Royalty Pharma plc (Nasdaq: RPRX) today announced that it has
agreed to acquire a royalty interest in TRELEGY ELLIPTA (Trelegy)
from Theravance Biopharma, Inc. (Nasdaq: TBPH) and Innoviva, Inc.
(Nasdaq: INVA) for $1.31 billion in cash up front and up to $300
million in additional payments contingent on the achievement of
certain sales milestones. The acquisition is expected to close
within ten business days.
Trelegy, marketed by GSK, is a combination of an
inhaled corticosteroid (fluticasone furoate) and two
bronchodilators (umeclidinium, a long-acting muscarinic antagonist,
and vilanterol, a long-acting β2 adrenoreceptor agonist) in a
single delivery device administered once-daily for the maintenance
treatment of chronic obstructive pulmonary disease (COPD) and the
maintenance treatment of asthma in patients aged 18 years and
older(2). Many moderate to severe COPD and asthma patients still
experience symptoms and Trelegy has been shown to meaningfully
improve lung function and quality of life, as well as reduce
exacerbations. In 2021, Trelegy generated sales of $1.68 billion,
an increase of 57% at constant exchange rates versus the prior
year.
“We are excited to acquire this royalty from Theravance and
Innoviva,” said Pablo Legorreta, Royalty Pharma’s founder and Chief
Executive Officer. “Trelegy is the leading triple combination
therapy for COPD and asthma and adds another important, rapidly
growing blockbuster therapy to our royalty portfolio. Additionally,
providing capital at scale positions Theravance and Innoviva to
pursue important strategic initiatives. The transaction involves
multiple parties with different motivations and goals and once
again highlights how Royalty Pharma can facilitate complex
transactions to create win-win solutions for its partners.”
Transaction Terms
Royalty Pharma is acquiring from Theravance and Innoviva all of
the equity interests in Theravance Respiratory Company, LLC, which
is entitled to an upward tiering royalty of 6.5% to 10% on annual
worldwide Trelegy sales, payable by GSK. Royalty Pharma will pay to
Theravance 85% of the royalties in respect of ex-U.S. net sales
after June 30, 2029 and 85% of the royalties in respect of U.S. net
sales after December 31, 2030.
Royalty Pharma is also providing Theravance $25 million in
upfront funding and a potential $15 million regulatory milestone to
support the clinical development of ampreloxetine, an
investigational once-daily norepinephrine reuptake inhibitor for
the treatment of symptomatic neurogenic orthostatic hypotension in
patients with multiple system atrophy. Neurogenic orthostatic
hypotension is a rare disorder in which the autonomic system fails
to regulate blood pressure properly, resulting in low blood
pressure upon standing. In exchange, Royalty Pharma will receive a
low- to mid-single digit royalty on worldwide sales of
ampreloxetine.
Trelegy Financial Contribution
The purchase of royalties on Trelegy will further diversify
Royalty Pharma’s portfolio with a premier, blockbuster therapy.
Based on the current analyst consensus estimate, Royalty Pharma
expects this transaction to add at least $200 million to Adjusted
Cash Receipts(1) (non-GAAP) in 2025, resulting in enhanced
long-term growth.
Royalty Pharma expects to fund this transaction with existing
cash on the balance sheet and to maintain significant financial
capacity to deploy capital in additional value-creating
opportunities.
Advisors
Goodwin Procter, Jones Day and Maiwald acted as
legal advisors to Royalty Pharma.
About Royalty Pharma
Founded in 1996, Royalty Pharma is the largest buyer of
biopharmaceutical royalties and a leading funder of innovation
across the biopharmaceutical industry, collaborating with
innovators from academic institutions, research hospitals and
non-for-profits through small and mid-cap biotechnology companies
to leading global pharmaceutical companies. Royalty Pharma has
assembled a portfolio of royalties which entitles it to payments
based directly on the top-line sales of many of the industry’s
leading therapies. Royalty Pharma funds innovation in the
biopharmaceutical industry both directly and indirectly - directly
when it partners with companies to co-fund late-stage clinical
trials and new product launches in exchange for future royalties,
and indirectly when it acquires existing royalties from the
original innovators. Royalty Pharma’s current portfolio includes
royalties on around 35 commercial products, including AbbVie and
Johnson & Johnson’s Imbruvica, Johnson & Johnson’s Tremfya,
Astellas’ and Pfizer’s Xtandi, Biogen’s Tysabri, Gilead’s Trodelvy,
Novartis’ Promacta, Vertex’s Kalydeco, Orkambi, Symdeko and
Trikafta, and 10 development-stage therapies.
Forward-Looking Statements
The information set forth herein does not purport to be complete
or to contain all of the information you may desire. Statements
contained herein are made as of the date of this document unless
stated otherwise, and neither the delivery of this document at any
time, nor any sale of securities, shall under any circumstances
create an implication that the information contained herein is
correct as of any time after such date or that information will be
updated or revised to reflect information that subsequently becomes
available or changes occurring after the date hereof. This document
contains statements that constitute “forward-looking statements” as
that term is defined in the United States Private Securities
Litigation Reform Act of 1995, including statements that express
the company’s opinions, expectations, beliefs, plans, objectives,
assumptions or projections regarding future events or future
results, in contrast with statements that reflect historical facts.
Examples include discussion of Royalty Pharma’s strategies,
financing plans, growth opportunities and market growth. In some
cases, you can identify such forward-looking statements by
terminology such as “anticipate,” “intend,” “believe,” “estimate,”
“plan,” “seek,” “project,” “expect,” “may,” “will,” “would,”
“could” or “should,” the negative of these terms or similar
expressions. Forward-looking statements are based on management’s
current beliefs and assumptions and on information currently
available to the company. However, these forward-looking statements
are not a guarantee of Royalty Pharma’s performance, and you should
not place undue reliance on such statements. Forward-looking
statements are subject to many risks, uncertainties and other
variable circumstances, and other factors. Such risks and
uncertainties may cause the statements to be inaccurate and readers
are cautioned not to place undue reliance on such statements. Many
of these risks are outside of Royalty Pharma’s control and could
cause its actual results to differ materially from those it thought
would occur. The forward-looking statements included in this
document are made only as of the date hereof. Royalty Pharma does
not undertake, and specifically declines, any obligation to update
any such statements or to publicly announce the results of any
revisions to any such statements to reflect future events or
developments, except as required by law. Certain information
contained in this document relates to or is based on studies,
publications, surveys and other data obtained from third-party
sources and Royalty Pharma’s own internal estimates and research.
While Royalty Pharma believes these third-party sources to be
reliable as of the date of this document, it has not independently
verified, and makes no representation as to the adequacy, fairness,
accuracy or completeness of, any information obtained from
third-party sources. In addition, all of the market data included
in this document involves a number of assumptions and limitations,
and there can be no guarantee as to the accuracy or reliability of
such assumptions. Finally, while the company believes its own
internal research is reliable, such research has not been verified
by any independent source. For further information, please
reference Royalty Pharma’s reports and documents filed with the
U.S. Securities and Exchange Commission (“SEC”) by visiting EDGAR
on the SEC’s website at www.sec.gov.
Notes
(1) |
Adjusted Cash Receipts is a measure calculated with inputs directly
from the statements of cash flows and includes (1) royalty
receipts by product: (i) cash collections from royalty assets
(financial assets and intangible assets), (ii) Other royalty
cash collections, (iii) Distributions from equity method
investees, plus (2) Proceeds from available for sale debt
securities, and less (1) Distributions
to non-controlling interests, which represents
contractual distributions of royalty receipts and proceeds from
available for sale debt securities to our
historical non-controlling interests related to the
Legacy Investors Partnerships and Royalty Pharma Select Finance
Trust. See Royalty Pharma’s Annual Report on
Form 10-K filed with the SEC on February 15, 2022
for additional discussion. See GAAP
to Non-GAAP reconciliation in the Company’s Current
Report on Form 8-K dated May 5, 2022. |
|
|
(2) |
TRELEGY ELLIPTA has not been
authorized for the treatment of asthma in the European Union. |
|
|
(3) |
Adjusted Cash Flow is defined as
Adjusted EBITDA less (1) Development-stage funding
payments—ongoing, (2) Development-stage funding payments –
upfront and milestones, (3) Interest paid, net
of Interest received, (4) Investments in equity method
investees and (5) Other (including Derivative
collateral posted, net of Derivative collateral
received and Termination payments on derivative
instruments) plus (1) Contributions
from non-controlling interests- R&D, all
directly reconcilable to the statements of cash flows. See GAAP
to Non-GAAP reconciliation in the Company’s Current
Report on Form 8-K dated May 5, 2022. |
|
|
(4) |
Adjusted EBITDA is important to
lenders and is defined under the credit agreement as Adjusted Cash
Receipts less payments for operating and professional costs.
Operating and professional costs are comprised of Payments for
operating and professional costs from the statements of cash
flows. See GAAP to Non-GAAP reconciliation in the
Company’s Current Report on Form 8-K dated May 5,
2022. |
|
|
Use of Non-GAAP Measures
Adjusted Cash Receipts, Adjusted EBITDA and Adjusted Cash Flow
are non-GAAP measures presented as supplemental measures
to Royalty Pharma’s GAAP financial performance.
These non-GAAP financial measures exclude the impact of
certain items and therefore have not been calculated in accordance
with GAAP. In each case, because operating performance is a
function of liquidity, the non-GAAP measures used by
management are presented and defined as supplemental liquidity
measures. Royalty Pharma cautions readers that amounts presented in
accordance with the definitions of Adjusted Cash Receipts, Adjusted
EBITDA and Adjusted Cash Flow may not be the same as similar
measures used by other companies. Not all companies and analysts
calculate the non-GAAP measures Royalty Pharma uses in
the same manner. Royalty Pharma compensates for these limitations
by using non-GAAP financial measures as supplements to
GAAP financial measures and by presenting the reconciliations of
the non-GAAP financial measures to their most comparable
GAAP financial measures, in each case being net cash provided by
operating activities.
Royalty Pharma believes that Adjusted Cash Receipts and Adjusted
Cash Flow provide meaningful information about its operating
performance because the business is heavily reliant on its ability
to generate consistent cash flows and these measures reflect the
core cash collections and cash charges comprising its operating
results. Management strongly believes that Royalty Pharma’s
significant operating cash flow is one of the attributes that
attracts potential investors to its business.
In addition, Royalty Pharma believes that Adjusted Cash Receipts
and Adjusted Cash Flow help identify underlying trends in the
business and permit investors to more fully understand how
management assesses the performance of the company, including
planning and forecasting for future periods. Adjusted Cash Receipts
and Adjusted Cash Flow are used by management as key liquidity
measures in the evaluation of the company’s ability to generate
cash from operations. Both measures are an indication of the
strength of the company and the performance of the business.
Management uses Adjusted Cash Receipts and Adjusted Cash Flow when
considering available cash, including for decision-making purposes
related to funding of acquisitions, voluntary debt repayments,
dividends and other discretionary investments. Further,
these non-GAAP financial measures help management, the
audit committee and investors evaluate the company’s ability to
generate liquidity from operating activities.
TRELEGY and ELLIPTA are trademarks of the GSK group of
companies.
Royalty Pharma Investor Relations and
Communications:+1 (212) 883-6772ir@royaltypharma.com
Theravance Biopharma (NASDAQ:TBPH)
Historical Stock Chart
From Mar 2024 to Apr 2024
Theravance Biopharma (NASDAQ:TBPH)
Historical Stock Chart
From Apr 2023 to Apr 2024