Theravance Biopharma sells royalty rights for $1.5 billion

Shares of US drug developer Theravance Biopharma (Nasdaq: TBPH) were up more than 17% at $10.14 pre-market, following the announcement late Wednesday that it has entered into a definitive agreement to sell all of its units in Theravance Respiratory Company, representing its 85% economic interest in the sales-based royalty rights on worldwide net sales of UK pharma major GSK's (LSE: GSK) Trelegy (fluticasone furoate/ umeclidinium/vilanterol) Ellipta to Royalty Pharma (Nasdaq: RPRX) for over $1.5 billion in potential total value.

The transaction is intended to provide near-, mid- and long-term value to the company with an upfront cash payment of around $1.1 billion, up to $250 million in additional milestone payments contingent on the achievement of certain Trelegy net sales thresholds between 2023 and 2026 and outer year royalties to Theravance providing an opportunity to receive an estimated NPV of approximately $200 million.

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