Great Article. GSK and THRX are like peanut butter & jelly. Buyout Makes Logical Sense. 'link'
Why Theravance Shares Soared
By Sean Williams | More Articles | Save For Later
March 4, 2013 | Comments (0)
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of biotechnology company Theravance (NASDAQ: THRX ) shot up as much as 18% after brokerage firm Piper Jaffray insinuated that a positive outcome from the FDA regarding Breo Ellipta, which has a PDUFA date of March 7, could create a takeover opportunity.
So what: Breo Ellipta -- which combines a long-acting beta agonist with an inhaled corticosteroid for 24-hour, long-term COPD relief -- uses components from both Theravance and GlaxoSmithKline (NYSE: GSK ) . Glaxo actually owns a 25% stake in Theravance to begin with, and they currently have multiple COPD treatments in clinical trials and/or working their way through the FDA review process, so a buyout, assuming approval, could make logistical sense.
Now what: Don't say I haven't already climbed this tree -- because I have. My exact words on Jan. 25 with regard to which biotech was the next buyout candidate were, "Personally, I'd call a hookup between Theravance and GlaxoSmithKline a no-brainer. Theravance and Glaxo have been like peanut butter and jelly when it comes to developing revolutionary new COPD treatments." I really don't see anything on the safety side of things that would preclude Breo Ellipta from an approval later this week, so I'd agree that Piper Jaffray is probably wise to speculate on Glaxo buying Theravance.