Key Takeaways:
Zymeworks Inc. agreed to acquire Theravance Biopharma Inc. for $17 a share in cash, or about $929 million in equity value, adding the COPD drug YUPELRI to its portfolio of licensed healthcare assets in a deal that also includes a contingent value right tied to a pipeline asset.
"The acquisition of Theravance Biopharma represents successful execution of one of the key strategic priorities we outlined earlier this year," said Kenneth Galbraith, Chair and Chief Executive Officer of Zymeworks. "We are building a more diversified and durable business by combining partner-driven cash flows and innovative R&D, together in an integrated strategic approach to build long-term stockholder value."
The $17 per share cash consideration represents a 22% premium to Theravance's closing price on March 3, the day the company reported topline results from the ampreloxetine Phase 3 CYPRESS study, and a 10% premium to its volume-weighted average price since that date. Shareholders will also receive a contingent value right entitling them to 80% of net proceeds from any future monetization of ampreloxetine over the next ten years, with Zymeworks retaining the remaining 20%.
The deal caps a strategic review process that began in 2024, during which Theravance monetized its TRELEGY royalty interest for $225 million, restructured its organization, and evaluated multiple alternatives. The acquisition is expected to close in the second half of 2026, subject to shareholder approval and customary regulatory clearances.
Financing and Deal Structure
Zymeworks will fund the acquisition through a $350 million non-recourse note from OMERS Life Sciences, secured solely by 75% of YUPELRI's U.S. profit-share cash flows, plus about $219 million of its own cash and Theravance's expected net cash balance of roughly $360 million at closing. The non-recourse structure preserves Zymeworks' balance sheet flexibility and minimizes shareholder dilution, the company said.
Factoring in a $100 million milestone payment expected from Royalty Pharma in the first quarter of 2027 tied to global sales of TRELEGY ELLIPTA, Zymeworks' effective net investment will be reduced by roughly 50%, according to the company.
YUPELRI, the first and only approved nebulized long-acting muscarinic antagonist for COPD, generated U.S. net sales of $266.6 million in 2025, up 12% from the prior year, and $62.4 million in the first quarter of 2026, up 7% year-over-year. Zymeworks will gain access to a 35% U.S. net profit share in the drug, which generates about $60 million in annualized cash flow at current run rates. Settlements with all YUPELRI generic filers push the earliest licensed launch date to April 2039.
Additional Assets and Tax Attributes
Beyond YUPELRI, Zymeworks acquires Theravance's eligibility for up to $125 million in additional commercial milestone payments from Viatris based on U.S. net sales, double-digit tiered royalties on ex-U.S. sales, and a roughly 20% royalty on VIBATIV sales from Cumberland. The company also inherits about $2.5 billion in Irish tax attributes accumulated by Theravance.
Zymeworks plans to complete Theravance's previously announced organizational restructuring, reducing research and development and general and administrative costs while preserving the hospital promotion infrastructure. The company will evaluate Theravance's preclinical inflammation and immunology pipeline within its broader capital allocation framework.
Lazard served as lead financial adviser to Theravance, with Evercore also advising. Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel. Kirkland & Ellis LLP advised Zymeworks, with TD Cowen as financial adviser on the OMERS royalty note and MTS Health Partners providing financial advice.
The deal gives Zymeworks a diversified revenue stream alongside existing Ziihera cash flows, supporting a model in which proceeds from partnered assets are reinvested into internal research and development, additional acquisitions, and share repurchases. Zymeworks has repurchased 1.4 million shares for $35.4 million under a $125 million buyback program authorized in May.
This article is for informational purposes only and does not constitute investment advice.
