UPDATED: On the ropes, GlaxoSmithKline admits to another PhIII debacle

GlaxoSmithKline's stretch of bad, ugly, not-good results just got longer. The pharma giant, which recruited more than 16,000 patients in a monumental postapproval effort to distinguish Breo Ellipta by improving the mortality rates of high-risk patients with COPD, says that study failed.

The study not only failed its primary endpoint, but it also failed key secondary endpoints, leaving the pharma giant with a disappointing product that has failed to deliver the kind of blockbuster revenue that was forecast in the heady days following its approval by the FDA. Shares of GSK's partner, Theravance ($THRX), dropped 14% on the news Tuesday afternoon.

Breo Ellipta was GlaxoSmithKline's ($GSK) top prospect in a small wave of approvals that came through two years ago, earning peak sales estimates of $1.3 billion as GSK assured investors that the pharma giant had a remedy in hand that would counter the coming generic competition to its $8 billion megablockbuster Advair, which is largely expected to be engulfed by 2020.

But the product didn't play out as planned (2014 revenue: $100 million). Meanwhile, its big home run swings at breakthrough drugs for Duchenne muscular dystrophy, heart disease and cancer (Mage A-3), all flopped in company studies, and GSK followed up by flipping out everything in oncology--except its early-stage cancer work--to Novartis ($NVS) in exchange for a dependable but dull portfolio of vaccines.

Analysts have been left wondering what the company can do now, and whether CEO Andrew Witty can survive the bleak outlook and falling profits.

"This is another unfortunate hit to GSK's lackluster R&D track record, in our view," remarked Leerink's Seamus Fernandez, especially as Breo is left looking remarkably similar to Advair as that franchise is tottering.

"Even if results had been positive, it was never clear how impactful they would be because physicians largely view Breo and Advair as interchangeable, and Advair is very well-entrenched," notes Bernstein's Tim Anderson. "With Advair likely to face true generic competition in the US in 2017 (which is why our Advair estimates are materially lower than consensus…), we felt that Breo would always be pushing uphill. In ex-US markets, it is already facing quasi-generic competition."

About the only thing keeping GSK's shares up, as Anderson notes, is its 6% dividend. That's safe, for now.

- here's the release

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