LONDON Shares in GlaxoSmithKline (GSK.L) gained 3.2 percent on Thursday after a U.S. panel recommended approval of new lung drug Breo Ellipta.
The inhaled drug to treat smoking-related lung damage has been developed with GSK's partner Theravance (THRX.O).
The green light came from an advisory panel to the U.S. Food and Drug Administration. Britain's biggest drugmaker may still face a battle to convince patients and doctors to use the new product widely.
The decision is a relief for investors, who had been worried that some mixed clinical trial results might result in the panel of experts snubbing Breo, which GSK is banking on as a replacement for its ageing top-seller Advair.
Deutsche Bank analysts said they now assumed U.S. Breo revenues of around 300 million pounds by 2016, from zero previously, and forecast GSK's respiratory franchise would grow from 7.3 billion pounds in 2012 to more than 8 billion in 2016.
Still, Breo may not fly off the shelves. Tim Anderson of Bernstein said patients and doctors were generally happy with Advair and that, because Breo was only a slight improvement, it was unlikely to see rapid adoption.
Glaxo and Theravance are hoping the once-daily delivery of Breo, in particular, will make their drug more attractive.
Analysts at Jefferies, meanwhile, said there was still a 50 percent chance that the FDA might delay final approval of Breo - partly because it has little time to assess the comments from its panel of outside experts. The agency is due to give its verdict on the medicine by May 12.
Glaxo and Theravance are also jointly developing another chronic obstructive pulmonary disease (COPD) drug called Anoro, which some analysts believe could be a bigger seller.
(Reporting by Ben Hirschler; Editing by Tom Pfeiffer)