Dublin, Ireland-based biotech Elan has hooked up with US group Theravance under a $1-billion deal that gives it access to a portion of royalties from four of the latter's drugs.

The group said it is shelling out $1 billion for a 21% stake in Theravance's potential future royalty payments from drug giant GlaxoSmithKline relating to four respiratory programmes. 

There are: Breo Ellipta, which won all-important US approval just last week; Anoro Ellipta, which has been filed both in the US and EU; MABA monotherapy, which should enter Phase III trials this year; and vilanterol monotherapy. 

Explaining its strategy, Elan said the transaction is attractive because it provides access to a "significant global therapeutics business", with an immediate positive impact on the books from the launch of the first product (Breo) included in the deal.

But despite assurances to the contrary, some industry observers suspect that the Irish drugmaker has set up the deal to help protect itself from a potentially hostile takeover from Royalty Pharma.

Kelly Martin, chief executive of Elan, denied that the move has anything to do with Royalty's $5.7 billion bid for the firm, which it rejected last month, reportedly saying that "Royalty - to myself, to the board, to pretty much every shareholder that we can talk to, frankly - is utterly irrelevant", according to Reuters.

Nevertheless, it has been pointed out that the deal will trim the amount of cash in Elan's coffers, and thus potentially reduce its attractiveness as a takeover target.