As per the sale agreement, GSK will divest its roughly 32 million shares of Innoviva. Credit: GSK / Flickr.

GlaxoSmithKline (GSK) has entered a definitive agreement to sell its entire equity stake in royalty management company Innoviva at $12.25 for each share, taking the deal proceeds to a total of nearly $392m.

According to the agreement, GSK will sell its roughly 32 million shares or 32% of the outstanding common stock back to Innoviva at a 3% discount.

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Innoviva CEO Pavel Raifeld said: “We view the buyback as a compelling and highly accretive transaction demonstrating our ability to act strategically and opportunistically at the same time.

“We believe that it materially accelerates the delivery of our strategy while also meaningfully improving our shares’ long-term trading dynamics with an aligned shareholder base.”

This deal settlement will provide GSK with funds to further invest in its planned priorities. The company added that on concluding the equity disposal, it will not own any Innoviva stock.

For this transaction, Moelis was the financial advisor while Willkie Farr Gallagher was the legal advisor to Innoviva.

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GSK noted that the terms of the company’s respiratory partnership with Innoviva will not be affected by this sale. Under the collaboration, Innoviva receives royalty payments for Trelegy Ellipta, Relvar/Breo Ellipta and Anoro Ellipta from GSK.

In September last year, the US Food and Drug Administration (FDA) granted approval for a new indication for Trelegy Ellipta to treat asthma in adults. It is also indicated for use in chronic obstructive pulmonary disease patients.

Trelegy Ellipta sales generated $1.16bn (£819m) last year while Relvar/Breo Ellipta and Anoro Ellipta sales generated revenue of $1.4bn (£1.1bn) and $776m (£547m), respectively.

Last month, GSK reported an 18% year-on-year (YOY) decline in revenue in the first quarter of this year to £7.41bn and down 15% at constant currency due to disruption caused by the global Covid-19 pandemic.