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Will Theravance Succeed in Staph and MRSA?

Hospital-born infections have become quite serious over the past decade. While not new, the problem remains that the hospitals can cure a patient or fix the problem, but many patients still become seriously ill or even die to infections they get while in the hospital or under medical care.

Now a new treatment from Theravance Biopharma Inc. (TBPH) has been highlighted with positive data from multiple retrospective studies of its Vibativ (telavancin). Theravance announced on Monday that Vibativ demonstrated positive clinical outcomes for patients with staphylococcus aureus (S. aureus) bacteremia and methicillin-resistant S. aureus (MRSA) osteomyelitis following treatment.

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Staph infections and MRSA are both very serious. Theravance said:

These study findings, which include clinical cure/improvement rates for VIBATIV-treated patients of 79.4% in bacteremia and 88.9% in osteomyelitis, demonstrate the potential of VIBATIV against two additional difficult-to-treat infections. Results from these studies were presented at IDWeek™ 2015.

What investors have to now consider is that this multi-center study was a retrospective study of 34 S. aureus bectermia patients who received Vibativ. A second presentation covered some 513 patients with hospital-onset MRSA pneumonia.

They said of the first retrospective study:

Data showed that 27 patients (79.4%) were considered cured or improved at end of therapy (EOT), the study’s primary outcome measure. When researchers excluded the seven patients who died before EOT, 95.8% of patients with 30-day follow-up post-EOT were considered cured or improved. It is important to note that the approximately 20% mortality rate observed in this study is consistent with reported mortality rates (20-30%) associated with S. aureus bacteremia, even with appropriate antibacterial therapy.1-4 There were no adverse events in the study that led to discontinuation of VIBATIV for any patients.

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A second poster was presented at IDWeek from a retrospective study in adult patients with hospital-onset MRSA pneumonia (HOMP). This particular retrospective review was designed to identify the frequency with which HOMP occurs concurrently with bacteremia and the clinical impact that concurrent bacteremia has on these patients. The company said:

Results showed that it is common for bacteremia to occur concurrently with HOMP, with 58 out of 513 HOMP patients (11.3%) also presenting with bacteremia. Furthermore, HOMP patients with concurrent bacteremia experienced higher mortality (35.1% vs. 26.2%) and longer post-pneumonia hospital stays (an average increase of 13.5 days) as compared to patients with HOMP alone.

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What matters here for Theravance is that its market cap is a mere $469 million. It loses money, and sales in 2014 were just under $12 million. Of the two analysts who project revenues ahead, Theravance is expected to post revenue of almost $40 million in 2015 and almost $27 million in 2016.

While it is hard to know what a reaction to positive staph and MRSA will be down the road, this is a blockbuster potential category, with over $1 billion in annual sales if a drug can rival or exceed other treatments on the market.

As of June 30, 2015, Theravance had some $210 million or so in liquidity between its cash and short-term investments and another $17.8 million or so in long-term investments for additional liquidity. It had no listed long-term debt and has retained earnings (loss) of -$229.4 million accumulated so far.

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Trading near $13.80, Theravance has a 52-week range of $10.56 to $22.00. Another issue to consider is that this company just came public in May of 2014.

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