Biopharmaceutical company Theravance has announced it will split into two independent, publicly traded companies via a stock dividend on May 15.

Each Theravance stockholder will receive shares of Theravance Biopharma on the issue date, currently expected to be June 2. In addition, the company said it intends to initiate a quarterly cash dividend to stockholders of Theravance of $0.25 per share beginning in the third quarter of 2014.

Rick E. Winningham, CEO, said, "The completion of the separation will be a major milestone on the path toward creating two separate successful companies, each aligned with distinct stockholder objectives. Theravance's strategy will align with stockholders who seek capital returns from dividend payouts, which we intend to grow over time, and potential future share repurchases. Theravance Biopharma shareholders, on the other hand, have the potential to benefit primarily from capital appreciation associated with progress in the research, development and commercialization activities in our product pipeline."

Theravance, a royalty management company, will focus on managing all development and commercial responsibilities under its respiratory partnership agreements with GlaxoSmithKline and associated royalty revenues, including royalties from RELVAR/BREO ELLIPTA and ANORO ELLIPTA, with the intention of providing capital returns to stockholders.

The R&D company, Theravance Biopharma, will be a biopharmaceutical company focused on discovery, development and commercialization of small molecule product candidates in the bacterial infections, central nervous system (CNS)/pain, respiratory disease and gastrointestinal (GI) motility dysfunction therapeutic areas.

The separation will create two independent, publicly traded companies with different business models, enabling investors to align their investment philosophies with the strategic opportunities and financial objectives of the two independent enterprises.

Theravance will be capitalized with the net proceeds of approximately $434.3 million from the recently completed private placement of non-recourse PhaRMA royalty notes less any milestones paid to GSK prior to the separation. The dividend is intended to grow over time.