Glaxo, Theravance Win Approval for Lung Disease Treatment

GlaxoSmithKline Plc (GSK) and Theravance Inc. (THRX) won U.S. approval of their once-daily drug Breo Ellipta to treat a lung disorder that is the third-leading cause of death.

Theravance rose to its highest price in almost six years after the Food and Drug Administration today cleared the dry powder inhaler to treat exacerbations of chronic obstructive pulmonary disease, or COPD, and airflow obstruction. COPD, often caused by cigarette smoking, is an umbrella term for emphysema and chronic bronchitis.

Breo may generate $4 billion in worldwide peak sales, translating to $500 million in royalties for South San Francisco, California-based Theravance, M. Ian Somaiya, a senior research analyst with Piper Jaffray & Co., said in an e-mail. The once-a-day Breo will compete with twice-daily products, including Glaxo’s Advair and AstraZeneca Plc (AZN)’s Symbicort.

“COPD is a serious disease that makes breathing difficult,” Curtis Rosebraugh, director of FDA Office of Drug Evaluation II, said in a statement. “The availability of new long-term maintenance medications provides additional treatment options for the millions of Americans who suffer with COPD.”

Theravance rose 12 percent to $34.94 at the close in New York, its highest price since June 2007. London-based Glaxo gained 1.6 percent to 1,670 pence.

Drug Availability

The treatment may be available in the third quarter of this year, according to a statement from the companies. Theravance owes Glaxo a $30 million milestone payment based on the FDA approval, they said.

Breo works by decreasing inflammation in the lungs and helping the muscles around the airways stay relaxed, the FDA said. The treatment is a combination of the compound vilanterol and a corticosteroid.

Breo carries a boxed warning that drugs like it can increase the risk of asthma-related death. The drug isn’t recommended for people younger than 18 years old and can increase users’ risk of pneumonia and bone fractures, the FDA said.

The therapy is the first to be cleared that was produced by a partnership Glaxo and Theravance formed more than 10 years ago. Glaxo is the largest shareholder in Theravance with 27 percent of the stock.

Glaxo Partnership

“After more than a decade of joint respiratory research and development, the approval is a very important milestone for Theravance and Glaxo,” Theravance Chief Executive Officer Rick Winningham said in a statement.

The companies also are working on another treatment for chronic obstructive pulmonary disease, called Anoro. The once-daily medicine combines vilanterol with another ingredient to improve lung function. The FDA is expected to decide whether to approve Anoro in December. The drug would compete with Spiriva from Pfizer Inc. (PFE) and Boehringer Ingelheim GmbH.

Theravance said last month it would split into two companies at the end of this year or early 2014. One of the companies will be called Royalty Management Co. and will focus on the Glaxo collaboration, while the other, Theravance Biopharma, will focus on developing drugs.

Theravance generated $136 million in revenue last year while sales are projected to almost triple to $383 million in 2016, according to the average of five analysts’ estimates compiled by Bloomberg.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Romaine Bostick at rbostick@bloomberg.net

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