Theravance Biopharma cashes out remaining Trelegy royalties in $225m deal with GSK

Theravance Biopharma, Inc. (NASDAQ: TBPH) has reached a definitive agreement to sell its remaining royalty interest in Trelegy Ellipta to GSK plc (NYSE: GSK) for $225 million in cash. This deal, announced on June 2, 2025, is part of Theravance’s broader capital reallocation strategy, reflecting the company’s continued focus on maximizing shareholder value while streamlining its operations around a leaner, growth-focused pipeline. The agreement marks the first material outcome from the Strategic Review Committee formed in late 2024.

In this latest transaction, Theravance has effectively monetized its “Outer Year Royalties”—rights to 85% of royalty payments from Trelegy sales starting in 2029 ex-U.S. and 2031 in the U.S. This adds to the $1.1 billion the company previously received from Royalty Pharma in a 2022 deal, where most of its royalty stream from Trelegy was sold upfront while milestone rights and distant royalties were retained. The new sale elevates the total lifetime monetization potential from Trelegy to an estimated $1.525 billion, including milestone payouts.

What Is the History Behind Theravance’s Trelegy Stake?

Theravance’s economic claim to Trelegy dates back to a 2002 collaboration agreement with GSK. As part of this alliance, Theravance’s predecessor contributed a suite of long-acting beta agonist (LABA) assets, which GSK later incorporated into various combination respiratory drugs. Among them, Trelegy—a triple therapy inhaler for COPD and asthma—emerged as the most commercially successful.

In July 2022, Theravance executed a significant monetization event, selling the majority of its interest in Trelegy to Royalty Pharma for $1.1 billion in upfront cash. In that deal, Theravance maintained the rights to future royalty flows post-2029 and milestone payments tied to sales in 2025 and 2026. Today’s transaction eliminates that final royalty exposure, while retaining milestone eligibility through Royalty Pharma. This approach has enabled Theravance to extract upfront liquidity at different stages, while de-risking long-term financial uncertainty.

What Are the Financial Terms of the GSK Agreement?

Under the terms of the new agreement, GSK will pay Theravance $225 million in cash for the transfer of all remaining royalty rights to Trelegy Ellipta. Additionally, Theravance retains the potential to earn up to $150 million in sales-based milestones from Royalty Pharma:

Theravance Biopharma retains upside exposure through potential milestone payments even after transferring the remainder of its Trelegy royalty stream. Specifically, the company remains eligible to receive up to $150 million in additional performance-based payments from Royalty Pharma over the next two years. These include a $50 million milestone if global net sales of Trelegy reach approximately $3.41 billion in calendar year 2025, representing only a marginal decline of about 1% from 2024 levels. A second milestone worth $100 million would be triggered in 2026 if Trelegy achieves global sales of approximately $3.51 billion, reflecting a modest 2% increase over the prior year. Analysts note that these thresholds appear conservative given Trelegy’s entrenched presence in COPD treatment regimens and continued international uptake, particularly in markets with established reimbursement channels.

These milestones are tied to modest sales thresholds, reflecting roughly a 1% decline and a 2% increase over 2024 sales respectively. Given Trelegy’s strong global uptake and limited competition in the triple-combination inhaler category, analysts believe both targets are realistically attainable, especially in the absence of pricing erosion or generic entrants in the near term.

Theravance’s financial guidance for 2025 remains unchanged following the transaction, underscoring management’s confidence in the company’s commercial trajectory and controlled cost structure.

How Did the Market React to the News?

The stock market responded favorably to the announcement. Theravance Biopharma’s stock (NASDAQ: TBPH) surged approximately 18.9% in intraday trading, buoyed by investor optimism regarding the immediate cash infusion and the company’s continued focus on shareholder returns. Institutional investors appeared to initiate new positions, as reflected in trading volumes well above the 30-day average.

Buy-side analysts interpreted the deal as a logical continuation of Theravance’s strategy to monetize legacy assets while focusing resources on its two remaining growth engines: YUPELRI and ampreloxetine. Some market observers also viewed the deal as a precursor to further capital distribution—possibly share repurchases or strategic M&A—in the coming quarters.

GSK’s stock (NYSE: GSK) registered a small but positive uptick as well, signaling investor approval of the company’s decision to secure full economic ownership of Trelegy, one of its leading respiratory assets.

What Does This Mean for Theravance’s Strategy Going Forward?

This transaction is the first concrete result of the Strategic Review Committee that Theravance’s board established in November 2024. The Committee, composed solely of independent directors, is tasked with exploring all viable strategic options, including asset sales, business development opportunities, and capital return initiatives. Today’s sale marks a strategic win—unlocking $225 million in immediate liquidity while simplifying the company’s royalty structure and risk exposure.

In a statement, CEO Rick E. Winningham emphasized that the decision reinforces management’s long-held confidence in Trelegy’s commercial durability and the strategic merit of monetizing at opportune points. He also reiterated Theravance’s commitment to advancing its pipeline and maximizing value through targeted R&D investments and capital deployment.

Theravance’s two primary assets—YUPELRI and ampreloxetine—remain the company’s focus. YUPELRI, a once-daily nebulized bronchodilator co-marketed with Viatris, continues to gain traction in the COPD maintenance space. Analysts estimate it could surpass $100 million in annual revenue in 2025, given its unique delivery format for patients unable to use handheld inhalers. Ampreloxetine, a norepinephrine reuptake inhibitor, is in late-stage development for symptomatic neurogenic orthostatic hypotension (nOH) in patients with Multiple System Atrophy (MSA). Regulatory filings are expected within the next 12 months.

How Does the GSK Deal Fit Into Broader Industry Trends?

Theravance’s move reflects a growing trend among mid-cap biopharma firms to monetize royalty streams as a means of raising non-dilutive capital. In a high-interest rate environment, where equity markets remain selective about early-stage biotech, strategic monetization offers a compelling funding alternative. Firms like Alnylam, Mirati Therapeutics, and ImmunoGen have executed similar royalty or milestone sales to extend cash runways or invest in near-commercial programs.

On the other side of the deal, GSK’s decision to consolidate Trelegy royalty rights aligns with its broader respiratory strategy. As the company continues to navigate revenue headwinds from off-patent drugs, acquiring full control of high-margin products like Trelegy helps bolster recurring revenue visibility. The acquisition also reduces future payout obligations, potentially boosting operating margins from 2029 onward.

What’s the Investor Outlook on Theravance?

With the Trelegy royalty sale completed, Theravance Biopharma is now viewed by analysts as a more focused and capital-efficient organization. Several equity research firms have reiterated their Buy or Overweight ratings, highlighting the strengthened balance sheet and clarity of vision. The company is now largely free of complex royalty entanglements and can concentrate on commercial execution and late-stage clinical development.

Looking ahead, investors expect further communication from the Strategic Review Committee. While no other transactions are guaranteed, industry speculation includes the potential licensing of ampreloxetine ex-U.S., deeper YUPELRI commercialization partnerships, or shareholder-friendly capital return plans. With over $225 million in new cash and potential for another $150 million in milestones, Theravance’s financial position is materially improved.

For retail and institutional investors alike, Theravance now presents a cleaner, easier-to-model investment thesis: two near-term assets with growth potential, a derisked capital structure, and board-level commitment to unlocking further value.