Theravance Biopharma (TBPH) ($700MM market cap) introduced earlier this week their Section 3 trial evaluating ampreloxetine for the remedy of a uncommon illness didn’t meet its main endpoint and the corporate was winding down R&D efforts. The press launch has lots of good nuggets in it that’ll be referencing. Again in November 2024, the corporate started a strategic overview with the hiring of Lazard as their monetary advisor. The overview on the floor would look like stale, but it surely reads as if a choice tree is in place depending on the outcomes of the ampreloxetine scientific trial.
In reference to this announcement, the Strategic Overview Committee of the Theravance Biopharma Board of Administrators (the “Committee”) is accelerating its ongoing overview of alternate options to maximise worth for shareholders. Since its formation in 2024, the Committee has been engaged on an ongoing foundation with Lazard, its unbiased monetary advisor, to consider alternatives accessible to the Firm, together with underneath a number of potential outcomes for the CYPRESS examine. Constructing upon this work, the Committee will act with urgency to judge a broad vary of worth maximizing and tax environment friendly alternate options, together with however not restricted to a sale of the corporate.
If the trial failure was already totally contemplated and the strategic course of is not ranging from a standstill, issues may transfer fairly rapidly from right here. Within the press launch, TBPH provides us all of the elements we have to provide you with a again of envelope estimate of its honest worth. In contrast to different busted biotech, TBPH has plenty of helpful property, this is not a typical melting ice dice, put up restructuring, it will likely be money generative.
Money of $326.5 million at This autumn 2025 (no debt); roughly $400 million anticipated at finish of Q1 2026 together with receipt of 2025 milestones; Theravance extremely assured in attaining $100 million 2026 TRELEGY milestone
Trelegy is a blockbuster COPD and bronchial asthma remedy (partnered w/GSK) TBPH monetized by promoting their curiosity to Royalty Pharma (RPRX) in 2022 for $1.1B in upfront money plus some contingent milestone funds (they additional monetized Trelegy final 12 months by promoting some farther dated royalty funds to GSK for $225MM, however that is within the money steadiness quantity above). The remaining milestone cost TBPH is entitled to obtain from Royalty Pharma is printed within the 10-Q, which they describe as “extremely assured in attaining”:
With respect to 2026 TRELEGY world web gross sales, we’re eligible to obtain both (i) $50.0 million if Royalty Pharma receives $270.0 million or extra in royalty funds from GSK, which we’d count on to happen within the occasion TRELEGY world web gross sales are roughly $3.16 billion or (ii) $100.0 million if Royalty Pharma receives $305.0 million or extra in royalty funds from GSK, which we’d count on to happen within the occasion TRELEGY world web gross sales exceed roughly $3.51 billion. To realize the upper $100.0 million milestone in 2026, TRELEGY world web gross sales would require lower than a 2% enhance over its 2024 world web gross sales.
Complete 2024 TRELEGY world web gross sales represented a 26% enhance in comparison with 2023, and TRELEGY is presently anticipated to generate world peak gross sales of roughly $4.0 billion in 2026 in keeping with consensus estimates. TRELEGY world web gross sales for the three and 9 months ended September 30, 2025 have been $979 million and $2.92 billion, respectively, which represented 24% and 13% year-over-year progress, respectively.
As well as, TBPH additionally has a 35% curiosity in one other FDA permitted COPD remedy, Yupelri with companion Viatris (VTRS). It launched in 2019 and gross sales proceed to develop, though at a slowing tempo.
Collectively, the associated fee financial savings from the restructuring and continued gross sales from YUPELRI® are anticipated to consequence within the Firm producing roughly $60 to $70 million of annualized money move, beginning in Q3 2026. This money move projection is comprised of an estimated $45 to $55 million of Earnings from Operations (excluding non-cash share-based compensation) and projected Curiosity and Different Earnings, and doesn’t embrace potential revenue from the $100 million TRELEGY milestone.
Following the choice to wind down the ampreloxetine program, the Firm’s sources of worth embrace roughly $400 million of anticipated money on the finish of Q1 2026, a 35% curiosity in YUPELRI® that generates sturdy money move, and the potential TRELEGY milestone cost, in addition to Irish tax attributes.
The Irish tax attributes are described as following of their 10-Ok:
As of December 31, 2024, the Firm had Irish web working loss carryforwards of $1.17 billion and capital loss carryforwards of $60.9 million, each of which will be carried ahead indefinitely. The Firm has extra Irish tax attributes of $1.19 billion which primarily include unused capital allowances. Web working losses and capital allowances can be utilized to offset future revenue from Irish entities and revenue associated to mental property.
I am simply going to assign no worth to the tax attributes, however actually to the appropriate purchaser they’d be value one thing. The important thing variable is how a lot the Yupelri 35% stake is value, it does have patent safety out to 2039 however that has confronted some authorized challenges. The apparent purchaser could be VTRS, they may understand value synergies, however for a finger within the air valuation, I will toss an 8x a number of on the mid-point of their revenue from operations steering which incorporates their company overhead prices. I believe is fairly conversative, however be happy to pushback when you disagree.
Disclosure: I personal shares of TBPH