Theravance Rises on Speculation of Possible Glaxo Buyout

Theravance Inc. rose the most in 11 months on investor speculation that GlaxoSmithKline Plc may purchase the remaining 73 percent of the company that it doesn’t already own.

Theravance gained 16 percent to $24.29 at the close in New York, its biggest climb since April 2. Glaxo, the U.K.’s largest drugmaker, may consider acquiring Theravance to fully control respiratory drugs the companies developed together, Piper Jaffray analysts said today in a note to clients.

A Food and Drug Administration advisory committee will review the companies’ Breo drug on March 7. Glaxo owns 27 percent of Theravance and may pay $51 a share for the rest of the South San Francisco, California-based drugmaker, Piper Jaffray said. That would be more than double the March 1 closing price and would value the remaining stake at about $3.6 billion.

Glaxo and Theravance formed an alliance a decade ago to develop respiratory drugs including Breo and Anoro to help succeed Advair, Glaxo’s aging best-seller. The U.K. company raised its stake in Theravance from 18 percent in April 2012. A regulatory decision on Breo is scheduled for May 12 and on Anoro on Dec. 18.

“We believe approval for Anoro by year end could lead to an eventual takeout,” Piper Jaffray analysts M. Ian Somaiya, Do Kim and Matthew Luchini said.

No Comment

Sarah Spencer, a spokeswoman for Glaxo, declined to comment. A voice mail left at Theravance’s headquarters, asking for comment on the Piper Jaffray note, wasn’t immediately returned.

Breo is a once-daily treatment for chronic obstructive pulmonary disease, an umbrella term for emphysema and chronic bronchitis often caused by cigarette smoking. The medicine would compete with Novartis AG’s Arcapta Neohaler approved in July and similar twice-daily products made by Glaxo and London-based AstraZeneca Plc.

Glaxo has said a once-daily formulation has better patient compliance than drugs that must be used more often.

While pneumonia-related deaths observed in clinical trials is cause for uncertainty, only one death occurred at the lower dose that Glaxo is seeking approval for, Piper Jaffray said.

The drug may generate $738 million in sales for Glaxo in 2016, according to the average of seven analysts’ estimates compiled by Bloomberg.

Glaxo fell less than 1 percent to 1,460.5 pence in London.