GlaxoSmithKline shares soar after FDA approves lung drug

Sales of Breo Ellipta forecast to reach £703 million by 2020

Shares in pharmaceutical giant GlaxoSmithKline rose to the highest price in 11 years after advisers to the US Food and Drug Administration recommended that experimental treatment Breo Ellipta be approved to treat a lung disorder.

The shares were up 3.1 per cent at £16.56 in London earlier, giving the company a market value of £81.2 billion.

The positive panel vote may mean a broad label approval for the drug, which was developed to treat chronic obstructive pulmonary disease, according to Bloomberg Industries analysts.

The FDA is expected to decide whether to approve the treatment, which the London-based drugmaker licensed from Theravance, by May 12th.

"The benign tone of the FDA briefing documents makes us materially more upbeat over the near-term approval," Andrew Baum, an analyst at Citigroup, wrote in a note to investors.

He recommends buying the shares. It's unlikely the FDA will block final approval despite side effects, Tim Anderson, an analyst at Sanford C. Bernstein, wrote in a note.

He forecasts that sales of Breo Ellipta will reach £703 million in 2020. Anderson has a "market perform" rating on the shares.

Glaxo is Theravance's largest shareholder, with 27 per cent of the South San Francisco, California-based company's stock, according to data compiled by Bloomberg.