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GlaxoSmithKline (GSK - Analyst Report) and partner Theravance, Inc. (THRX - Analyst Report) announced that the European Commission (EC) has cleared Relvar Ellipta. The EC approved the drug for the regular treatment of asthma in adults and adolescents (aged above 12 years) in cases where treatment by a combination therapy is appropriate. Approval was also granted for treating asthma patients whose disease was not sufficiently controlled with inhaled corticosteroids and inhaled short acting beta2-agonists.

The EC also approved the drug for the symptomatic treatment of adults suffering from chronic obstructive pulmonary disease (COPD).

The Relvar Ellipta EU approval was not surprising considering that the European Medicines Agency's Committee for Medicinal Products for Human Use recommended the approval of the drug in Sep 2013.

We remind investors that in May 2013, the U.S. Food and Drug Administration (FDA) approved the drug (trade name: Breo Ellipta) as a long-term maintenance therapy of airflow obstruction and for bringing down exacerbations in patients suffering from COPD.

The European approval for Relvar Ellipta triggered a $15 million payment from Theravance to Glaxo. Glaxo will receive further $15 million upon launch in the Europe. We are positive on Glaxo’s pipeline programs in collaboration with Theravance.

We note that Glaxo and Theravance are also looking to get another COPD candidate approved. In Sep 2013, Glaxo announced that the Pulmonary-Allergy Drugs Advisory Committee of the FDA voted in favor (11-2) of approving their candidate UMEC/VI (proposed trade name: Anoro Ellipta). A final decision from the U.S. regulatory body on UMEC/VI’s marketing application is expected by Dec 18, 2013 (target date).

Both Glaxo and Theravance carry a Zacks Rank #3 (Hold). Right now, Bayer (BAYRY - Analyst Report) and Johnson & Johnson (JNJ - Analyst Report) look attractive. Both carry a Zacks Rank #2 (Buy).

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