Theravance Inc (THRX), Elan Corporation, plc (ADR) (ELN), GlaxoSmithKline plc (ADR) (GSK): Biotech Companies Breaking Up

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Unlike PDL, the holding company will only have one partner, making it ripe for a takeout. Theravance Inc (NASDAQ:THRX), of course, has long been speculated as a takeout target of Glaxo, but the split makes things much cleaner; pharmas don’t like to pay extra for entire biotech companies if they don’t want all the assets. The new entity makes for a clean takeout of the assets by GlaxoSmithKline plc (ADR) (NYSE:GSK) to avoid paying the royalty. Of course, GlaxoSmithKline plc (ADR) (NYSE:GSK) could have purchased the full rights to the assets directly from Theravance Inc (NASDAQ:THRX), so one has to assume that either GlaxoSmithKline plc (ADR) (NYSE:GSK) isn’t interested at the moment, or that Thervance’s management wasn’t willing to let it go for a price Glaxo was willing to pay.

Either way, splitting into two biotech companies will make it easier for GlaxoSmithKline plc (ADR) (NYSE:GSK) to make a move when/if it makes financial sense.

The article Biotech Companies Breaking Up originally appeared on Fool.com and is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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