GlaxoSmithKline plc (GSK) and Theravance, Inc, a biopharmaceutical company with a pipeline of internally discovered product candidates and strategic collaborations with pharmaceutical companies, have entered into a stock purchase agreement, under which Theravance will issue, and GSK will acquire, 10,000,000 shares of Theravance common stock at a price of $21.2887 per share, for a total investment of $212,887,000.

Following this purchase, GSK would own 25,814,421 shares of Theravance common stock, which would increase GSK’s ownership from approximately 18.3 per cent to approximately 26.8 per cent of the total outstanding capital stock of Theravance. The price per share was determined based upon a 7.5 per cent premium to the volume-weighted average price per share of Theravance common stock over the five-day period ending March 30, 2012, which was $19.8034.

The transaction is subject to certain closing conditions, including approval of Theravance’s stockholders at their Annual Meeting scheduled for May 15, 2012, and expiration of the waiting period under the Hart-Scott-Rodino Act. The transaction is expected to be completed shortly after the Theravance Annual Meeting. GSK expects to continue to account for its total stake in Theravance as an investment held at fair value, due to the existing governance agreement which places limitations on GSK's voting rights.

In November 2002, Theravance entered into a long-acting beta2 agonist (LABA) collaboration with GSK to develop and commercialize a once-daily LABA product candidate either as a single agent or in a combination medicine for the treatment of asthma and/or chronic obstructive pulmonary disease (COPD). The inhaled corticosteroid (ICS)/ LABA combination, Relovair, has now completed its phase III development and GSK intends to submit regulatory applications for COPD in the US and Europe in mid-2012.

For asthma, GSK also plans to submit an application in Europe in mid-2012 and will continue discussions with the FDA on the regulatory requirements for a US asthma indication. The long-acting muscarinic antagonist (LAMA)/LABA programme is in phase III development in COPD. In March 2004, Theravance entered into a strategic alliance with GSK, under the terms of which GSK has licensed a Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) for the treatment of COPD. This programme is currently in phase II development.

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