- Theravance Biopharma will trim research spending and lay off nearly a fifth of its workforce, furthering a company restructuring that’s seen it sell off royalty drug rights, cut costs and pay down debt.
- The most recent moves, announced by Theravance Monday afternoon, involve discontinuing research into inhaled formulations of a type of inflammatory disease drug known as JAK inhibitors. As a result of that decision, the company is reducing its headcount by 17%.
- Additionally, Theravance said it would spend another $75 million returning capital to shareholders, on top of a previously planned $250 million. The drugmaker has come under pressure from an activist investor, Irenic Capital Management, which has called for a special dividend as well as changes to company leadership.
The layoffs announced Monday are Theravance’s second in as many years, after the company cut 75% of its staff back in September 2021. Spending has been sharply curtailed, with last year’s cash operating expenses $200 million lower than what Theravance spent in 2020, excluding one-time restructuring costs.
The company has slimmed down its drug portfolio, too, inking a $1.1 billion deal last year with Royalty Pharma for Theravance’s royalty rights on sales of GSK’s asthma drug Trelegy Ellipta. The influx of cash allowed Theravance to eliminate approximately $650 million of debt as well as buy back shares, helping prop up the company’s stock price.
With its decision to shut down JAK research, Theravance is prioritizing a Phase 3 study testing a drug it’s developing for a form of low blood pressure in people with the rare disease multiple system atrophy. The company also shares responsibility for marketing a chronic obstructive pulmonary disease drug called Yupelri with generic drugmaker Viatris.
In the background of all of these changes, Theravance is being pressured to take further action by Irenic, which owns just over 4% of the company.
“Investors have substantial concerns with Theravance’s capital allocation, approach to executive compensation and operating costs, and management’s choice of ultimate strategic direction,” Irenic wrote in a letter made public Monday.
The investor wants Theravance to institute a special dividend of the company’s excess cash, trim share-based compensation plans and formally begin a strategic review.
In announcing its new plans Monday, Theravance also attempted to rebut Irenic’s claims, noting that the investor has refused to enter into a non-disclosure agreement to hold further discussions.
“Had Irenic entered into an NDA with us, they would have learned of our plans to increase the capital return program by $75 [million],” Theravance wrote in a slide presentation filed with the Securities and Exchange Commission Tuesday.
Theravance added that a special dividend could come with negative tax implications, and said some of Irenic’s statements about its spending were inaccurate.
“We have a track record of taking action to create shareholder value without first publicly announcing a formal strategic review that could meaningfully disrupt the business and could be misinterpreted as a fire sale,” Theravance wrote.
Also on Monday, Theravance announced it had appointed Susannah Gray, formerly Royalty Pharma’s CFO, as a new independent director on the company’s board.
Shares in Theravance were trading flat by mid-morning Tuesday after initially declining at market open.