Zymeworks to buy Theravance Biopharma in $929mn cash deal

Zymeworks (ZYME) has agreed to acquire Theravance Biopharma (TBPH) for $929mn in cash, four months after the Dublin-based drugmaker shut down its research and development operations, cut half its workforce and put itself up for sale.

Under the terms of the agreement, Zymeworks will pay $17 a share, a 4 per cent discount to Theravance's Friday closing price but a 22 per cent premium to its valuation on March 3, the day the company disclosed that its blood pressure candidate ampreloxetine had failed a Phase 3 trial in symptomatic neurogenic orthostatic hypotension. Theravance announced the restructuring and strategic review, including a possible sale, on the same day.

The deal also includes a contingent value right tied to any future dealmaking involving ampreloxetine. Theravance shareholders would receive 80 per cent of net proceeds from such transactions over the next ten years, with Zymeworks retaining the remainder.

The acquisition gives Zymeworks, best known for its oncology pipeline, access to Theravance's 35 per cent interest in Yupelri, a nebulized long-acting muscarinic antagonist for chronic obstructive pulmonary disease partnered with Viatris (VTRS). The therapy, approved in 2018, generates annualized cash flow of $60mn to $70mn and posted sales of $267mn last year, up 12 per cent year-on-year.

The transaction, expected to close in the second half of this year, follows a strategic review Theravance launched two years ago that culminated in the sale of its remaining royalty interest in the asthma and COPD inhaler Trelegy to GSK (GSK) for $225mn.

Susannah Gray, Theravance's independent board chair, said the transaction reflected the value of the company's assets, including its Yupelri stake, a potential Trelegy milestone payment, a strong balance sheet and Irish tax attributes.

Zymeworks will also gain immediate cash flow from Yupelri as its HER2-positive biliary tract cancer treatment Ziihera, partnered with Jazz Pharmaceuticals (JAZZ), continues its early commercial rollout. Royalty Pharma has projected Ziihera sales could reach $2.6bn by 2035; the drug generated $13mn in the first quarter.

Kenneth Galbraith, Zymeworks' chairman and chief executive, said the acquisition would build a more diversified and durable business by combining partner-driven cash flows with the company's own research pipeline, adding that it would have a near-term positive impact on commercial royalty revenue upon closing.