Theravance Inc.
(
THRX
) recently announced that it has entered into an agreement with a
privately held, Italy based company, Alfa Wassermann S.p.A. for the
development and commercialization of velusetrag (TD-5108) in some
countries. Velusetrag, an investigational 5-HT4 agonist, is being
developed for gastrointestinal motility disorders.
As per the agreement, both the companies will undertake the
responsibility of conducting a two-part phase II program. The phase
II program will evaluate the efficacy, safety and tolerability of
velusetrag in gastroparesis patients. Alfa Wassermann will fund
this program.
Alfa Wassermann will have a right to execute an option by paying a
fee of $10 million to Theravance, if the data from the phase II
program are sufficiently favorable. The option entails exclusive
development and commercialization rights of velusetrag in the EU,
Russia, China, Mexico and certain other nations. Theravance will
retain rights to velusetrag in other countries including the US,
Canada and Japan.
If Alfa Wassermann exercises the option, Theravance will be
entitled to receive milestone payments of up to $53.5 million on
the achievement of certain development, regulatory and sales
targets. Theravance will also receive royalties (low teens to 20%)
on net sales of velusetrag in Alfa Wassermann regions.
Our Recommendation
Currently, we are Neutral on Theravance. Our long-term stance is in
line with the Zacks #3 Rank (short-term Hold rating) carried by the
company. Though we are concerned about the challenges currently
faced by Theravance relating to Vibativ's supply following the
termination of its collaboration with Astellas, we are impressed by
Theravance's pipeline.
In particular, we are positive on Theravance's collaborations with
GlaxoSmithKline
(
GSK
) for respiratory candidates, which include FF/VI (proposed brand
names: Breo in the US and Relvar in the EU), LAMA/LABA (UMEC/VI)
and MABA (GSK961081). FF/VI is currently under regulatory review
with a final decision expected by May 12, 2013. It will be
positioned as a replacement for Advair on approval. Advair is one
of Glaxo's highest revenue earners with 2011 sales exceeding £5
billion.
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