West Coast Editor

Word that GlaxoSmithKline plc opted to skip the 2004 call right that would have let the pharma firm buy 50 percent of Theravance Inc.'s stock at $54.25 per share did little to the latter's current share price, as investors watch the steady progress of clinical programs and the relationship with GSK remains on course.

Theravance's stock (NASDAQ:THRX) closed Monday at $32.78, up 78 cents, after dipping to $30 in early trading.

The stock buy would have made an "attractive short-term financial gain," conceded Rick Winningham, South San Francisco-based Theravance's CEO during a quick conference call with investors, but the company is looking forward to acting as a "truly independent" firm in the years ahead. Analysts had no questions for the company's chief.

As part of the "put-call" terms of a strategic alliance between the pair entered in 2004, GSK had the right this month to acquire half of Theravance's stock at $54.25 per share. Now, each holder of Theravance common stock has the right - between Aug. 1 and Sept. 12 - to require that Theravance, using funds provided by GSK, redeem up to 50 percent of their common stock at about $19.37 (the "put"). GSK's maximum obligation for those shares is capped at $525 million. (See BioWorld Today, April 1, 2004.)

Just last month, Theravance reported positive results from its 400-patient Phase II ACCORD study of its selective 5-HT4 agonist TD-5108 in chronic constipation, a compound for which London-based GSK holds a license option. Winningham noted that GSK also holds options to Theravance's three discovery programs in hypertension, neuropathic pain, opioid-induced bowel dysfunction.

Also last month, Theravance enrolled the last patient in its Phase III clinical study of the investigational antibiotic telavancin in patients with hospital-acquired pneumonia due to Gram-positive bacteria, including resistant strains such as methicillin-resistant Staphylococcus aureus. Telavancin already is under regulatory review in the U.S. and Europe for the treatment of complicated skin and skin structure infections caused by Gram-positive bacteria.

Televancin is partnered with Astellas Pharma Inc., of Tokyo. Antibiotics to treat serious, antibiotic-resistant, Gram-positive bacterial infections in the U.S. sold $945 million last year, IMS Health reported, and vancomycin accounted for about 85 percent of that, with Zyvox (linezolid, Pfizer Inc.) and Cubicin (daptomycin, Cubist Pharmaceuticals Inc.) taking up the rest. Telavancin likely will soon enter the field, and Basel, Switzerland-based Arpida Ltd. has iclaprim in Phase III trials.

Back in 2002, Theravance and GSK signed a potential $545 million deal to find new, long-acting beta2-agonists for respiratory diseases. In April of this year, the companies disclosed positive results of two studies in their Phase IIb program of the investigational bronchodilators GSK642444 and GSK159797.

The candidates emerged from their Beyond Advair collaboration, intended to develop a once-a-day inhaled medicine comprised of a LABA and a corticosteroid for treating asthma and chronic obstructive pulmonary disease. That push remains unchanged.

Also ahead for Theravance is a report on data from the Phase II study with the next-generation antibiotic TD-1792. Winningham said he expected no significant changes in strategy or execution as a result of GSK's latest decision, but plans an "enhanced effort to build our demonstrated strengths" by increasing the research staff to boost work with multivalency.