Innoviva, Glaxo Partnership Has Been A Lucrative One So Far

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On a day when two big mergers in the biotech industry made headlines, a fast-growing biotech appeared in Monday’s Stock Spotlight screen, not only because of big earnings and sales growth in recent quarters but also because of a bullish chart.

[ibd-display-video id=3098125 width=50 float=left autostart=true] Innoviva ( INVA ), with a market capitalization of just over $1.5 billion, is plenty liquid with a 50-day average volume of close to 800,000 shares. Formerly known as Theravance, the company also boasts solid fund sponsorship, with 347 funds owning shares at the end of the third quarter, up from 248 in the year-ago period.

Innoviva’s specialty is respiratory drugs, and a partnership with GlaxoSmithKline ( GSK ) has been lucrative as both firms make good progress with multiple next-generation chronic obstructive pulmonary disease (COPD) and asthma products.

In September, the Food and Drug Administration (FDA) approved Trelegy Ellipta as the first once-daily single inhaler triple therapy for the treatment of COPD. In November, the drug received marketing approval by European regulators.

Also in November, after positive late-stage data, Innoviva filed a supplemental new drug application with the FDA that could result in an expanded label for Trelegy Ellipta, meaning the drug could be used to treat a larger population of patients with COPD.

When Innoviva reported third-quarter results in late October, earnings per share jumped 82% from a year ago, while sales rose 46% to $48.6 million. The stock got pounded following results, but then recovered nicely over the next three months to form its latest base, a cup with handle .

For 2017, annual earnings are expected to surge 64%, with growth accelerating in 2018, rising 86%. The company hasn’t announced an earnings date yet, but last year it reported Q4 results on Feb. 8.

Headed into Monday, Innoviva was still well within buy range from a 14.61 cup-with-handle buy point. But shares were up another 3.8% in afternoon trading Monday to 15.40, putting the stock slightly past the 5% buy zone.

Note that Innoviva’s handle is only seen on the daily chart. On a weekly chart, the stock just capped its sixth straight week of price gains or no weekly loss.

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