British pharma giant
GlaxoSmithKline
(
GSK
) announced that it will increase its holding in biopharmaceutical
company
Theravance Inc.
(
THRX
) to 26.8% from 18.3%. The two companies inked a deal, which will
allow Glaxo to acquire 10,000,000 shares of Theravance for
approximately $21.3 per share. The deal is worth approximately
$212.88 million.
We note that the offer price per share for the transaction
reflected a 7.5% premium over Theravance's volume-weighted average
price of $19.8 per share over the five-day period ending March 30,
2012. The closure of the transaction is dependent on the approval
of Theravance's shareholders (expected at its annual general
meeting on May 15, 2012) in addition to other closing
conditions.
The increased holding by the pharma major reflects its
confidence in the Relovair program, under which the companies are
looking to replace one of Glaxo's best selling drugs Advair by
evaluating treatment options for asthma and chronic obstructive
pulmonary disease (COPD).
We remind investors that in November 2002, Theravance entered
into a collaboration agreement with GlaxoSmithKline. Under the
deal, the companies are looking to develop and commercialize a
once-daily long-acting-beta 2 agonist (LABA) candidate both as a
single agent and also as a combination therapy for the treatment of
asthma and/or a long-acting muscarinic antagonist (LAMA) for COPD.
These programs are collectively known as the Relovair program
(phase III completed).
Glaxo intends to seek approval of Relovair in the US and Europe
in mid-2012 for the COPD indication. The pharma giant intends to
seek European approval of the drug for treating asthma patients in
mid-2012. Regarding the US approval of Relovair for
theasthma indication, Glaxo is in discussions with the FDA.
Furthermore, the LAMA/LABA program is undergoing phase III
development for treating COPD patients.
Our Recommendation
Currently, we are Neutral on both Glaxo and Theravance. Our
long-term stance is in line with the Zacks #3 Rank (short-term Hold
rating) carried by both the companies.
GLAXOSMITHKLINE (
GSK
): Free Stock Analysis Report
THERAVANCE INC (
THRX
): Free Stock Analysis Report
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