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Royalty Pharma buys rights to top-selling GSK drug in pair of deals

Dive Brief:

  • Royalty Pharma, which calls itself the largest buyer of biopharmaceutical royalties, said Wednesday it’s undertaking a two-pronged transaction to acquire royalty rights to GSK’s blockbuster respiratory drug Trelegy Ellipta.


  • The biggest part of the deal is a $1.1 billion payment to Theravance Biopharma, which holds 85% of the Trelegy royalty rights through Theravance Respiratory LLC. Royalty is buying up the rest of the rights by paying Innoviva $282 million.


  • Theravance said it will use the cash to eliminate outstanding debt, return capital to shareholders and focus on its pipeline. As part of the agreement with Royalty, Theravance will receive a $25 million investment in its experimental drug ampreloxetine, which is being developed to treat neurogenic orthostatic hypotension.

Dive Insight:

GSK’s Trelegy, used to treat patients with asthma and chronic obstructive pulmonary disease, has built a significant following among doctors. Sales grew 37% to 340 million pounds, or roughly $400 million, in the first quarter of this year.

While Theravance is giving up a steady influx of cash from royalty rights to Trelegy, it’s still eligible for future milestone and royalty payments worth as much as $450 million under the deal with Royalty. After paying down debt and accounting for various expenses, Theravance said it expects to have about $430 million in cash.

The rights sale offers a quick boost to shareholders and a cleaner balance sheet for Theravance, Brian Skorney, an analyst at Baird, wrote in a note to investors. Still, the deal means Theravance is losing control over its most valuable asset, Skorney said.

Theravance will now focus on Yupelri, an approved respiratory drug developed with Mylan, and the experimental medicine ampreloxetine, which has stumbled in clinical testing. Though Skorney is skeptical of ampreloxetine’s prospects, he views the investment from Royalty as a vote of confidence.

Theravance and GSK have had a long partnership in drug development that also resulted in an equity relationship. The British drugmaker made several purchases of Theravance shares over the years, owning more than a quarter of the original Theravance Inc. in 2012.

In 2014, Theravance split into two companies, a royalty management company and Theravance, which focused on research and development. The royalty management company, which had traded as Theravance Inc., changed its name to Innoviva in 2016. In 2021, GSK sold all its holdings in Innoviva for $392 million.

With the latest deal, Royalty is essentially reuniting the royalty rights once owned by the original Theravance. Royalty, which raised nearly $2.2 billion in an initial public offering in 2020, has a vast portfolio of royalty rights to marketed therapies, including a number of blockbuster medicines. Recently, it’s done deals with Blueprint Medicines and MorphoSys.