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What Are Theravance's GSK Drugs Really Worth?

With Theravance (THRX) plunging back to its June lows and investors panicking about GlaxoSmithKline's (NYSE:GSK) prospects in the respiratory market segment, the stock is worth a second look. As recent as 4 weeks ago it traded at $30 and has now lost again 25%. According to Morgan Stanley's David Friedman Theravance might be worth only $7 per share, based on his below-consensus revenue estimates of $21 million for 2014 and $89 million for 2015.

It is obviously almost impossible to come up with reliable sales estimates for the drugs Theravance has developed together with GSK over the past decade, as GSK doesn't publish its launch strategies and there are a lot of unknown factors that could...

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