Theravance & Elan Sign $1-Billion Agreement

Theravance, Inc. and Elan Corporation, plc recently announced they have entered into a royalty participation agreement wherein Elan will purchase a participation interest in potential future royalty payments related to four respiratory programs 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 billion to Theravance in exchange for a 21% participation interest in the potential future royalty payments from the four programs 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 programs 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.”

“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, added Kelly Martin, Chief Executive Officer of Elan. “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.”

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% of the

first $3 billion of combined annual global net sales, and 5% of combined annual global net sales above $3 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%. 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% and 20% of the first $3.5 billion of annual global net sales, and 7.5% 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. For more information, please visit www.theravance.com.