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Theravance Inc. (THRX - Analyst Report) recently announced that the US Food and Drug Administration (FDA) has approved the company’s marketed product, Vibativ (telavancin), for an additional indication.

The FDA approved Vibativ for treating adults suffering from hospital-acquired and ventilator-associated bacterial pneumonia. The disease is also known as nosocomial pneumonia (NP). Approval was gained for treating the disease caused by susceptible isolates of staphylococcus aureus in the absence of suitable alternatives.

Following the approval, Theravance intends to launch the drug for the new indication in the third quarter of 2013. The FDA approved Vibativ for the new indication on the basis of data from two phase III studies (ATTAIN I and II).

We note that Vibativ is already approved in the US for treating adults with complicated skin and skin structure infections (cSSSI) caused by susceptible isolates of gram-positive bacteria, including both methicillin-resistant and methicillin-susceptible strains of staphylococcus aureus. Vibativ is also marketed in Canada for cSSSI.

In Nov 2012, an advisory panel of FDA issued a 13-2 favorable vote about the safety and efficacy of the drug for the NP indication due to susceptible isolates of gram-positive microorganisms in the absence of suitable alternatives. The panel did not recommend the drug as a first-line treatment for NP. The FDA approval was also for the limited indication.

We believe that the label expansion of the drug for a limited indication will restrict the drug’s sales potential. Consequently, we do not expect the FDA decision to boost Theravance’s top line significantly.

Theravance, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Biopharma companies that currently look more attractive include Jazz Pharmaceuticals (JAZZ - Analyst Report), Cytokinetics, Inc. (CYTK - Snapshot Report) and Alexion Pharmaceuticals, Inc. (ALXN - Analyst Report). While Jazz Pharma is a Zacks Rank #1 (Strong Buy) stock, Cytokinetics and Alexion Pharma carry a Zacks Rank #2 (Buy).

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