Four months after Theravance Biopharma shut down its R&D unit, laid off half its staff and signaled it was up for sale, the Dublin-based company has entered into an agreement to be bought out by Zymeworks.
Vancouver, Canada-based Zymeworks is paying $929 million in cash, plus a contingent value right (CVR) tied to certain future dealmaking activities. The transaction allows the cancer specialist to branch out into the respiratory space as it brings Theravance’s Viatris-partnered chronic obstructive pulmonary disease (COPD) therapy Yupelri.
Zymeworks has agreed to pay $17 per share, which is a 4% discount on Theravance’s closing price from Friday.
The companies also pointed out that it is a 22% premium on Theravance’s share price from market close on March 3 when it revealed that its blood pressure candidate ampreloxetine had come up short a phase 3 trial in symptomatic neurogenic orthostatic hypotension (nOH). On the same day, Theravance said it was slashing its workforce and considering strategic options, including a sale.
Under the CVR, Theravance shareholders would be entitled to 80% of net proceeds realized from any future business development transactions involving ampreloxetine over the next 10 years, with the remaining 20% to Zymeworks, the companies said.
Theravance holds a 35% interest in Yupelri, which was approved in 2018, bringing an annualized cash flow of between $60 million and $70 million. The nebulized long-acting muscarinic antagonist (LAMA) maintenance therapy generated sales of $267 million last year for a 12% year-over-year increase.
The transaction, which the companies expect to close in the second half of this year, comes two years after Theravance initiated another strategic review, which led to it selling off the last of its royalties for asthma and COPD blockbuster inhaler Trelegy to GSK for $225 million.
“We believe this transaction recognizes the value of our assets, including our interest in Yupelri, the potential Trelegy milestone payment, a robust balance sheet and Irish tax attributes,” Susannah Gray, Theravance’s independent chair of the board, said in a release.
Meanwhile, Zymeworks will benefit immediately from cash flow generated by Yuelri, while its HER2-positive biliary tract cancer drug Ziihera takes hold in the market. The Jazz-partnered treatment, which has been projected (PDF) by Royalty Pharma to achieve sales of $2.6 billion by 2035, generated $13 million in the first quarter.
In a June 29 release, Zymeworks touted its “differentiated approach,” which enables the acquisition and active restructuring of businesses to “generate royalty-like economics with greater control, strategic flexibility and a clear focus on long-term value creation.”
“We are building a more diversified and durable business by combining partner-driven cash flows and innovative R&D, together in an integrated strategic approach to build long-term stockholder value,” Kenneth Galbraith, the chairman and CEO of Zymeworks, added. “Upon closing, this acquisition meaningfully expands and diversifies future revenue sources for our partnered product portfolio, with an expected near-term impact on commercial royalty revenue.”