Why Theravance Shares Roared Higher -- Again

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 , a biopharmaceutical company that focuses on central nervous system and respiratory disorders, leapt as much as 19% -- its second double-digit jump this week -- following a positive recommendation from the Food and Drug Administration's panel regarding COPD drug Breo Ellipta.

So what: Breo is a once-daily treatment Theravance co-developed with GlaxoSmithKline that targets long-acting relief for COPD sufferers and is taken as a dry inhalable powder through a device known as Ellipta. The FDA's panel voted 9-4 in favor of recommending approval of the drug, noting that it demonstrated effectiveness in reducing COPD exacerbations and in treating airflow obstruction. Furthermore, a separate vote by the panel of 10-3 indicated that Breo had been proven adequately safe given its proposed indications.


Now what: This is one step closer to Glaxo getting its Advair back-up approved and for Theravance to getting a potential blockbuster approved and on the market. I stand by my assessment that if Breo is approved, Glaxo would be foolish not to buy Theravance; but that's just one man's opinion. As always, keep in mind that just because the FDA's panel recommended approval the FDA is not bound by its panels' recommendation. In this case, I'd have a hard time seeing what would stop Breo from gaining approval unless there was some concern from the FDA about the delivery mechanism or manufacturing, of which neither was brought up during the FDA panel meeting.

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.

The article Why Theravance Shares Roared Higher -- Again originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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