Theravance (THRX) received a boost recently when the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) gave a positive opinion recommending approval of Vibativ for the treatment of nosocomial pneumonia (NP) caused by methicillin-resistant staphylococcus aureus (MRSA).
Vibativ, Theravance’s lead drug, is an injectable antibiotic which is marketed in the US and Canada for the treatment of complicated skin and skin structure infections (cSSSI) caused by gram-positive bacteria, including resistant pathogens such as MRSA. Vibativ is marketed and sold by Astellas, while Theravance receives royalties, ranging from high teens to upper twenties depending on sales volume.
For the NP indication, the CHMP concluded that Vibativ provides a better benefit risk profile on the basis of quality, safety and efficacy data submitted. They, however, recommended that Vibativ should be used only when other suitable treatment options are not available. If approved for NP, Vibativ will provide a new treatment option for critically ill patients including those suffering from ventilator-associated pneumonia caused by MRSA.
If approved, EU will be the first country to give the nod to Vibativ for the treatment of NP which is associated with high mortality rates. Vibativ is not approved for NP in either Canada or the US. A decision from the European Commission is expected within 2-3 months of the opinion from the CHMP.
It is significant to note that Theravance received a complete response letter (CRL), in the US, for the NP indication from the FDA. Per the CRL, the company will have to submit additional data and analyses from the NP patient population. While the Vibativ NP clinical trials included clinical response as the primary endpoint and all-cause mortality as a secondary endpoint, the FDA has asked the company to evaluate data with all-cause mortality as the primary efficacy endpoint. The company is currently in discussions with the FDA and has no plans to conduct additional studies.
Our Recommendation
We currently have a Neutral recommendation on Theravance. The stock currently carries a Zacks #3 Rank (short-term Hold rating). Royalties on Vibativ sales provide Theravance with some much-needed funds. Furthermore, the company’s collaboration agreement with Astellas Pharma will fetch royalties on global sales of Vibativ. Moreover, we believe that the Relovair and the LABA/LAMA combination programs, in partnership with GlaxoSmithKline (GSK), hold immense potential and could bring signifcant royalties to the company, if successful. However, the cSSSI market remains fiercely competitive. Though we are encouraged by the positive CHMP opinion for Vibativ for NP, we are disappointed with the CRL received in the US. Despite the impressive pipeline at Theravance, we believe the primary potential for the company lies with the Relovair collaboration.
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