Theravance Shares Rise On Approval Of Glaxo's COPD Therapy

Theravance Biopharma, Inc.’s (NASDAQ:TBPH) shares rose almost 6.5% on Thursday following the approval of GlaxoSmithKline plc’s (NYSE:GSK) chronic obstructive pulmonary disease ("COPD") therapy, Trelegy Ellipta in Europe. Investors cheered the approval as Theravance has an economic interest on the royalties that Glaxo will pay to its partner Innoviva, Inc. (NASDAQ:INVA) on global sales of Trelegy Ellipta.

We note that Innoviva spun-off its biopharmaceutical operations in June 2014 into a subsidiary called Theravance Biopharma. As part of the spin-off agreement between the two entities, Theravance is eligible to receive 85% of any future payments paid by Glaxo in connection with GSK-Partnered Respiratory Programs.

Moreover, Glaxo is expected to pay Innoviva royalties in the range of 6.5% to 10% on global sales of Trelegy Elipta. Theravance will receive cash flows, which amount to approximately 5.5% to 8.5% of worldwide net sales of the drug.

However, Theravance’s shares are down 9.4% so far this year, underperforming the industry’s decline of 0.4%.

Trelegy Ellipta, a triple combination therapy, was granted marketing authorization in the EU as maintenance therapy for treatment of patients with COPD on Nov 16. It was approved in the United States in September this year. The product is expected to bring in blockbuster sales.

Meanwhile, earlier this week, Theravance submitted a new drug application to the FDA for its COPD candidate, revefenacin, which has been developed in partnership with Mylan (NASDAQ:MYL) . Revefenacin is nebulized long-acting muscarinic antagonist (“LAMA”). An approval will be a huge boost as patients who prefer nebulized therapy have no access to a nebulized LAMA.

Theravance has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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