Theravance Spikes on $1 Billion Deal for COPD Treatment

Michael Teague |

Shares for biopharmaceutical developer and marketer Theravance (THRX) are on a tear to start off the week, after the company announced a last-minute $1 billion royalties deal with Irish drug maker Elan Corporation (ELN).

Elan has recently been fending off take-over efforts by Royalty Pharma, who last month bid $5.7 billion for the company. For $1 billion, Elan will acquire 21 percent of the royalties that Theravance receives from its partnership with Glaxo SmithKline (GSK) from a series of four respiratory drugs currently under development by the two U.S. companies.

The deal includes, Breo Ellipta, a new treatment for chronic obstructive pulmonary disease (COPD) which was just approved by the FDA last Friday, along with another COPD treatment called Anoro Ellipta, as well as two others that are in earlier stages of development.

The move comes as Elan attempts to expand past its focus on neurological treatments after the company sold half of its stake in the multiple sclerosis drug Tysabri to the U.S. company Biogen Idec (BIIB) for $3.25 billion and royalties.

While Elan denies the move has anything to do with Royalty Pharma’s take-over bid, the company had intended to use the Tysabri sale to finance a purchase that would buffer its limited portfolio.

Meanwhile, Theravance CEO Rick Winningham said in a press release on Monday that the 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”.

Shares for Theravance were up over 15 percent on Monday to $40.32.

Elan Corporation was down almost 3 percent to $11.43, while Glaxo SmithKline edged a slight 0.2 percent gain to $51.72.

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Companies

Symbol Name Price Change % Volume
BIIB Biogen Inc. 312.58 -2.23 -0.71 881,641
CTT CatchMark Timber Trust Inc. Class A 11.59 -0.11 -0.94 119,571
ELN Elan Corp. PLC ADS n/a n/a n/a 0
GSK GlaxoSmithKline PLC 43.42 -0.16 -0.37 2,128,068
THRX Theravance Inc n/a n/a n/a 0

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