Please ensure Javascript is enabled for purposes of website accessibility

The FDA Helps Investors Breathe Well

By Brian Orelli, PhD - Apr 15, 2013 at 5:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

GlaxoSmithKline and Theravance's COPD drug Breo gets a marginally positive review from the Food and Drug Administration.

The Food and Drug Administration wasn't exactly ecstatic in its review of GlaxoSmithKline (GSK 2.20%) and Theravance's (NASDAQ: THRX) lung drug Breo. But it didn't crush the inhaled drug, either.

A mediocre review was music to the ears of investors, which sent Theravance's shares up by double digits.

Breo would be Theravance's second product. It also sells an antibiotic called Vibativ, but it's a minor product at the moment. Theravance only recognized $5.8 million in revenue in the fourth quarter, which included not only revenue from royalties on sales of Vibativ, but also included amortized upfront licensing payments from one of its partners.

Theravance is counting on its respiratory partnership with Glaxo to help it breathe easier. Breo could be a blockbuster in a few years considering that Glaxo's Advair, which treats COPD as well as asthma, racks up sales of $8 billion a year. With Advair exclusivity in doubt -- patents are expired, but no generics of the inhaled product have been approved yet -- Glaxo is happy to have the additional drug even if it'll cut into Advair sales initially.

The FDA's review was posted ahead of Wednesday's advisory panel to review the drug. The outside experts will review Breo's safety and efficacy data to treat chronic obstructive pulmonary disease, or COPD.

The Pulmonary-Allergy Drugs Advisory Committee will be asked to vote on whether the drug should be used as a long-term maintenance treatment for COPD as well as whether it reduces COPD exacerbations. Either alone could get the drug approved, but getting both indications on the label would help with sales considering the extensive competition for COPD patients.

The FDA seems generally happy with the data, but questioned whether both components of the drug -- a corticosteroid called fluticasone furoate and a long-acting beta-agonist, or LABA, called vilanterol -- were required for efficacy. The reviewers don't seem to be convinced that fluticasone furoate is necessary for the maintenance treatment, but may limit COPD exacerbations.

Investors should pay close attention to the safety discussion about the vilanterol component because the duo has another COPD treatment, Anoro, which contains vilanterol combined with a long-acting muscarinic antagonist, or LAMA, called umeclidinium bromide. Anoro was recently submitted to the FDA and could face its own advisory committee meeting later this year.

The FDA isn't required to follow the advisory committee's advice, but given the marginally positive FDA review, a strong endorsement should make an approval likely, while a negative vote will cause the FDA to follow suit. If the committee is wishy-washy, it'll probably be hard to know which way the FDA will ultimately decide.

If Breo is approved, it'll have to compete with Boehringer Ingelheim and Pfizer's (PFE 3.59%) Spiriva, Merck's (MRK 1.58%) Foradil, and AstraZeneca's (AZN 2.59%) Symbicort, as well as the aforementioned Advair. While there's a lot of competition, Breo could take sales from Foradil and Symbicort since it only has to be taken once a day -- half as often as Foradil and Symbicort. The toughest competition is likely to come from Spirvia, which is only taken once daily.

Don't hold your breath, though; first the drug has to get approved.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GlaxoSmithKline plc Stock Quote
GlaxoSmithKline plc
$44.52 (2.20%) $0.96
Pfizer Inc. Stock Quote
Pfizer Inc.
$52.47 (3.59%) $1.82
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
$93.55 (1.58%) $1.46
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$66.21 (2.59%) $1.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.