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Why Theravance Shares Skyrocketed

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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 Theravance (UNKNOWN: THRX.DL  ) , a biopharmaceutical company with a focus on respiratory and central nervous system disorders, skyrocketed as much as 25% after Food and Drug Administration reviewers released their findings on COPD drug hopeful, Breo.

So what: Breo -- which is an inhalable, long-lasting powder that combines Theravance's long-acting beta-2 agonists with GlaxoSmithKline's (NYSE: GSK  ) long-acting muscarinic antagonists -- was shown to be safe compared to other similar drugs, even though its efficacy was considered inconsistent. The reviewers did note that cases of pneumonia and fractures were higher for patients on Breo, but that its overall safety profile appeared consistent with other drugs already on the market. On the basis of efficacy, the reviewers questioned whether the use of a corticosteroid actually improved lung function, but they did imply that it helped reduce COPD exacerbations. Wall Street took this as a positive sign ahead of Wednesday's FDA panel meeting as safety drawbacks had been the biggest concern.

Now what: Now it's just a matter of whether Breo is effective enough to impress the FDA. There are clearly patients who won't prefer an inhaled powder, but the results thus far in trials have suggested that it does indeed reduce COPD exacerbations and provide long-lasting relief. If approved, peak sales could vary anywhere from $1.5 billion to as high as $4 billion, so this is a key drug for both Glaxo and Theravance. If Breo does gain eventual FDA approval, don't be shocked if Glaxo decides to gobble up Theravance, either!

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.

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Related Tickers

9/23/2016 4:02 PM
GSK $43.42 Down -0.16 -0.37%
GlaxoSmithKline CAPS Rating: ***
THRX.DL $0.00 Down +0.00 +0.00%
Theravance CAPS Rating: **