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Tickers in this Article: THRX, GSK
GlaxoSmithKline (GSK) and Theravance, Inc. (THRX) recently announced the submission of regulatory applications for their pipeline candidate, Breo (proposed brand name Relvar in the EU, formerly known as Relovair). Breo is a combination of fluticasone furoate and vilanterol, administered using a dry powder inhaler called Ellipta. Regulatory applications for the chronic obstructive pulmonary disease (COPD) indication were submitted in both the US and EU. In the EU, a regulatory application for asthma was also submitted. The COPD application in the US relates to the approval of Breo as long-term maintenance treatment of airflow obstruction in COPD patients, including chronic bronchitis and/or emphysema and to reduce exacerbations of COPD in patients with an exacerbation history. Glaxo and Theravance are finalizing the strategy for the US regulatory filing for the asthma indication.

The EU submission for the COPD indication relates to the symptomatic treatment of COPD in patients with a FEV1 70%>

Earlier in March 2012, Glaxo and Theravance had announced the completion of the registrational program for Breo. They reported results from two non-pivotal 12 week phase III COPD studies with approximately 500 patients each. The studies compared once daily Breo with twice daily Advair. In the first study, Breo demonstrated superiority over Advair (combination of fluticasone propionate and salmeterol) and met the primary end point. However, in the second study, the improvements were not statistically significant.

The companies also completed the phase III Breo registrational program for the treatment of persistent asthma in adults and adolescents. Positive results were reported from a study evaluating the efficacy and safety of fluticasone furoate and fluticasone propionate compared to placebo. 

Our Take

Breo, if approved, will be positioned as a replacement for Advair, one of Glaxo's highest revenue earners with 2011 sales exceeding £5 billion. We note that Glaxo along with Theravance is also developing other COPD candidates including LAMA/LABA (UMEC/VI) and MABA (GSK961081).

Earlier in May 2012, Glaxo had acquired 10,000,000 shares of Theravance for approximately $21.2887 per share, increasing its holding in Theravance to 26.7% from 18.3%. The increased holding by Glaxo reflects its confidence in the pipeline candidates.

We currently have Neutral recommendations on both Glaxo and Theravance. While Theravance carries a Zacks #2 Rank (Buy rating) in the short run, Glaxo carries a Zacks #4 Rank (Sell rating) in the short run.

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