Theravance Takes Drastic Action: Cuts JAK Inhibitor, 17% of Workforce Following Shareholder Criticism.

Theravance Biopharma has announced that, in order to reduce its headcount by about 17%, it is discontinuing its JAK inhibitor program for lung inflammation. The Dublin and Bay area-based company, which has been conducting research in this area for some time, made the decision in order to focus on other areas.

Theravance, one of the leading biopharmaceutical companies, is undergoing a strategic realignment following a letter from one of its largest shareholders, Irenic Capital. Irenic, which holds around 4.2% of Theravance’s shares, has urged the company to review its governance structure and business strategies. This move is expected to usher in a new era of growth and success for the company.

In a letter dated Feb. 27, Irenic revealed that the value of Theravance is not just derived from its pipeline candidates and clinical trials, but also from its commercialized and tangible assets. They estimate the current trade price of $9.87 per share should be closer to $21 per share, making it significantly undervalued.

Theravance is currently trading at a per-share price of $15.89, a price supported by its substantial wealth of assets, including Yupelri, a COPD drug, and a steroid inhaler for COPD and asthma, Trelegy Ellipta, developed in collaboration with GSK. This impressive portfolio allows Theravance to benefit from both milestones and royalties, making it an attractive and lucrative investment.

Theravance’s stock price just got a major boost thanks to the promising Phase III clinical trials for an investigational norepinephrine reuptake inhibitor, Ampreloxetine, as a treatment for neurogenic orthostatic hypotension (nOH). Investors sent the share price soaring by an extraordinary $5.05 per share.

The massive disparity between Theravance’s actual worth and its current market price is indicative of a lack of faith in the company’s management and board from investors. Irenic believes this is a clear sign of a need for a change.

Rick Winningham, CEO of Theravance, addressed Irenic’s letter in an investor call Monday, stating that the company had attempted to resolve the issues and discuss upcoming plans but had been declined by Irenic under a non-disclosure agreement.

During the call, Theravance declined to take any questions regarding the letter, leaving many in the audience wondering what it could contain.

A Complicated History

On the same day, in an effort to drive maximum shareholder value, Theravance took decisive action.

In a strategic move to prioritize its research and development efforts, the company has decided to discontinue the development of its JAK inhibitor and focus instead on ampreloxetine. This exciting candidate works by binding to norepinephrine transporters, thus raising extracellular levels of norepinephrine to address the underlying pathological pathway of nOH.

In September 2021, the future of ampreloxetine, a promising new mechanism of action, was thrown into doubt after its Phase III endpoint in nOH failed to meet expectations. As a result, Theravance, the company behind the drug, had to make the difficult decision to let go of 270 employees, representing a staggering 75% of its workforce.

In April 2022, the results of a Phase III trial of ampreloxetine were mixed, as overall improvement in treatment failure rates was not seen. However, a significant benefit was identified in patients with multiple system atrophy (MSA). As a result, Theravance refocused their efforts and narrowed the focus of ampreloxetine to those with MSA.

Ampreloxetine has the potential to revolutionize the way Multiple System Atrophy (MSA) patients suffering from nOH (neurogenic orthostatic hypotension) are treated. This innovative new treatment has the power to completely transform the landscape of how these patients are managed and cared for, offering a much-needed ray of hope for those who suffer from this debilitating condition.

Despite the availability of two approved treatments for orthostatic hypertension, neither has been found to effectively reduce the symptoms of Multiple System Atrophy (MSA) in the long term. According to Richard Graham, Senior Vice President of Research and Development at Theravance, this is a major challenge for patients with MSA.

Theravance is taking steps to potentially revolutionize the treatment of rare diseases by submitting an Orphan Drug designation request for ampreloxetine in early 2023. If approved, this could be a major breakthrough in improving the quality of life for those living with rare diseases.

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