TBPH Stock: Why It Significantly Decreased Today

By Dan Anderson ● Sep 15, 2021
  • The stock price of Theravance Biopharma Inc (NASDAQ: TBPH) decreased by over 19% pre-market. This is why it happened.

The stock price of Theravance Biopharma Inc (NASDAQ: TBPH) decreased by over 19% pre-market. Investors are responding negatively to Theravance Biopharma announcing strategic actions to focus on leveraging its expertise in developing and commercializing respiratory therapeutics in order to maximize shareholder value. 

The changes follow a comprehensive scenario planning exercise led by the Board and Management with the assistance of outside advisors. In order to implement this plan, Theravance Biopharma will immediately initiate a significant cost reduction program:

— Headcount will be reduced by approximately 75%, an estimated 270 positions, with approximately 75% of the reduction expected to be completed in November 2021 and the remainder to be completed in February 2022
— Total annualized operating expense savings of approximately $165 million in 2022 compared with the company’s updated 2021 Financial Guidance below:

Expenses ($ million)

– R&D: $195-$225 (2021 Initial Guidance); $180 – 190 (2021 Updated Guidance); $55 – 65 (2022 Preliminary Guidance)

– SG&A: $80 – 90 (2021 Initial Guidance); $70 – 80 (2021 Updated Guidance); $30 – 40 (2022 Preliminary Guidance)

By implementing the strategic actions, Theravance Biopharma expects to become sustainably cash flow positive beginning in the second half of 2022.

The go-forward organization will build on the company’s proven track record of innovation leading to several approved medicines for COPD and asthma, including YUPELRI, launched in 2019 — which was discovered and developed by the Company and is now commercialized in partnership with Viatris and TRELEGY, a respiratory medicine developed by Glaxo Group Limited in collaboration with the company’s predecessor Theravance.

TRELEGY is currently expected to generate global peak sales of approximately $3 billion annually. And YUPELRI remains early in its product lifecycle, has demonstrated quarter-over-quarter market share growth, and has the potential to generate US peak sales exceeding $400 million. Theravance Biopharma believes the strong and growing cash flows of YUPELRI and TRELEGY will generate significant value creation opportunities for the company’s shareholders.

The company intends to significantly narrow its R&D focus on its core respiratory assets, including a clinical study in partnership with Viatris, intended to generate data supporting label expansion for YUPELRI — which would significantly increase YUPELRI’s addressable market and investment in Theravance Biopharma’s inhaled Janus kinase inhibitor portfolio with focus on the most advanced clinical candidate, nezulcitinib, initially targeting acute lung injury. In order to implement this plan, the company will halt the development of all non-respiratory disease-related programs except that it will close out the izencitinib Phase 2 Crohn’s disease Study 0157 (NCT03758443) and the ampreloxetine Phase 3 REDWOOD Study 0170 (NCT03829657).

Management will work to optimize the Company’s capital structure as financial flexibility increases in order to maximize total shareholder returns. And management will also prioritize initiatives that seek to realize the value of the Company’s non-core assets and partnerships.

KEY QUOTE:

“Given the recent results from our late-stage development programs, we have made the difficult but necessary decision to focus our resources on our most promising respiratory programs and reduce the size of the organization. I want to thank all of the patients who participated in our clinical trials and their families, the investigators, as well as the Theravance Biopharma employees who have worked tirelessly on these programs. I am grateful for the team’s significant contributions over the years. I am confident these actions will help us to continue making transformational medicines aimed at improving the lives of patients suffering from serious respiratory illnesses while creating value for our shareholders.”

“The company has also decided to reduce the size of its Board, and is announcing the resignations from the Board of two long-term directors: George M. Whitesides, Ph.D., and Robert V. Gunderson, Jr., effective September 14, 2021 and September 11, 2021, respectively. Dr. Whitesides has served on the Board of the Company and its predecessor, Theravance, Inc., since its inception in 1996. Mr. Gunderson has served on the Board of the Company and its predecessor, Theravance, Inc., since September 1999. “George and Bob each have dedicated themselves to the Company and its predecessor for over two decades, providing their valuable expertise to us on a variety of matters. On behalf of my fellow Board members I thank them both for their many contributions to the Company over their years of service.” 

— Rick E Winningham, Chairman and Chief Executive Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.