Royalty Pharma ( NASDAQ: RPRX ) has agreed to buy a royalty interest in pulmonary disease and asthma treatment Trelegy Ellipta from Theravance Biopharma ( NASDAQ: TBPH ) and Innoviva ( NASDAQ: INVA ) for $1.3B in cash up front and up to $300M in milestone payments.
RPRX stock was down 0.8% after hours, while TBPH jumped 28.7% and INVA gained 10.7% .
The deal is expected to expand RPRX's portfolio with the addition of a blockbuster drug and add at least $200M to adj. cash receipts in 2025, Royalty Pharma ( RPRX ) said in a statement on Wednesday.
Trelegy, marketed by GlaxoSmithKline ( GSK ), brought in sales of £1.22B in 2021.
As per the terms of the deal, RPRX is acquiring from TPBH and INVA all of their equity interest in Theravance Respiratory Company, which is entitled to a royalty of 6.5% to 10% on annual worldwide Trelegy sales payable by GSK.
Theravance ( TBPH ) has an 85% stake in Theravance Respiratory Company, while Innoviva ( INVA ) has a 15% stake.
Royalty Pharma ( RPRX ) will pay Theravance ( TBPH ) 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 Dec. 31, 2030.
RPRX will also provide TBPH $25M in upfront funding and a potential $15M in milestone payments to support the clinical development of ampreloxetine, an inhibitor for the treatment of hypotension.
TBPH in a separate release said it would get an upfront cash payment of $1.1B and potentially up to $250M in milestone payments contingent upon certain Trelegy net sales thresholds between 2023 and 2026.
INVA separately said it would get an upfront cash payment of about $282M and potentially up to $50M in milestone payments contingent upon Trelegy sales.
Goodwin Procter, Jones Day and Maiwald acted as legal advisors to RPRX.
Evercore and MTS Partners acted as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to TBPH.
Willkie Farr & Gallagher LLP served as legal advisor and Moelis & Company LLC served as financial advisor to INVA.
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Royalty Pharma to buy royalty interest in Trelegy drug from Theravance, Innoviva for $1.3B