GSK ups lung drug bet by buying more of Theravance (Nasdaq: THRX)

Shawshank, Va 4/2/12 (StreetBeat) -- GlaxoSmithKline (NYSE: GSK) bet another LONDON 12.9 million on the success of lung drug Relovair on Monday by raising its stake in U.S. biotech firm Theravance (Nasdaq: THRX) - its partner on the new medicine - to 26.8 percent.

Britain's biggest drugmaker has been working with Theravance for 10 years to develop Relovair, an inhaled therapy combining two ingredients, which is a potential successor to GSK's $8 billion-a-year top-seller Advair.

Relovair will be submitted to regulators for approval as a treatment for chronic obstructive pulmonary disease (COPD) in mid-2012.

The new drug has had mixed results in clinical trials, showing superiority to Advair in some tests but not others. Still, GSK remains confident and hopes the convenience of once-daily dosing will appeal to patients, helping Relovair carve out good sales as a replacement for twice-daily Advair.

Current consensus forecasts point to annual Relovair sales of $1.46 billion by 2016, according to Thomson Reuters Pharma.

The success of Relovair is critical to GSK's future business in lung disease as Advair is set to lose patent protection in key markets, although it is not certain it will face immediate generic competition as respiratory drugs are difficult to copy.

GSK, which previously had an 18.3 percent holding in its U.S. partner, said it was paying $21.2887 per share for 10 million Theravance shares, a 7.5 percent premium to the five-day average price up to March 30..

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Theravance (Nasdaq: THRX) Shares Slide on Lung Drug Deaths

Tallahassee, FL 1/912 (StreetBeat) – Theravance (Nasdaq: THRX) shares slumped Monday after pneumonia-related deaths were reported in patients taking the company's experimental lung drug Relovair.

GlaxoSmithKline (NYSE: GSK), Theravance's Relovair development partner, sad it plans to seek U.S. and European regulatory approvals in the middle of the year based on the just-completed phase III program in chronic obstructive pulmonary disease (COPD) and asthma.

But questions about mixed results from these Relovair studies, safety concerns and perhaps a recognition that Theravance's chances of being acquired by Glaxo have now dimmed, all conspired to drop the value of Theravance shares by $6.72, or 33%, to $13.46 in early Monday trading.

Glaxo has been working with Theravance to develop Relovair as a follow-on drug to Advair, which brings in about $8 billion in revenue for the Big Pharma giant. Relovair is important because Advair has been gradually losing market share to AstraZeneca's (NYSE: AZN) more convenient asthma and COPD medicine Symbicort.

As reported Monday, Relovair beat Advair at all tested doses in one large phase III study of COPD patients. But in a second COPD phase III study, Relovair at its highest dose failed to beat Advair.

Glaxo said it was investigating reports of "fatal pneumonia" in patients treated with Relovair, primarily at the highest dose tested.

Likewise, a large phase III trial program in asthma didn't produce pristine results. A 12-week study of Relovair versus placebo failed to demonstrate a statistically significant difference in lung function. Likewise, a 24-week study of Relovair compared to another asthma medicine failed a predefined superiority test of lung function.

"Having undertaken an initial assessment of these data we believe they support our plan to seek global approvals of this once-daily medicine for the treatment of patients with COPD and asthma," said Glaxo's Darrell Baker, in a statement.

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