After a devastating trial fail last year, Theravance Biopharma has inked a major deal to sell its Trelegy royalties to Royalty Pharma.
The company agreed to sell its entire stake in Theravance Respiratory Company, which holds 85% of the royalty rights on sales of GSK’s asthma and COPD inhaler Trelegy. The deal is worth more than $1.5 billion in potential value, and Theravance will receive an upfront cash payment of about $1.31 billion. The remaining $250 million will be payable if the drug meets certain sales thresholds.
Theravance plans to use the money to bolster its balance sheet and return money to investors. After paying down its debt and paying taxes and transaction fees, the company expects to have $430 million in cash on its balance sheet. The company plans to return money to investors only after working down its debt.
Aside from buying Trelegy royalty rights, Royalty Pharma also invested $40 million in ampreloxetine, a Theravance therapy that failed to achieve positive results in a phase 3 trial last September. The flopped trial caused the company to axe 75% of its staff.
To support development of the drug, Royalty paid $25 million upfront and will pay another $15 million upon regulatory approval. It'll also receive future royalties of 2.5% based on annual global sales of up to $500 million and 4.5% on sales over $500 million. Theravance plans to initiate another phase 3 trial for the drug in early 2023.
That’s not the only royalty deal of the week. Ultragenyx on Thursday agreed to sell 30% of its royalty interest in X-linked hypophosphatemia medicine Crysvita to OMERS, one of Canada's largest benefit pension plans. OMERS’ royalty payments based on the drug's net sales will start in April 2023.
Crysvita has generated more than $1.3 billion in net sales in its first four years on the market, Ultragenyx says. The financing from OMERS “bolsters Ultragenyx’s balance sheet, funds the ongoing commercialization of multiple approved medicines,” and will help pay for R&D, the company said.