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THRX > SEC Filings for THRX > Form 8-K on 5-Jun-2014All Recent SEC Filings

Show all filings for THERAVANCE INC

Form 8-K for THERAVANCE INC


5-Jun-2014

Entry into a Material Definitive Agreement, Completion of Acquisition or Dispositi


Item 1.01 Entry into a Material Definitive Agreement

On April 25, 2013, we announced our intention to separate our late-stage partnered respiratory assets from our biopharmaceutical research and development operations and create two companies, Theravance, Inc. (the royalty management company, "Theravance" or "we") and Theravance Biopharma, Inc. (the research and development company, "Theravance Biopharma"). On June 1, 2014 we transferred our research and development operations to Theravance Biopharma and on June 2, 2014 made a pro rata dividend distribution to our stockholders of record on May 15, 2014 of one ordinary share of Theravance Biopharma for every three and one half shares of Theravance common stock outstanding on the record date (the "Spin-Off"). Our primary assets are now our royalty assets, and our business will focus on managing all development and commercial responsibilities under our respiratory partnership agreements with Glaxo Group Limited (together with its affiliates, "GSK") and associated royalty revenues, including royalties from RELVAR®/BREO® ELLIPTA® and ANORO™ ELLIPTA®, with the intention of providing capital returns to stockholders. The research and development company, Theravance Biopharma, is a biopharmaceutical company focused on discovery, development and commercialization of small molecule product candidates in the bacterial infections, central nervous system (CNS)/pain, respiratory disease, and gastrointestinal (GI) motility dysfunction therapeutic areas. The Spin-Off was announced in a press release on June 2, 2014. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The Spin-Off was effected pursuant to a Separation and Distribution Agreement with Theravance Biopharma, dated June 1, 2014 (the "Separation Agreement"), which provides, among other things, for the principal corporate transactions required to effect the Spin-Off and certain other agreements governing Theravance's relationship with Theravance Biopharma after the Spin-Off. A copy of the Separation Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. In connection with the Spin-Off, Theravance and Theravance Biopharma entered into certain other agreements to govern the terms of the Spin-Off and to define the ongoing relationships. Those agreements include:

† Transition Services Agreement between Theravance and Theravance Biopharma dated June 2, 2014, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference;

† Tax Matters Agreement between Theravance and Theravance Biopharma dated June 2, 2014, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference;

† Employee Matters Agreement between Theravance and Theravance Biopharma dated June 1, 2014, a copy of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference; and

† Theravance Respiratory Company, LLC Limited Liability Company Agreement between Theravance and Theravance Biopharma dated May 31, 2014, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference (the "TRC LLC Agreement").

Separation and Distribution Agreement

In connection with the Spin-Off, on June 1, 2014, Theravance and Theravance Biopharma entered into the Separation Agreement. The Separation Agreement identifies the assets transferred, liabilities assumed and contracts assigned to Theravance Biopharma as part of the Spin-Off, and describes when and how these transfers, assumptions and assignments occur. In particular, all of the assets and liabilities associated or primarily used in connection with the drug discovery and development business operations were transferred to Theravance Biopharma, including:

† VIBATIV® (telavancin), a bactericidal, once daily injectable antibiotic;

† The small molecule product candidate pipeline currently focused on bacterial infections, CNS/pain, respiratory disease, and GI motility dysfunction; and

† A portion of the equity interests in Theravance Respiratory Company, LLC, which will entitle Theravance Biopharma to receive 85% of the economic interest in any future payments made by GSK under the various GSK agreements relating to UMEC/VI/FF and the MABA program, as monotherapy and in combination with other therapeutically active components, such as an inhaled corticosteroid (ICS), and any other product or combination of products that may be discovered and developed in the future under the GSK agreements (other than RELVAR®/ELLIPTA®, BREO®/ELLIPTA®, ANORO™ ELLIPTA™ and VI monotherapy).


As a result, the primary non-cash assets and liabilities retained by us after the Spin-Off are those related to RELVAR® ELLIPTA®/ BREO® ELLIPTA®, ANORO™ ELLIPTA™, and vilanterol monotherapy. In connection with the Spin-Off, we capitalized Theravance Biopharma with $393.0 million in cash, cash equivalents and marketable securities and pursuant to the Separation Agreement will make an additional cash payment to Theravance Biopharma following the companies' agreement on the amount of current liabilities assumed by Theravance Biopharma related to accrued nondiscretionary cash bonus expenses, accrued clinical and development expenses and accrued sales and marketing expenses, which additional payment is expected to be made in late June or early July. Except as expressly set forth in the Separation Agreement or any ancillary . . .



Item 2.01 Completion of Acquisition or Disposition of Assets.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference to this Item 2.01.

The unaudited pro forma financial information of Theravance giving effect to the Spin-Off, and the related notes thereto, are attached hereto as Exhibit 99.2.



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 2, 2014, immediately after the Spin-Off, Catherine J. Friedman, Paul Pepe and James L. Tyree (collectively, the "New Directors") became members of the Board of Directors of Theravance. Ms. Friedman will serve on the Audit Committee and Compensation Committee of the Board; Mr. Pepe will serve on the Audit Committee and Nominating / Corporate Governance Committee of the Board; and Mr. Tyree will serve on the Audit Committee, Compensation Committee and Nominating / Corporate Governance Committee of the Board. The Theravance Board of Directors has determined that each of the New Directors is independent within the meaning of the independent director standards of the Securities and Exchange Commission and Nasdaq Stock Market, Inc. In connection with their appointment to the Board, each of the New Directors will be entitled to receive cash and equity compensation consistent with that of Theravance's other non-employee directors. Such compensation is described in Theravance's definitive proxy statement filed with the Securities and Exchange Commission on April 15, 2014.

On June 2, 2014, immediately after the effectiveness of the appointment of the New Directors, the members of the Board of Directors of Theravance listed below, each of whom is a member of the Board of Directors of Theravance Biopharma, resigned as directors of Theravance:

†          Henrietta H. Fore;

†          Robert V. Gunderson, Jr., Esq.;

†          Burton G. Malkiel, Ph.D.;

†          Peter S. Ringrose, Ph.D.;

†          George M. Whitesides, Ph.D.; and

†          William D. Young.



Item 8.01 Other Events

On June 2, 2014, Theravance and Theravance Biopharma issued a joint press release, a copy of which is hereby incorporated by reference and attached hereto as Exhibit 99.1.


Forward-Looking Statements

This Form 8-K contains certain "forward-looking" statements as that term is defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans, objectives and future events. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Examples of such statements include statements relating to the expected timing of our payment of additional cash amounts to Theravance Biopharma. Forward-looking statements are subject to risks, uncertainties, changes in circumstances, assumptions and other factors that may cause our actual results to be materially different from those reflected in the forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others, risks related to the disruption of operations during the transition period following the Spin-Off, including the diversion of our management's and employees' attention, disruption of our relationships with collaborators and increased employee turnover, and difficulties or delays in reaching agreement with Theravance Biopharma on the amount of liabilities assumed by Theravance Biopharma. Other risks affecting us are described under the heading "Risk Factors" contained in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on May 7, 2014 and the risks discussed in our other periodic filings with the SEC. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We assume no obligation to update our forward-looking statements.



Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The pro forma financial information specified in Article 11 of Regulation S-X is filed as Exhibit 99.2 hereto.

(d) Exhibits

10.1  Separation and Distribution Agreement between Theravance and Theravance
      Biopharma, dated June 1, 2014.
10.2  Transition Services Agreement between Theravance and Theravance Biopharma,
      dated June 2, 2014.
10.3  Tax Matters Agreement between Theravance and Theravance Biopharma, dated
      June 2, 2014.
10.4  Employee Matters Agreement between Theravance and Theravance Biopharma,
      dated June 1, 2014.
10.5  Theravance Respiratory Company, LLC Limited Liability Company Agreement
      between Theravance and Theravance Biopharma, dated May 31, 2014.
99.1  Press Release dated June 2, 2014.
99.2  Unaudited pro forma financial statements.


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