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Theravance Inc. (THRX - Analyst Report) recently entered into an agreement with UK-based Clinigen Group plc for the commercialization of Vibativ (telavancin) in the EU and several other European countries including Switzerland and Norway.

As per the terms of the agreement, Clinigen Group will have the exclusive rights to commercialize Vibativ in the above territories for treating patients suffering from nosocomial pneumonia (NP), including ventilator-associated pneumonia, caused by susceptible isolates of gram-positive micro organisms. We note that NP is a dangerous infection and is contracted by hospitalized patients.

In return, Clinigen Group will make upfront payments of $5 million to Theravance. Additionally, Theravance will also be eligible to receive tiered royalties (in the range of 20% to 30%) on net sales of Vibativ.

Theravance received EU approval for Vibativ for NP in 2011. However, in May 2012, the European Commission (EC) suspended marketing of Vibativ due to manufacturing issues. Theravance is currently working on sorting out these issues.

Vibativ was approved by the US Food and Drug Administration (FDA) in Sep 2009 for treating adults suffering from complicated skin and skin structure infections (cSSSI) resulting from susceptible gram-positive bacteria, including both methicillin-resistant (MRSA) and methicillin-susceptible (MSSA) strains of staphylococcus aureus.

Theravance, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Biopharma companies that currently look more attractive include Cytokinetics, Inc. (CYTK - Snapshot Report) and Array BioPharma Inc. (ARRY - Snapshot Report). While Cytokinetics is a Zacks Rank #1 (Strong Buy) stock, Array BioPharma carries a Zacks Rank #2 (Buy). Another pharma stock that looks attractive is Osiris Therapeutics, Inc. (OSIR - Analyst Report). Osiris is also a Zacks Rank #1 stock.

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