UPDATE 2-Glaxo pulmonary drug seen closer to approval by FDA -analysts

* FDA review of Glaxo/Theravance drug backs efficacy

* FDA notes some inconsistencies in safety data

* Analysts believe review broadly positive (Adds analyst comments, stock prices)

By Toni Clarke

WASHINGTON, Sept 6 (Reuters) - A U.S. Food and DrugAdministration review of GlaxoSmithKline Plc andTheravance Inc's experimental drug to treat chronicobstructive pulmonary disease bodes well for approval, analystssaid on Friday.

The review, posted on the FDA's website, comes ahead of ameeting next Tuesday of outside medical experts who will discussthe drug and recommend whether the agency should approve it. TheFDA is not required to follow the advice of its expert panelsbut typically does so.

The report, written by FDA reviewer Dr Jennifer RodriguezPippins, notes that the drug appears to work at the doseproposed by the company, but that the safety database, whilelarge, is "not entirely conclusive, particularly in regards tocardiovascular safety." The database lists the side effectsreported in clinical trials.

Overall, she said, the cardiovascular safety profile wasunremarkable and the number of major heart-related problems wasfairly low, but imbalances were found when subsets of data wereexamined, particularly in nonfatal heart attacks.

"Whether these imbalances and discrepancies constitute asafety signal when taken in the context of the completedevelopment program will be a topic for further discussion," shesaid.

The drug, Anoro, is an inhaled combination of vilanterol, along-acting beta-agonist that is designed to open the airways,and umeclidinium, a long-acting muscarinic receptor antagonist,which works to improve lung function.

Analysts expect the drug to generate sales of more than $2billion a year by 2018 according to the average estimate of sixanalysts polled by Thomson Reuters. A decision is expected byDec. 18.

Chronic obstructive pulmonary disease, or COPD, is thethird-leading cause of death in the United States, according tofederal data. It is a condition often associated with smokingthat can include emphysema, chronic bronchitis, or both.

Investment analysts interpreted the FDA staff reviewpositively.

James Gordon, an analyst at J.P. Morgan, said in a researchnote that while he expects a good deal of discussion around thecardiovascular safety data, "we don't expect the data on thisquestion to be a barrier to approval, as the FDA on balanceseems comfortable."

An imbalance in the number of nonfatal heart attacks wasseen in some shorter trials testing for efficacy but not in thelonger-term safety trial, which the FDA said was "reassuring."

Graham Parry, an analyst at Merrill Lynch, said in aresearch report that investors had been concerned that thecompanies may not have selected the right once-daily dose, andthat the FDA might request twice-daily dosing trials.

However, he said, "FDA appears to back GSK's dose selectionincluding Anoro's once-daily dosing."

In May, the FDA approved another drug for COPD made by thetwo companies called Breo. Breo is an inhaledcombination of vilanterol and the corticosteroid fluticasonefuroate, which reduces inflammation. That drug is expected togenerate $1.9 billion by 2018.

Theravance plans to split into two publicly tradedcompanies, separating the respiratory drugs it is developingwith Glaxo from its other operations.

After the split, the company holding the respiratory drugswill be called Royalty Management Co. The second company, to becalled Theravance Biopharma, will focus on developing drugs forrare diseases.

The move has fueled speculation that Glaxo, which owns 27percent of Theravance, may eventually buy Theravance's mostlucrative products.

Theravance shares were up 2.8 percent at $37.75 on theNasdaq on Friday morning, while GlaxoSmithKline shares were down0.2 percent at 1,650.00 pence in London. (Editing by Gerald E. McCormick, Grant McCool and MatthewLewis)