Theravance Biopharma (TBPH) Q1 Loss Narrows, Sales Up Y/Y

Theravance Biopharma (NASDAQ:TBPH) reported first-quarter 2018 loss of $1.22 per share, narrower than the Zacks Consensus Estimate of a loss of $1.29 and the year-ago loss of $1.27.

Total revenues in the quarter surged 169.5% year over year to $8.3 million. This upside can mainly be attributed to amortization of the upfront fees related to a global development and commercialization agreement with Janssen, subsidiary of Johnson & Johnson (NYSE:JNJ) , for TD-1473. Moreover, the top line surpassed the Zacks Consensus Estimate of $5.74 million.

Theravance shares were up 3.4% on May 8, following the earnings release. However, shares have underperformed the industry in a year’s time. The stock has lost 12.6% compared with the industry’s 2.9% decrease.

Quarterly Details

Vibativ generated U.S. revenues of $3.7 million in the first quarter, up 20.6% from the year-ago period. Revenues from collaborations were $4.6 million compared with $37,000 in the year-earlier quarter.

Research and development expenses were $47.8 million, up 21.4% from the year-ago period while selling, general & administrative expenses rose 44.6% to $24.7 million. The increase in expenses was due to higher employee-related costs and stock-based compensation.

Pipeline and Other Updates

In February 2018, Theravance entered into a global collaboration agreement with Janssen to jointly develop and commercialize its pan-Janus kinase inhibitor, TD-1473, for the treatment of inflammatory intestinal diseases. A phase II study and a phase IIb/III study are likely to be initiated in the second half of 2018 to evaluate TD-1473 in Crohn's disease and ulcerative colitis, respectively.

In January, Theravance along with partner Mylan (NASDAQ:MYL) announced that the new drug application ("NDA") for pipeline candidate, revefenacin (TD-4208), has been accepted by the FDA for treatment of adults with chronic obstructive pulmonary disease. A response from the regulatory body is expected on Nov 13, 2018. The company is preparing for the commercial launch of the drug upon potential approval.

The company’s collaboration partner Alfasigma for velusetrag (TD-5108) opted-in to acquire rights to the candidate. Per the opt-in decision, global rights to develop, manufacture and commercialize velusetrag will be transferred to Alfasigma for $10 million upfront fees and future milestone payments and royalties. Theravance has decided not to pursue further development of velusetrag as part of its pipeline strategy.

2018 Outlook Reiterated

Theravance continues to expect operating loss, excluding non-cash share-based compensation, for 2018 in the range of $180-$200 million.

Zacks Rank & Key Pick

Theravance currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the health care sector is Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ligand’s earnings per share estimates moved up from $4.40 to $4.43 and remained stable at $5.32 for 2018 and 2019, respectively, in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters with an average beat of 24.88%. The company’s stock is up 14.9% so far this year.

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