Small Company Spotlight: Theravance Biopharma (TBPH)
Summary
Small biopharma company focused on the discovery, development and commercialization of organ-selective medicines.
Company continues to receive small, but growing, royalties from its partnered products along with the potential for more milestone payments.
Upcoming izencitinib phase 2b data in ulcerative colitis (UC) in 3Q 2021 and ampreloxetine phase 3 data in neurogenic orthostatic hypotension (nOH) in 3Q 2021 can swing the current company stock price before the end of the year.
Data in Focus — Izencitinib in UC (Phase 1b)
Phase 1b efficacy outcomes (3): rectal bleeding, endoscopic improvement, stool frequency, and physician assessment subscores and total Mayo score (assesses the severity of a patient's UC).
Rectal Bleeding Subscore: izencitinib 80 mg and 270 mg doses outperformed placebo.
Endoscopic Improvement Subscore: all strengths of izencitinib outperformed placebo.
Stool Frequency Subscore: all strengths of izencitinib flopped compared to placebo.
Physician Assessment Subscore: only the 270 mg dose outperformed placebo.
Total Mayo Score (most relevant to phase 2b/3 study): only 270 mg dose outperformed placebo.
There were no clinical remissions observed at 28 days.
Negatives
Data for izencitinib at 20 mg, 80 mg, and 270 mg doses did not consistently outperform placebo on efficacy outcomes.
Izencitinib phase 1b data in UC (1, 2, 3) is challenging to interpret (acknowledging the small number of trial participants, limited duration of treatment, and early stage of development).
Phase 2b/3 study in UC uses 20, 80, and 200 mg izencitinib doses will be used in phase 2b/3 study, but if you assume phase 1b data is a peek at the type of activity seen in the phase 2b/3 study, then the data readout in Q3 2021 for izencitinib will disappoint.
Patients in study were naïve to immunomodulators and/or biologics yet phase 2b/3 study will enroll patients who may have an inadequate response or intolerance and/or biologics.
UC space is crowded with competition and nOH faces competition from existing treatment options and generics.
Positives
Company’s stock price is near all-time lows (regardless of whether or not it belongs there) and may not be reflecting the potential value of the pipeline programs that are soon to report data.
If phase 2b data of izencitinib in UC compares favorably to tofacitinib and upadacitinib, then stock price could be positively impacted both by data and potential for Janssen milestone payment of $200 million if Janssen opts in.
Positive data from the phase 3 study studying ampreloxetine use in nOH may provide upside surprise to the stock price.
Assessment
Mixed results from the izencitinib UC phase 1b study (3), doses selected for phase 2b/3 trial (6), bars set by data by tofacitinib (4) and upadacitinib (5), and comparing izencitinib data to date indirectly to bars set by tofacitinib and upadacitinib unfortunately makes me pessimistic on izencitinib’s future (though I would love to be proved wrong for the sake of the patients).
If phase 2b UC data surprises and improves upon the observed phase 1b UC data, then we will see upside in the current stock price and phase 3 portion of the study will be de-risked.
If taking a position, I think the conservative approach would be a small position using December 2021 or March 2022 options chain to capture all incoming catalysts.
Regardless if you believe in the near term success or failure of the upcoming events, since the data readout could come at the end of Q3 2021, then the September options chain (though yielding the potential for a higher return) carries more risk due to theta decay and option expiry risk.
If a October 2021 or November 2021 options chain is available before the data readouts, then those options chains would also be preferred over a September options chain.
I would be more comfortable taking a position that bets the stock price will fall by Q3 2021 because of the above presented risks and assessment.
Despite having a larger return on investment, I do not think taking a long position is worth given the above points about data seen to date.
Interesting Tidbits
GSK and Citadel are some of the largest stake holders — both names of which have come under fire ‘recently’ for different reasons.
Board of Directors includes a number of individuals who served on company from which TBPH was spun out of.
Aside from Orbimed, no other prominent biotech VC/hedge fund ownership.
Royalties/partnered programs with Pfizer, Takeda (Millenium), Viatris (Mylan/Pfizer merger), and Janssen.
All analyst price targets (if these matter to you) are above current share price, but some of these analysts still gave a ‘sell’ or ‘underperform’ rating.
Had a COVID-19 program that failed.
References
Author’s Note
I hope this short write-up acts as a starting point for your research if you are interested in considering TBPH as a potential speculative investment. If you want me to highlight a small (biotech/pharma) company you are interested in, then let me know!
Disclosures
As of the date of this post, I do not have any positions on TBPH, but I plan on opening a position by the time this post is published. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it from any related parties mentioned in the article, directly or indirectly. I have no business relationship with any company whose stock is mentioned in this article.
