GlaxoTHRX Withdraw Relvar Application

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GlaxoSmithKline (GSK) and partner Theravance, Inc. (THRX) recently announced the withdrawal of the marketing application for fluticasone furoate and vilanterol (FF/VI) – proposed brand name Relvar Ellipta – from Japan. Glaxo and Theravance were looking to get FF/VI approved for chronic obstructive pulmonary disease (:COPD).

The marketing application was withdrawn as Glaxo believed that the currently available data is insufficient to secure approval in Japan. Glaxo and Theravance are determining further options for resubmission of FF/VI’s marketing application in Japan including conducting a study on FF/VI for the treatment of Japanese patients with COPD. The drug is currently under review in Japan for asthma

We remind investors that in May 2013, the US Food and Drug Administration (:FDA) approved FF/VI under the trade name Breo Ellipta for COPD. The FDA cleared Breo Ellipta as a long-term maintenance therapy of airflow obstruction and for bringing down exacerbations in patients suffering from COPD. Breo Ellipta is expected to be available from the third quarter of 2013.

We note that Glaxo and Theravance are also looking to get another COPD candidate approved. In Feb 2013, the FDA accepted the regulatory application of Glaxo/Theravance’s Anoro. The companies are looking to get the candidate approved in the US as a once daily therapy for treating patients suffering from COPD. A decision from the US regulatory body on Anoro’s marketing application is expected by Dec 18, 2013.

Glaxo currently holds a Zacks Rank #3 (Hold). The biggest near-term challenge for Glaxo will be to replace the revenues that will be lost to generic competition. Products like Valtrex, Lamictal, Imitrex, Requip, Combivir and Epivir are already facing declining sales due to intense generic competition. Going forward, a major part of Glaxo’s revenues will be exposed to generic competition as products like Pandemrix and Prepandrix are all scheduled to lose exclusivity in the next few quarters.

We believe that the pipeline at Glaxo must deliver to counter the generic threat. We are impressed by Glaxo’s growth-by-acquisition strategy to combat the loss of revenues due to genericization of key products.

Companies that currently look more attractive include Jazz Pharmaceuticals (JAZZ) and Cadence Pharmaceuticals Inc. (CADX) carrying a Zacks Rank #1 (Strong Buy).

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