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Theravance, J&J Ink Deal for Inflammatory Intestinal Drug


Theravance Biopharma, Inc.’s TBPH shares increased almost 15% on Feb 7 after it announced a global collaboration agreement with Janssen, a subsidiary of Johnson & Johnson JNJ, to jointly develop and commercialize its pan-Janus kinase (JAK) inhibitor, TD-1473, for treatment of inflammatory intestinal diseases.

Notably, TD-1473 is being evaluated in a phase Ib study for moderate to severe active ulcerative colitis. In August 2017, the company announced positive results from the trial.

It also plans to initiate a phase IIb/III adaptive design induction and maintenance program on TD-1473 this year, for the given indication. Additionally, Theravance is planning to start a phase II study on the candidate for Crohn's Disease in 2018.

Pursuant to the above-mentioned agreement, Theravance will be entitled to receive an upfront payment of $100 million and be also eligible to get potential payments of $900 million if J&J remains in the collaboration on completion of phase II activities. Moreover, while Janssen will be responsible for developing TD-1473 in Crohn's Disease after phase II, Theravance will lead the candidate’s development in ulcerative colitis after the conclusion of phase IIb/III program.

Both Janssen and Theravance will share profits in the respective ratios of 67% and 33% with potential sales in the United States and expenses related to a potential phase III program.

Theravance’ shares have underperformed the industry in a year’s time. The stock has lost 8.6% versus the industry’s 2.6% increase.

Theravance is focused on using targeted JAK inhibitors for treatment of a range of inflammatory intestinal diseases. Around 900,000 and 700,000 patients in the United States are affected with ulcerative colitis and Crohn's Disease, respectively. Hence, successful development of the candidate will offer a huge boost to the company’s top line.

Apart from TD-1473, Theravance’s pipeline includes promising candidates like revefenacin. Revefenacin is under review in the United States for treatment of COPD.

Zacks Rank & Key Picks

Theravance carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the health care sector are Exelixis, Inc. EXEL and XOMA Corporation XOMA, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exelixis’ earnings per share estimates have been revised upward from 72 cents to 77 cents for 2018 over the last 60 days. The company pulled off a positive surprise in all the trailing four quarters with an average beat of 572.92%. Share price of the company has surged 37.6% in a year’s time.

XOMA’s loss per share estimates have narrowed from 99 cents to 42 cents for 2018 over the last 60 days. The company came up with an average beat of 47.92%. The stock has skyrocketed 556.9% in the last 12 months.

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