In the end, it's the royalty

Despite the positive Phase IIb asthma data reported by Theravance Inc. and partner GlaxoSmithKline plc for two of their long-acting adrenergic receptor beta 2 agonists, investors initially pushed THRX's share price down 3% on the news. A close look at the terms of the companies' 2002 deal to pool four LABAs from each company hints at the reason - milestone payments.

The goal of the deal is to develop a once-daily version of Advair, GlaxoSmithKline's blockbuster drug for asthma and chronic obstructive pulmonary disease (COPD). Advair, a combination of the adrenergic receptor alpha 2 agonist salmeterol and the corticosteroid fluticasone, is dosed twice daily. It posted FY06 sales of £3.3 billion ($6.4 billion)...