Irenic Capital urges Theravance to conduct review, add shareholder to board

Theravance Biopharma

27/02/2023 13:00

By Svea Herbst-Bayliss
       NEW YORK, Feb 27 (Reuters) - Activist investor Irenic
Capital Management is urging Theravance Biopharma Inc  TBPH.O 
to initiate a review of strategic alternatives, including a full
sale, and to add a shareholder to its board, according to a
letter seen by Reuters.
    Irenic owns a 4.2% stake in the biotechnology company and
has criticized its lagging valuation and stock-based
compensation to its chief executive and board chair, Rick
Winningham. 
    Theravance, which is well-known for its respiratory
medications, could be worth $21 a share, roughly double its
$9.87 closing price last week, Irenic co-founders Adam Katz and
Andy Dodge wrote in the letter. They estimate the company's
assets exceed "$1.4 billion in value."  
    "Were the Company to conduct a proper strategic review with
independent financial advisors, we strongly believe that there
are buyers for all of the company and/or individual assets at a
substantial premium to Theravance's trading price," they wrote.
    A representative for Theravance was not immediately
available for comment.
    Irenic also called on Theravance to use excess cash to
immediately issue a $300 million special dividend to
shareholders. The company does not pay a dividend now but has
been repurchasing its stock and plans to continue repurchases
this year.
    Irenic criticized Theravance's executive compensation,
writing that the CEO received more than $48 million in
compensation since the company's split from Innoviva  INVA.O  in
2014. During that time "shareholders have endured substantial
losses," the letter said.  The stock price has dropped 57% since
then.
    The fund also asked the company to adopt several other
changes, including having all directors stand for elections
annually and splitting the CEO and chairman roles. 
    Irenic's founders said they want to work constructively with
the company and said in the letter that they asked for a
shareholder representative to be appointed to the eight-member
board. They suggested Dodge as a director candidate but wrote in
the letter that the company rejected him as a candidate.
    Theravance's largest shareholders include The Baupost Group
and Madison Avenue Partners.
    Since launching last year, Irenic has established itself as
a successful newcomer among activist investors. The fund
invested in News Corp  NWSA.O  and was the first to publicly
come out against a planned reunification with Fox Corp months
before a deal was abandoned. It also played a role in
overhauling the board of Capricorn Energy  CNE.L . 
    Irenic is the latest hedge fund to propose changes at poorly
performing biotech companies. Last week, Caligan Partners urged
Anika Therapeutics  ANIK.O  to consider strategic alternatives,
including a full sale, and is preparing to nominate directors to
the biotech company's board, according to a letter seen by
Reuters.
  
    
    

 (Reporting by Svea Herbst-Bayliss; Editing by Stephen Coates)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))