Theravance, Inc. and Elan Corporation, plc have entered into a royalty participation agreement wherein Elan will purchase a participation interest in potential future royalty payments related to four respiratory programmes partnered with GlaxoSmithKline plc (GSK): Relvar Ellipta/Breo Ellipta, Anoro Ellipta, Maba (Bifunctional Muscarinic Antagonist-Beta2 Agonist) monotherapy (GSK961081, or Maba '081), and vilanterol (VI) monotherapy.

Under the terms of the agreement, Elan will make a one-time cash payment of $1.0 billion to Theravance in exchange for a 21 per cent participation interest in the potential future royalty payments from the four programmes when, as and if received by Theravance.

"We are very excited to partner with Elan in a transaction that recognizes the significant value of four programmes from our GSK collaborations targeted at respiratory disease," said Rick E Winningham, Theravance's chief executive officer. "This agreement complements our strategy to facilitate and accelerate the return of capital to our stockholders and build value, consistent with our recently announced plan to separate Theravance into two entities, Royalty Management Company and Theravance Biopharma."

Kelly Martin, chief executive officer of Elan commented, "This transaction, upon closing, will immediately diversify our business with an investment in four high quality and late stage clinical assets within a large and growing therapeutic area. This diversification should benefit our shareholders by spreading the inherent risk embedded in any one specific asset. In addition, the long term and future potential cash flow streams and net income will be shared with investors both directly -- through a dividend pass through -- and indirectly through overall after tax earnings."

Martin added, "Being involved, even indirectly, with an important therapeutic area that addresses the needs of millions of patients who suffer from respiratory disease is particularly meaningful to all of us at Elan."

Relvar Ellipta/Breo Ellipta (fluticasone furoate (FF)/vilanterol (VI)), Anoro Ellipta (umeclidinium bromide (UMEC)/VI) and VI monotherapy have been developed under the LABA collaboration with GSK. For Relvar Ellipta/Breo Ellipta and VI, Theravance is entitled to receive royalties from GSK of 15 per cent of the first $3.0 billion of combined annual global net sales, and 5 per cent of combined annual global net sales above $3.0 billion. If Anoro Ellipta is approved and commercialized, royalties on annual global net sales are upward tiering and range from the mid-single digits to 10 per cent. The transaction does not include any royalty participation interest associated with UMEC/VI/FF, an investigational medicine also in development under the LABA collaboration with GSK.

Maba '081 is an investigational medicine in development under the strategic alliance between Theravance and GSK. If Maba '081 is successfully developed and commercialized as monotherapy, Theravance is entitled to receive royalties from GSK of between 10 per cent and 20 per cent of the first $3.5 billion of annual global net sales, and 7.5 per cent of all annual global net sales above $3.5 billion. The transaction does not include any royalty participation interest associated with MABA '081 in combination with any other therapeutically active component, including an inhaled corticosteroid, or any other Maba compound as monotherapy or in combination.

The transaction is not subject to any material conditions, other than approval by Elan's shareholders. Elan plans to promptly prepare the required documentation to enable a shareholder vote, which Elan has agreed to hold within 35 days. If approved by Elan's shareholders, the parties expect the transaction to be consummated by the end of June 2013.

Relvar Ellipta/Breo Ellipta, Anoro Ellipta, VI monotherapy and Maba monotherapy (GSK961081, or Maba '081), are assets developed in collaboration with GlaxoSmithKline plc (GSK).

In November 2002, Theravance entered into its LABA collaboration with GSK to develop and commercialize once-daily long-acting beta2 agonist (LABA) products for the treatment of chronic obstructive pulmonary disease (COPD) and asthma. For the treatment of COPD, the collaboration is developing two combination products: (1) Relvar Ellipta or Breo Ellipta (FF/VI), an investigational once-daily combination medicine consisting of a LABA, vilanterol (VI), and an inhaled corticosteroid (ICS), fluticasone furoate (FF) and (2) Anoro Eellipta (UMEC/VI), a once-daily investigational medicine combining a long-acting muscarinic antagonist (LAMA), umeclidinium bromide (UMEC), with a LABA, VI. For the treatment of asthma, the collaboration is developing FF/VI. Breo Ellipta 100/25 mcg is approved in the United States as an inhaled long-term, once-daily maintenance treatment of airflow obstruction in patients with COPD, including chronic bronchitis and/or emphysema. It is also indicated to reduce exacerbations of COPD in patients with a history of exacerbations. Relvar Ellipta for the treatment of COPD and asthma patients is currently under review by the European Medicines Agency (EMA) and Japan. FF/VI is not approved or licensed in the European Union or anywhere outside of the United States. Anoro Ellipta for the treatment of COPD patients is currently under review by the US Food and Drug Administration, the EMA and Japan. The Prescription Drug User Fee Act goal date for Anoro Ellipta is December 18, 2013. Anoro ellipta (UMEC/VI) is an investigational medicine and is not currently approved anywhere in the world.

In March 2004, Theravance entered into its strategic alliance with GSK. Under this alliance, GSK received an option to license exclusive development and commercialization rights to product candidates from certain of Theravance's discovery programmes on predetermined terms and on an exclusive, worldwide basis. In 2005, GSK licensed Theravance's Maba programme for the treatment of COPD. GSK961081 ('081), the lead Maba, is an investigational, single molecule bifunctional bronchodilator with both muscarinic antagonist and beta2 receptor agonist activities. Based on the results from a phase 2b study, GSK and Theravance plan to advance '081 monotherapy into phase 3 and the '081/FF combination into phase 3-enabling studies, later in 2013.

Elan Corporation, plc is a biotechnology company, headquartered in Ireland, committed to making a difference in the lives of patients and their families by dedicating itself to bringing innovations in science to fill significant unmet medical needs that continue to exist around the world.

Theravance is a biopharmaceutical company with a pipeline of internally discovered product candidates and strategic collaborations with pharmaceutical companies.