The Zacks Analyst Blog Highlights: GlaxoSmithKline , Theravance, Pfizer, BP and Talisman Energy
For Immediate Release
Chicago, IL – August 28, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include GlaxoSmithKline (GSK), Theravance, Inc. (THRX), Pfizer (PFE), BP Plc (BP) and Talisman Energy (TLM).
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Here are highlights from Monday’s Analyst Blog:
Pipeline Advances at Glaxo/Theravance
GlaxoSmithKline (GSK) and Theravance, Inc. (THRX) recently announced that they have completed the phase III program for their pipeline candidate, LAMA/LABA (UMEC/VI), for chronic obstructive pulmonary disease (:COPD). LAMA/LABA is a combination of a long-acting muscarinic antagonist/LAMA (GSK573719 or umeclidinium bromide/UMEC) and a long-acting beta2 agonist/LABA (vilanterol/VI).
The 52-week safety study and two replicate 12-week crossover exercise studies for LAMA/LABA are now complete. Data from these studies will be presented at upcoming scientific meetings. Glaxo remains on track to submit regulatory applications for LAMA/LABA toward the end of 2012.
Earlier, in July 2012, Glaxo and Theravance had announced data from four pivotal phase III studies of LAMA/LABA. While two studies compared the efficacy and safety of LAMA/LABA with VI, UMEC and placebo, the two other studies compared the efficacy and safety of LAMA/LABA with Pfizer’s (PFE) Spiriva. The four studies together enrolled over 4,000 COPD patients.
In both the placebo-controlled, 24-week, randomized, double-blind studies, LAMA/LABA showed a statistically significant benefit over VI, UMEC and placebo. In the first head-to-head comparison with Spiriva, LAMA/LABA showed a statistically significant improvement. However, in the second study, LAMA/LABA failed to do so although it demonstrated numerical difference.
Our Take
LAMA/LABA, 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 Breo (proposed brand name Relvar in the EU, formerly known as Relovair) and MABA (GSK961081).
Glaxo, in May 2012, had acquired 10,000,000 shares of Theravance for approximately $21.2887 per share. With this transaction, Glaxo increased 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 a Neutral recommendation on Theravance, which carries a Zacks #3 Rank (short-term Hold rating). We, however, have an Underperform recommendation on Glaxo, which carries a Zacks #4 Rank (short-term Sell rating). Glaxo’s second quarter results missed expectations. The company is facing headwinds like generic competition and EU pricing pressure.
Cost Overruns Dog BP Project
BP Plc (BP) has incurred a huge cost overrun on its Skarv project off Norway, which got deferred mainly due to supply hindrances to obtain some vital equipment and services. The company is now trying hard to start operations in the field by the end of 2012.
The overrun cost is estimated at over NOK 10 billion ($1.7 billion) on the original budget of NOK 34 billion. The project is under pressure due to the elevated expenses associated with production setback, fixing of vessel charters, engineering services and an extended yard stay for the floater.
The repetitive weather-related problems such as high waves have prohibited the set up of risers and thus postponed the commissioning of the field’s floating production, storage and offloading (:FPSO) vessel by over a year to December 2012. The field’s FPSO would be the largest in operation in the Norwegian region.
Earlier, the project was delayed due to complex and prolonged repair work that had to be performed on the turret, assembled at South Korea’s Samsung Heavy Industries and supplied by the Dutch contractor SBM Offshore.
Initially, BP had given the contract to Bluewater, but later cancelled it as Samsung did not possess the capacity to honor the order. SBM was finally contracted for engineering of the turret. SBM has also been criticized over its supply of offshore production unit for Talisman Energy’s (TLM) disturbed Yme project off Norway.
However, BP management has defended SBM and said that the Skarv development is now moving as scheduled and will start producing in December, as the last of the field’s 13 risers was installed in the turret this summer.
The Skarv field is estimated to hold oil and condensate reserves of around 104 million barrels and gas reserves of about 42.1 billion cubic meters of gas. Initially, BP targets a daily yield rate of 80,000 barrels from the field.
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