Theravance Biopharma’s rotten run has triggered big changes at the biotech. With a phase 3 rare disease study becoming the third trial to fail in as many months, Theravance is axing 75% of its staff and narrowing its focus to respiratory diseases.
Going into the summer, Theravance was looking to phase 2 and 3 readouts on three drug candidates to boost its prospects. Strike one came in June, when a phase 2 trial in patients hospitalized with acute lung injury due to COVID-19 missed its primary endpoint. Strike two followed last month with news of the failure of a Johnson & Johnson-partnered drug in ulcerative colitis.
The back-to-back setbacks left a phase 3 trial of a norepinephrine reuptake inhibitor in patients with a rare blood pressure disorder as Theravance’s last chance of recording a win in the sequence of data drops. But the drug, ampreloxetine, did no better than placebo against the primary endpoint.
Theravance responded swiftly to the setback. One minute after disclosing the failure, Theravance published a second statement setting out plans to slash its headcount and R&D costs as part of the narrowing of its therapeutic focus.
The reorganization will cost around 270 people their jobs. Theravance expects to part company with most of the employees by the end of November, with the rest of the layoffs being completed early next year.
Reducing the headcount by 75% will have a big effect on costs. Theravance will realize some of the savings this year, when R&D costs are forecast to be around 12% lower than originally anticipated. The big drop will come in 2022, though. Theravance expects to spend $55 million to $60 million on R&D next year, around 70% below its original budget for 2021.
The plummeting R&D costs reflect a new focus. Theravance’s remaining R&D group will focus on its respiratory disease assets, including the JAK inhibitor that failed the COVID-19 study in June. The only non-respiratory projects to survive the cull are a phase 2 clinical trial of the once-failed J&J-partnered prospect in Crohn’s disease and a phase 3 study of ampreloxetine that is already 75% enrolled. With the two studies nearing data drops, Theravance has opted to close them out rather than kill them off.
Shrinking the R&D operation is intended to make Theravance “sustainably cash flow positive” by the second half of next year. Theravance is in line for paydays tied to its work on Viatris’ Yupelri and GlaxoSmithKline’s Trelegy, enabling it to pivot to a different model if it can drive costs down enough.