Theravance Inc.
(
THRX
) recently announced that it has inked a deal with
Merck
(
MRK
) for the discovery, development and commercialization of novel
small molecule therapeutics for treating hypertension and heart
failure.
Per the terms of the deal, Theravance will grant Merck an
exclusive, global license for its candidates. The deal will see
Theravance receiving an upfront payment worth $5 million apart
from research related funding from Merck. Moreover, Merck will
have to make milestone payments of up to $148 million for the
first indication. Furthermore, Theravance will receive royalties
from Merck on global net sales of any products derived from the
agreement.
We note that this is the second major deal inked by Theravance
over the past few weeks. Earlier in the month, Theravance
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 the former's velusetrag
(TD-5108) in some countries. Velusetrag, an investigational 5-HT4
agonist, is being developed for treating patients suffering from
gastrointestinal motility disorders.
As per the agreement, both 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 patients suffering from
gastroparesis. Alfa Wassermann will fund this program.
Our Recommendation
Currently, we have a Neutral stance on Theravance. The stock
carries a Zacks #3 Rank (Hold rating) in the short run. 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
and a final decision is expected by May 12, 2013. On approval, it
will be positioned as a replacement for Glaxo's Advair.
GLAXOSMITHKLINE (GSK): Free Stock Analysis
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MERCK & CO INC (MRK): Free Stock Analysis
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THERAVANCE INC (THRX): Free Stock Analysis
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