering from 6.5% to 10%.
So, now we wait for an update to see if Glaxo’s gamble will pay off for it, and for Theravance and its shareholders.