Zymeworks to Acquire Theravance Biopharma, Inc.

§ 01 Executive Snapshot

• What: Zymeworks has announced its acquisition of Theravance Biopharma, adding the COPD treatment YUPELRI® to its portfolio.
• Who: Zymeworks Inc. and Theravance Biopharma, Inc.
• Why it matters: This acquisition is expected to diversify Zymeworks' revenue sources and enhance its cash flow generation while minimizing capital risk through innovative financing structures.

§ 02 Key Developments

• Zymeworks will acquire Theravance Biopharma for $17 per share, totaling approximately $929 million in cash consideration, subject to adjustments.
• The acquisition is financed by a $350 million non-recourse note secured by U.S. YUPELRI® profit share, alongside $219 million of cash from Zymeworks and Theravance's expected net cash balance of $360 million at closing.
• YUPELRI® is projected to generate about $60 million in annual cash flow at current run rates, with growth anticipated.

§ 03 Strategic Context

• The acquisition aligns with Zymeworks' strategic focus on diversifying revenue streams and enhancing shareholder value through innovative financing and active business restructuring.
• Zymeworks is leveraging its differentiated capital allocation model to integrate cash flows from established products to fund future research and development.

§ 04 Strategic Implications

• The transaction is expected to provide immediate cash flow benefits and enhance Zymeworks' financial flexibility, enabling further investments in R&D and shareholder returns.
• Long-term, the acquisition positions Zymeworks to capitalize on additional assets and potential revenue streams from Theravance's portfolio, including milestone payments and royalties.

§ 05 Risks & Constraints

• Potential regulatory approvals and shareholder consent are required for the acquisition to close, which introduces execution risks.
• The transaction's success may be contingent on the performance of YUPELRI® and other Theravance assets, which could be affected by market competition and generic entries.

§ 06 Watchlist / Forward Signals

• The transaction is expected to close in the second half of 2026, pending regulatory and shareholder approvals.
• Future developments will be monitored through the performance of YUPELRI® and the realization of anticipated milestone payments from related products.