- Theravance Biopharma plans to lay off an estimated 270 employees, or roughly 75% of its workforce, in a bid by its leadership to reduce costs during a major shift at the company.
- Around three-fourths of the layoffs are slated for November, with the rest expected in February. Theravance says the reduced headcount will save the company approximately $165 million in annualized operating expenses next year, and help it to sustain positive cash flow by the second half of 2022.
- The job cuts are part of a larger strategic reorganization that Theravance announced Wednesday. Though much of its pipeline has revolved around anti-inflammatory diseases, moving forward, the company intends to focus on a narrow group of medicines for respiratory conditions. That group includes the marketed drugs Yuperli and Trelegy, which Theravance helped develop and now are, respectively, commercialized by Viatris and GlaxoSmithKline.
The restructuring at Theravance comes just weeks after one of the company's more closely watched drugs failed a key test.
Called izencitinib, the drug is meant to fight inflammation, and has been under investigation as a potential treatment for ulcerative colitis and Crohn's disease. While Theravance believed in the drug enough to advance it to mid- and late-stage studies, it also caught the attention of Johnson & Johnson, which in 2018 agreed to pay as much as $1 billion for partial commercial rights.
In late August, however, Theravance disclosed that izencitinib had missed the main goal in a study of about 240 ulcerative colitis patients. The study found symptoms of the disease like bleeding and ulcers didn't significantly improve when patients were treated with the drug rather than a placebo.
Those results disappointed Theravance, which said it would "minimize future expenses" on the program, as well as the company's investors. Theravance's stock price subsequently fell 30%.
Theravance now plans to further narrow the scope of its research and development. Though it intends to finish the mid-stage study of izencitinib in Crohn's disease, the company will stop development of all programs not targeting respiratory diseases.
"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," said Rick Winningham, the company's chairman and CEO, in a statement.
Moving forward, Theravance says it will be working on label expansions for Yuperli, which the Food and Drug Administration first approved in 2018 as a treatment for COPD, or chronic obstructive pulmonary disease.
The company also wants to invest more into inhalable forms of Janus kinase inhibitors, a type of anti-inflammatory drug. Theravance has already ushered one such drug, nezulcitinib, into mid-stage testing for acute lung injury.
Whether those programs put Theravance in a better position won't be known for some time. The company has updated its guidance for 2021, forecasting $180 million to $195 million in research and development expenses and $70 million to $80 million in selling, general and administrative expenses. Before, it had forecasted $195 million to $225 million for the former category and $80 million to $90 million in the latter.
For 2022, Theravance is preliminarily expecting $55 million to $65 million in research and development expenses, and $30 million to $40 million in selling, general and administrative expenses.
While Yuperli and Trelegy provide Theravance with streams of income, they've been more than offset by spending. Over the first six months of this year, the company recorded $21.2 million in collaboration revenue, much less than its $175 million in expenses, most of which were tied to research and development.
Along with the layoffs and R&D restructuring, Theravance will reconfigure its board of directors, announcing the resignation of two long-term directors.