Theravance, flush with royalty cash, buys shares from GSK

Theravance Biopharma on Monday said it is buying back all 9.6 million of its shares owned by GSK, part of a $250 million stock repurchase plan, as it pivots away from legacy respiratory products developed in a longstanding collaboration with the U.K. drugmaker.

The deal comes nine weeks after Theravance sold off rights to its share of royalties from GSK’s blockbuster asthma drug Trelegy Ellipta to Royalty Pharma for $1.1 billion upfront and as much as $250 million in future milestone payments.

Under the buyback plan, Theravance will purchase GSK’s stake, representing about 13% of the company, at $9.75 a share, a slight discount from Friday’s closing price of $10.07. That transaction will close Tuesday.

Following that, Theravance will “in the near term” buy back $95 million in shares via a Dutch auction and then by the end of 2023 repurchase another $60 million on the open market.

Buying out GSK’s stake will help it further unwind from the collaboration with GSK, which dates back to 2002 when the two companies pooled their intellectual property to develop more effective inhaled drugs for asthma and chronic obstructive pulmonary disease. That partnership resulted in the marketed drugs Breo, Anoro and Trelegy.

As that collaboration went on, Theravance signaled it aimed to do more than be a research partner with GSK. In 2013, the company split in two. One half became Innoviva, a management company for Breo, Anoro and Trelegy royalties that has now become a biopharma investor in its own right. GSK sold its stake in Innoviva in 2021 for $392 million.

The company now known as Theravance Biopharma was founded as part of that split to develop the original company’s non-GSK research and development assets. Theravance Biopharma successfully developed the COPD drug Yupelri, which is marketed by Viatris. Yupelri generated $44 million in royalties for Theravance in 2021.

Subsequent pipeline projects have had more problems, however. In 2021, Theravance reported that two of its experimental drugs failed in clinical trials. That prompted the company to lay off 270 people, around 75% of its workforce.

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