Why Theravance Shares Soared

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 be speculating on a buyout in the near future.

Craving more input? Start by adding Theravance to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like Theravance, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 04, 2013, at 5:28 PM, Retaility wrote:

    Theravance soared because no one read the fine print. And I quote "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 in a note to clients. The current price target factors in almost 200 million a year of future earnings for a drug that won't be approved for 9 months.

  • Report this Comment On March 05, 2013, at 7:53 AM, chrispycrunch wrote:

    Good point Retaility - much of the gains happening today and over the next few days will be led with a sell-off after the FDA Mar 7 news.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2291870, ~/Articles/ArticleHandler.aspx, 9/17/2014 12:13:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement