Drug developer Theravance Inc. plans to split into two independent, publicly traded companies after a royalty agreement it had ironed out with Irish drugmaker Elan Corp. PLC fell through.
South San Francisco, Calif.-based Theravance said Monday it will split into businesses named Royalty Management Co. and Theravance Biopharma. Royalty will focuses on managing the rights to potential royalty streams from its collaboration with British drug developer GlaxoSmithKline.
Theravance Biopharma will center on drug discovery and development. Theravance said the Royalty Management company will be the main vehicle for returning capital to shareholders.
The company had announced plans for the split in April. Then its stock jumped last month, after Elan said it would pay $1 billion for the right to receive a percentage of the future royalties Theravance earns from its development agreement with Glaxo.
The companies had planned to close the deal by the end of June if Elan shareholders approved it. But Elan said Monday that its shareholders rejected the Theravance deal, along with some other acquisitions.
Theravance CEO Rick E. Winningham said in a statement that while they are disappointed Elan shareholders rejected the deal, Theravance remains confident in its strategy.
Shares of Theravance climbed 9 cents to $36.13 in Monday morning trading, while the broader markets added about 1 percent. The stock has traded between $18.22 and $42.41 over the past year.