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What happened

After reporting that it's raising capital via a stock and debt offering, Theravance Biopharma (NASDAQ:TBPH) shares fell 19.5% today.

So what

Theravance Biopharma is offering $100 million of its ordinary shares and $150 million aggregate principal of convertible senior notes due in 2023. Theravance Biopharma plans to grant the stock offering underwriters a 30-day option to purchase up to $15.0 million of additional ordinary shares, and the convertible offering underwriters will get a 30-day option to purchase up to $22.5 million principal amount of additional notes.

Money raised from the offerings, minus fees and expenses, will land on Theravance Biopharma's balance sheet to be used to fund its general corporate activities, including the ongoing development of its COPD drug TD-4208, which it's co-developing with Mylan (NASDAQ: MYL).

Now what

Mylan paid Theravance Biopharma $15 million up front and agreed to pay up to $220 million in potential milestone payments on TD-4208 in 2015, and recently, the company has reported positive phase 3 efficacy from two TD-4208 trials. At the time the deal was struck, Mylan also paid $30 million to buy shares in Theravance Biopharma at a price of $18.92 per share. 

TD-4208 is a once-daily, long-acting COPD drug that's dosed via the mist of a nebulizer, rather than via a handheld device. Theravance has previously indicated it believes TD-4208 could help as many as 9% of the 12.7 million American suffering from COPD. 

Although results from TD-4208's late-stage trials were positive, the companies won't file for FDA approval until results are available from a separate late-stage safety study. Those results are expected next year. Assuming they're good, an FDA filing for approval could come shortly thereafter. Given that the market for COPD therapies values out north of billion-dollar blockbuster territory, investors will want to pay close attention to the company's progress next year.

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