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May 13, 2013

Elan Bets $1B on Theravance/GSK Respiratory Drugs

  • Theravance and Elan have entered into a $1 billion royalty participation agreement through which the latter firm will purchase interest in potential future payments related to four respiratory programs partnered with GlaxoSmithKline.

    Under the terms of the agreement, Elan will make a one-time cash payment to Theravance for a 21% participation interest in potential future royalty payments from the four programs—RELVAR™ or BREO™ ELLIPTA™ (approved last week by the U.S. FDA for the treatment of chronic obstructive pulmonary disease), ANORO™ ELLIPTA™, MABA (Bifunctional Muscarinic Antagonist-Beta2 Agonist) monotherapy (GSK961081/MABA '081), and VI monotherapy, all developed through the LABA collaboration with GSK—when, as, and if received. Theravance is entitled to receive royalties from GSK of 15% of the first $3 billion combined annual global net sales, plus 5% of such sales above $3 billion.

    Last month, S. San Francisco-based Theravance announced plans to separate its late-stage partnered respiratory assets from its biopharma operations, creating two independent and publicly traded companies. The first, Royalty Management Company, will be managing development and commercial responsibilities under the LABA collaboration with GSK, Theravance said.

    “We are very excited to partner with Elan in a transaction that recognizes the significant value of four programs from our GSK collaborations targeted at respiratory disease,” Theravance CEO Rick Winningham said in a statement. “This agreement complements our strategy to facilitate and accelerate the return of capital to our stockholders and build value, consistent with our recently announced plan to separate Theravance into two entities, Royalty Management Company and Theravance Biopharma.”

    Added Kelly Martin, Elan CEO: “This transaction, upon closing, will immediately diversify our business with an investment in four high quality and late stage clinical assets within a large and growing therapeutic area.”

    Elan noted that this transaction is subject to shareholder approval, through a vote it plans to hold within 35 days. If approved, the firm said it expects the transaction to be completed by the end of next month.

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