Theravance Biopharma (TBPH) has seen its share price drop almost 20% in the past week after announcing mixed Q2 financial results. Expectations for the short term remain challenging, including a delay in the clinical trial of a leading treatment candidate. Yet, the long-term outlook is more promising, suggesting upside potential, and the stock trades at a discount to industry peers. Investors may want to add this one to a tracking list and revisit it periodically for signs of progress.
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Theravance’s Products & Promising Pipeline
Theravance Biopharma is a biopharmaceutical company focused on discovering, developing, and commercializing respiratory medicines. The company’s lead treatments that have been brought to market are YUPELRI (distributed in collaboration with Viatris), a once-daily, nebulized long-acting muscarinic antagonist used for chronic obstructive pulmonary disease (COPD), and asthma treatment TRELEGY (in which it retains royalties after selling to GSK).
The company has also been developing products such as Ampreloxetine, a norepinephrine reuptake inhibitor therapy for symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy (MSA). Finally, Ampreloxetine, currently under Phase III study, has shown promising results. It is reported to increase norepinephrine levels, positively impact blood pressure, and offer durable symptom improvements without causing supine hypertension in MSA patients.
Theravance’s Recent Financial Results & Outlook
The company announced results for the second quarter of 2024, which presented a mixed financial picture. Revenue fell short of projections, coming in at $14.26 million, lower than analysts’ estimates of $15.45 million. The results were entirely derived from the Viatris collaboration, which saw a modest increase of 4% compared to the same quarter in 2023 due to reduced costs incurred by Viatris.
Also, Research and Development expenses rose slightly to $10.0 million from $9.4 million, while Selling, General and Administrative expenses fell to $17.1 million from $19.3 million. The net loss climbed to $16.5 million from $15.6 million in the same quarter of the previous year. However, when adjusted for non-GAAP metrics, the net loss from operations was lower, at $6.3 million from $7.4 million. As a result, earnings per share of -$0.13 beat analysts’ estimates of -$0.21.
As of the quarter’s end, the company had cash, cash equivalents, and marketable securities valued at $96.1 million.
Management has updated its 2024 financial guidance, expecting full-year R&D expenses between $30 million and $36 million and SG&A expenses between $45 million and $55 million. The company also anticipates non-GAAP losses and cash burn to mirror the first half of 2024 actuals.
What Is the Price Target for TBPH Stock?
The stock has been range-bound for the past few years, with the recent price drop accounting for the -19.61% one-year return. It now trades at the bottom of its 52-week price range of $8.13 – $11.71 and shows negative price momentum, trading below its 20-day (8.89) and 50-day (8.88) moving averages. The shares are relatively undervalued, with a P/S ratio of 6.27x, comparing favorably to the Biotechnology industry average of 10.43x.
Analysts following the company have been cautiously optimistic about the stock. For instance, H.C. Wainwright analyst Douglas Tsao recently lowered the price target on the shares from $20 to $15 while maintaining a Buy rating, noting the disappointing Q2 financial results.
Based on four analysts’ recommendations and price targets, Theravance Biopharma is rated Moderate Buy. The average price target for TBPH stock is $13.20, representing a potential 68.58% change from current levels.
TBPH in Summary
Although Theravance’s Q2 revenue fell slightly below analysts’ expectations, the company beat anticipated earnings per share estimates. With its promising pipeline of treatments and first-in-class therapies, Theravance is potentially attractive for long-term investors. As it advances its promising pipeline, it could be a stock to monitor for progress and positive change.
