Elan, Theravance, GlaxoSmithKline deal

Elan said it will pay $1 billion in cash to Theravance in exchange for a 21% interest in the royalties Theravance is eligible to receive from partner GlaxoSmithKline for four respiratory programs. The programs are Breo/ Relvar Ellipta fluticasone furoate/vilanterol, which is approved in the U.S. and under review in the EU; Anoro Ellipta umeclidinium bromide/vilanterol, which is under review in Japan, Europe and the U.S.; GSK961081, which is slated to start Phase III testing for chronic obstructive pulmonary disease (COPD) this year; and vilanterol monotherapy, which is in Phase III testing. The deal is subject to Elan shareholder approval and is expected to close next month. Elan said it will issue a biannual dividend worth 20% of the royalties it receives from Theravance (see BioCentury, May 13).

Theravance is eligible for 15% royalties from GSK on the first $3 billion in combined annual global net sales of Breo Ellipta and vilanterol monotherapy and 5% royalties on sales above $3 billion. Theravance is also eligible for tiered royalties up to 10% for Anoro Ellipta, as well as royalties of 10-20% on the first $3.5 billion of annual global net sales of GSK961081 and 7.5% royalties on sales above $3.5 billion. Breo Ellipta is a fixed-dose combination of an inhaled corticosteroid and vilanterol, a long-acting adrenergic receptor beta 2 agonist (LABA), while Anoro Ellipta is a fixed-dose inhaled dry powder formulation of a long-acting muscarinic antagonist (LAMA) and vilanterol, both administered with the dry powder Ellipta inhaler. GSK961081 is a bifunctional muscarinic receptor antagonist and beta 2 agonist (MABA). Centerview Partners was Theravance's financial advisor, and Skadden, Arps, Slate, Meagher & Flom and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian were its legal advisors. Evercore Partners and Ondra Partners were Elan's financial advisors while Cadwalader, Wickersham & Taft and A&L Goodbody were its legal advisors. ...