Astellas Scraps Antibiotic Partnership With Theravance

Xconomy San Francisco — 

South San Francisco-based Theravance said today that Astellas Pharma, its longtime partner in marketing a new antibiotic, has decided to walk away from its collaboration.

Theravance (NASDAQ: THRX) said Japan-based Astellas has exercised its right to terminate its worldwide license agreement to co-market telavancin (Vibativ) as a once-daily injectable drug for bacterial infections. Astellas has stopped promoting the product, it doesn’t owe a termination payment, and it is still entitled to collect a 2 percent royalty on net sales of the drug over the next 10 years, Theravance said in a statement. Astellas plans to transfer inventory of the drug to Theravance and finish up various clinical, regulatory and medical tasks by March 31.

The drug rights now revert to Theravance, which will consider options on what to do next, including possibly finding another partner, the company said in a statement. The product—Theravance’s only one on the market—won FDA approval in September 2009, and was cleared for sale in Europe in September, but it has never gotten much traction in the antibiotic marketplace. The drug—which is currently hemmed in by manufacturing shortages—generated just $800,000 in royalties from $4.5 million in net sales in the most recent quarter ended Sept. 30. While telavancin was once a big part of the Theravance story, most of its value is now tied up in experimental drugs for chronic obstructive pulmonary disease and other conditions.

Theravance got $65 million in an upfront payment as part of its collaboration with Astellas in 2005, and was eligible for $156 million more in payments for reaching certain clinical and regulatory milestones. The deal allowed Theravance to collect a “high-teens to upper 20s” percentage royalty on sales of the product.

Theravance noted in a regulatory filing today that the manufacturing supply issue for telavancin could be significant. “If these issues at the manufacturer are not promptly resolved, obtaining supply would require identifying and qualifying an alternative manufacturer, which could take 12 to 24 months,” the company said.

“We believe that Vibativ is an important, life-saving medicine, and we appreciate Astellas’ commitment to a smooth transition. We will continue the focus on re-establishing consistent Vibativ product supply. We will assess strategic alternatives for Vibativ, including repartnering, and will provide updates later this year,” Rick Winningham, Theravance’s CEO, said in a statement.

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