Theravance Biopharma (TBPH) to sell the royalty rights of TRELEGY ELLIPTA to Royalty Pharma (RPRX) for approximately $1.1 billion in upfront cash with over $1.5 billion in potential total value



News and research before you hear about it on CNBC and others. Claim your one week free trial for StreetInsider Premium here.


Theravance Biopharma, Inc. (“Theravance Biopharma” or the “Company”) (NASDAQ: TBPH) announced today that it has entered into a definitive agreement to sell all of its units in Theravance Respiratory Company, LLC, representing its economic interest of 85% in the sales-based royalty fee on GSK’s worldwide net sales of TRELEGY ELLIPTA (“TRELEGY”) to Royalty Pharma (NASDAQ: RPRX) for more than $1.5 billion in total potential value (the “TRELEGY Royalty Transaction”). The transaction aims to deliver short, medium and long-term value to the Company with an upfront cash payment of approximately $1.1 billion, up to $250 million in additional milestone payments depending on the achievement of certain TRELEGY net sales thresholds between 2023 and 2026 and royalties in subsequent years to the Company providing the possibility of receiving an estimated NPV of approximately $200 million.1

Immediately following the announcement of the TRELEGY royalty transaction, Theravance Biopharma intends to initiate a multi-step process to eliminate its outstanding debt and return capital to shareholders. This process should include:

  • First, the repayment of the Company’s non-recourse TRELEGY Notes for approximately $420 million upon closing of the TRELEGY Royalty Transaction;
  • Second, the initiation of a tender offer to withdraw the principal amount of approximately $230 million of the Company’s 2023 senior convertible bonds, at par, shortly thereafter and subject to closing the TRELEGY royalty operation; and
  • Third, the implementation of a capital return plan to shareholders, to be finalized following the repayment of the debt.

After paying off debt, estimated taxes and transaction costs, the Company estimates that it has approximately $430 million of cash on its balance sheet.

At the end of this process, Theravance Biopharma expects to be well capitalized with a simplified and debt-free balance sheet. The Company now expects to approach cash flow break-even in the second half of 2022 without cash flow from its TRELEGY royalty interest, thanks to disciplined R&D spending and YUPELRI® growth.

Additionally, Royalty Pharma’s investment in ampreloxetine validates its potential as a therapy to manage symptomatic neurogenic orthostatic hypotension (nOH) in patients with MSA. Royalty Pharma’s $40 million investment in ampreloxetine includes an upfront payment of $25 million and an additional payment of $15 million upon first regulatory approval of ampreloxetine2. In return, Royalty Pharma will receive future unsecured royalties of 2.5% on annual worldwide net sales up to $500 million and 4.5% on annual worldwide net sales above $500 million.

“Royalty Pharma is an industry leader in identifying world-class therapies and structuring creative financing transactions that support innovative royalty-holding biopharmaceutical companies. We believe this transaction for the TRELEGY royalties provides the strategic value of our economic interest in this important therapy for COPD and asthma. patients,” said Rick E Winningham, Chairman and CEO of Theravance Biopharma. “This transaction underscores our commitment to maximizing shareholder value by eliminating debt, accelerating the return of capital to shareholders and strengthening our position as a biopharmaceutical leader. Additionally, Royalty Pharma’s additional investment in ampreloxetine supports the value creation potential of this promising therapy for MSA. We strongly believe that upon closing of this transaction, Theravance Biopharma will operate from a position of financial strength and will continue to focus on the continued commercial performance of YUPELRI in the United States. »

“This transaction reflects our confidence in the significant value TRELEGY brings as a triple therapy for COPD and asthma patients, and GSK’s continued global commercial excellence,” said Pablo Legorreta, Founder and CEO of Royalty Pharma. . “This transaction highlights our ability to provide large-scale capital and structure creative financing solutions, enabling Theravance to pursue important strategic initiatives, including the advancement of its late-stage, internally discovered therapeutic ampreloxetine. .

Theravance Biopharma will continue to pursue its overriding purpose and objectives as a biopharmaceutical company focused on delivering medicines that make a difference® by building on its co-commercial efforts of YUPELRI®, a measured investment in the respiratory portfolio of the company and a focused effort to bring ampreloxetine to the MSA community. The company plans to initiate the Phase 3 clinical trial with ampreloxetine in early 2023 and share additional details regarding the clinical study later this year. With recent guidance from the U.S. Food and Drug Administration (FDA) in a Type C meeting on key study design elements and alignment on the path to a new drug (NDA), Theravance Biopharma will conduct a new study in patients with MSA and expects the $25 million investment to fund the majority of Phase 3 costs.

The transaction with Royalty Pharma is subject to certain limited closing conditions and is expected to close up to ten business days after the date of this press release, concurrent with the redemption of the non-recourse TRELEGY notes noted above.

Advisors

Evercore and MTS Partners acted as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Theravance Biopharma. Goodwin Procter acted as legal counsel to Royalty Pharma.

Conference call and live webcast today at 5:00 p.m. ET

Theravance Biopharma will host a conference call and live webcast with slides today at 5:00 p.m. ET / 2:00 p.m. PT / 10:00 p.m. IST. To participate in the live call by phone, please dial (800) 225-9448 from the United States or (203) 518-9708 for international callers, using confirmation code TBPH0713. Those interested in listening to the conference call live via the Internet can do so by visiting Theravance Biopharma’s website at www.theravance.comunder Investors, Presentations and Events.

A replay of the conference call will be available on Theravance Biopharma’s website for 30 days until August 12, 2022. An audio replay will also be available until 11:59 p.m. ET on July 20, 2022, by dialing (800) 839 -2485 from within the United States or (402) 220-7222 for international calls.

Previous The District 65 Council will discuss new safety measures this morning
Next Instant trickles offer states a chance to increase safety and save money