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Theravance Biopharma (TBPH) to Sell Trelegy Royalty Interests

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Theravance Biopharma (TBPH - Free Report) recently announced that it has entered into a definitive agreement with Royalty Pharma (RPRX - Free Report) to sell all of the former’s equity interests in Theravance Respiratory Company LLC for over $1.5 billion in potential value.

Theravance Respiratory Company, LLC represents 85% economic interest in the sales-based royalty rights on the global net sales of GlaxoSmithKline’s (GSK - Free Report) once-daily single inhaler triple therapy for COPD and asthma, Trelegy Ellipta. With the deal in place, royalty interests for GSK’s Trelegy Ellipta now belong to Royalty Pharma.

Theravance is entitled to royalties equal to 5.5-8.5% of annual global Trelegy product sales, payable by GSK.

Per the terms of the agreement, Theravance will receive an upfront cash payment of approximately $1.1 billion, up to $250 million in additional milestone payments from Royalty Pharma, subject to the achievement of certain Trelegy net sales thresholds between 2023 and 2026.

Royalty Pharma will also have to pay Theravance 85% of the Trelegy royalties for ex-U.S. net sales beginning Jul 1, 2029, and 85% of the royalties for net sales in the United States beginning Jan 1, 2031.

Additionally, Royalty Pharma will be investing $40 million in Theravance to support the clinical development of the latter’s investigational pipeline candidate, ampreloxetine, for the treatment of symptomatic neurogenic orthostatic hypotension (nOH). Under the terms of the deal, Theravance will receive an upfront payment of $25 million and an additional $15 million upon the first regulatory approval of ampreloxetine.

In exchange, Royalty Pharma will receive a low- to mid-single digit royalty on the global sales of ampreloxetine.

The transaction with Royalty Pharma is expected to close in ten business days, subject to certain limited closing conditions.

Shares of Theravance rallied 16.22% in the after-hours on Jun 13, post the deal announcement. The stock has dropped 21.9% year-to-date against the industry’s 21.3% decline.


Presently TBPH depends on its sole product, Yupelri (revefenacin), for its profits. It is currently putting efforts toward the commercialization of Yupelri.

Theravance is also continuing its efforts to develop its investigational pipeline candidate ampreloxetine, for the treatment of patients with nOH. The company expects to initiate another phase III study with ampreloxetine in early 2023. data from its previous phase III study.

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Royalty Pharma is also acquiring 15% of Innoviva’s (INVA - Free Report) equity interests in Theravance Respiratory Company, LLC, for an upfront cash payment of $282 million and a potential $50 million subject to Trelegy’s sales-based milestone payment. Post the announcement of the deal, INVA shares are up 6.02% in the after-hours on Jun 13.

Innoviva partnered with GlaxoSmithKline on several respiratory assets and is entitled to receive royalties from GSK on the sales of respiratory drugs like Breo Ellipta, Anoro Ellipta and Trelegy Ellipta.

The purchase of Trelegy royalties will diversify Royalty Pharma’s portfolio with a premier, triple-combination therapy for COPD and asthma patients.

Zacks Rank

Theravance Biopharma currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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