Vancouver-based cancer drug maker Zymeworks Inc. ZYME-Q is buying Theravance Biopharma Inc. for US$929-million in cash with financing from a major Canadian pension fund.
Zymeworks will pay US$17 per share for Dublin-based Theravance, which is actually a slight discount to the Irish company’s most recent closing price.
However, the price also represents a 22-per-cent premium relative to the value of Theravance shares on Nasdaq in early March, after disappointing results from its latest blood pressure drug prompted the company to put itself up for sale.
The deal represents the first acquisition Zymeworks has made since shifting to a royalty-based business strategy in November, 2025, which involves buying a percentage of a precommercialized drug’s expected future sales.
It also marks the Canadian company’s entry into the highly competitive market of respiratory illness treatments. Theravance offers a drug called Yupelri that is prescribed to people with chronic obstructive pulmonary disease, or COPD, and is patented until October, 2039.
Yupelri has been marketed in the U.S. since 2019 through a partnership between Theravance and Viatris Inc. The drug generated more than US$266-million in sales over the course of 2025 and Zymeworks will receive 35 per cent of Yupelri’s net U.S. profits once the Theravance deal closes later this year.
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Zymeworks is using US$219-million of its own cash to fund the transaction, while the life sciences arm of the Ontario Municipal Employees Retirement System (OMERS) is providing US$350-million in additional financing. Theravance’s own US$360-million in cash reserves is covering the balance.
In a Monday morning conference call with analysts, Zymeworks chief financial officer Kristin Stafford said the OMERS debt will be repaid at an interest rate of 8.25 per cent by 2036 and will be funded by Yupelri royalties.
“Once the note is repaid, the residual profit share reverts to Zymeworks,” Ms. Stafford said. “I want to reiterate that there’s no Zymeworks equity component to this deal and thus zero shareholder dilution.”
Brian Bloom, chief executive officer of Toronto-based life sciences investment bank Bloom Burton & Co., said it is interesting that Zymeworks needed partner capital to get the Theravance deal done.
“OMERS is usually a competitor for royalty transactions,” Mr. Bloom said in an interview. “OMERS did about 10 deals last year. It’s one of most active royalty monetizers globally in pharmaceuticals and many people aren’t aware of that.”
OMERS Life Sciences has committed approximately US$5-billion in total to more than 30 financing deals since it was established in 2016, Rob Missere, managing director of OMERS Private Capital, said in an e-mail. The size and structure of the Zymeworks deal is similar to the fund’s previous transactions, Mr. Missere said.
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Zymeworks stock has nearly doubled over the past 12 months, rising from roughly US$12.55 in June, 2025, to close Monday on Nasdaq at US$24.10 per share. Just before announcing its new strategy in November, 2025, Zymeworks shares hit a four-year high after clinical trial results showed the company’s lead drug – called Ziihera – had proven effective in controlling the spread of a digestive system cancer.
When combined with chemotherapy, Zymeworks said Ziihera “demonstrated highly statistically significant and clinically meaningful improvements” in prolonging the period in which patients with the cancer don’t experience a worsening or spread of advanced metastatic gastroesophageal adenocarcinoma (GEA). GEA is a type of cancer that typically occurs in the esophagus or stomach.
In addition to Yupelri, Zymeworks is also eligible to receive up to US$100-million in early 2027 if annual net sales of another Theravance respiratory drug – called Trelegy Ellipta – surpass US$3.513-billion this year. British pharma giant GlaxoSmithKline, or GSK, which holds the worldwide manufacturing and commercialization rights to Trelegy, is forecast to sell more than US$4-billion worth of the drug this year, Zymeworks chief business officer Scott Platshon told analysts on the Monday morning conference call.
“As a result, we view this milestone as highly visible and an attractive source of near-term value,” Mr. Platshon said, adding the transaction will also provide Zymeworks with a 20-per-cent royalty interest in Yupelri partner Viatris.
Buying Theravance also gives Zymeworks access to US$2.5-billion in Irish tax attributes, which Mr. Platshon said, “have the potential to very meaningfully enhance the economics of future investments and improve our capital efficiency.”
Mr. Bloom said Zymeworks could get end reincorporating as an Ireland-based company to get “an even lower corporate tax rate” than what it gets in the U.S., where it has been legally incorporated since 2022.
With a report from James Bradshaw