TD-0903

The South San Francisco and Dublin-based biopharma reduced its headcount by 17% and cut the inhaled Janus kinase (JAK) inhibitor program, nezulcitinib. Theravance Biopharma has taken a series of body blows over the past few years, but executives think they’re on the right track—one that will be taken without 17% of staff and a JAK program that long ago lost its luster. The company disclosed a pipeline prioritization after market Monday in a fourth-quarter earnings release. The South San Francisco and Dublin-based biopharma reduced its head count by 17% and cut inhaled Janus kinase (JAK) inhibitor program nezulcitinib. The therapy was in phase 2 development for acute and chronic lung inflammation and fibrotic disease. Theravance will focus on completing the phase 4 head-to-head study called PIFR-2, which pits the biopharma’s approved nebulized bronchodilator Yupelri against Boehringer Ingelheim’s Spiriva in chronic obstructive pulmonary disease. The Viatris-partnered med brought in $19.5 million in the fourth quarter for Theravance, according to the earnings report. The JAK class has been hard on Theravance. Back in 2021, the FDA increased its oversight of JAK inhibitors through a safety review that ultimately saw the therapeutic class relegated to second-line treatment. The move put companies with JAKs in the clinic, like Theravance, in a tough spot. Theravance’s izencitinib struggled in the clinic as the biopharma tried to avoid the adverse events common in the class with a cautious approach to dosing. Ultimately, efficacy was not seen in a phase 2 study. Theravance discontinued izencitinib in Crohn’s disease and Johnson & Johnson’s Janssen unit ultimately cut ties in December 2021. The wholly owned inhaled nezulcitinib asset, however, went on. Now, Theravance will seek a partner to continue the JAK program, according to the earnings release. From the pipeline, Theravance will prioritize ampreloxetine, which failed in a late-stage study of a blood pressure disorder in April 2022. After a meeting with the FDA, executives think they have sufficiently narrowed the trial parameters around a subgroup analysis conducted at the time of the failure. The phase 3 CYPRESS study will test ampreloxetine again in symptomatic neurogenic orthostatic hypotension but will target patients who have multiple system atrophy. The disorder is characterized by sustained falls in blood pressure shortly after standing up. Theravance hopes to get the new study underway by the end of the first quarter, thanks to an up to $40 million deal with Royalty Pharma, which included a $25 million investment for the phase 3 trial. The workforce reduction was not detailed, beyond saying it would be completed by the end of March. A related earnings slide presentation said the severance costs are expected to be around $1 million to $2 million in the first quarter. As for cash on hand, Theravance reported $327.5 million as of Dec. 31, 2022. The company previously cut 75% of its staff after the phase 3 failure of ampreloxetine in September 2021. The news comes as an investor with a 4.2% stake calls for a leadership change at Theravance. Shareholders have suffered a 50% decline in returns since the company spun out of Innoviva in 2014, Irenic Capital Management LP wrote in a letter dated Feb. 27. "Shareholders simply do not believe Theravance’s board and management team are properly aligned with shareholders, and do not have confidence that Theravance leadership will take the necessary steps to maximize shareholder value," the firm wrote.  Irenic has proposed a special dividend to be paid to the tune of $300 million, a reduction in Theravance's overhead costs, a shareholder representative on the board and a more formal strategic review with independent financial advisors leaading the charge.  Editior's Note: This story was updated at 2:48 p.m. ET on Feb. 28 to include details from the Irenic Capital Management LP letter.

Theravance Biopharma is cutting 17% of its workforce and a mid-stage inhaled JAK inhibitor program, it announced Monday afternoon. Theravance will be discontinuing work on its inhaled JAK inhibitor nezulcitinib, which failed a trial in Covid-19 patients in 2021. As a result, Theravance said, it will be cutting about 17% of its staff by the end of March. The changes follow Monday morning’s call by activist investor Irenic Capital Management, demanding changes to the board, a strategic review, and for less share-based compensation. The Bay Area biotech will be getting a new board member in Susannah Gray, formerly CFO of Royalty Pharma. In addition, it will propose to declassify the board at its next shareholder meeting, meaning that all directors will stand for re-election in the same year. Theravance has had little luck with JAK inhibitors. Its past JAK inhibitor collaboration with J&J failed a key mid-stage study in ulcerative colitis in 2021. At the end of 2021, J&J cut its collaboration with Theravance completely. In 2021, Theravance also laid off 75% of its workforce, or some 270 staffers after a separate Phase III failure of ​​ampreloxetine in symptomatic neurogenic orthostatic hypotension. However, Theravance is doubling down on that candidate , spotlighting a subgroup analysis after a second trial fail in April.