Theravance (THRX) Incurs Narrower-than-Expected Loss in Q2

Zacks

Theravance’s (THRX) second quarter 2014 loss of 18 cents per share was narrower than the Zacks Consensus Estimate of a loss of 53 cents. The company had incurred a loss of 37 cents per share a year ago. However, the year-ago number represented the results of the combined company (royalty management and the biopharma division).

Theravance in its present form (a royalty management company) came into being in June this year following the split-off of the erstwhile Theravance into two listed companies. While Theravance deals with products/candidates under the partnership with GlaxoSmithKline (GSK), Theravance Biopharma (TBPH) focuses on the discovery, development and commercialization of small-molecule therapies targeting areas of high unmet medical need. Excluding the biopharma division, loss was 2 cents per share in the second quarter of 2013.

This was the first quarter for Theravance as a royalty management company. Net revenues in the second quarter of 2014 came in at $0.9 million. Revenues in the quarter were well short of the Zacks Consensus Estimate of $3 million.

During the reported quarter, Theravance earned royalties of $2.7 million from net sales of Relvar/Breo Ellipta and $0.5 million from net sales of Anoro Ellipta. Royalties from respiratory drugs were partially offset by $2.6 million amortization of intangible assets. The remaining revenues came from collaborative arrangements with a third party.

Research & development expenses were $2.1 million in the reported quarter. General & administrative expenses came in at $8.6 million.

Management at Theravance declared a cash dividend of 25 cents per share payable to shareholders of record as of Aug 28, 2014. We expect investor focus to remain on the performance of the newly formed Theravance going forward.

Theravance holds a Zacks Rank #3 (Hold). A better-ranked stock in the health care space is Actelion (ALIOF), sporting a Zacks Rank #1 (Strong Buy).

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