It was shares of smaller partner Theravance Inc., however, that took the hit. The stock (NASDAQ:THRX) slipped 16.7 percent Tuesday afternoon and fell another 21 percent Wednesday to close at $10.68. But the South San Francisco-based firm, which emerged as a royalty holding company after spinning off development-stage assets last year and earns royalties from GSK on sales of Relvar/Breo, as well as from Anoro Ellipta (umeclidinium/vilanterol), might have been girding itself for failure of the SUMMIT trial, having brought on board a chief business officer earlier this year tasked with expanding company revenues beyond the existing respiratory portfolio.
Despite approvals of Breo, a long-acting beta2-adrenergic agonist (LABA) combined with a corticosteroid, in COPD and the first FDA nod for a LABA/long-acting muscarinic antagonist (Anoro), the returns for Theravance have so far been modest. For the second quarter, Theravance earned royalties totaling $13.9 million on total Relvar/Breo sales of $82 million and Anoro sales of $23.7 million, though executives noted sales could increase significantly thanks to the April approval of Breo for asthma patients.
Full-year 2014 sales for Breo reached $110.4 million, according to Cortellis Competitive Intelligence, which showed consensus estimates of about $1.5 billion in annual sales by 2020.
That's still a far cry from Advair's performance. Sales of the salmeterol/fluticasone propionate combo drug, delivered via inhaler, peaked at $8.3 billion in 2013, according to Cortellis, though that number has fallen since, with GSK citing a mix of generic threats and price cuts. Cortellis showed consensus estimates of $2.6 billion in Advair sales predicted for 2020.
Breo could have helped offset that decline had it become the first COPD drug on the market to demonstrate a clear survival benefit. But, while data from the 16,485-patient SUMMIT (Study to Understand Mortality and MorbidITy in COPD) study showed a trend in extending the lives of COPD patients, it fell short of statistical significance. The risk of dying on Breo was 12.2 percent lower than on placebo over the study period (p = 0.137).
In that way, it failed to one-up its predecessor. Advair, tested in an earlier study, dubbed TORCH, which enrolled more than 6,000 patients, also missed its primary endpoint of all-cause mortality, though just barely. Data, according to Cortellis Clinical Trials Intelligence, showed all-cause mortality of 12.6 percent of patients receiving Advair vs. 15.2 percent of patients receiving placebo (p = 0.052).
In addition to SUMMIT, Breo also is the subject of a COPD and asthma trial in the Salford Lung Study, designed to test the product in real-world settings. The primary endpoint is the mean annual rate of moderate and severe exacerbations, while secondary endpoints will assess safety, contact with health care professionals and patient-reported outcomes. The 12-month COPD part of the study is expected to complete in the second half of this year, with data available in 2016.
Even though SUMMIT failed to show a statistically significant survival benefit, Theravance President and CEO Michael Aguiar noted that the full dataset "provides additional confidence in the safety and efficacy" of Breo as a once-daily treatment to improve lung function and reduce exacerbation risk in COPD patients.
Because the primary endpoint wasn't met, the companies said they could not infer statistical significance on other endpoints, but several positive trends were noted. Breo reduced the rate of lung function decline, as measured by forced expiratory volume in one second (FEV1), by 8 mL per year, compared with placebo (p = 0.19), a secondary endpoint. Another secondary endpoint showed a 7.4 percent lower risk of experiencing an on-treatment cardiovascular (CV) event – CV death, myocardial infarction, stroke, unstable angina or transient ischemic stroke – in Breo-treated patients vs. placebo (p = 0.475).
Analyses of several additional COPD endpoints, including FEV1, rate of moderate/severe exacerbations, time to first moderate/severe exacerbation, time to first severe exacerbation, rate of severe exacerbation, health-related quality of life and health status, all showed an improvement with Breo vs. placebo with a nominal "p" value of 0.002.
On-treatment serious adverse events were 23.2 percent for Breo patients and 22.2 percent for those on placebo.
Theravance and GSK have been working together since 2003, when they pooled their LABA programs into a single collaboration. In 2013, Theravance decided to split its GSK-partnered respiratory franchise from the remainder of its pipeline, spinning off its antibiotic asset Vibativ (telavancin) and investigational pipeline into Theravance Biopharma Inc. (See BioWorld Today, April 30, 2013,)
While the deal fell among many asset spinout arrangements, Theravance was an interesting case in that most of the original firm's management, including CEO Rick Winningham, opted to follow the riskier development-stage assets.
Theravance completed the spinout last year, and executives also so far have kept the promise of a quarterly dividend of at least 25 cents. The plan was for payouts initially to be financed by a $450 million debt offering, and then covered by the increasing royalties from the respiratory product sales. That prospect, however, is looking a little dimmer given the slow growth of Breo and Anoro and now the disappointing SUMMIT data.
But working with GSK to boost those products among the increasing competition is only one of the company's goals, executives explained during the second quarter earnings call, in which they introduced new Chief Business Officer Michael Faerm, who will be responsible for leading growth strategies beyond the respiratory franchise.
"We are starting to look at potentially things beyond the range of our current portfolio, and that's really where Mike comes in," CEO Aguiar told investors on the July conference call, though he stressed the company was in no hurry to ink additional deals.
"We have 14, 15 years left in front of us in terms of life from [the current portfolio]. So there is no immediate urgency around doing a deal tomorrow morning," he added. "If the right deal came up, we would certainly look at it."
As of June 30, Theravance had cash, equivalents, short-term investments and marketable securities totaling $229.3 million.