2022-09-20| Funding

Theravance Allots $250 Million to Repurchase Shares, Removing GSK as a Shareholder

by Reed Slater
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After a disappointment in the clinic earlier in the year and a big sale of part of its stake in a respiratory product, Theravance Biopharma announced it plans to allocate $250 million to buy back large portions of its shares. A large chunk of the money will go towards buying all of GSK’s shares in the company, and the remainder will be from current investors and shares on the open market. 

Three Sets of Share Buy-Backs

In its first set of buy-backs, Theravance is targeting all of GSK’s 9.6 million shares in the company. Theravance said it plans to pay $9.75 per share, bringing the total to about $94 million, to gain independence from the pharma giant. The two companies have a long history dating back to 2002, when GSK first invested in the company, buying 4 million shares. Since then, GSK gradually picked up more Theravance shares in 2010 and again in 2012.

The second set of share buy-backs will come from current investors. Theravance said it plans to initiate a Dutch auction tender offer, providing investors the opportunity to recoup some cash from their shares. In the Dutch auction tender offer, Theravance is setting aside $95 million to repurchase several shares. 

Theravance said it would allocate another $60 million to buy shares on the open market after the tender offer closes. The company hopes to complete the tender offer and open market purchases by the end of 2023, with the GSK purchase closing this week. 

All the cash for the share purchases comes from a royalty sale Theravance made in July with Royalty Pharma. The deal promised Theravance $1.3 billion upfront for the royalty rights to Trelegy Ellipta, a GSK product for asthma and COPD. 

Related Article: Troubled Theravance Offloads Rights To Top Asset To Royalty Pharma For $1.5 Billion

Setting the Stage for a Comeback

Except for the large royalty purchase deal with Royalty Pharma, Theravance has not been making waves this year as it has in the past. After a few clinical letdowns, it is no surprise the company is shaking things up financially in hopes of getting back on the right track.

In April, the company announced a Phase 3 failure for a rare blood pressure disorder drug, ampreloxetine. The drug did not prove any more effective than a placebo in a general population, but the company did not lose all hope, citing the drug’s effectiveness in a more specific population. A group of patients with multiple system atrophy (MSA) saw more significant improvements than the rest of the study’s population. 

In September 2021, Theravance announced another clinical trial failure associated with ampreloxetine. That setback and two other failures prompted Theravance to cut 75% of its staff and shift all of its focus to respiratory diseases. The swift move resulted in 270 employees losing their jobs, but Theravance said it stood to save about $165 million in 2022 due to the cuts. 

Theravance’s plan to buy back up to $250 million in shares is the most recent step in building back after a rough couple of years in the clinic. The purchase will remove GSK as a shareholder and give current investors the option to recoup some money in a Dutch auction tender offer. With several other promising candidates in its pipeline, with any luck, Theravance will bounce back even stronger in the coming years. 

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