Theravance and Elan Enter $1 Billion Royalty Participation Agreement

Theravance and Elan announced in a press release that Elan will purchase a participation interest in potential future royalty payments related to four respiratory programs partnered with GlaxoSmithKline (GSK): RELVAR ELLIPTA/BREO ELLIPTA (fluticasone furoate/vilanterol: FF/VI), ANORO ELLIPTA (umeclidinium bromide/vilanterol: UMEC/VI), MABA (Bifunctional Muscarinic Antagonist-Beta2 Agonist) monotherapy (GSK961081, or MABA '081), and vilanterol (VI) monotherapy. Under the terms of the agreement, Elan will make a one-time cash payment of $1 billion to Theravance in exchange for a 21% participation interest in the potential future royalty payments from the four programs when, as, and if received by Theravance.

In April, Theravance announced plans to separate its businesses into two independent publicly traded companies: one (Royalty Management Company) to focus on managing development and commercial responsibilities under the late-stage partnered respiratory program collaboration with GSK and the second (Theravance Biopharma) to focus on discovery, development, and commercialization of small-molecule medicines in areas of significant unmet medical need. The two companies with different business models would enable investors to align their investment philosophies with the strategic opportunities and financial objectives of the two independent companies, said Theravance in the April 25, 2013 press release. The recent agreement with Elan is consistent with this plan, said Rick E Winningham, Theravance’s CEO in the May 13 press release.

"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,” said Kelly Martin, CEO of Elan, in the May 13 press release.