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Organization and Summary of Significant Accounting Policies - Segment Reporting (Details)	12 Months Ended
	Dec. 31, 2019 segment
Organization and Summary of Significant Accounting Policies
Number of business segments	1

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 58,064	$ 378,021
Short-term marketable securities	222,767	127,255
Accounts receivable, net of allowances of $0 at December 31, 2019 and 2018, respectively		620
Receivables from collaborative arrangements	11,996	10,053
Receivables from licensing arrangements	10,000
Amounts due from TRC, LLC	28,574	5,422
Other prepaid and current assets	7,087	11,452
Total current assets	338,488	532,823
Property and equipment, net	12,644	13,176
Long-term marketable securities	4,985	11,869
Operating lease assets	46,604
Tax receivable	3,682
Restricted cash	833	833
Other assets	1,590	1,534
Total assets	408,826	560,235
Current liabilities:
Accounts payable	4,758	9,028
Accrued personnel-related expenses	28,180	23,803
Accrued clinical and development expenses	17,587	11,876
Accrued interest payable	5,659	3,086
Non-recourse notes due 2033, net	9,851
Operating lease liabilities	7,762
Deferred revenue	31,575	43,402
Other accrued liabilities	6,331	7,359
Total current liabilities	111,703	98,554
Convertible senior notes due 2023, net	225,890	224,818
Non-recourse notes due 2033, net	219,300	229,535
Deferred rent		7,976
Long-term operating lease liabilities	47,725
Long-term deferred revenue	6,761	26,179
Other long-term liabilities	21,287	24,762
Commitments and contingencies (Notes 11 and 13)
Shareholders' Deficit
Preferred shares, $0.00001 par value: 230 shares authorized, no shares issued or outstanding
Ordinary shares, $0.00001 par value: 200,000 shares authorized; 57,015 and 55,681 shares issued and outstanding at December 31, 2019 and 2018, respectively	1	1
Additional paid-in capital	1,024,614	960,721
Accumulated other comprehensive income (loss)	145	(166)
Accumulated deficit	(1,248,600)	(1,012,145)
Total shareholders' deficit	(223,840)	(51,589)
Total liabilities and shareholders' deficit	$ 408,826	$ 560,235

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (236,455)	$ (215,524)	$ (285,405)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale investments, net of tax	311	567	(480)
Comprehensive loss	$ (236,144)	$ (214,957)	$ (285,885)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Revenue - Development and Commercialization Agreement (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended		3 Months Ended								12 Months Ended
	Jan. 30, 2015	Feb. 28, 2018	Feb. 28, 2015	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Collaborative Arrangements and Co-Promote Agreement
Milestone payment				$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
Equity investments made in the entity														$ 1
Percentage of profit share		33.00%										35.00%
Revenue from the recognition of previously deferred revenue												$ 31,245	130
Future potential combination products
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments				7,500								7,500
Mylan
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments				205,000								$ 205,000
Percentage of profit share												65.00%
Mylan \| Purchase Agreement
Collaborative Arrangements and Co-Promote Agreement
Equity investments made in the entity			$ 30,000
Number of shares purchased			1,585,790
Share Price			$ 18.918
Price per share premium (as a percent)			10.00%
Premium proceeds from sale of ordinary shares			$ 4,200
Trading days	5 days
Mylan \| Development and Commercialization Agreement
Collaborative Arrangements and Co-Promote Agreement
Initial cash payment																$ 15,000
Milestone payment																$ 15,000
Mylan \| Revefenacin Monotherapy (TD-4208)
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments				160,000								$ 160,000
Mylan \| Future potential combination products
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments				45,000								45,000
Mylan \| Milestone - 50% enrollment in Phase 3 twelve-month safety study \| Collaborative Arrangement
Collaborative Arrangements and Co-Promote Agreement
Milestone payment															$ 15,000
Mylan \| Sales milestones \| Revefenacin Monotherapy (TD-4208)
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments				150,000								150,000
Mylan \| Regulatory actions \| Revefenacin Monotherapy (TD-4208) \| European Union
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments				$ 10,000								10,000
Pfizer
Collaborative Arrangements and Co-Promote Agreement
Initial cash payment												10,000
Pfizer \| Sales milestones
Collaborative Arrangements and Co-Promote Agreement
Milestone payment												240,000
Alfasigma
Collaborative Arrangements and Co-Promote Agreement
Milestone payment												125	10,678
Alfasigma \| Development and Commercialization Agreement
Collaborative Arrangements and Co-Promote Agreement
Milestone payment												$ 100	$ 10,700

Share-Based Compensation - Performance Contingent Awards (Details) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Sep. 25, 2015	Aug. 28, 2015	Mar. 31, 2016	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-Based Compensation
Vesting period	3 years
Share-based compensation expense				$ 60,450	$ 51,313	$ 49,145
Research and development
Share-Based Compensation
Share-based compensation expense				28,953	25,563	22,691
Selling, general and administrative
Share-Based Compensation
Share-based compensation expense				$ 31,497	$ 25,750	26,454
Performance-Contingent Awards - RSAs
Share-Based Compensation
Shares approved for grant (in shares)			1,575,000
Awards outstanding (in shares)				776,250	978,750
Performance-Contingent Awards - RSUs
Share-Based Compensation
Shares approved for grant (in shares)			135,000
Awards outstanding (in shares)				101,250	101,250
Performance-based vesting
Share-Based Compensation
Vesting period			5 years
RSUs
Share-Based Compensation
Vesting period			5 years
Awards outstanding (in shares)				4,939,774	3,069,403
Share-based compensation expense				$ 39,520	$ 34,077	25,959
RSUs \| Minimum
Share-Based Compensation
Vesting period		3 years
RSUs \| Maximum
Share-Based Compensation
Vesting period		4 years
Maximum potential expense \| Research and development
Share-Based Compensation
Share-based compensation expense				100
Maximum potential expense \| Selling, general and administrative
Share-Based Compensation
Share-based compensation expense				300
First tranche
Share-Based Compensation
Share-based compensation expense					1,700	2,600
Second tranche
Share-Based Compensation
Share-based compensation expense				1,900	$ 2,600	$ 6,300
Third tranche
Share-Based Compensation
Share-based compensation expense				9,800
Third tranche \| Research and development
Share-Based Compensation
Share-based compensation expense				1,000
Third tranche \| Selling, general and administrative
Share-Based Compensation
Share-based compensation expense				1,900
Third tranche \| Maximum potential expense
Share-Based Compensation
Share-based compensation expense				2,900
Second and Third tranche
Share-Based Compensation
Share-based compensation expense				$ 400

Organization and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Organization and Summary of Significant Accounting Policies

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Theravance Biopharma, Inc. (“Theravance Biopharma” or the “Company”) is a diversified biopharmaceutical company primarily focused on the discovery, development and commercialization of organ-selective medicines. The Company’s purpose is to create transformational medicines to improve the lives of patients suffering from serious illnesses. The Company’s research is focused in the areas of inflammation and immunology.

Basis of Presentation

The Company’s consolidated financial statements have been prepared in conformity with United States (“US”) Generally Accepted Accounting Principles ("GAAP"), and the US Securities and Exchange (“SEC”) regulations for annual reporting.

Principles of Consolidation

The consolidated financial statements include the accounts of Theravance Biopharma and its wholly-owned subsidiaries, all of which are denominated in US dollars. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

Segment Reporting

The Company operates in a single segment, which is the discovery (research), development and commercialization of human therapeutics. The Company’s business offerings have similar economics and other characteristics, including the nature of products and manufacturing processes, types of customers, distribution methods and regulatory environment. The Company is comprehensively managed as one business segment by the Company’s Chief Executive Officer and the management team. Product sales are attributed to regions based on ship-to location and revenue from collaborative arrangements, including royalty revenue, are attributed to regions based on the location of the collaboration partner. Revenue from profit sharing-type arrangements are attributed to the geographic market in which the products are sold. Capitalized property and equipment is predominantly located in the US.

Cash and Cash Equivalents

The Company considers all highly-liquid investments purchased with a maturity of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at fair value.

Restricted Cash

The Company maintains restricted cash for certain debt servicing arrangements and for a letter of credit under its South San Francisco, California, facility lease. As of December 31, 2019 and 2018, restricted cash related to such arrangements was $0.8 million.

Investments in Marketable Securities

The Company invests in marketable securities, primarily corporate notes, government bonds and government agency bonds. The Company classifies its marketable securities as available-for-sale securities and reports them at fair value in cash equivalents or marketable securities on the consolidated balance sheets with related unrealized gains and

losses included as a component of shareholders’ equity (deficit). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income and other income (loss) on the consolidated statements of operations. The cost of securities sold is based on the specific identification method. Realized gains and losses and declines in value judged to be other-than-temporary, if any, and interest and dividends on securities are included in interest and other income (loss).

The Company regularly reviews all of its investments for other-than-temporary declines in estimated fair value. The Company’s review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in unrealized loss positions, the severity and duration of the unrealized losses, whether the Company has the intent to sell the securities and whether it is more likely than not that the Company will be required to sell the securities before the recovery of their amortized cost basis. When the Company determines that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is other-than-temporary, the Company reduces the carrying value of the security and recognizes a loss for the amount of such decline.

Fair Value of Financial Instruments

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company’s market assumptions. The Company classifies these inputs into the following hierarchy:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 — Unobservable inputs and little, if any, market activity for the assets.

Financial instruments include cash equivalents, marketable securities, non-marketable securities, accounts receivable, accounts payable, accrued liabilities and debt. The Company’s cash equivalents and marketable securities are carried at estimated fair value and remeasured on a recurring basis. The carrying value of accounts receivable, receivables from collaborative arrangements, accounts payable and accrued liabilities approximate their estimated fair value due to the relatively short-term nature of these instruments. The fair value of the Company's debt is classified as a level 2 financial instrument and is disclosed in “Note 7. Long-Term Debt”.

Accounts Receivable

Trade accounts receivable are recorded net of allowances for wholesaler chargebacks related to government rebate programs, cash discounts for prompt payment, distribution fees and sales discounts. Estimates for wholesaler chargebacks for government rebates and cash discounts are based on contractual terms, historical trends and the Company’s expectations regarding the utilization rates for these programs. When appropriate, the Company provides for an allowance for doubtful accounts by reserving for specifically identified doubtful accounts. The Company performs periodic credit evaluations of its customers and generally does not require collateral. For the periods presented, the Company did not have any material write-offs of trade accounts receivable.

On November 12, 2018, the Company completed the sale of its assets related to the manufacture, marketing and sale of the VIBATIV product to Cumberland Pharmaceuticals Inc. (“Cumberland”) pursuant to the Asset Purchase Agreement dated November 1, 2018. As a result, the remaining accounts receivable balance at December 31, 2018 related to product sales recognized prior to November 12, 2018. There was no remaining accounts receivable balance at December 31, 2019.

Concentration of Credit Risks

The Company invests in a variety of financial instruments and, based on its policy, limits the amount of credit exposure with any one issuer, industry or geographic area for investments other than instruments backed by the US federal government.

Property and Equipment

Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and depreciated using the straight-line method as follows:


Leasehold improvements		Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures		5 - 7 years
Software and computer equipment		3 - 5 years

Capitalized Software

The Company capitalizes certain costs related to direct material and service costs for software obtained for internal use. Upon being placed in service, these costs and other future capitalizable costs related to the internal use software system integration will be depreciated over five years. There were no material capitalized software costs recorded for the years ended December 31, 2019 and 2018.

Impairment of Long-Lived Assets

The Company’s long-lived assets consists of property and equipment, operating lease assets and other assets. The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable. An impairment loss is recognized when the total of estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

Deferred Rent

Deferred rent consists of the difference between cash payments and the recognition of rent expense on a straight-line basis for the buildings the Company occupies. Rent expense is recognized ratably over the life of the leases. Because the Company’s facility operating leases provide for rent increases over the terms of the leases, average annual rent expense during the initial years of the leases exceeded the Company’s actual cash rent payments. Also included in deferred rent are lease incentives which are being recognized ratably over the life of the leases.

Revenue Recognition

Prior to January 1, 2018, the Company recognized revenue under Accounting Standards Codification (“ASC”), Topic 605, Revenue Recognition (“ASC 605”). Under ASC 605, revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Where the revenue recognition criteria was not met, the Company delayed the recognition of revenue by recording deferred revenue until such time that all criteria are met.

Effective January 1, 2018, the Company adopted ASC, Topic 606, Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective method. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, an entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company identifies the performance obligations in the contract by assessing whether the goods or services promised within each contract are distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a reduction to the opening balance of accumulated deficit of approximately $1.1 million and a corresponding reduction in deferred revenue as of January 1, 2018 due to ASC 606’s cumulative adoption impact on the Company’s collaborative arrangements. The Company’s revenue recognized in 2018 would not have been materially different under ASC 605 as compared to ASC 606.

Product Sales

On November 12, 2018, the Company completed the sale of its assets related to the manufacture, marketing and sale of the VIBATIV product to Cumberland pursuant to the Asset Purchase Agreement dated November 1, 2018. Up until that date, the Company sold VIBATIV in the US market by making the drug product available through a limited number of distributors, who sold VIBATIV to healthcare providers. Title and risk of loss transferred upon receipt by these distributors. The Company recognized VIBATIV product sales and related cost of product sales when the distributors obtained control of the drug product, which was at the time title transferred to the distributors.

The Company recorded sales on a net sales basis which included estimates of variable consideration. The variable consideration resulted from sales discounts, government-mandated rebates and chargebacks, distribution fees, estimated product returns and other deductions for sales made by the Company prior to the November 12, 2018 sale to Cumberland. The Company reflected such reductions in revenue as either an allowance to the related account receivable from the distributor, or as an accrued liability, depending on the nature of the sales deduction. Sales deductions were based on management’s estimates that considered payor mix in target markets, industry benchmarks and historical experience. In general, these estimates took into consideration a range of possible outcomes which were probability-weighted in accordance with the expected value method in ASC 606. The Company monitored inventory levels in the distribution channel, as well as sales by distributors to healthcare providers, using product-specific data provided by the distributors. Product return allowances were based on amounts owed or to be claimed on related sales. These estimates took into consideration the terms of the Company’s agreements with customers, historical product returns, rebates or discounts taken, estimated levels of inventory in the distribution channel, the shelf life of the product and specific known market events, such as competitive pricing and new product introductions. The Company updated its estimates and assumptions each quarter and if actual future results varied from its estimates, the Company adjusted these estimates, which could have had an effect on product sales and earnings in the period of adjustment.

The following table summarizes activity in each of the product revenue allowance and reserve categories:


	Chargebacks,		Government
	Discounts and		and Other
(In thousands)	Fees		Rebates		Returns		Total
Balance at December 31, 2017	$	992	$	352	$	946	$	2,290
Provision related to current period sales		6,402		704		521		7,627
Adjustment related to prior period sales		(81)		168		(449)		(362)
Credit or payments made during the period		(6,938)		(932)		(157)		(8,027)
Balance at December 31, 2018	$	375	$	292	$	861	$	1,528
Provision related to current period sales		—		—		—		—
Adjustment related to prior period sales		116		121		(38)		199
Credit or payments made during the period		(264)		(202)		—		(466)
Balance at December 31, 2019	$	227	$	211	$	823	$	1,261

Collaborative Arrangements under ASC 606 (Effective January 1, 2018)

The Company enters into collaborative arrangements with partners that fall under the scope of ASC Topic 808, Collaborative Arrangements (“ASC 808”). While these arrangements are in the scope of ASC 808, the Company may analogize to ASC 606 for some aspects of the arrangements. The Company analogizes to ASC 606 for certain activities within the collaborative arrangement for the delivery of a good or service (i.e., a unit of account) that is part of its ongoing major or central operations. Revenue recognized by analogizing to ASC 606 is recorded as “collaboration revenue” or “licensing revenue” whereas, revenue recognized in accordance with ASC 808, is recorded on a separate collaboration revenue line on the consolidated statements of operations.

The terms of the Company’s collaborative arrangements typically include one or more of the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; (iii) royalties on net sales of licensed products; (iv) reimbursements or cost-sharing of research and development expenses; and (v) profit/loss sharing arising from co-promotion arrangements. Each of these payments results in collaboration revenues or an offset against research and development expense. Where a portion of non-refundable up-front fees or other payments received is allocated to continuing performance obligations under the terms of a collaborative arrangement, they are recorded as deferred revenue and recognized as collaboration revenue when (or as) the underlying performance obligation is satisfied.

As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price may include such estimates as, forecasted revenues or costs, development timelines, discount rates and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and it measures the services delivered to the collaborative partner which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

Up-front Fees: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes collaboration revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing collaboration revenue from the allocated transaction price. For example, when the Company receives up-front fees for the performance of research and development services, or when research and development services are not considered to be distinct from a license, the Company recognizes collaboration revenue for those units of account over time using a measure of progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue or expense recognition as a change in estimate.

Milestone Payments: At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the collaborative partner’s control, such as non-operational developmental and regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or the collaborative partner’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative collaboration revenues and earnings in the period of adjustment.

Royalties: For arrangements that include sales-based royalties, including commercial milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Following the sale of VIBATIV to Cumberland in November 2018, VIBATIV royalties earned from Cumberland are included within “interest and other income, net” on the consolidated statements of operations. In addition, the Company’s income earned related to TRELEGY ELLIPTA sales is included within “income from our investment in TRC, LLC” on the consolidated statements of operations.

Reimbursement, cost-sharing and profit-sharing payments: Under certain collaborative arrangements, the Company has been reimbursed for a portion of its research and development expenses or participates in the cost-sharing of such research and development expenses. Such reimbursements and cost-sharing arrangements have been reflected as a reduction of research and development expense in the Company’s consolidated statements of operations, as the Company does not consider performing research and development services for reimbursement to be a part of its ongoing major or central operations.

Collaborative Arrangements under ASC 605 (Effective Prior to January 1, 2018)

Revenue from non-refundable, up-front license or technology access payments under license and collaborative arrangements that were not dependent on any future performance by the Company was recognized when such amounts were earned. If the Company had continuing obligations to perform under the arrangement, such fees were recognized over the estimated period of continuing performance obligation.

The Company accounted for multiple element arrangements, such as license and development agreements in which it may have provided several deliverables, in accordance with ASC, Subtopic 605-25, Multiple Element Arrangements. For new or materially amended multiple element arrangements, the Company identified the deliverables at the inception of the arrangement and each deliverable within a multiple deliverable revenue arrangement was accounted for as a separate unit of accounting if both of the following criteria were met: (1) the delivered item or items had value to the customer on a standalone basis; and (2) for an arrangement that included a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) was considered probable and substantially in the Company’s control. The Company allocated revenue to each non-contingent element based on the relative selling price of each element. When applying the relative selling price method, the Company determined the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it existed, or third-party evidence (“TPE”) of selling price, if it existed. If neither VSOE nor TPE of selling price existed for a deliverable, the Company used the best estimated selling price for that deliverable. Revenue allocated to each element was then recognized based on when the basic four revenue recognition criteria were met for each element.

Where a portion of non-refundable upfront fees or other payments received were allocated to continuing performance obligations under the terms of a collaborative arrangement, they were recorded as deferred revenue and recognized as revenue ratably over the term of the Company’s estimated performance period under the agreement. The Company determined the estimated performance periods, and they were periodically reviewed based on the progress of the related program. The effect of any change made to an estimated performance period and, therefore revenue recognized, would occur on a prospective basis in the period that the change was made.

Under certain collaborative arrangements, the Company was reimbursed for a portion of its research and development expenses. These reimbursements were reflected as a reduction of research and development expense in the Company’s consolidated statements of operations, as it did not consider performing research and development services to be a customer relationship in the context of those collaborative arrangements. Therefore, the reimbursement of research and development services were recorded as a reduction of research and development expense.

The Company recognized revenue from milestone payments when (i) the milestone event was substantive and its achievability was not reasonably assured at the inception of the agreement; and (ii) the Company did not have ongoing performance obligations related to the achievement of the milestone. Milestone payments were considered substantive if all of the following conditions were met: the milestone payment (a) was commensurate with either the

Company’s performance to achieve the milestone or the enhancement of the value of the delivered item or items as a result of a specific outcome resulting from the Company’s performance to achieve the milestone; (b) related solely to past performance; and (c) was reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.

Research and Development Expenses

Research and development (“R&D”) expenses are recorded in the period that services are rendered or goods are received. R&D expenses consist of salaries and benefits, laboratory supplies and facility costs, as well as fees paid to third parties that conduct R&D activities on behalf of the Company, net of certain external R&D expenses reimbursed under the Company’s collaborative arrangements.

As part of the process of preparing financial statements, the Company is required to estimate and accrue certain R&D expenses. This process involves the following:

•

identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of actual cost;

•

estimating and accruing expenses in the Company’s financial statements as of each balance sheet date based on facts and circumstances known to it at the time; and

•

periodically confirming the accuracy of the Company’s estimates with selected service providers and making adjustments, if necessary.

Examples of estimated research and development expenses that the Company accrues include:

•

fees paid to clinical research organizations (“CROs”) in connection with preclinical and toxicology studies and clinical studies;

•

fees paid to investigative sites in connection with clinical studies;

•

fees paid to contract manufacturing organizations (“CMOs”) in connection with the production of product and clinical study materials; and

•

professional service fees for consulting and related services.

The Company bases its expense accruals related to clinical studies on its estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical studies on the Company’s behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors, such as the successful enrollment of patients and the completion of clinical study milestones. The Company’s service providers typically invoice it monthly in arrears for services performed. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the Company does not identify costs that it has begun to incur or if it underestimates or overestimates the level of services performed or the costs of these services, the Company’s actual expenses could differ from its estimates.

To date, the Company has not experienced significant changes in its estimates of accrued research and development expenses after a reporting period. Such changes in estimates recorded after a reporting period have been less than 1% of the Company’s annual R&D expenses and have not been material. However, due to the nature of estimates, there is no assurance that the Company will not make changes to its estimates in the future as it becomes aware of additional information about the status or conduct of its clinical studies and other research activities. Such

changes in estimates will be recognized as research and development expenses in the period that the change in estimate occurs.

Advertising Expenses

The Company expenses the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $2.4 million, $1.9 million and $3.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Fair Value of Share-Based Compensation Awards

The Company uses the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under its equity incentive plans and rights to acquire shares granted under its employee share purchase plan (“ESPP”). The Black-Scholes-Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected share price volatility. The Company uses the “simplified” method as described in Staff Accounting Bulletin No. 107, Share-Based Payment, to estimate the expected option term.

Share-based compensation expense is calculated based on awards ultimately expected to vest and is reduced for actual forfeitures as they occur. Compensation expense for purchases under the ESPP is recognized based on the fair value of the award on the date of offering.

Amortization of Debt Issuance Costs

Debt issuance costs are amortized to interest expense over the estimated life of the related debt based on the effective interest method.

Theravance Respiratory Company, LLC (“TRC”)

Through its equity ownership of TRC, the Company is entitled to receive an 85% economic interest in any future payments that may be made by Glaxo Group or one of its affiliates (“GSK”) relating to the GSK-Partnered Respiratory Programs (net of TRC expenses paid and the amount of cash, if any, expected to be used by TRC pursuant to the TRC LLC Agreement over the next four fiscal quarters). The GSK-Partnered Respiratory Programs consist primarily of the Trelegy Ellipta program and the inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (“MABA”) program.

The Company analyzed its ownership, contractual and other interests in TRC to determine if TRC is a variable-interest entity (“VIE”), whether the Company has a variable interest in TRC and the nature and extent of that interest. The Company determined that TRC is a VIE. The party with the controlling financial interest, the primary beneficiary, is required to consolidate the entity determined to be a VIE. Therefore, the Company also assessed whether the Company is the primary beneficiary of TRC based on the power to direct its activities that most significantly impact its economic performance and the Company’s obligation to absorb its losses or the right to receive benefits from it that could potentially be significant to TRC. Based on the Company’s assessment, it determined that it is not the primary beneficiary of TRC, and, as a result, the Company does not consolidate TRC in its consolidated financial statements. TRC is recognized in the Company’s consolidated financial statements under the equity method of accounting. Income related to the Company’s equity ownership of TRC is reflected in its consolidated statements of operations as non-operating income.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are anticipated to be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company’s total unrecognized tax benefits of $58.8 million and $52.4 million, as of December 31, 2019 and December 31, 2018, respectively, may reduce the effective tax rate in the period of recognition. The Company

currently has a full valuation allowance against its deferred tax assets, which would impact the timing of the effective tax rate benefit should any of these uncertain positions be favorably settled in the future.

The Company assesses all material positions, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether the factors underlying the sustainability assertion have changed and whether the amount of the recognized tax benefit is still appropriate.

The recognition and measurement of tax benefits requires significant judgment. The Company has taken certain positions where it believes that its position is greater than 50% likely to be realized upon ultimate settlement and for which no reserve for uncertain tax positions has been recorded. If the Company does not ultimately realize the expected benefit of these positions, it will record additional income tax expenses in future periods. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Any tax levied or credited by a governmental taxing authority that is not based on the Company’s income is outside the scope of accounting for income taxes. Therefore, the Company records such items as a component in its loss before income taxes.

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding, less ordinary shares subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding, less ordinary shares subject to forfeiture, plus all additional ordinary shares that would have been outstanding, assuming dilutive potential ordinary shares had been issued for other dilutive securities.



	Year Ended December 31,
(In thousands)	2019		2018		2017
Numerator:
Net loss	$	(236,455)	$	(215,524)	$	(285,405)
Denominator:
Weighted-average common shares outstanding		56,452		55,076		53,703
Less: weighted-average common shares subject to forfeiture		(842)		(1,107)		(1,351)
Weighted-average common shares used to compute basic and diluted net loss per share		55,610		53,969		52,352
Basic and diluted net loss per share	$	(4.25)	$	(3.99)	$	(5.45)

For the years ended December 31, 2019, 2018 and 2017, diluted and basic net loss per share was identical since potential ordinary shares were excluded from the calculation, as their effect was anti-dilutive.

Anti-dilutive Securities

The following ordinary equivalent shares were not included in the computation of diluted net loss per share because their effect was anti-dilutive:


	Year Ended December 31,
(In thousands)	2019	2018	2017
Share issuances under equity incentive plans and ESPP	6,577	3,492	3,369
Restricted shares	—	2	6
Share issuances upon the conversion of convertible senior notes	6,676	6,676	6,676
Total	13,253	10,170	10,051

In addition, there were 414,000, 978,750 and 1,305,000 shares that are subject to performance-based vesting criteria which have been excluded from the ordinary equivalent shares table above for the years ended December 31, 2019, 2018 and 2017, respectively.

Comprehensive Loss

Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments.

Related Parties

GSK owned 16.9% of the Company’s ordinary shares outstanding as of December 31, 2019. On March 17, 2016, GSK purchased from the Company 1,301,015 of its ordinary shares for an aggregate purchase price of approximately $23.0 million pursuant to a Share Purchase Agreement between GSK and the Company dated March 14, 2016. The Share Purchase Agreement was entered into pursuant to Section 2.1(d)(ii) of the Governance Agreement between GSK and the Company dated March 3, 2014 (the “Governance Agreement”), which until December 31, 2017 afforded GSK, on a quarterly basis, the opportunity to purchase from the Company ordinary shares sufficient to maintain GSK’s Percentage Interest (as defined in the Governance Agreement) at the same level as prior to any exercise of share options and vesting of restricted shares that occurred during the prior quarter, and pursuant to the Company’s approval to GSK to make additional purchases, which approval was required by Section 2.1(a) of the Governance Agreement. The Governance Agreement expired on December 31, 2017.

Robert V. Gunderson, Jr. is a member of the Company’s board of directors. The Company has engaged Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, of which Mr. Gunderson is a partner, as its primary legal counsel. Fees incurred were $0.4 million, $0.5 million and $0.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Dr. Smaldone Alsup is a member of the Company’s board of directors and is also the Chief Operating Officer and Chief Scientific Officer of NDA Group. The Company engaged NDA Group in 2017 to perform consulting services related to the regulatory plans for one of the Company’s drug candidates. There were no fees incurred for services performed by NDA Group for the years ended December 31, 2019 and 2018, and there were $0.1 million in fees incurred for the year ended December 31, 2017.

Recently Adopted Accounting Pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 was aimed at making leasing activities more transparent and comparable, and requires leases with terms greater than one year to be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability.

The Company adopted the new standard using a modified retrospective transition method to initially account for the impact of the adoption with a cumulative adjustment to accumulated deficit, if any, on the effective date of ASU 2016-02 of January 1, 2019, rather than applying the transition provisions in the earliest period presented. The Company elected a package of practical expedients that allowed entities to not: (i) reassess whether any expired or existing contracts are considered or contain leases; (ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases. In addition, the Company elected other practical expedients that allowed entities to: (i) use hindsight in determining the term of a lease when the lease includes an option to extend the lease term; (ii) exclude all leases, on a go forward basis, that have a lease term of 12-months or less; and (iii) combine lease and non-lease components (e.g., office common area maintenance expenses) when recognizing a lease on an entity’s balance sheet on a go forward basis.

As a result of the adoption of ASU 2016-02, on January 1, 2019, the Company recorded a right-of-use operating lease asset of $48.3 million and an operating lease liability of $56.3 million related to its office leases in South San Francisco, California and Dublin, Ireland. The lease liability included $8.0 million related to deferred rent liabilities. The adoption of ASU 2016-02 did not have an impact on the Company’s consolidated results of operations, lease expense, or cash flows.

Effective January 1, 2019, the Company adopted ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 was issued to provide clarity and reduce both (i) diversity in practice; and (ii) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in ASU 2017-09 provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Essentially, an entity will not have to account for the effects of a modification if: (i) the fair value of the modified award is the same immediately before and after the modification; (ii) the vesting conditions of the modified award are the same immediately before and after the modification; and (iii) the classification of the modified award as either an equity instrument or liability instrument is the same immediately before and after the modification. The adoption of ASU 2017-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures as of January 1, 2019.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13"). This guidance requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. ASU 2016-13 also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt securities and instead focuses on determining whether any impairment is a result of a credit loss or other factors. An entity will recognize an allowance for credit losses on available-for-sale debt securities rather than an other-than-temporary impairment that reduces the cost basis of the investment. ASU 2016-13 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2019. The Company has evaluated ASU 2016-13 and determined that ASU 2016-13 is not expected to have a material impact on its consolidated financial statements and related disclosures based on the historically high credit quality and short-term maturities of the Company’s marketable securities.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, ASU 2018-15 requires a customer in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2019. The Company has evaluated ASU 2018-15 and determined that ASU 2016-15 is not expected to have a material impact on its consolidated financial statements and related disclosures. However, the adoption of ASU 2018-15 may result in an increase in capitalized assets related to qualifying cloud computing arrangement implementation costs incurred after the adoption date.

In November 2018, the FASB issued ASU 2018-18, Collaboration Arrangements: Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”). The issuance of Topic 606 raised questions about the interaction between the guidance on collaborative arrangements and revenue recognition. ASU 2018-18 addresses this uncertainty by: (i) clarifying that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaboration arrangement participant is a customer; (ii) adding unit of account guidance to assess whether the collaboration arrangement or a part of the arrangement is with a customer; and (iii) precluding a company from presenting transactions with collaboration arrangement participants that are not directly related to sales to third parties together with revenue from contracts with customers. ASU 2018-18 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2019. The Company has evaluated ASU 2018-18 and determined that ASU 2018-18 is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

On December 18, 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards. ASU 2019-12 removes certain exceptions from ASC 740, Income Taxes, including (i) the exception to the incremental approach for intra period tax allocation when there is a loss from continuing operations and income or a gain from other items such as discontinued operations or other comprehensive income; (ii) the exception to accounting for outside basis differences of equity method investments and foreign subsidiaries; and (iii) the exception to limit tax benefit recognized in interim periods in cases when the year-to-date losses exceed anticipated losses. ASU 2019-12 also simplifies GAAP in several other areas of ASC 740 such as (i) franchise taxes and other taxes partially based on income; (ii) step-up in tax basis goodwill considered part of a business combination in which the book goodwill was originally recognized or should be considered a separate transaction; (iii) separate financial statements of entities not subject to tax; and (iv) interim recognition of enactment of tax laws or rate changes. ASU 2019-12 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2020, and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its consolidated financial statements and related disclosures.

The Company has evaluated other recently issued accounting pronouncements and does not currently believe that any of these pronouncements will have a material impact on its consolidated financial statements and related disclosures.

Leases - Maturity of Lease Liabilities and Other Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Nov. 30, 2018
Maturity of Lease Liabilities
2020	$ 7,940
2021	9,480
2022	9,745
2023	10,023
2024	10,309
Thereafter	59,860
Total operating lease payments	107,357
Less: Estimated tenant improvement allowance	(15,561)
Less: Imputed interest	(36,309)
Present value of operating lease liabilities	55,487
Operating cash flows from operating leases	$ 7,200
Weighted-average remaining lease term (years)	10 years 2 months 12 days
Weighted-average discount rate	8.65%
9.0% non-recourse notes due 2033
Maturity of Lease Liabilities
Interest rate (as a percent)	9.00%	9.00%	9.00%

Share-Based Compensation - RSU and RSA activity (Details) - USD ($) $ in Millions		12 Months Ended
	Sep. 25, 2015	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
RSUs
RSU and RSA activity ( including Performance RSUs and RSAs)
Outstanding at beginning of year		3,069,403
Granted (in shares)	987,496	3,959,496
Released (in shares)		(1,307,842)
Forfeited (in shares)		(781,283)
Outstanding at end of year		4,939,774	3,069,403
Additional disclosures
Aggregate intrinsic value outstanding		$ 127.9
Total estimated fair value of RSUs vested		32.4	$ 31.6	$ 25.1
Restricted shares
Additional disclosures
Aggregate intrinsic value outstanding		$ 20.1
Performance-Contingent Awards - RSAs
RSU and RSA activity ( including Performance RSUs and RSAs)
Outstanding at beginning of year		978,750
Granted (in shares)		0
Released (in shares)		0
Forfeited (in shares)		(202,500)
Outstanding at end of year		776,250	978,750

Revenue - Revenue from Collaborative Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Collaborative Arrangements and Co-Promote Agreement
Revenue	$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
Collaboration revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period									31,245	130
Janssen
Collaborative Arrangements and Co-Promote Agreement
Revenue									31,096	31,053
Collaboration revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period									37,900
Alfasigma
Collaborative Arrangements and Co-Promote Agreement
Revenue									125	10,678
Other
Collaborative Arrangements and Co-Promote Agreement
Revenue									29	60	598
Collaborative revenue
Collaborative Arrangements and Co-Promote Agreement
Revenue									$ 31,250	$ 41,791	$ 598

Leases

12 Months Ended

Dec. 31, 2019

Leases

Leases

8. Leases

The Company leases approximately 170,000 square feet of office and laboratory space in two buildings in South San Francisco, California, under a non-cancelable operating lease that ends in May 2030 (“SSF Lease”) and includes a tenant improvement allowance with a remaining balance of $15.6 million, as of December 31, 2019, that expires in May 2022. The Company’s Irish subsidiary leases approximately 6,100 square feet of office space in Dublin, Ireland under a lease that expires in April 2027 (“Dublin Lease”). In addition, the Company leases equipment for clinical research studies with an estimated lease period ending in September 2020.

The SSF Lease contains two options to extend the term of the lease for successive periods of five years each, and the Dublin Lease contains a lease termination option in April 2024 at the Company’s discretion. The two options to extend the SSF Lease and the option to terminate the Dublin Lease were not recognized in the determination of the Company’s right-of-use assets and lease liabilities below.

The Company has evaluated its leases and determined that they were all operating leases. The present values of the remaining lease payments and corresponding right-of-use assets were as follows, and the difference between the right-of-use assets and lease liabilities was due to deferred rent payments that are payable in future periods.


(In thousands)	Classification	December 31, 2019
Assets
Operating lease assets	Operating lease assets	$	46,604

Liabilities
Current:
Operating lease liabilities	Operating lease liabilities	$	7,762
Non-current:
Operating lease liabilities	Long-term operating lease liabilities		47,725
Total operating lease liabilities		$	55,487

Lease expense was included within operating expenses in the consolidated statements of operations as follows:


		Year Ended
(In thousands)	Classification	December 31, 2019
Operating lease expense	Selling, general and administrative expenses	$	9,964
Operating lease expense	Research and development expenses		164
Total operating lease expense ⁽¹⁾		$	10,128

(1)	Includes short-term leases which were immaterial.

As of December 31, 2019, the maturities of the Company’s lease liabilities were as follows:


(In thousands)
Years ending December 31:
2020	$	7,940
2021		9,480
2022		9,745
2023		10,023
2024		10,309
Thereafter		59,860
Total operating lease payments	$	107,357
Less: Estimated tenant improvement allowance		(15,561)
Less: Imputed interest		(36,309)
Present value of operating lease liabilities	$	55,487

Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2019 was $7.2 million and is included in net cash used in operating activities in the consolidated statements of cash flows. As of December 31, 2019, the weighted-average remaining lease term was 10.2 years, and the weighted-average discount rate used to determine the lease liabilities was 8.65%. The Company’s discount rate was primarily derived from the 9.0% interest rate on its Non-Recourse 2033 Notes issued in November 2018 and did not involve any significant assumptions.

Leases - Assets and Liabilities (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Assets and liabilities
Operating lease assets	$ 46,604
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Operating lease assets
Operating lease liabilities, current	$ 7,762
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other Accrued Liabilities, Current
Operating lease liabilities	$ 47,725
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Operating lease liabilities
Total operating lease liabilities	$ 55,487

Income Taxes - Uncertain Tax Positions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Gross unrecognized tax benefits
Unrecognized tax benefits at the beginning of the period	$ 52,404	$ 41,794
Gross increase in tax positions for prior year		(685)
Gross increase in tax positions for current year	8,369	11,295
Gross decrease in tax positions for prior years	(2,010)
Unrecognized tax benefits at the end of the period	58,763	$ 52,404
Unrecognized tax benefits decrease	$ 8,000

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)
Revenue	$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
Costs and expenses	100,071	77,628	68,626	79,004	78,358	75,288	72,180	73,295	325,329	299,121	275,509
Loss from operations	(70,572)	(65,201)	(42,476)	(73,666)	(62,621)	(62,450)	(48,704)	(64,976)	(251,915)	(238,751)	(260,123)
Net loss	$ (65,606)	$ (58,431)	$ (39,838)	$ (72,580)	$ (50,186)	$ (59,433)	$ (40,818)	$ (65,087)	$ (236,455)	$ (215,524)	$ (285,405)
Basic and diluted net loss per share (in dollars per share)	$ (1.17)	$ (1.05)	$ (0.72)	$ (1.32)	$ (0.92)	$ (1.10)	$ (0.76)	$ (1.22)	$ (4.25)	$ (3.99)	$ (5.45)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Income Taxes - Components of provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Provision for income tax benefit (expense)
Current	$ 5,222	$ 10,561	$ (13,694)
Total	$ 5,222	$ 10,561	$ (13,694)
Effective tax rate (as a percent)	2.16%	4.67%	(5.04%)
Provision for income taxes on undistributed earnings of foreign subsidiaries	$ 0
Undistributed earnings	0
United States
Provision for income tax benefit (expense)
Current	$ 5,210	$ 10,563	$ (13,091)
Ireland
Provision for income tax benefit (expense)
Current			$ (566)
Effective tax rate (as a percent)	2.16%	4.67%	(5.04%)
United Kingdom
Provision for income tax benefit (expense)
Current	$ 12	$ (2)	$ (37)

Revenue - Revenue from Licensing Arrangements (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Future potential combination products
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	$ 7.5
Mylan
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	205.0
Upfront payment receivable	18.5
Mylan \| Revefenacin Monotherapy (TD-4208)
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	160.0
Mylan \| Revefenacin Monotherapy (TD-4208) \| Sales milestones
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	150.0
Mylan \| YUPELRI Monotherapy
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	9.0
Mylan \| YUPELRI Monotherapy \| Sales milestones
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	37.5
Mylan \| Future potential combination products
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	45.0
Mylan \| Future potential combination products \| Development and Sales Milestones
Collaborative Arrangements and Co-Promote Agreement
Potential milestone or contingent payments	$ 54.0

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property and Equipment
Property and equipment, gross	$ 60,212	$ 62,871
Less: accumulated depreciation	(47,568)	(49,695)
Property and equipment, net	12,644	13,176
Depreciation expense	3,300	3,000	$ 2,500
Computer equipment
Property and Equipment
Property and equipment, gross	2,119	2,522
Software
Property and Equipment
Property and equipment, gross	1,718	3,577
Furniture and fixtures
Property and Equipment
Property and equipment, gross	3,665	3,759
Laboratory equipment
Property and Equipment
Property and equipment, gross	30,546	31,164
Leasehold improvements
Property and Equipment
Property and equipment, gross	$ 22,164	$ 21,849

Organization and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Organization and Summary of Significant Accounting Policies

Basis of Presentation

Principles of Consolidation

Use of Estimates

Segment Reporting

Cash and Cash Equivalents

The Company considers all highly-liquid investments purchased with a maturity of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at fair value.

Restricted Cash

Investments in Marketable Securities

Fair Value of Financial Instruments

Level 1 — Quoted prices for identical instruments in active markets.

Level 3 — Unobservable inputs and little, if any, market activity for the assets.

Accounts Receivable

Concentration of Credit Risks

Property and Equipment

Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and depreciated using the straight-line method as follows:


Leasehold improvements		Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures		5 - 7 years
Software and computer equipment		3 - 5 years

Capitalized Software

Impairment of Long-Lived Assets

Deferred Rent

Revenue Recognition

Product Sales

The following table summarizes activity in each of the product revenue allowance and reserve categories:


	Chargebacks,		Government
	Discounts and		and Other
(In thousands)	Fees		Rebates		Returns		Total
Balance at December 31, 2017	$	992	$	352	$	946	$	2,290
Provision related to current period sales		6,402		704		521		7,627
Adjustment related to prior period sales		(81)		168		(449)		(362)
Credit or payments made during the period		(6,938)		(932)		(157)		(8,027)
Balance at December 31, 2018	$	375	$	292	$	861	$	1,528
Provision related to current period sales		—		—		—		—
Adjustment related to prior period sales		116		121		(38)		199
Credit or payments made during the period		(264)		(202)		—		(466)
Balance at December 31, 2019	$	227	$	211	$	823	$	1,261

Collaborative Arrangements under ASC 606 (Effective January 1, 2018)

Collaborative Arrangements under ASC 605 (Effective Prior to January 1, 2018)

Research and Development Expenses

As part of the process of preparing financial statements, the Company is required to estimate and accrue certain R&D expenses. This process involves the following:

•

estimating and accruing expenses in the Company’s financial statements as of each balance sheet date based on facts and circumstances known to it at the time; and

•

periodically confirming the accuracy of the Company’s estimates with selected service providers and making adjustments, if necessary.

Examples of estimated research and development expenses that the Company accrues include:

•

fees paid to clinical research organizations (“CROs”) in connection with preclinical and toxicology studies and clinical studies;

•

fees paid to investigative sites in connection with clinical studies;

•

fees paid to contract manufacturing organizations (“CMOs”) in connection with the production of product and clinical study materials; and

•

professional service fees for consulting and related services.

changes in estimates will be recognized as research and development expenses in the period that the change in estimate occurs.

Advertising Expenses

Fair Value of Share-Based Compensation Awards

Amortization of Debt Issuance Costs

Debt issuance costs are amortized to interest expense over the estimated life of the related debt based on the effective interest method.

Theravance Respiratory Company, LLC ("TRC")

Theravance Respiratory Company, LLC (“TRC”)

Income Taxes

Net Loss per Share



	Year Ended December 31,
(In thousands)	2019		2018		2017
Numerator:
Net loss	$	(236,455)	$	(215,524)	$	(285,405)
Denominator:
Weighted-average common shares outstanding		56,452		55,076		53,703
Less: weighted-average common shares subject to forfeiture		(842)		(1,107)		(1,351)
Weighted-average common shares used to compute basic and diluted net loss per share		55,610		53,969		52,352
Basic and diluted net loss per share	$	(4.25)	$	(3.99)	$	(5.45)

Anti-dilutive Securities

The following ordinary equivalent shares were not included in the computation of diluted net loss per share because their effect was anti-dilutive:


	Year Ended December 31,
(In thousands)	2019	2018	2017
Share issuances under equity incentive plans and ESPP	6,577	3,492	3,369
Restricted shares	—	2	6
Share issuances upon the conversion of convertible senior notes	6,676	6,676	6,676
Total	13,253	10,170	10,051

Comprehensive Loss

Comprehensive loss is comprised of net loss and changes in unrealized gains and losses on the Company’s available-for-sale investments.

Related Parties

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

Organization and Summary of Significant Accounting Policies - Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net loss	$ (65,606)	$ (58,431)	$ (39,838)	$ (72,580)	$ (50,186)	$ (59,433)	$ (40,818)	$ (65,087)	$ (236,455)	$ (215,524)	$ (285,405)
Denominator:
Weighted-average common shares outstanding									56,452	55,076	53,703
Less: weighted-average common shares subject to forfeiture									(842)	(1,107)	(1,351)
Weighted-average common shares used to compute basic and diluted net loss per share									55,610	53,969	52,352
Basic and diluted net loss per share	$ (1.17)	$ (1.05)	$ (0.72)	$ (1.32)	$ (0.92)	$ (1.10)	$ (0.76)	$ (1.22)	$ (4.25)	$ (3.99)	$ (5.45)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Leases - Lease Cost (Details) $ in Thousands	12 Months Ended
Leases - Lease Cost (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease expense	$ 10,128
Selling, general and administrative
Lessee, Lease, Description [Line Items]
Operating lease expense	9,964
Research and development
Lessee, Lease, Description [Line Items]
Operating lease expense	$ 164

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2019

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

SUPPLEMENTARY FINANCIAL DATA

(UNAUDITED)

(In thousands, except per share data)

The following table presents certain unaudited consolidated quarterly financial information for the eight quarters in the periods ended December 31, 2019 and 2018. This information has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein.


	For the Quarters Ended
	March 31,		June 30,		September 30,		December 31,
2019
Total revenue	$	5,338	$	26,150	$	12,427	$	29,499
Costs and expenses		79,004		68,626		77,628		100,071
Loss from operations		(73,666)		(42,476)		(65,201)		(70,572)
Net loss		(72,580)		(39,838)		(58,431)		(65,606)
Basic and diluted net loss per share	$	(1.32)	$	(0.72)	$	(1.05)	$	(1.17)
2018
Total revenue	$	8,319	$	23,476	$	12,838	$	15,737
Costs and expenses		73,295		72,180		75,288		78,358
Loss from operations		(64,976)		(48,704)		(62,450)		(62,621)
Net loss		(65,087)		(40,818)		(59,433)		(50,186)
Basic and diluted net loss per share	$	(1.22)	$	(0.76)	$	(1.10)	$	(0.92)

Revenue - Janssen Biotech Agreement (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
	Feb. 28, 2018	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Collaborative Arrangements and Co-Promote Agreement
Revenue		$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
Percentage of profit share	33.00%									35.00%
Revenue from the recognition of previously deferred revenue										$ 31,245	130
Research and development										219,248	201,348	$ 173,887
Janssen
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable	$ 100,000
Revenue										31,096	31,053
Percentage of profit share	67.00%
Maximum potential payments receivable	$ 900,000
Revenue from collaborative arrangements											31,100
Revenue from the recognition of previously deferred revenue										37,900
Research and development										$ 39,900	$ 38,600
Janssen \| Collaborative Arrangement
Collaborative Arrangements and Co-Promote Agreement
Revenue	700,000
Janssen \| Collaborative Arrangement \| TD-1473
Collaborative Arrangements and Co-Promote Agreement
Revenue	$ 200,000

Revenue - Reimbursement of R and D Costs (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended	12 Months Ended
	Feb. 28, 2018	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Research and Development Reimbursement
Total reduction to R and D expense			$ 5,589	$ 9,112	$ 23,540
Percentage of profit share	33.00%		35.00%
Operating expenses
Research and Development Reimbursement
Percentage of profit share		35.00%
Janssen
Research and Development Reimbursement
Total reduction to R and D expense			$ 5,129	1,597
Percentage of profit share	67.00%
Mylan
Research and Development Reimbursement
Total reduction to R and D expense			$ 460	$ 7,515	23,427
Percentage of profit share			65.00%
Other
Research and Development Reimbursement
Total reduction to R and D expense					$ 113

Sale of VIBATIV (Details) - USD ($) $ in Thousands			12 Months Ended
Sale of VIBATIV (Details) - USD ($) $ in Thousands	Nov. 12, 2018	Nov. 01, 2018	Dec. 31, 2019	Dec. 31, 2018	Apr. 30, 2019
Sale of VIBATIV
Proceeds from the sale of assets			$ 5	$ 17
Net gain upon sale of VIBATIV				6,056
VIBATIV \| Disposed of by Sale
Sale of VIBATIV
Proceeds from the sale of assets	$ 20,000
Additional cash payment to the Company					$ 5,000
Tiered royalties (as a percent)		20.00%
Cumulative amount of royalties to be received		$ 100,000
VIBATIV \| Disposed of by Sale \| Interest and other income (expense), net
Sale of VIBATIV
Net gain upon sale of VIBATIV				$ 6,100
Transition-related costs	$ 1,100

Organization and Summary of Significant Accounting Policies - Related Parties (Details) - USD ($) $ in Millions		12 Months Ended
	Mar. 17, 2016	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
GSK
Related party transactions
Ordinary shares held (in percent)		16.90%
Number of shares purchased	1,301,015
Proceeds from sale of ordinary shares, net	$ 23.0
Member board of directors
Related party transactions
Fees incurred related to related party		$ 0.4	$ 0.5	$ 0.3
NDA Group
Related party transactions
Fees incurred related to related party		$ 0.0	$ 0.0	$ 0.1

Investments and Fair Value Measurements - Non-Marketable Equity Securities and Other-Than-Temporary Impairment (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Sep. 30, 2015
Investments and Fair Value Measurements
Consideration received, fair value		$ 8.0
Other than Temporary Impairment Losses, Investments	$ 8.0

Share-Based Compensation - Employee Share Option Exchange Program (Details) $ / shares in Units, $ in Thousands			3 Months Ended	12 Months Ended
	Sep. 25, 2015 USD ($) $ / shares shares	Aug. 28, 2015	Mar. 31, 2016	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Share-Based Compensation
Vesting period	3 years
Total incremental stock-based compensation expense recognized	$ 1,400
Share-based compensation expense				$ 60,450	$ 51,313	$ 49,145
Options
Share-Based Compensation
Options exchanged (in shares) \| shares	1,975,009
Share-based compensation expense				$ 6,381	8,441	7,969
RSUs
Share-Based Compensation
Exchange ratio		2
Vesting period			5 years
RSUs issued (in shares) \| shares	987,496			3,959,496
Fair value (USD per share) \| $ / shares	$ 12.43
Share-based compensation expense				$ 39,520	34,077	25,959
Minimum \| RSUs
Share-Based Compensation
Vesting period		3 years
Maximum \| RSUs
Share-Based Compensation
Vesting period		4 years
Employer Share Option Exchange Program
Share-Based Compensation
Share-based compensation expense				$ 0	$ 300	$ 500

Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-Based Compensation

Share-Based Compensation

11. Share-Based Compensation

Theravance Biopharma Equity Plans

The Company has three equity compensation plans — its 2013 Equity Incentive Plan (the “2013 EIP”), its 2013 Employee Share Purchase Plan (the “2013 ESPP”) and its 2014 New Employee Equity Incentive Plan (the “2014 NEEIP”). At inception, the Company was authorized to issue 5,428,571 ordinary shares under the 2013 EIP, 857,142 ordinary shares under the 2013 ESPP, and 750,000 ordinary shares under the 2014 NEEIP.

The 2013 EIP provides for the issuance of share-based awards, including restricted shares, restricted share units, options, share appreciation rights (“SARs”) and other equity-based awards, to Company employees, officers, directors and consultants. As of January 1 of each year, commencing on January 1, 2015 and ending on (and including) January 1, 2023, the aggregate number of ordinary shares that may be issued under the 2013 EIP shall automatically increase by a number equal to the least of 5% of the total number of ordinary shares outstanding on December 31 of the prior year, 3,428,571 ordinary shares, or a number of ordinary shares determined by the Company’s board of directors. Options may be granted with an exercise price not less than the fair market value of the ordinary shares on the grant date. Under the terms of the Company’s 2013 EIP, options granted to employees generally have a maximum term of 10 years and vest over a four-year period from the date of grant; 25% vest at the end of one year, and 75% vest monthly over the remaining three years. The Company may grant options with different vesting terms from time to time. Unless an employee’s termination of service is due to disability or death, upon termination of service, any unexercised vested options will generally be forfeited at the end of three months or the expiration of the option, whichever is earlier.

Under the 2013 ESPP, the Company’s officers and employees may purchase ordinary shares through payroll deductions at a price equal to 85% of the lower of the fair market value of the ordinary share at the beginning of the offering period or at the end of each applicable purchase period. As of January 1 of each year, commencing on January 1, 2015 and ending on (and including) January 1, 2033, the aggregate number of ordinary shares that may be issued under the 2013 ESPP shall automatically increase by a number equal to the least of 1% of the total number of ordinary shares outstanding on December 31 of the prior year, 571,428 ordinary shares or a number of ordinary shares determined by the Company’s board of directors. The ESPP generally provides for consecutive and overlapping offering periods of 24 months in duration, with each offering period generally composed of four consecutive six-month purchase periods. The purchase periods end on either May 15 or November 15. ESPP contributions are limited to a maximum of 15% of an employee’s eligible compensation. The 2013 ESPP also includes a feature that provides for the existing offering period to terminate and for participants in that offering period to automatically be enrolled in a new offering period when the fair market value of an ordinary share at the beginning of a subsequent offering period falls below the fair market value of an ordinary share on the first day of such offering period.

The 2014 NEEIP provides for the issuance of share-based awards, including restricted shares, restricted share units, non-qualified options and SARs, to the Company’s employees. Options may be granted with an exercise price not less than the fair market value of the ordinary shares on the grant date. Under the terms of the 2014 NEEIP, options granted to employees generally have a maximum term of 10 years and vest over a four-year period from the date of grant; 25% vest at the end of one year, and 75% vest monthly over the remaining three years. The Company may grant options with different vesting terms from time to time. Unless an employee’s termination of service is due to disability or death, upon termination of service, any unexercised vested options will generally be forfeited at the end of three months or the expiration of the option, whichever is earlier.

Innoviva’s Equity Plans

Prior to the Spin-Off, the Company’s employees may have received Innoviva stock-based compensation awards, and, therefore, the following disclosures include information regarding stock-based compensation expense allocated to Theravance Biopharma that relates to Innoviva stock-based equity awards.

At the time of the Spin-Off, Innoviva had one active stock-based incentive plan under which it granted stock-based awards to employees, officers and consultants, the 2012 Equity Incentive Plan. All outstanding stock options and restricted stock units (“RSUs”) held by (i) Innoviva employees who became the Company’s employees; and (ii) members of the board of directors of Innoviva who became members of the Company’s board of directors, in connection with the Spin-Off were adjusted for the Spin-Off. Such awards, along with outstanding restricted stock awards (“RSAs”) held by Innoviva employees who became the Company’s employees in connection with the Spin-Off, will continue to vest and remain outstanding based on continuing employment or service with the Company.

The 2012 Equity Incentive Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, stock unit awards and SARs to employees, non-employee directors and consultants. Stock options were granted with an exercise price not less than the fair market value of the common stock on the grant date. Stock options granted to employees generally have a maximum term of 10 years and vest over a four-year period from the date of grant; 25% vest at the end of one year, and 75% vest monthly over the remaining three years. However, Innoviva granted options with different vesting terms from time to time. Unless an employee’s termination of service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of three months or the expiration of the option, whichever is earlier.

Employee Share Option Exchange Program

On August 28, 2015, the Company gave eligible share option holders of the Company and its subsidiaries the opportunity to exchange some or all of their outstanding options granted under the 2013 EIP or the 2014 NEEIP before August 4, 2015, whether vested or unvested, for RSUs (the “Exchange Program”). The Exchange Program was designed to restore the intended employee retention and incentive value of the equity awards.

In accordance with the terms of the Exchange Program, employees who held options that had an exercise price above the market price of the Company’s ordinary shares at the offer expiration date were eligible to exchange two shares subject to eligible options for one RSU granted under the terms of the 2013 EIP. The RSUs granted under the Exchange Program vest over a three or four-year service period depending on the grant date of the original option exchanged. The Company’s executive officers and members of the board of directors were not eligible to participate in the Exchange Program.

The Exchange Program closed on September 25, 2015, and the Company exchanged 1,975,009 outstanding options for 987,496 RSUs with a fair value of $12.43 per share. The exchange of options for RSUs was considered a modification to the terms of the original equity award. As such, the Exchange Program resulted in incremental share-based compensation costs of $1.4 million to be recognized, concurrently with the unamortized original compensation costs of the exchanged option awards, ratably over the new vesting period of three years. For the years ended December 31, 2018 and 2017, the Company recognized $0.3 million and $0.5 million, respectively, of the $1.4 million in incremental share-based compensation costs. There was no such expense recognized for the year ended December 31, 2019.

Performance-Contingent Awards

In 2016, the Compensation Committee of the Company’s board of directors (“Compensation Committee”) approved the grant of 1,575,000 performance-contingent restricted share awards (“RSAs”) and 135,000 performance-contingent restricted share units (“RSUs”) to senior management. The vesting of such awards is dependent on the Company meeting its critical operating goals and objectives during the five-year period from 2016 to December 31, 2020, as well as, continued employment. The goals that must be met in order for the performance-contingent RSAs and RSUs to vest are strategically important for the Company, and the Compensation Committee believes the goals, if achieved, will increase shareholder value. The awards have dual triggers of vesting based upon the achievement of these goals and continued employment.

Expense associated with these awards may be recognized during the years 2016 to 2020 depending on the probability of meeting certain performance conditions. Compensation expense relating to awards subject to performance conditions is recognized if it is considered probable that the performance goals will be achieved. The probability of achievement is reassessed at each quarter-end reporting period. Previously recognized expense is reversed in the period in which it becomes probable that the requisite service period will not be rendered. The awards are broken into three separate tranches and comprised of a share-based award component and a cash bonus award component. See “Note 13. Commitments and Contingencies” for information related to the cash bonus award component.

As of December 31, 2019, there were 776,250 of these performance-contingent RSAs and 101,250 of these performance-contingent RSUs outstanding, and as of December 31, 2018, there were 978,750 of these performance-contingent RSAs and 101,250 of these performance-contingent RSUs outstanding. The performance conditions associated with the first tranche of these awards were completed in the second quarter of 2018, and the Company recognized $1.7 million and $2.6 million of share-based compensation expense for the year ended December 31, 2018 and 2017, respectively, associated with the first tranche of these awards.

The performance conditions associated with the second tranche of these awards were completed in the first quarter of 2019. For year ended December 31, 2019, 2018 and 2017, the Company recognized $1.9 million, $2.6 million and $6.3 million, respectively, of share-based compensation expense related to the second tranche of these awards. As of December 31, 2019, the maximum remaining expense associated with the second tranche is $0.4 million (allocated as $0.1 million for research and development expense and $0.3 million for selling, general and administrative expense) and will be amortized through the first quarter of 2020.

In the fourth quarter of 2019, the Company determined that the remaining third tranche was probable of vesting and, as a result, recognized $9.8 million of share-based compensation expense related to the third tranche. The maximum remaining expense associated with the third tranche is $2.9 million (allocated as $1.0 million for research and development expense and $1.9 million for selling, general and administrative expense) and will be amortized through the first quarter of 2021.

Separate from the performance-contingent awards described above, the Company periodically grants performance-contingent RSUs to individual employees. For the year ended December 31, 2019, the Company recognized $1.0 million of share-based compensation expense related to such awards. As of December 31, 2019, there were 173,000 shares of these performance-contingent RSUs outstanding that have a maximum remaining share-based compensation expense of $2.6 million with performance expiration dates ranging from December 2020 to June 2022.

Share-Based Compensation Expense

The allocation of share-based compensation expense included in the consolidated statements of operations was as follows:


	Year Ended December 31,
(In thousands)	2019		2018		2017
Research and development	$	28,953	$	25,563	$	22,691
Selling, general and administrative		31,497		25,750		26,454
Total share-based compensation expense	$	60,450	$	51,313	$	49,145

Share-based compensation expense included in the consolidated statements of operations by award type was as follows:


	Year Ended December 31,
(In thousands)	2019		2018		2017
Innoviva equity:
Options	$	—	$	280	$	2,973
RSUs		—		—		224
RSAs		64		457		660
Performance RSAs		—		—		1
Theravance Biopharma equity:
Options		6,381		8,441		7,969
RSUs		39,520		34,077		25,959
Performance RSAs and RSUs		12,717		4,707		9,224
ESPP		1,768		3,351		2,135
Total share-based compensation expense	$	60,450	$	51,313	$	49,145

Total share-based compensation expense capitalized to inventory was not material for any of the periods presented.

As of December 31, 2019, the unrecognized share-based compensation cost, net of actual forfeitures, and the estimated weighted-average amortization period, using the straight-line attribution method, was as follows:


	Unrecognized		Weighted‑Average
	Compensation		Amortization Period
(In thousands, except amortization period)	Cost		(Years)
Theravance Biopharma equity:
Options	$	13,120	2.87
RSUs		93,104	2.80
Performance RSAs and RSUs ⁽¹⁾		3,681	0.76
ESPP		3,003	0.77
Total	$	112,908

(1)	Represents unrecognized share-based compensation cost associated with the Company’s performance-contingent awards described above that are probable of vesting.

Compensation Awards

The following table summarizes option activity under the 2013 EIP and 2014 NEEIP for the year ended December 31, 2019:


	Number of Shares	Weighted-Average
	Subject	Exercise Price
	to Outstanding Options	of Outstanding Options
Outstanding at December 31, 2018	3,063,169	$	26.70
Granted	960,850		20.25
Exercised	(164,076)		19.15
Forfeited	(909,471)		27.57
Outstanding at December 31, 2019	2,950,472	$	24.75

As of December 31, 2019, 2018 and 2017, the aggregate intrinsic value of the options outstanding was $8.5 million, $5.1 million and $8.0 million, respectively. As of December 31, 2019, the aggregate intrinsic value of the options exercisable was $3.8 million. The total estimated fair value of options vested (excluding vested options that have expired) was $6.2 million, $8.4 million and $8.2 million in 2019, 2018 and 2017, respectively.

The following table summarizes total RSU and RSA activity (including performance RSUs and RSAs) for the years ended December 31, 2019, 2018 and 2017:


	Number of Shares	Number of Shares
	Subject to	Outstanding Subject to
	Outstanding RSUs	Performance Conditions (RSAs)
Outstanding at December 31, 2018	3,069,403	978,750
Granted	3,959,496	—
Released	(1,307,842)	—
Forfeited	(781,283)	(202,500)
Outstanding at December 31, 2019	4,939,774	776,250

As of December 31, 2019, the aggregate intrinsic value of the RSUs and RSAs outstanding was $127.9 million and $20.1 million, respectively. The total estimated fair value of RSUs vested was $32.4 million, $31.6 million and $25.1 million in 2019, 2018 and 2017, respectively.

Valuation Assumptions

The range of assumptions used to estimate the fair value of options granted and rights granted under the 2013 ESPP was as follows:


	Year Ended December 31,
	2019		2018		2017
Options
Risk-free interest rate		1.6% - 2.5%		2.3% - 3.0%		2.0% - 2.1%
Expected term (in years)		6.0		6.0		6.0
Volatility		51% - 53%		53% - 54%		54% - 56%
Dividend yield		—		—		—
Weighted-average estimated fair value	$	10.20	$	14.32	$	17.29
2013 ESPP
Risk-free interest rate		1.5% - 2.4%		2.1% - 2.8%		0.9% - 1.7%
Expected term (in years)		0.5 - 2.0		0.5 - 2.0		0.5 - 2.0
Volatility		40% - 48%		42% - 53%		41% - 56%
Dividend yield		—		—		—
Weighted-average estimated fair value	$	6.17	$	9.13	$	7.09

Income Taxes - Irish statutory rate reconciliation (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
The differences between the U.S. federal statutory income tax rate to the Company's effective tax rate
Provision at statutory income tax rate (as a percent)	21.00%		35.00%
Effective tax rate (as a percent)	2.16%	4.67%	(5.04%)
Ireland
The differences between the U.S. federal statutory income tax rate to the Company's effective tax rate
Provision at statutory income tax rate (as a percent)	25.00%	25.00%	25.00%
Foreign rate differential (as a percent)	(6.96%)	(7.51%)	(18.17%)
Share-based compensation (as a percent)	(1.17%)	0.28%	1.52%
Non-deductible executive compensation (as a percent)	(0.51%)	(0.72%)	(1.03%)
Uncertain tax positions (as a percent)	(0.63%)	(4.00%)	(6.55%)
Research and development tax credit carryforwards (as a percent)	2.50%	1.79%	1.21%
Federal tax reforms - Tax rate change (as a percent)			(4.66%)
Foreign exchange loss (as a percent)		8.52%
Change in valuation allowance (as a percent)	(14.90%)	(18.82%)	(5.15%)
Other (as a percent)	(1.17%)	0.13%	2.79%
Effective tax rate (as a percent)	2.16%	4.67%	(5.04%)

Organization and Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease, Practical Expedients, Package	true
Lease, Practical Expedient, Use of Hindsight	true
Operating lease asset	$ 46,604
Operating lease liability	$ 55,487
Restatement Adjustment \| ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease asset		$ 48,300
Operating lease liability		56,300
Deferred rent liabilities		$ 8,000

Commitments and Contingencies - Performance-Contingent Awards (Details) - Long-Term Retention and Incentive Cash Bonus Awards - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Employee
Commitments and Contingencies
Service-based vesting period				5 years
First tranche
Commitments and Contingencies
Cash bonus awards recognized		$ 3.5	$ 9.5
Second tranche
Commitments and Contingencies
Cash bonus awards recognized	$ 2.4	$ 1.9	$ 8.7
Maximum potential of compensation expenses	0.5
Second tranche \| Research and development
Commitments and Contingencies
Maximum potential of compensation expenses	0.4
Second tranche \| Selling, general and administrative
Commitments and Contingencies
Maximum potential of compensation expenses	0.1
Second and Third tranche \| Employee
Commitments and Contingencies
Cash bonus awards recognized	0.5
Third tranche
Commitments and Contingencies
Cash bonus awards recognized	11.8
Maximum potential of compensation expenses	3.5
Third tranche \| Research and development
Commitments and Contingencies
Maximum potential of compensation expenses	2.7
Third tranche \| Selling, general and administrative
Commitments and Contingencies
Maximum potential of compensation expenses	$ 0.8

Investments and Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Investments and Fair Value Measurements

Investments and Fair Value Measurements

6. Investments and Fair Value Measurements

Available-for-Sale Securities

The estimated fair value of marketable securities is based on quoted market prices for these or similar investments obtained from a commercial pricing service. The fair market value of marketable securities classified within Level 1 is based on quoted prices for identical instruments in active markets. The fair value of marketable securities classified within Level 2 is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-driven valuations whose inputs are observable or whose significant value drivers are observable. Observable inputs may include benchmark yields, reported trades, broker/dealer

quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications.

Available-for-sale securities are summarized below:


		December 31, 2019
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	100,746	$	108	$	—	$	100,854
US government agency securities	Level 2		—		—		—		—
Corporate notes	Level 2		25,466		9		(1)		25,474
Commercial paper	Level 2		112,066		31		(2)		112,095
Marketable securities			238,278		148		(3)		238,423
Money market funds	Level 1		35,736		—		—		35,736
Total		$	274,014	$	148	$	(3)	$	274,159


		December 31, 2018
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	48,807	$	—	$	(86)	$	48,721
US government agency securities	Level 2		9,852		2		—		9,854
Corporate notes	Level 2		57,508		6		(88)		57,426
Commercial paper	Level 2		90,919		—		—		90,919
Marketable securities			207,086		8		(174)		206,920
Money market funds	Level 1		294,751		—		—		294,751
Total		$	501,837	$	8	$	(174)	$	501,671

As of December 31, 2019, all of the available-for-sale securities had contractual maturities within sixteen months and the weighted average maturity of marketable securities was approximately three months. There were no transfers between Level 1 and Level 2 during the periods presented, and there have been no material changes to the Company’s valuation techniques during the years ended December 31, 2019 and 2018.

In general, the Company invests in debt securities with the intent to hold such securities until maturity at par value. The Company does not intend to sell the investments that are currently in an unrealized loss position, and it is unlikely that it will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. The Company has determined that the gross unrealized losses on its marketable securities, as of December 31, 2019, were temporary in nature, and there were no material unrealized losses on investments which have been in a loss position for more than twelve months as of December 31, 2019.

As of December 31, 2019, the Company’s accumulated other comprehensive income (loss) on its consolidated balance sheets consisted of net unrealized gains or losses on available-for-sale investments. During the years ended December 31, 2019 and 2018, the Company did not sell any of its marketable securities.

Non-Marketable Equity Securities and Other-Than-Temporary Impairment

In September 2015, the Company and Trek Therapeutics, PBC ("TREKtx") entered into a licensing agreement (the "TREKtx Agreement") granting TREKtx an exclusive worldwide license for the development, manufacturing, use, marketing and sale of the Company’s NS5A inhibitor known as TD-6450 as a component in combination hepatitis C virus ("HCV") products (the "HCV Products"). Pursuant to the TREKtx Agreement, the Company received an upfront payment of $8.0 million in the form of TREKtx's Series A preferred stock and would be eligible to receive future royalties based on net sales of the HCV Products. TREKtx is solely responsible for all future costs associated with the supply, manufacture, development, sale and marketing of the licensed compound.

At the date of the acquisition of the investment, the Company estimated the fair value of the consideration received to be $8.0 million based upon the price of similar Series A preferred stock that TREKtx sold to an independent third-party for cash consideration. The Company accounted for this investment using the cost-method of accounting and recorded it in other investments on the Company’s consolidated balance sheets. The Company is not considered to be the primary beneficiary of TREKtx and therefore, does not consolidate the financial results of the company into its financial statements. The Company’s equity investments are reviewed at least annually for impairment or whenever events or changes in circumstances indicate that the carrying value of the investment might not be recoverable.

During 2017, the Company identified indicators of impairment were present for its investment in TREKtx. The Company concluded that the impairment of this investment was other-than-temporary due to TREKtx's challenges in securing additional funding and, as a result, the Company recorded an impairment charge. Due to the uncertainty in the recovery of the investment, the Company recorded an impairment charge for the full carrying value of the investment. The $8.0 million other-than-temporary impairment charge was reported as "Other-than-temporary impairment loss" on the consolidated statements of operations for the year ended December 31, 2017. As the inputs utilized for the assessment were not based on observable market data, the determination of fair value of this cost-method investment was classified within Level 3 of the fair value hierarchy. To determine the fair value of this investment, the Company used all available financial information related to the investee, including liquidity, rate of cash use, and ability to secure additional funding.

Reduction in Workforce (Details) $ in Millions	1 Months Ended	12 Months Ended
Reduction in Workforce (Details) $ in Millions	Jan. 31, 2019 individual	Dec. 31, 2019 USD ($)
Reduction in Workforce
Number of headcount reduced by Company on sale of VIBATIV \| individual	51
Severance related charges \| $		$ 3.5

Income Taxes - Components of loss before income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes
Loss before income taxes	$ (241,677)	$ (226,085)	$ (271,711)
Cayman Islands
Income Taxes
Loss before income taxes	11,779	14,838	(163,770)
United States
Income Taxes
Loss before income taxes	(99,225)	(69,695)	(33,374)
Ireland
Income Taxes
Loss before income taxes	(154,217)	(171,134)	(74,472)
United Kingdom
Income Taxes
Loss before income taxes	$ (14)	$ (94)	$ (95)

Reduction in Workforce

12 Months Ended

Dec. 31, 2019

Reduction in Workforce

Reduction in Workforce

14. Reduction in Workforce

In January 2019, the Company announced a reduction in workforce to align with its focus on continued execution of key strategic programs and advancement of selected late-stage research programs toward clinical development. The Company reduced its overall headcount by 51 individuals, with the affected employees primarily focused on early research or the infrastructure in support of VIBATIV, which was sold by the Company to Cumberland in November 2018.

The workforce reduction was substantially completed in the first quarter of 2019, and the Company recorded and paid severance related charges totaling $3.5 million for the year ended December 31, 2019, including compensation expense made to affected employees through any minimum statutory notice periods. The severance related charges are presented on the consolidated statements of operations within research and development expenses and selling, general and administrative expenses.

Long-Term Debt

12 Months Ended

Dec. 31, 2019

Long-Term Debt

Long-Term Debt

7. Long-Term Debt

Long-term debt consisted of the following liability components:


	December 31,
(In thousands)	2019		2018
3.25% Convertible notes due 2023
Principal amount	$	230,000	$	230,000
Unamortized debt issuance costs		(4,110)		(5,182)
9.0% Non-recourse notes due 2033
Principal amount, net of 5% retained by the Company		235,347		237,500
Unamortized debt issuance costs		(6,196)		(7,965)
Total long-term debt	$	455,041	$	454,353

Long-term debt interest expense consists of the following components:


	Year Ended December 31,
(In thousands)	2019		2018		2017
Stated coupon interest	$	28,811	$	9,316	$	7,475
Amortization of debt issuance costs		3,051		1,166		1,072
Total long-term debt interest expense	$	31,862	$	10,482	$	8,547

9.0% Non-Recourse Notes Due 2033

In November 2018, the Company entered into note purchase agreements relating to the private placement of $250.0 million aggregate principal amount of 9.0% non-recourse notes, due on or before 2033 (the "Non-Recourse 2033 Notes") issued by the Company’s wholly-owned subsidiary, Triple Royalty Sub LLC (the “Issuer”).

The Non-Recourse 2033 Notes are secured by all of the Issuer’s rights, title and interest as a holder of certain membership interests (the “Issuer Class C Units”) in Theravance Respiratory Company, LLC (“TRC”). The primary source of funds to make payments on the Non-Recourse 2033 Notes will be the 63.75% economic interest of the Issuer (evidenced by the Issuer Class C Units) in any future payments made by the GSK under the collaboration agreement, dated as of November 14, 2002, by and between Innoviva, Inc. (“Innoviva”) and GSK, as amended from time to time (net of the amount of cash, if any, expected to be used by TRC pursuant to the TRC LLC Agreement (“TRC LLC Agreement”) over the next four fiscal quarters) relating to the TRELEGY ELLIPTA program. The sole source of principal and interest payments for the Non-Recourse 2033 Notes are the future royalty payments generated from the

TRELEGY ELLIPTA program, and as a result, the holders of the Non-Recourse 2033 Notes have no recourse against the Company even if the TRELEGY ELLIPTA payments are insufficient to cover the principal and interest payments for the Non-Recourse 2033 Notes.

The Non-Recourse 2033 Notes are not convertible into Company equity and have no security interest in nor rights under any agreement with GSK. The Non-Recourse 2033 Notes may be redeemed at any time prior to maturity, in whole or in part, at specified redemption premiums. The Non-Recourse 2033 Notes bear an annual interest rate of 9.0%, with interest and principal paid quarterly beginning April 15, 2019. Prior to October 15, 2020, in the event that the distributions received by the Issuer from TRC in a quarter are less than the interest accrued for the quarter, the principal amount of the Non-Recourse 2033 Notes will increase by the interest shortfall amount for that period without a default or event of default occurring. The terms of the Notes also provide that the Company, at its option, may satisfy the quarterly interest payment obligations by making a capital contribution to the Issuer, but not for more than four (4) consecutive quarterly interest payment dates or for more than six (6) quarterly interest payment dates during the term of the Notes. Since the principal and interest payments on the Non-Recourse 2033 Notes are ultimately based on royalties from TRELEGY ELLIPTA product sales, which will vary from quarter to quarter, the Non-Recourse 2033 Notes may be repaid prior to the final maturity date in 2033. The portion of the Non-Recourse 2033 Notes classified as a current liability is based on the amount of royalties received, or receivable, as of December 31, 2019, that are expected to be used to make a principal repayment on the Non-Recourse 2033 Notes within the next 12 months. Please refer to “Note 9. Theravance Respiratory Company, LLC” for information regarding the results of the arbitration against Innoviva and TRC that the Company initiated in May 2019.

In order to comply with Regulation RR – Credit Risk Retention (17 C.F.R. Part 246), 5.0% of the principal amount of the Non-Recourse 2033 Notes were retained by Theravance Biopharma R&D, Inc. and eliminated in the Company’s consolidated financial statements.

As of December 31, 2019, the remaining net principal of the Non-Recourse 2033 Notes was $235.3 million. The estimated fair value of the Non-Recourse 2033 Notes was $228.3 million and $237.5 million as of December 31, 2019 and 2018, respectively. The inputs to determine fair value of the Non-Recourse 2033 Notes are categorized as Level 2 inputs. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

3.25% Convertible Senior Notes Due 2023

In November 2016, the Company completed an underwritten public offering of $230.0 million of 3.25% convertible senior notes, due 2023 (the "Convertible Senior 2023 Notes") for net proceeds of approximately $222.5 million. The Company incurred approximately $7.5 million in debt issuance costs, which are being amortized to interest expense over the estimated life of the Convertible Senior 2023 Notes. The Convertible Senior 2023 Notes bear an annual interest rate of 3.25%, payable semi-annually in arrears, on November 1 and May 1 of each year, which commenced on May 1, 2017.

The Convertible Senior 2023 Notes are senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Convertible Senior 2023 Notes; equal in right of payment to any of the Company’s indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

The Convertible Senior 2023 Notes will mature on November 1, 2023, unless earlier redeemed or repurchased by the Company or converted. Holders may convert their Convertible Senior 2023 Notes into ordinary shares at an initial conversion rate of 29.0276 shares for each $1,000 principal amount of Convertible Senior 2023 Notes, which is equivalent to an initial conversion price of approximately $34.45 per share, subject to adjustment, in certain circumstances (including upon the occurrence of a fundamental change), at any time prior to the close of business on the second business day immediately preceding the maturity date. Upon the occurrence of a fundamental change involving the Company, holders of the Convertible Senior 2023 Notes may require the Company to repurchase all or a portion of

their Convertible Senior 2023 Notes for cash at a redemption price equal to 100% of the principal amount of the Convertible Senior 2023 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, in some circumstances, the conversion rate of the Convertible Senior 2023 Notes will increase with a make whole premium for conversions in connection with certain fundamental changes.

The debt issuance costs related to the Convertible Senior 2023 Notes offering were capitalized as deferred financing costs and presented as a reduction of the carrying value of the financial liability on the Company’s consolidated balance sheets at December 31, 2019 and 2018.

The estimated fair value of the Convertible Senior 2023 Notes was $236.0 million and $235.0 million at December 31, 2019 and 2018, respectively. The estimated fair value was primarily based upon the underlying price of Theravance Biopharma’s publicly traded shares and other observable inputs as of December 31, 2019 and 2018. The inputs to determine fair value of the Convertible Senior 2023 Notes are categorized as Level 2 inputs. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Share-Based Compensation - Share Based Compensation Expense By Type (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-Based Compensation
Share-based compensation expense	$ 60,450	$ 51,313	$ 49,145
Unrecognized compensation cost	112,908
Options
Share-Based Compensation
Share-based compensation expense	6,381	8,441	7,969
Unrecognized compensation cost	$ 13,120
Weighted-average amortization period - years	2 years 10 months 13 days
RSUs
Share-Based Compensation
Share-based compensation expense	$ 39,520	34,077	25,959
Unrecognized compensation cost	$ 93,104
Weighted-average amortization period - years	2 years 9 months 18 days
Performance-Contingent Awards - RSAs and RSUs
Share-Based Compensation
Share-based compensation expense	$ 12,717	4,707	9,224
Unrecognized compensation cost	$ 3,681
Weighted-average amortization period - years	9 months 3 days
ESPP
Share-Based Compensation
Share-based compensation expense	$ 1,768	3,351	2,135
Unrecognized compensation cost	$ 3,003
Weighted-average amortization period - years	9 months 7 days
Innoviva \| Options
Share-Based Compensation
Share-based compensation expense		280	2,973
Innoviva \| RSUs
Share-Based Compensation
Share-based compensation expense			224
Innoviva \| Restricted shares
Share-Based Compensation
Share-based compensation expense	$ 64	$ 457	660
Innoviva \| Performance-Contingent Awards - RSAs \| Performance-Contingent
Share-Based Compensation
Share-based compensation expense			$ 1

Revenue - Condensed Statement Of Operations (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Development and Collaboration Agreement
Revenues	$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
Mylan collaboration agreement
Development and Collaboration Agreement
Revenues									13,664	3,275
Collaboration Loss									$ 1,582	$ 2,997

Organization and Summary of Significant Accounting Policies - Revenue Recognition (Details) $ in Millions	Dec. 31, 2019 USD ($)
Accounting Standards Update 2016-09
New Accounting Pronouncements or Change in Accounting Principle
Excess tax benefits cumulative effect adjustment recorded to retained earnings	$ 1.1

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of components of the loss before income taxes


	Year Ended December 31,
(In thousands)	2019		2018		2017
Income (loss) before provision for income taxes:
Cayman Islands	$	11,779	$	14,838	$	(163,770)
United States		(99,225)		(69,695)		(33,374)
Ireland		(154,217)		(171,134)		(74,472)
United Kingdom		(14)		(94)		(95)
Total	$	(241,677)	$	(226,085)	$	(271,711)

Schedule of the components of the provision for income taxes


	Year Ended December 31,
(In thousands)	2019			2018			2017
Provision for income tax benefit (expense):
Current:
Cayman Islands	$	—		$	—		$	—
United States		5,210			10,563			(13,091)
Ireland		—			—			(566)
United Kingdom		12			(2)			(37)
Subtotal		5,222			10,561			(13,694)
Deferred		—			—			—
Total	$	5,222		$	10,561		$	(13,694)
Effective tax rate		2.16	%		4.67	%		(5.04)	%

Schedule of the differences between the Irish statutory income tax rate and the Company's effective tax rates


	Year Ended December 31,
	2019		2018		2017
Provision at statutory income tax rate	25.00	%	25.00	%	25.00	%
Foreign rate differential	(6.96)		(7.51)		(18.17)
Share-based compensation	(1.17)		0.28		1.52
Non-deductible executive compensation	(0.51)		(0.72)		(1.03)
Uncertain tax positions	(0.63)		(4.00)		(6.55)
Research and development tax credit carryforwards	2.50		1.79		1.21
Federal tax reform - Tax rate change	—		—		(4.66)
Foreign exchange loss	—		8.52		—
Change in valuation allowance	(14.90)		(18.82)		(5.15)
Other	(1.17)		0.13		2.79
Effective tax rate	2.16	%	4.67	%	(5.04)	%

Significant components of the Company's deferred tax assets and liabilities


	December 31,
(In thousands)	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	58,161	$	33,396
Capital loss carryforwards		19,409		19,409
Research and development tax credit carryforwards		15,723		8,508
Fixed assets and intangibles		285,341		285,821
Share-based compensation		15,480		12,479
Accruals		8,245		8,343
Operating lease liabilities		11,358		—
Other		7		—
Subtotal		413,724		367,956
Valuation allowance		(403,836)		(367,748)
Total deferred tax assets		9,888		208

Deferred tax liabilities:
Operating lease assets		(9,429)		—
Prepaid assets		(459)		(208)
Total deferred tax liabilities		(9,888)		(208)

Net deferred tax assets/liabilities	$	—	$	—

Reconciliation of unrecognized tax benefits


(In thousands)
Unrecognized tax benefits as of December 31, 2017	$	41,794
Gross decrease in tax positions for prior years		(685)
Gross increase in tax positions for current year		11,295
Unrecognized tax benefits as of December 31, 2018		52,404
Gross decrease in tax positions for prior years		(2,010)
Gross increase in tax positions for current year		8,369
Unrecognized tax benefits as of December 31, 2019	$	58,763

Income Taxes - Deferred income taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Components of Deferred Tax Assets [Abstract]
Net operating loss carryforwards	$ 58,161	$ 33,396
Capital loss carryforwards	19,409	19,409
Research and development tax credit carryforwards	15,723	8,508
Fixed assets and intangibles	285,341	285,821
Share-based compensation	15,480	12,479
Accruals	8,245	8,343
Operating lease liabilities	11,358
Other	7
Subtotal	413,724	367,956
Valuation allowance	(403,836)	(367,748)
Total deferred tax assets	9,888	208
Deferred tax liabilities:
Operating lease assets	(9,429)
Prepaid assets	(459)	(208)
Total deferred tax liabilities	(9,888)	$ (208)
Information related to valuation allowance
Deferred tax asset, intellectual property	282,700
Ireland
Information related to valuation allowance
Net operating loss carryforwards	352,900
Capital loss carryforwards \| Ireland
Information related to valuation allowance
Tax credit carryforward amount	58,800
Federal
Information related to valuation allowance
Net operating loss carryforwards	163,600
Operating loss available	118,700
Federal \| Research and Development
Information related to valuation allowance
Tax credit carryforward amount	17,900
State
Information related to valuation allowance
Net operating loss carryforwards	71,900
State \| Research and Development
Information related to valuation allowance
Tax credit carryforward amount	$ 18,900

Organization and Summary of Significant Accounting Policies - Research and Development Expenses (Details)	12 Months Ended
	Dec. 31, 2019
Organization and Summary of Significant Accounting Policies
Change in estimate of accrued research as a percent of annual expense	1.00%

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Feb. 19, 2020	Jun. 30, 2019
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	001-36033
Entity Registrant Name	THERAVANCE BIOPHARMA, INC.
Entity Incorporation, State or Country Code	KY
Entity Tax Identification Number	98-1226628
Entity Address, Address Line One	P.O. Box 309
Entity Address, Address Line Two	Ugland House, South Church Street
Entity Address, City or Town	George Town, Grand Cayman
Entity Address, Country	KY
Entity Address, Postal Zip Code	KY1-1104
City Area Code	650
Local Phone Number	808-6000
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Ordinary Share $0.00001 Par Value
Trading Symbol	TBPH
Security Exchange Name	NASDAQ
Entity Public Float			$ 893,464,384
Entity Common Stock, Shares Outstanding		62,520,148
Entity Central Index Key	0001583107
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases

Summary of supplemental balance sheet information related to leases


(In thousands)	Classification	December 31, 2019
Assets
Operating lease assets	Operating lease assets	$	46,604

Liabilities
Current:
Operating lease liabilities	Operating lease liabilities	$	7,762
Non-current:
Operating lease liabilities	Long-term operating lease liabilities		47,725
Total operating lease liabilities		$	55,487

Summary of components of lease expense


		Year Ended
(In thousands)	Classification	December 31, 2019
Operating lease expense	Selling, general and administrative expenses	$	9,964
Operating lease expense	Research and development expenses		164
Total operating lease expense ⁽¹⁾		$	10,128

(1)	Includes short-term leases which were immaterial.

Summary of maturities of lease liabilities


(In thousands)
Years ending December 31:
2020	$	7,940
2021		9,480
2022		9,745
2023		10,023
2024		10,309
Thereafter		59,860
Total operating lease payments	$	107,357
Less: Estimated tenant improvement allowance		(15,561)
Less: Imputed interest		(36,309)
Present value of operating lease liabilities	$	55,487

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies

Commitments and Contingencies

13. Commitments and Contingencies

Performance-Contingent Awards

In 2016, the Compensation Committee granted long-term retention RSAs and RSUs to members of senior management and incentive cash bonus awards to certain employees. The vesting and payout of such awards is dependent on the Company meeting its critical operating goals and objectives during a five-year period from 2016 to December 31, 2020. These goals are strategically important for the Company, and it believes the goals, if achieved, will increase shareholder value. The awards have dual triggers of vesting based upon the achievement of these goals and continued employment.

Expense associated with these awards may be recognized during the years 2016 to 2020 depending on the probability of meeting certain performance conditions. Compensation expense relating to awards subject to performance conditions is recognized if it is considered probable that the performance goals will be achieved. The probability of achievement is reassessed at each quarter-end reporting period. Previously recognized expense is reversed in the period in which it becomes probable that the requisite service period will not be rendered. The awards are broken into three separate tranches and comprised of a share-based award component and a cash bonus award component. See “Note 11. Share-Based Compensation” for information related to the share-based award component.

The performance conditions associated with the first tranche of the cash bonus awards were completed in the second quarter of 2018, and the Company recognized $3.5 million and $9.5 million of cash bonus expense for the year ended December 31, 2018 and 2017, respectively, associated with the first tranche of these awards.

The performance conditions associated with the second tranche of these awards were completed in the first quarter of 2019. For year ended December 31, 2019, 2018 and 2017, the Company recognized $2.4 million, $1.9 million and $8.7 million, respectively, of cash bonus expense related to the second tranche of these awards. As of December 31, 2019, the maximum remaining cash bonus expense associated with the second tranche was $0.5 million (allocated as $0.4 million for research and development expense and $0.1 million for selling, general and administrative expense) and will be amortized through the first quarter of 2020.

In the fourth quarter of 2019, the Company determined that the remaining third tranche was probable of vesting, and, as a result, recognized $11.8 million in cash bonus expense for the year ended December 31, 2019. As of December 31, 2019, the maximum remaining cash bonus expense associated with the third tranche was $3.5 million (allocated as $2.7 million for research and development expense and $0.8 million for selling, general and administrative expense) and will be amortized through the first quarter of 2021.

Guarantees and Indemnifications

The Company indemnifies its officers and directors for certain events or occurrences, subject to certain limits. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recognized any liabilities relating to these agreements as of December 31, 2019.

Share-Based Compensation - Compensation Awards (Details) - 2013 EIP and 2014 NEEIP - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number of Shares Subject To Outstanding Options
Balance at the beginning of period	3,063,169
Granted ( in shares)	960,850
Exercised (in shares)	(164,076)
Forfeited (in shares)	(909,471)
Balance at the end of period	2,950,472	3,063,169
Weighted-Average Exercise Price of Outstanding Options
Balance at the beginning of the period (in dollars per share)	$ 26.70
Granted (in dollars per share)	20.25
Exercised (in dollars per share)	19.15
Forfeited (in dollars per share)	27.57
Balance at the end of the period (in dollars per share)	$ 24.75	$ 26.70
Additional disclosures
Aggregate intrinsic value of options outstanding	$ 8.5	$ 5.1	$ 8.0
Aggregate intrinsic value of options exercisable	3.8
Total estimated fair value of options vested	$ 6.2	$ 8.4	$ 8.2

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowances	$ 0	$ 0
Preferred shares, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred shares, shares authorized	230	230
Preferred shares, shares issued	0	0
Preferred shares, outstanding shares	0	0
Ordinary shares, par value (in dollars per share)	$ 0.00001	$ 0.00001
Ordinary shares, authorized shares	200,000	200,000
Ordinary shares, shares issued	57,015	55,681
Ordinary shares, outstanding shares	57,015	55,681

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating activities
Net loss	$ (236,455)	$ (215,524)	$ (285,405)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,441	4,481	3,801
Amortization and accretion income, net	(3,451)	(1,315)	226
Share-based compensation	60,450	51,313	49,145
Net gain from the sale of VIBATIV business		(6,056)
Other-than-temporary impairment loss			8,000
Inventory write-down			740
Amortization of right-of-use assets	3,224
Amounts due from TRC, LLC	(23,152)	(5,152)
Other	146	(43)	10
Changes in operating assets and liabilities:
Accounts receivable	620	1,633	(1,607)
Receivables from collaborative arrangements	(11,943)	(2,944)	1,967
Prepaid taxes			2,788
Other prepaid and current assets	(634)	(2,400)	(1,489)
Inventories		(1,629)	(7,301)
Tax receivable	(3,700)	8,191	(7,890)
Other assets	(358)	45	(354)
Accounts payable	(4,274)	3,575	3,796
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities	10,626	(12,357)	8,332
Accrued interest payable	2,573	1,841	21
Deferred rent		4,308	(298)
Deferred revenue	(31,245)	69,224	17
Operating lease liabilities	(2,317)
Other long-term liabilities	(4,748)	(10,058)	24,449
Net cash used in operating activities	(238,197)	(112,867)	(201,052)
Investing activities
Purchases of property and equipment	(3,176)	(7,240)	(2,406)
Purchases of marketable securities	(423,898)	(183,261)	(288,791)
Maturities of marketable securities	339,018	347,192	234,864
Proceeds from the sale of VIBATIV business, net	5,000	20,000
Proceeds from the sale of fixed assets	5	17
Net cash (used in) provided by investing activities	(83,051)	176,708	(56,333)
Financing activities
Proceeds from issuance of notes, net		229,441
Principal payment on notes	(2,152)
Proceeds from ESPP purchases	3,474	4,173	3,980
Proceeds from option exercises	3,142	1,393	6,236
Repurchase of shares to satisfy tax withholding	(3,173)	(9,807)	(8,560)
Net cash provided by financing activities	1,291	225,200	1,656
Net (decrease) increase in cash, cash equivalents, and restricted cash	(319,957)	289,041	(255,729)
Cash, cash equivalents, and restricted cash at beginning of period	378,854	89,813	345,542
Cash, cash equivalents, and restricted cash at end of period	58,897	378,854	89,813
Supplemental disclosure of cash flow information
Cash paid for interest	26,178	7,475	7,454
Cash paid (received) for income taxes, net	22	$ (7,316)	$ 4,929
Right-of-use assets obtained in exchange for lease obligations (1)	$ 49,847

Organization and Summary of Significant Accounting Policies - Capitalized Software (Details) - Capitalized Software - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property and Equipment
Capitalized costs software implementation	$ 0	$ 0
Estimated useful life	5 years

Organization and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Organization and Summary of Significant Accounting Policies

Schedule of property and equipment useful lives


Leasehold improvements		Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures		5 - 7 years
Software and computer equipment		3 - 5 years

Summary of product revenue allowance and reserve categories


	Chargebacks,		Government
	Discounts and		and Other
(In thousands)	Fees		Rebates		Returns		Total
Balance at December 31, 2017	$	992	$	352	$	946	$	2,290
Provision related to current period sales		6,402		704		521		7,627
Adjustment related to prior period sales		(81)		168		(449)		(362)
Credit or payments made during the period		(6,938)		(932)		(157)		(8,027)
Balance at December 31, 2018	$	375	$	292	$	861	$	1,528
Provision related to current period sales		—		—		—		—
Adjustment related to prior period sales		116		121		(38)		199
Credit or payments made during the period		(264)		(202)		—		(466)
Balance at December 31, 2019	$	227	$	211	$	823	$	1,261

Schedule of basic and diluted net loss per share



	Year Ended December 31,
(In thousands)	2019		2018		2017
Numerator:
Net loss	$	(236,455)	$	(215,524)	$	(285,405)
Denominator:
Weighted-average common shares outstanding		56,452		55,076		53,703
Less: weighted-average common shares subject to forfeiture		(842)		(1,107)		(1,351)
Weighted-average common shares used to compute basic and diluted net loss per share		55,610		53,969		52,352
Basic and diluted net loss per share	$	(4.25)	$	(3.99)	$	(5.45)

Schedule of anti-dilutive securities


	Year Ended December 31,
(In thousands)	2019	2018	2017
Share issuances under equity incentive plans and ESPP	6,577	3,492	3,369
Restricted shares	—	2	6
Share issuances upon the conversion of convertible senior notes	6,676	6,676	6,676
Total	13,253	10,170	10,051

Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Share-Based Compensation

Schedule of share-based compensation expense included in the consolidated statements of operations


	Year Ended December 31,
(In thousands)	2019		2018		2017
Research and development	$	28,953	$	25,563	$	22,691
Selling, general and administrative		31,497		25,750		26,454
Total share-based compensation expense	$	60,450	$	51,313	$	49,145

Schedule of share-based compensation expense by award type included in the consolidated statements of operations


	Year Ended December 31,
(In thousands)	2019		2018		2017
Innoviva equity:
Options	$	—	$	280	$	2,973
RSUs		—		—		224
RSAs		64		457		660
Performance RSAs		—		—		1
Theravance Biopharma equity:
Options		6,381		8,441		7,969
RSUs		39,520		34,077		25,959
Performance RSAs and RSUs		12,717		4,707		9,224
ESPP		1,768		3,351		2,135
Total share-based compensation expense	$	60,450	$	51,313	$	49,145

Schedule of unrecognized compensation cost, net of expected forfeitures, and the estimated weighted-average amortization period, using the straight-line attribution method


	Unrecognized		Weighted‑Average
	Compensation		Amortization Period
(In thousands, except amortization period)	Cost		(Years)
Theravance Biopharma equity:
Options	$	13,120	2.87
RSUs		93,104	2.80
Performance RSAs and RSUs ⁽¹⁾		3,681	0.76
ESPP		3,003	0.77
Total	$	112,908

(1)	Represents unrecognized share-based compensation cost associated with the Company’s performance-contingent awards described above that are probable of vesting.

Summary of option activity under the 2013 EIP and 2014 NEEIP


	Number of Shares	Weighted-Average
	Subject	Exercise Price
	to Outstanding Options	of Outstanding Options
Outstanding at December 31, 2018	3,063,169	$	26.70
Granted	960,850		20.25
Exercised	(164,076)		19.15
Forfeited	(909,471)		27.57
Outstanding at December 31, 2019	2,950,472	$	24.75

Schedule of RSU and RSA activity (including performance RSUs and RSAs)


	Number of Shares	Number of Shares
	Subject to	Outstanding Subject to
	Outstanding RSUs	Performance Conditions (RSAs)
Outstanding at December 31, 2018	3,069,403	978,750
Granted	3,959,496	—
Released	(1,307,842)	—
Forfeited	(781,283)	(202,500)
Outstanding at December 31, 2019	4,939,774	776,250

Schedule of range of assumptions used to estimate the fair value of share options granted and rights granted


	Year Ended December 31,
	2019		2018		2017
Options
Risk-free interest rate		1.6% - 2.5%		2.3% - 3.0%		2.0% - 2.1%
Expected term (in years)		6.0		6.0		6.0
Volatility		51% - 53%		53% - 54%		54% - 56%
Dividend yield		—		—		—
Weighted-average estimated fair value	$	10.20	$	14.32	$	17.29
2013 ESPP
Risk-free interest rate		1.5% - 2.4%		2.1% - 2.8%		0.9% - 1.7%
Expected term (in years)		0.5 - 2.0		0.5 - 2.0		0.5 - 2.0
Volatility		40% - 48%		42% - 53%		41% - 56%
Dividend yield		—		—		—
Weighted-average estimated fair value	$	6.17	$	9.13	$	7.09

Property and Equipment

12 Months Ended

Dec. 31, 2019

Property and Equipment

Property and Equipment

10. Property and Equipment

Property and equipment is held predominantly in the US and consisted of the following:


	December 31,
(In thousands)	2019		2018
Computer equipment	$	2,119	$	2,522
Software		1,718		3,577
Furniture and fixtures		3,665		3,759
Laboratory equipment		30,546		31,164
Leasehold improvements		22,164		21,849
Subtotal		60,212		62,871
Less: accumulated depreciation		(47,568)		(49,695)
Property and equipment, net	$	12,644	$	13,176

For the years ended December 31, 2019, 2018 and 2017, depreciation expense for property and equipment was $3.3 million, $3.0 million and $2.5 million, respectively.

Revenue (Tables)

12 Months Ended

Dec. 31, 2019

Revenue

Schedule of revenue recognized from collaborative arrangements



	Year Ended December 31,
(In thousands)	2019		2018		2017
Janssen	$	31,096	$	31,053	$	—
Alfasigma		125		10,678		—
Other		29		60		598
Total collaboration revenue	$	31,250	$	41,791	$	598

Summary of changes in deferred revenue



	Year Ended December 31,
(In thousands)	2019		2018
Collaboration revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period	$	31,245	$	130
Performance obligations satisfied in previous period		—		—

Summary of profit sharing revenue and collaboration loss



	Year Ended December 31,
(In thousands)	2019		2018
Mylan collaboration agreement - Amounts receivable from Mylan	$	13,664	$	3,275
Collaboration loss - Amounts payable to Mylan	$	1,582	$	2,997

Summary of the reductions to R&D costs related to reimbursement payments



	Year Ended December 31,
(In thousands)	2019		2018		2017
Janssen	$	5,129	$	1,597	$	—
Mylan		460		7,515		23,427
Other		—		—		113
Total reduction to R&D expense	$	5,589	$	9,112	$	23,540

Theravance Respiratory Company, LLC

12 Months Ended

Dec. 31, 2019

Theravance Respiratory Company, LLC

Theravance Respiratory Company, LLC

9. Theravance Respiratory Company, LLC

Prior to the June 2014 spin-off from Innoviva (the “Spin-Off”), the Company’s former parent company, Innoviva assigned to TRC, a Delaware limited liability company formed by Innoviva, its strategic alliance agreement with GSK and all of its rights and obligations under its collaboration agreement with GSK other than with respect to RELVAR^® ELLIPTA^®/BREO^® ELLIPTA^®, ANORO^® ELLIPTA^® and vilanterol monotherapy. Through the Company’s 85% equity interest in TRC, the Company is entitled to receive an 85% economic interest in any future payments made by GSK under the strategic alliance agreement and under the portion of the collaboration agreement assigned to TRC (net of TRC expenses paid and the amount of cash, if any, expected to be used by TRC pursuant to the TRC LLC Agreement over the next four fiscal quarters). The drug programs assigned to TRC include Trelegy Ellipta and the inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (“MABA”) program, as monotherapy and in combination with other therapeutically active components, such as an inhaled corticosteroid (“ICS”), and any other product or combination of products that may be discovered and developed in the future under the GSK agreements.

In May 2014, the Company entered into the TRC LLC Agreement with Innoviva that governs the operation of TRC. Under the TRC LLC Agreement, Innoviva is the manager of TRC, and the business and affairs of TRC are managed exclusively by the manager, including (i) day to day management of the drug programs in accordance with the existing GSK agreements; (ii) preparing an annual operating plan for TRC; and (iii) taking all actions necessary to ensure that the formation, structure and operation of TRC complies with applicable law and partner agreements. The Company is responsible for its proportionate share of TRC’s administrative expenses incurred, and communicated to the Company, by Innoviva.

The Company analyzed its ownership, contractual and other interests in TRC to determine if it is a variable-interest entity (“VIE”), whether the Company has a variable interest in TRC and the nature and extent of that interest. The Company determined that TRC is a VIE. The party with the controlling financial interest, the primary beneficiary, is required to consolidate the entity determined to be a VIE. Therefore, the Company also assessed whether it is the primary beneficiary of TRC based on the power to direct TRC’s activities that most significantly impact TRC’s economic performance and its obligation to absorb TRC’s losses or the right to receive benefits from TRC that could potentially be significant to TRC. Based on the Company’s assessment, the Company determined that it is not the

primary beneficiary of TRC, and, as a result, the Company does not consolidate TRC in its consolidated financial statements. TRC is recognized in the Company’s consolidated financial statements under the equity method of accounting, and the value of the Company’s equity investment in TRC was $28.6 million and $5.4 million as of December 31, 2019 and 2018, respectively. This amount includes undistributed earnings from the Company’s investment in TRC which are recorded on the consolidated balance sheets as “Amounts due from TRC, LLC” and are net of the Company’s proportionate share of TRC’s administrative expenses incurred, and communicated to the Company, by Innoviva. Pursuant to the TRC operating agreement, the cash from the TRELEGY ELLIPTA royalties, net of any expenses, is distributed to the equity holders quarterly.

For the years ended December 31, 2019 and 2018, the Company recognized net royalty income of $33.7 million and $11.2 million, respectively, within the consolidated statements of operations within “Income from investment in TRC, LLC”. These amounts were recorded net of the Company’s share of TRC’s expenses of $2.7 million for year ended December 31, 2019, which was primarily comprised of TRC’s legal and related fees associated with the arbitration between Innoviva and TRC and the Company. There were minimal TRC expenses for the year ended December 31, 2018.

In May 2019, the Company announced that it had initiated an arbitration against Innoviva and TRC because Innoviva, as manager of TRC, had caused TRC to withhold certain distributions owed to the Company with respect to the Company’s 85% economic interest in TRC since the quarter ended December 31, 2018, and Innoviva’s previous statement to the Company that it intended to prevent TRC from making cash distributions during 2019. The arbitration hearing commenced in July 2019.

In September 2019, the arbitrator issued a final decision. The arbitrator ruled that, while Innoviva breached the TRC LLC Agreement by failing to provide quarterly financial plans to the Company as required, the withholding of funds by Innoviva with respect to certain TRELEGY ELLIPTA development and commercialization initiatives proposed by Innoviva was not in breach of the TRC LLC Agreement. The arbitrator also found that Innoviva had not breached its fiduciary duties to the Company. The arbitrator awarded injunctive relief to give more certainty to future dealings between the parties and to clarify certain terms of the TRC LLC Agreement, and imposed additional obligations on Innoviva to obtain the consent of GSK for any proposed investment of TRC funds that requires the consent of GSK under the collaboration agreement dated November 14, 2002, as amended. Under the arbitrator’s ruling, Innoviva was permitted to withhold $8.0 million of TRC funds for certain TRELEGY ELLIPTA development and commercialization initiatives proposed by Innoviva. These initiatives were presented to GSK in the fourth quarter of 2019 and could not be implemented without GSK’s approval, which was required by no later than during the first quarter of 2020.

As of June 30, 2019, the Company was owed, under the TRC LLC Agreement, $20.0 million in net royalty income payments for the period from the fourth quarter of 2018 through the second quarter of 2019. After initiation of the arbitration and prior to the final decision being issued in the third quarter of 2019, Innoviva caused TRC to make a partial distribution of funds to the Company of $10.6 million against these amounts due. Innoviva withheld $6.9 million, representing the Company’s share of the $8.0 million of total TRC funds earmarked for certain TRELEGY ELLIPTA development and commercialization initiatives proposed by Innoviva, pursuant to the arbitrator’s final decision. The $2.5 million difference between the $20.0 million and the combined $10.6 million and $6.9 million represented legal-related expenses incurred by TRC.

In January 2020, the Company was informed by Innoviva that GSK had declined to adopt certain TRELEGY ELLIPTA development and commercialization initiatives proposed by Innoviva. As a result, Innoviva would not continue to withhold any funds that had been reserved for those initiatives, and the Company subsequently received $15.8 million in a distribution from Innoviva representing its share of the net royalty income payments for the third quarter of 2019 plus the $6.9 million previously withheld, less estimated TRC expenses for the quarter ended December 31, 2019 and estimated expenses through 2020. The amount due to the Company from TRC, as of December 31, 2019, was $28.6 million.

Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events

Subsequent Events

15. Subsequent Events

Public Offering of Ordinary Shares

On February 12, 2020, the Company sold 5,500,000 ordinary shares at a price to the public of $27.00 per share (the “Shares”). The gross proceeds to the Company from the offering were approximately $148.5 million, before deducting underwriting discounts and commissions and estimated offering expenses. The Shares were issued pursuant to the Company’s currently effective shelf registration statement on Form S-3 and an accompanying prospectus (File No. 333-235339) filed with the SEC, which became effective automatically on December 3, 2019, and a prospectus supplement filed with the SEC in connection with the offering.

Refinancing of Non-Recourse 2033 Notes

On February 21, 2020, Theravance Biopharma R&D, Inc., a Cayman Islands exempted company (“Theravance R&D”), a wholly-owned subsidiary of the Company, and Triple Royalty Sub II LLC, a Delaware limited liability company (the “Issuer II”) and wholly-owned subsidiary of Theravance Biopharma R&D, entered into certain note purchase agreements (each, a “Note Purchase Agreement” and collectively, the “Note Purchase Agreements”), with the note purchaser or note purchasers referenced therein (each, a “Note Purchaser” and collectively, the “Note Purchasers”), relating to the private placement by the Issuer II to the Note Purchasers of $400.0 million aggregate principal amount of the Issuer II’s non-recourse Triple II 9.5% Fixed Rate Term Notes due on or before 2035 (the “Non-Recourse 2035 Notes”) expected to be issued under an Indenture by and between Issuer II and US Bank National Association, a national banking association, as initial trustee. 95% of the Non-Recourse 2035 Notes are expected to be sold to the Note Purchasers pursuant to the Note Purchase Agreements. The remaining 5% of the Non-Recourse 2035 Notes (the “Retained Notes”) are expected to be retained by the Company in order to comply with Regulation RR — Credit Risk Retention (17 C.F.R. Part 246) and are expected to be eliminated in the Company’s consolidated financial statements. Issuance of the Non-Recourse 2035 Notes is subject to the satisfaction of certain customary conditions.

The Non-Recourse 2035 Notes are expected to be secured by all of Issuer II’s right, title and interest as a holder of certain membership interests (the “Issuer II Class C Units”) in TRC. The primary source of funds to make payments on the Non-Recourse 2035 Notes are expected to be the 63.75% economic interest of the Issuer II (evidenced by the Issuer II Class C Units) in any future payments made by GSK to TRC under the collaboration agreement, dated as of November 14, 2002, by and between Innoviva and GSK, as amended from time to time (net of TRC expenses paid and the amount of cash, if any, expected to be used by TRC pursuant to the TRC LLC Agreement over the next four fiscal quarters) relating to the Trelegy Ellipta program.

The proceeds from the issuance are expected to be used to repay in full the remaining outstanding balance of the Non-Recourse 2033 Notes and/or for other general purposes.

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Revenue	$ 73,414	$ 60,370	$ 15,386
Costs and expenses:
Cost of goods sold		715	6,030
Research and development	219,248	201,348	173,887
Selling, general and administrative	106,081	97,058	95,592
Total costs and expenses	325,329	299,121	275,509
Loss from operations	(251,915)	(238,751)	(260,123)
Income from investment in TRC, LLC	33,705	11,182	170
Interest expense	(31,862)	(10,482)	(8,547)
Other-than-temporary impairment loss			(8,000)
Interest and other income, net	8,395	11,966	4,789
Loss before income taxes	(241,677)	(226,085)	(271,711)
Provision for income tax benefit (expense)	5,222	10,561	(13,694)
Net loss	$ (236,455)	$ (215,524)	$ (285,405)
Net loss per share:
Basic and diluted net loss per share (in dollars per share)	$ (4.25)	$ (3.99)	$ (5.45)
Shares used to compute basic and diluted net loss per share (in shares)	55,610	53,969	52,352
Share-based compensation expense	$ 60,450	$ 51,313	$ 49,145
Research and development
Net loss per share:
Share-based compensation expense	28,953	25,563	22,691
Selling, general and administrative
Net loss per share:
Share-based compensation expense	31,497	25,750	26,454
Product sales
Revenue:
Revenue		15,304	14,788
Collaborative revenue
Revenue:
Revenue	31,250	41,791	$ 598
Licensing revenue
Revenue:
Revenue	28,500
Mylan collaboration agreement
Revenue:
Revenue	$ 13,664	$ 3,275

Segment Information - Percentage of Revenue (Details) - Total revenue - Customer concentration risk	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Mylan
Segment Information
Percentage of total revenues	44.00%	0.00%	0.00%
Janssen
Segment Information
Percentage of total revenues	42.00%	51.00%	0.00%
Pfizer
Segment Information
Percentage of total revenues	14.00%	0.00%	0.00%
Alfasigma
Segment Information
Percentage of total revenues	0.00%	18.00%	0.00%
Cardinal Health
Segment Information
Percentage of total revenues	0.00%	0.00%	28.00%
AmerisourceBergen Drug Corp
Segment Information
Percentage of total revenues	0.00%	0.00%	25.00%
McKesson Corp
Segment Information
Percentage of total revenues	0.00%	0.00%	23.00%
Besse Medical
Segment Information
Percentage of total revenues	0.00%	0.00%	13.00%

Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-Based Compensation
Share-based compensation expense	$ 60,450	$ 51,313	$ 49,145
Research and development
Share-Based Compensation
Share-based compensation expense	28,953	25,563	22,691
Selling, general and administrative
Share-Based Compensation
Share-based compensation expense	$ 31,497	$ 25,750	$ 26,454

Share-Based Compensation - Theravance Biopharma Equity Plans (Details)			12 Months Ended
	Sep. 25, 2015	Jun. 02, 2014 plan	Dec. 31, 2014 shares	Dec. 31, 2013 item shares
Share-Based Compensation
Number of plans \| plan		3
Vesting period	3 years
2013 EIP
Share-Based Compensation
Shares approved for grant (in shares)				5,428,571
2013 EIP \| Maximum
Share-Based Compensation
Shares that may be issued as percent of prior year outstanding shares				5.00%
Automatic increase in number of shares that may be issued				3,428,571
2013 EIP \| Options
Share-Based Compensation
Term (in years)				10 years
Vesting period				4 years
Period of forfeiture of unvested option upon termination of service			3 months
2013 EIP \| Options \| Vesting after one year
Share-Based Compensation
Vesting period				1 year
Vesting of RSU (as a percent)				25.00%
2013 EIP \| Options \| Monthly vesting over the remaining three years
Share-Based Compensation
Vesting period				3 years
Vesting of RSU (as a percent)				75.00%
2013 ESPP
Share-Based Compensation
Shares approved for grant (in shares)				857,142
Purchase price as a percentage of fair market value of stock				85.00%
Consecutive and overlapping offering periods				24 months
Number of purchase periods \| item				4
Duration of purchase period				6 months
Maximum contribution as percent of compensation				15.00%
2013 ESPP \| Maximum
Share-Based Compensation
Shares that may be issued as percent of prior year outstanding shares				1.00%
Automatic increase in number of shares that may be issued				571,428
2014 NEEIP
Share-Based Compensation
Shares approved for grant (in shares)			750,000
2014 NEEIP \| Options
Share-Based Compensation
Term (in years)			10 years
Vesting period			4 years
Period of forfeiture of unvested option upon termination of service			3 months
2014 NEEIP \| Options \| Vesting after one year
Share-Based Compensation
Vesting of RSU (as a percent)			25.00%
2014 NEEIP \| Options \| Monthly vesting over the remaining three years
Share-Based Compensation
Vesting of RSU (as a percent)			75.00%

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

12. Income Taxes

Theravance Biopharma was incorporated in the Cayman Islands in July 2013 under the name Theravance Biopharma, Inc. as a wholly-owned subsidiary of Innoviva and began operations subsequent to the Spin-Off with wholly-owned subsidiaries in the Cayman Islands, US, United Kingdom, and Ireland. Effective July 1, 2015, Theravance Biopharma became an Irish tax resident, therefore, the loss before income taxes of Theravance Biopharma, the parent company, are included in Ireland in the tables below.

The components of the loss before income taxes were as follows:


	Year Ended December 31,
(In thousands)	2019		2018		2017
Income (loss) before provision for income taxes:
Cayman Islands	$	11,779	$	14,838	$	(163,770)
United States		(99,225)		(69,695)		(33,374)
Ireland		(154,217)		(171,134)		(74,472)
United Kingdom		(14)		(94)		(95)
Total	$	(241,677)	$	(226,085)	$	(271,711)

The components of provision for income tax benefit (expense) were as follows:


	Year Ended December 31,
(In thousands)	2019			2018			2017
Provision for income tax benefit (expense):
Current:
Cayman Islands	$	—		$	—		$	—
United States		5,210			10,563			(13,091)
Ireland		—			—			(566)
United Kingdom		12			(2)			(37)
Subtotal		5,222			10,561			(13,694)
Deferred		—			—			—
Total	$	5,222		$	10,561		$	(13,694)
Effective tax rate		2.16	%		4.67	%		(5.04)	%

The provision for income tax benefit (expense) was $5.2 million, $10.6 million and ($13.7) million for the years ended December 31, 2019, 2018 and 2017 respectively.

The 2019 net income tax benefit was primarily attributed to a reversal of previously accrued contingent tax liabilities for uncertain tax positions due to a lapse of the statute of limitations and current year US research and development credits. The 2018 net income tax benefit was primarily due to additional tax loss generated in 2017 by the US entity as a result of the finalization of transfer pricing policy, current year US research and development credit, and the release of previously recorded contingent tax liabilities due to the lapse of the statute of limitations. The provision for income tax recorded in 2017 primarily resulted from contingent tax liabilities related to uncertain tax positions taken with respect to transfer pricing and tax credits.

No provision for income taxes has been recognized on undistributed earnings of the Company’s foreign subsidiaries because it considers such earnings to be indefinitely reinvested. In the event of a distribution of these earnings in the form of dividends or otherwise, the Company may be liable for income taxes, subject to an adjustment, if any, for foreign tax credits and foreign withholdings taxes payable to certain foreign tax authorities. As of December 31, 2019, there were no undistributed earnings.

As a result of the Company becoming an Irish tax resident effective July 1, 2015, the tax rates reflect the Irish statutory rate of 25%. The differences between the Irish statutory income tax rate and the Company’s effective tax rates were as follows:


	Year Ended December 31,
	2019		2018		2017
Provision at statutory income tax rate	25.00	%	25.00	%	25.00	%
Foreign rate differential	(6.96)		(7.51)		(18.17)
Share-based compensation	(1.17)		0.28		1.52
Non-deductible executive compensation	(0.51)		(0.72)		(1.03)
Uncertain tax positions	(0.63)		(4.00)		(6.55)
Research and development tax credit carryforwards	2.50		1.79		1.21
Federal tax reform - Tax rate change	—		—		(4.66)
Foreign exchange loss	—		8.52		—
Change in valuation allowance	(14.90)		(18.82)		(5.15)
Other	(1.17)		0.13		2.79
Effective tax rate	2.16	%	4.67	%	(5.04)	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows:


	December 31,
(In thousands)	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	58,161	$	33,396
Capital loss carryforwards		19,409		19,409
Research and development tax credit carryforwards		15,723		8,508
Fixed assets and intangibles		285,341		285,821
Share-based compensation		15,480		12,479
Accruals		8,245		8,343
Operating lease liabilities		11,358		—
Other		7		—
Subtotal		413,724		367,956
Valuation allowance		(403,836)		(367,748)
Total deferred tax assets		9,888		208

Deferred tax liabilities:
Operating lease assets		(9,429)		—
Prepaid assets		(459)		(208)
Total deferred tax liabilities		(9,888)		(208)

Net deferred tax assets/liabilities	$	—	$	—

The Company follows the accounting guidance related to accounting for income taxes which requires that a company reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. As of December 31, 2019, the Company’s deferred tax assets were offset in full by a valuation allowance.

On January 1, 2018, the Company adopted ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”) using the modified retrospective approach. ASU 2016-16 requires immediate recognition of income tax consequences of intra-company asset transfers, other than inventory transfers. Legacy GAAP prohibited recognition of income tax consequences of intra-company asset transfers whereby the seller defers any net tax effect and the buyer is prohibited from recognizing a deferred tax asset on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the consolidated financial statements. An example of an inter-company asset transfers included in ASU 2016-16’s scope is intellectual property. On October 2, 2017, Theravance Biopharma R&D, Inc. (Cayman Islands) transferred its economic interests in certain intellectual property to Theravance Biopharma Ireland Limited. The transfer was classified as an intra-company sale of assets for both financial reporting and income tax purposes. The Company recorded a deferred tax asset of $282.7 million fully offset by a valuation allowance as a result of the sale of intellectual property. The adoption of this pronouncement did not have a material impact on the Company’s consolidated balance sheet or statement of operations.

The valuation allowance as of December 31, 2019 increased from $367.7 million (the valuation allowance as of December 31, 2018) to $403.8 million, primarily as a result of additional tax loss generated in various jurisdictions during the current year and the additional research tax credit generated in the US. Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that the deferred tax assets are recoverable. As required, the Company prepares its assessment of the realizability of deferred tax assets on a jurisdiction-by-jurisdiction basis.

As of December 31, 2019, the Company had $163.6 million of US federal net operating loss carryforwards and $17.9 million of federal research and development tax credit carryforwards which expire beginning in 2035. After the

enactment of the Tax Cut and Jobs Act (the “Tax Act”) in December 2017, the operating losses generated had an indefinite carryforward life, but was limited to 80% of taxable income when utilized. As of December 31, 2019, this amount was $118.7 million. The Company had state net operating loss carryforwards of $71.9 million which generally begin to expire in 2034 and state research and development credit carryforwards of $18.9 million to be carried forward indefinitely.

The Company also had Irish net operating loss carryforwards of $352.9 million with no expiration date and capital loss carryforwards of $58.8 million to be carried forward indefinitely.

Utilization of net operating loss and tax credit carryforwards may be subject to an annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar state provisions. Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized.

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The amount of tax expense related to interest or penalties was immaterial for the years ended December 31, 2019 and 2018.

Uncertain Tax Positions

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits were as follows:


(In thousands)
Unrecognized tax benefits as of December 31, 2017	$	41,794
Gross decrease in tax positions for prior years		(685)
Gross increase in tax positions for current year		11,295
Unrecognized tax benefits as of December 31, 2018		52,404
Gross decrease in tax positions for prior years		(2,010)
Gross increase in tax positions for current year		8,369
Unrecognized tax benefits as of December 31, 2019	$	58,763

The Company records liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. The Company includes any applicable interest and penalties within the provision for income taxes in the consolidated statements of operations.

The total unrecognized tax benefits of $58.8 million and $52.4 million, as of December 31, 2019 and December 31, 2018, respectively, may reduce the effective tax rate in the period of recognition. Within the next twelve months, the Company is no longer subject to IRS tax audit examinations for the years ended on or before December 31, 2016. However, carryforward tax attributes that were generated in years beginning on or before January 1, 2017 may still be adjusted upon examination by tax authorities since the attributes are not yet utilized. As of December 31, 2019, the Company believes it is reasonably possible that its unrecognized tax benefits and related interest recorded for various US matters could decrease by approximately $8.0 million in the next twelve months. The Company does not expect to record any other material reductions in the measurement of its unrecognized tax benefits within the next twelve months. The Company currently has a full valuation allowance against its deferred tax assets, which would impact the timing of the effective tax rate benefit should any of these uncertain positions be favorably settled in the future.

The Company is subject to taxation in Ireland, the US, and various other jurisdictions. The tax years 2016 and forward remain open to examination in Ireland, tax years 2016 and forward remain open to examination in the US, and the tax years 2013 and forward remain open to examination in other jurisdictions.

The Company’s future income tax expense may be affected by such factors as changes in tax laws, its business, regulations, tax rates, interpretation of existing laws or regulations, the impact of accounting for share-based compensation, the impact of accounting for business combinations, its international organization, shifts in the amount of income before tax earned in the US as compared with other regions in the world, and changes in overall levels of income before tax.

US Tax Reform

In December 2017, the US government enacted the Tax Act. The Tax Act significantly revises the US corporate income tax laws by, amongst other things, reducing the corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time repatriation tax on accumulated undistributed foreign earnings.

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allowed the Company to record provisional amounts for the Tax Act during a measurement period not to extend beyond one year of the enactment date, with further clarifications made recently with the issuance of amendments to SAB 118. The Company has completed its assessment of the Tax Act and did not have any significant adjustments to its provisional amount of $12.4 million related to the reduction in the corporate income tax rate from 35% to 21%.

Investments and Fair Value Measurements - Available-for-sale securities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Available for sale securities:
Amortized Cost	$ 274,014	$ 501,837
Gross Unrealized Gains	148	8
Gross Unrealized Losses	(3)	(174)
Estimated Fair Value	274,159	501,671
Marketable securities
Available for sale securities:
Amortized Cost	238,278	207,086
Gross Unrealized Gains	148	8
Gross Unrealized Losses	(3)	(174)
Estimated Fair Value	238,423	206,920
US government securities \| Level 1
Available for sale securities:
Amortized Cost	100,746	48,807
Gross Unrealized Gains	108
Gross Unrealized Losses		(86)
Estimated Fair Value	100,854	48,721
US government agency securities \| Level 2
Available for sale securities:
Amortized Cost		9,852
Gross Unrealized Gains		2
Estimated Fair Value		9,854
Corporate notes \| Level 2
Available for sale securities:
Amortized Cost	25,466	57,508
Gross Unrealized Gains	9	6
Gross Unrealized Losses	(1)	(88)
Estimated Fair Value	25,474	57,426
Commercial paper \| Level 2
Available for sale securities:
Amortized Cost	112,066	90,919
Gross Unrealized Gains	31
Gross Unrealized Losses	(2)
Estimated Fair Value	112,095	90,919
Money market funds \| Level 1
Available for sale securities:
Amortized Cost	35,736	294,751
Estimated Fair Value	$ 35,736	$ 294,751

Cash, Cash Equivalents, and Restricted Cash (Tables)

12 Months Ended

Dec. 31, 2019

Cash, Cash Equivalents, and Restricted Cash

Schedule of reconciliation of cash, cash equivalents, and restricted cash


	December 31,
(In thousands)	2019		2018		2017
Cash and cash equivalents	$	58,064	$	378,021	$	88,980
Restricted cash		833		833		833
Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows	$	58,897	$	378,854	$	89,813

Revenue

12 Months Ended

Dec. 31, 2019

Revenue

Revenue

2. Revenue

Revenues from Collaborative Arrangements

The Company recognized revenues from its collaborative arrangements as follows:



	Year Ended December 31,
(In thousands)	2019		2018		2017
Janssen	$	31,096	$	31,053	$	—
Alfasigma		125		10,678		—
Other		29		60		598
Total collaboration revenue	$	31,250	$	41,791	$	598

As noted earlier, the Company adopted ASC 606 on January 1, 2018. Had ASC 605 been in effect, the 2018 collaboration revenue in the above table would not have been materially different.

Changes in Deferred Revenue Balances

Changes in deferred revenue balances arose as a result of the Company recognizing the following revenue from collaborative arrangements during the periods below:



	Year Ended December 31,
(In thousands)	2019		2018
Collaboration revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period	$	31,245	$	130
Performance obligations satisfied in previous period		—		—

Janssen Biotech

In February 2018, the Company entered into a global co-development and commercialization agreement with Janssen Biotech, Inc. (“Janssen”) for TD-1473 and related back-up compounds for inflammatory intestinal diseases, including ulcerative colitis and Crohn’s disease (the “Janssen Agreement”). Under the terms of the Janssen Agreement, the Company received an upfront payment of $100.0 million. The Company is conducting a Phase 2 (DIONE) study of TD-1473 in Crohn’s disease and a Phase 2b/3 (RHEA) induction and maintenance study of TD-1473 in ulcerative colitis. Following the initial Phase 2 development period, including the completion of the Phase 2 Crohn’s study and the Phase 2b induction portion of the ulcerative colitis study, Janssen can elect to obtain an exclusive license to develop and commercialize TD-1473 and certain related back-up compounds by paying the Company a fee of $200.0 million. Upon any such election, the Company and Janssen will jointly develop and commercialize TD-1473 in inflammatory intestinal

diseases and share profits in the US and expenses related to Phase 3 development and registration activities (67% to Janssen; 33% to Theravance Biopharma). The Company would receive royalties on ex-US sales at double-digit tiered percentage royalty rates, and the Company would be eligible to receive up to an additional $700.0 million in development and commercialization milestone payments from Janssen.

The Janssen Agreement is considered to be within the scope of ASC 808 as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The Company evaluated the terms of the Janssen Agreement and have analogized to ASC 606 for the research and development activities to be performed through the initial Phase 2 development period of the collaborative arrangement that are considered to be part of the Company’s ongoing major or central operations. Using the concepts of ASC 606, the Company has identified research and development activities as its only performance obligation. The Company further determined that the transaction price under the arrangement was the $100.0 million upfront payment which was allocated to the single performance obligation.

The $900.0 million in future potential payments, inclusive of the $200.0 million opt-in fee and $700.0 million future development and commercialization milestones, is considered variable consideration if Janssen elects to remain in the collaboration arrangement following completion of the initial Phase 2 development period, as described above and, as such, was not included in the transaction price, as the potential payments were all determined to be fully constrained under ASC 606. As part of the Company’s evaluation of this variable consideration constraint, it determined that the potential payments are contingent upon developmental and regulatory milestones that are uncertain and are highly susceptible to factors outside of its control. The Company expects that any consideration related to royalties and sales-based milestones will be recognized when the subsequent sales occur.

For each of the years ended December 31, 2019 and 2018, the Company recognized approximately $31.1 million as revenue from collaboration arrangements related to the Janssen Agreement. The remaining transaction price of $37.9 million was recorded in deferred revenue on the consolidated balance sheets and is expected to be recognized as collaboration revenue as the research and development services are delivered over the Phase 2 development period. Collaboration revenue is recognized for the research and development services based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g., costs incurred compared to total budget). For the years ended December 31, 2019 and 2018, the Company incurred $39.9 million and $38.6 million, respectively, in research and development costs related to the Janssen Agreement. In future reporting periods, the Company will reevaluate the estimates related to its efforts towards satisfying the performance obligation and may record a change in estimate if deemed necessary.

Mylan

In January 2015, the Company and Mylan Ireland Limited (“Mylan”) established a strategic collaboration (the “Mylan Agreement”) for the development and commercialization of revefenacin, including YUPELRI^® (revefenacin) inhalation solution. The Company entered into the collaboration to expand the breadth of its revefenacin development program and extend its commercial reach beyond the hospital setting.

Under the Mylan Agreement, Mylan paid the Company an upfront fee of $15.0 million for the delivery of the revefenacin license in 2015 and, in 2016, Mylan paid the Company a milestone payment of $15.0 million for the achievement of 50% enrollment in the related Phase 3 twelve-month safety study. Separately, pursuant to an agreement to purchase ordinary shares entered into on January 30, 2015, Mylan Inc., a subsidiary of Mylan N.V., made a $30.0 million equity investment in the Company, buying 1,585,790 ordinary shares from the Company in February 2015 in a private placement transaction at a price of approximately $18.918 per share, which represented a 10% premium, equal to $4.2 million, over the volume weighted-average price per share of the Company’s ordinary shares for the five trading days ending on January 30, 2015. These shares were subsequently sold by Mylan in 2018.

Under the Mylan Agreement, as of December 31, 2019, the Company is eligible to receive from Mylan potential global (ex-China and adjacent territories) development, regulatory and sales milestone payments totaling up to $205.0 million in the aggregate, with $160.0 million associated with YUPELRI monotherapy, and $45.0 million associated with future potential combination products. Of the $160.0 million associated with monotherapy, $150.0 million relates to sales milestones based on achieving certain levels of net sales and $10.0 million relates to

regulatory actions in the European Union (“EU”). The $45.0 million associated with future potential combination products relates solely to development and regulatory actions.

The Mylan Agreement is considered to be within the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. Under the terms of the Mylan Agreement, Mylan was responsible for reimbursement of the Company’s costs related to the registrational program up until the approval of the first new drug application in November 2018, thereafter, R&D expenses are shared. Performing R&D services for reimbursement is considered to be a collaborative activity under the scope of ASC 808. Reimbursable program costs are recognized proportionately with the performance of the underlying services and accounted for as reductions to R&D expense. For this unit of account, the Company did not recognize revenue or analogize to ASC 606 and, as such, the reimbursable program costs are excluded from the transaction price.

The Company analogized to ASC 606 for the accounting for two performance obligations: (1) delivery of the license to develop and commercialize revefenacin; and (2) joint steering committee participation. The Company determined the license to be distinct from the joint steering committee participation. The Company further determined that the transaction price under the arrangement was comprised of the following: (1) $15.0 million upfront license fee received in 2015; (2) $4.2 million premium related to the ordinary share purchase agreement received in 2015; and (3) $15.0 million milestone for 50% enrollment in the Phase 3 twelve-month safety study received in 2016. The total transaction price of $34.2 million was allocated to the two performance obligations based on the Company’s best estimate of the relative stand-alone selling price. For the delivery of the license, the Company based the stand-alone selling price on a discounted cash flow approach and considered several factors including, but not limited to: discount rate, development timeline, regulatory risks, estimated market demand and future revenue potential. For the committee participation, the Company based the stand-alone selling price on the average compensation of its committee members estimated to be incurred over the performance period. The Company expects to recognize collaboration revenue from the committee participation ratably over the performance period of approximately seventeen years.

The future potential milestone amounts for the Mylan Agreement were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. As part of the Company’s evaluation of the development and regulatory milestones constraint, the Company determined that the achievement of such milestones are contingent upon success in future clinical trials and regulatory approvals which are not within its control and uncertain at this stage. The Company expects that the sales-based milestone payments and royalty arrangements will be recognized when the sales occur or the milestone is achieved. The Company will re-evaluate the transaction price each quarter and as uncertain events are resolved or other changes in circumstances occur.

As of December 31, 2019, $0.3 million was recorded in deferred revenue on the consolidated balance sheets under the Mylan Agreement. This amount reflects revenue allocated to joint steering committee participation which will be recognized as collaboration revenue over the course of the remaining performance period of approximately twelve years.

The Company is also entitled to a share of US profits and losses (65% to Mylan; 35% to Theravance Biopharma) received in connection with commercialization of YUPELRI, and the Company is entitled to low double-digit tiered royalties on ex-US net sales. Mylan is the principal in the sales transactions, and as a result, the Company does not reflect the product sales in its financial statements.

Following the US Food and Drug Administration (“FDA”) approval of YUPELRI in November 2018, net amounts payable to or receivable from Mylan each quarter under the profit-sharing structure are disaggregated according to their individual components. Any reimbursement from Mylan attributed to the 65% cost-sharing of the Company’s R&D expenses is characterized as a reduction of R&D expense, as the Company does not consider performing research and development services for reimbursement to be a part of its ongoing major or central operations. In accordance with the applicable accounting guidance, amounts receivable from Mylan in connection with the commercialization of YUPELRI are recorded within the consolidated statements of operations as revenue from “Mylan collaboration agreement” irrespective of whether the overall collaboration is profitable. Amounts payable to Mylan in connection with the commercialization of YUPELRI are recorded within the consolidated statements of operations as a collaboration loss within selling, general and administrative expenses.

The following YUPLERI-related amounts were recognized in the Company’s consolidated statements of operations:



	Year Ended December 31,
(In thousands)	2019		2018
Mylan collaboration agreement - Amounts receivable from Mylan	$	13,664	$	3,275
Collaboration loss - Amounts payable to Mylan	$	1,582	$	2,997

Prior to the FDA approval of YUPELRI in late 2018, the Company recognized its 35% share of expenses within R&D expense and selling, general and administrative expense on its consolidated statements of operations.

Alfasigma

Under an October 2012 development and collaboration agreement for velusetrag, the Company and Alfasigma S.p.A (“Alfasigma”) agreed to collaborate in the execution of a two-part Phase 2 program to test the efficacy, safety and tolerability of velusetrag in the treatment of patients with gastroparesis (a medical condition consisting of a paresis (partial paralysis) of the stomach, resulting in food remaining in the stomach for a longer time than normal) (the “Alfasigma Agreement”). As part of the Alfasigma Agreement, Alfasigma funded the majority of the costs associated with the Phase 2 gastroparesis program, which consisted of a Phase 2 study focused on gastric emptying and a Phase 2 study focused on symptoms. Alfasigma had an exclusive option to develop and commercialize velusetrag in the EU, Russia, China, Mexico and certain other countries, while the Company retained full rights to velusetrag in the US, Canada, Japan and certain other countries.

In April 2018, Alfasigma exercised its exclusive option to develop and commercialize velusetrag, and the Company elected not to pursue further development of velusetrag. As a result, the Company is transferring global rights for velusetrag to Alfasigma under the terms of the existing collaboration agreement. The Company received a $10.0 million option exercise fee and a $1.0 million non-refundable reimbursement from Alfasigma, and the Company is eligible to receive future potential development, regulatory and sales milestone payments of up to $26.8 million and tiered royalties on global net sales ranging from high single digits to the mid-teens.

The Alfasigma Agreement is considered to be within the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The Company has historically received reimbursements related to R&D services performed under the Alfasigma Agreement. Performing R&D services for reimbursement is considered to be a collaborative activity under the scope of ASC 808. Reimbursable program costs are accounted for as reductions to R&D expense. For this unit of account, the Company does not recognize revenue or analogize to ASC 606 and, as such, the reimbursable program costs are excluded from the transaction price.

As a result of Alfasigma’s election to exercise its exclusive option to develop and commercialize velusetrag in April 2018, Alfasigma paid the Company a total of $11.0 million, comprised of the $10.0 million option exercise fee and the $1.0 million non-refundable reimbursement. The Company analogized to ASC 606 for the delivery of the following identified performance obligations: (i) delivery of the velusetrag license; (ii) transfer of technical know-how; (iii) delivery of clinical study reports (“CSRs”); (iv) delivery of registration batches, including drug substances; and (v) joint steering committee participation. The Company determined that all of the five performance obligations were distinct, and it allocated the transaction price based on the estimated stand-alone selling prices of each of the performance obligations. The stand-alone selling price of the license was based on a discounted cash flow approach and considered several factors including, but not limited to: discount rate, development timeline, regulatory risks, estimated market demand and future revenue potential.

The Company determined that any potential development or regulatory milestones were to be fully constrained as prescribed under ASC 606. As part of its evaluation of this variable consideration constraint, the Company determined that the potential payments are contingent upon developmental and regulatory milestones that are uncertain and are highly susceptible to factors outside of the Company’s control. In addition, the Company expects that any consideration related to sales-based milestones would be recognized when the subsequent sales occur.

For the year ended December 31, 2019 and 2018, the Company recognized $0.1 million and $10.7 million, respectively, as revenue from collaboration arrangements related to the Alfasigma Agreement. As of December 31, 2019, $0.2 million was recorded in deferred revenue on the consolidated balance sheets and is expected to be recognized as collaboration revenue over approximately the next seven years.

Reimbursement of R&D Expenses

As noted above, under certain collaborative arrangements the Company is entitled to reimbursement of certain R&D expenses. Activities under collaborative arrangements for which the Company is entitled to reimbursement are considered to be collaborative activities under the scope of ASC 808. For these units of account, the Company does not analogize to ASC 606 or recognize revenue. The Company records reimbursement payments received from its collaboration partners as reductions to R&D expense.

The following table summarizes the reductions to R&D expenses related to reimbursement payments:



	Year Ended December 31,
(In thousands)	2019		2018		2017
Janssen	$	5,129	$	1,597	$	—
Mylan		460		7,515		23,427
Other		—		—		113
Total reduction to R&D expense	$	5,589	$	9,112	$	23,540

Revenue from Licensing Arrangements

Mylan

In June 2019, the Company announced the expansion of the Mylan Agreement (the “Mylan Amendment”) to grant Mylan exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories. In exchange, the Company received an upfront payment of $18.5 million (before a required tax withholding) and will be eligible to receive potential development and sales milestones totaling $54.0 million and low double-digit tiered royalties on net sales of nebulized revefenacin, if approved. Of the $54.0 million in potential milestones, $9.0 million is associated with the development of YUPELRI monotherapy, $7.5 million associated with the development of future potential combination products, and $37.5 million is associated with sales milestones. Mylan will be responsible for all aspects of development and commercialization in the partnered regions, including pre- and post-launch activities and product registration and all associated costs.

The Mylan Amendment is accounted for under ASC 606 as a separate contract from the original Mylan Agreement that was entered into in January 2015. The Company identified a single performance obligation comprising of the delivery of the license to develop and commercialize revefenacin in China and adjacent territories. The transaction price was determined to be the upfront payment of $18.5 million which the Company recognized as licensing revenue following the completion of the performance obligation in June 2019.

The future potential milestone amounts for the Mylan Amendment were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. As part of the Company’s evaluation of the development milestones constraint, the Company determined that the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals which are not within its control and uncertain at this stage. The Company expects that the sales-based milestone payments and royalty arrangements will be recognized when the sales occur or the milestone is achieved. The Company will re-evaluate the transaction price each quarter and as uncertain events are resolved or other changes in circumstances occur.

Pfizer

In December 2019, the Company entered into a global license agreement with Pfizer Inc. for its preclinical skin-selective, locally-acting pan-JAK inhibitor program (the “Pfizer Agreement”). The compounds in this program are designed to target validated pro-inflammatory pathways and are specifically designed to possess skin-selective activity with minimal systemic exposure.

Under the Pfizer Agreement, Pfizer has an exclusive license to develop, manufacture and commercialize certain compounds for all uses other than gastrointestinal, ophthalmic and respiratory applications. Under the terms of the Pfizer Agreement, the Company will receive an upfront cash payment of $10.0 million and is eligible to receive up to an additional $240.0 million in development and sales milestone payments from Pfizer. In addition, the Company will be eligible to receive a tiered royalty on worldwide net sales of any potential products under the license at percentage royalty rates ranging from middle single-digits to low double-digits.

The Pfizer Agreement is accounted for under ASC 606. The Company identified two performance obligations primarily comprised of the delivery of the license and samples of tangible materials which was completed in December 2019. The transaction price was determined to be the upfront payment of $10.0 million which the Company recognized as licensing revenue for the year ended December 31, 2019.

The future potential milestones payable under the Pfizer Amendment were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. As part of the Company’s evaluation of the development milestones constraint, the Company determined that the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals which are not within its control and uncertain at this stage. The Company expects that the sales-based milestone payments will be recognized when the sales occur or the milestone is achieved. The Company will re-evaluate the transaction price each quarter and as uncertain events are resolved or other changes in circumstances occur.

Segment Information

12 Months Ended

Dec. 31, 2019

Segment Information

Segment Information

4. Segment Information

The Company operates in a single segment, which is the discovery (research), development and commercialization of human therapeutics. The following table summarizes total revenue by geographic region:


	Year Ended December 31,
(In thousands)	2019		2018		2017
US	$	54,760	$	49,239	$	14,272
Europe		18,654		11,117		1,109
Asia		—		14		5
Total revenue	$	73,414	$	60,370	$	15,386

The following table summarizes total revenue from each of the Company’s customers or collaboration partners who individually accounted for 10% or more of the Company’s total revenue (as a percentage of total revenues) during the most recent three years:


	Year Ended December 31,
(% of total revenue)	2019		2018		2017
Mylan	44	%	—		—
Janssen	42	%	51	%	—
Pfizer	14	%	—		—
Alfasigma	—		18	%	—
Cardinal Health	—		—		28	%
AmerisourceBergen	—		—		25	%
McKesson	—		—		23	%
Besse Medical	—		—		13	%

Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Nov. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash and cash equivalents	$ 58,064	$ 378,021		$ 88,980
Restricted cash	833	833		833
Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows	$ 58,897	$ 378,854		$ 89,813	$ 345,542
9.0% non-recourse notes due 2033
Interest rate (as a percent)	9.00%	9.00%	9.00%

Organization and Summary of Significant Accounting Policies - Net Loss per Share - Anti-dilutive (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	13,253,000	10,170,000	10,051,000
Share issuances under equity incentive plans and ESPP
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	6,577,000	3,492,000	3,369,000
Restricted shares
Anti-Dilutive Securities
Anti-dilutive securities (in shares)		2,000	6,000
Share issuances upon the conversion of convertible senior notes
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	6,676,000	6,676,000	6,676,000
Performance-based vesting
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	414,000	978,750	1,305,000

Investments and Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Investments and Fair Value Measurements

Schedule of available-for-sale securities


		December 31, 2019
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	100,746	$	108	$	—	$	100,854
US government agency securities	Level 2		—		—		—		—
Corporate notes	Level 2		25,466		9		(1)		25,474
Commercial paper	Level 2		112,066		31		(2)		112,095
Marketable securities			238,278		148		(3)		238,423
Money market funds	Level 1		35,736		—		—		35,736
Total		$	274,014	$	148	$	(3)	$	274,159


		December 31, 2018
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	48,807	$	—	$	(86)	$	48,721
US government agency securities	Level 2		9,852		2		—		9,854
Corporate notes	Level 2		57,508		6		(88)		57,426
Commercial paper	Level 2		90,919		—		—		90,919
Marketable securities			207,086		8		(174)		206,920
Money market funds	Level 1		294,751		—		—		294,751
Total		$	501,837	$	8	$	(174)	$	501,671

Segment Information - Geographic region (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Information
Revenue	$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
United States
Segment Information
Revenue									54,760	49,239	14,272
Europe
Segment Information
Revenue									$ 18,654	11,117	1,109
Asia
Segment Information
Revenue										$ 14	$ 5

Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Segment Information

Schedule of total revenue by geographic region


	Year Ended December 31,
(In thousands)	2019		2018		2017
US	$	54,760	$	49,239	$	14,272
Europe		18,654		11,117		1,109
Asia		—		14		5
Total revenue	$	73,414	$	60,370	$	15,386

Schedule of total revenue from customers or collaboration partners who individually accounted for 10% or more of total revenue


	Year Ended December 31,
(% of total revenue)	2019		2018		2017
Mylan	44	%	—		—
Janssen	42	%	51	%	—
Pfizer	14	%	—		—
Alfasigma	—		18	%	—
Cardinal Health	—		—		28	%
AmerisourceBergen	—		—		25	%
McKesson	—		—		23	%
Besse Medical	—		—		13	%

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Ordinary Shares	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Balances at Dec. 31, 2016	$ 1	$ 862,708	$ (253)	$ (512,225)	$ 350,231
Balances (in shares) at Dec. 31, 2016	52,833
Increase (Decrease) in Stockholders' Equity
Proceeds from sale of ordinary shares		1			1
Proceeds from ESPP purchases		3,980			3,980
Proceeds from ESPP purchases (in shares)	250
Employee share-based compensation expense		49,175			49,175
Issuance of restricted shares (in shares)	1,025
Option exercises		6,236			6,236
Option exercises (in shares)	276
Cumulative effect upon the adoption of ASU 2016-09		110		(110)
Repurchase of shares to satisfy tax withholding		(8,560)			(8,560)
Repurchase of shares to satisfy tax withholding (in shares)	(3)
Net unrealized gain (loss) on marketable securities			(480)		(480)
Net loss				(285,405)	(285,405)
Balances at Dec. 31, 2017	$ 1	913,650	(733)	(797,740)	115,178
Balances (in shares) at Dec. 31, 2017	54,381
Increase (Decrease) in Stockholders' Equity
Proceeds from ESPP purchases		4,173			4,173
Proceeds from ESPP purchases (in shares)	204
Employee share-based compensation expense		51,313			51,313
Issuance of restricted shares (in shares)	1,168
Option exercises		1,393			1,393
Option exercises (in shares)	75
Cumulative effect upon the adoption of ASC 606				1,119	1,119
Repurchase of shares to satisfy tax withholding		(9,808)			(9,808)
Repurchase of shares to satisfy tax withholding (in shares)	(147)
Net unrealized gain (loss) on marketable securities			567		567
Net loss				(215,524)	(215,524)
Balances at Dec. 31, 2018	$ 1	960,721	(166)	(1,012,145)	$ (51,589)
Balances (in shares) at Dec. 31, 2018	55,681				55,681
Increase (Decrease) in Stockholders' Equity
Proceeds from ESPP purchases		3,474			$ 3,474
Proceeds from ESPP purchases (in shares)	203
Employee share-based compensation expense		60,450			60,450
Issuance of restricted shares (in shares)	1,105
Option exercises		3,142			3,142
Option exercises (in shares)	164
Repurchase of shares to satisfy tax withholding		(3,173)			(3,173)
Repurchase of shares to satisfy tax withholding (in shares)	(138)
Net unrealized gain (loss) on marketable securities			311		311
Net loss				(236,455)	(236,455)
Balances at Dec. 31, 2019	$ 1	$ 1,024,614	$ 145	$ (1,248,600)	$ (223,840)
Balances (in shares) at Dec. 31, 2019	57,015				57,015

Organization and Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at the beginning	$ 1,528	$ 2,290
Provision related to current period sales		7,627
Adjustment related to prior period sales	199	(362)
Credit or payments made during the period	(466)	(8,027)
Balance at the end	1,261	1,528
Chargebacks, Discounts and Fees
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at the beginning	375	992
Provision related to current period sales		6,402
Adjustment related to prior period sales	116	(81)
Credit or payments made during the period	(264)	(6,938)
Balance at the end	227	375
Government and Other Rebates
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at the beginning	292	352
Provision related to current period sales		704
Adjustment related to prior period sales	121	168
Credit or payments made during the period	(202)	(932)
Balance at the end	211	292
Returns
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at the beginning	861	946
Provision related to current period sales		521
Adjustment related to prior period sales	(38)	(449)
Credit or payments made during the period		(157)
Balance at the end	$ 823	$ 861
TRC
Movement in Valuation Allowances and Reserves [Roll Forward]
Percentage of equity interest	85.00%

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property and Equipment

Schedule of property and equipment


	December 31,
(In thousands)	2019		2018
Computer equipment	$	2,119	$	2,522
Software		1,718		3,577
Furniture and fixtures		3,665		3,759
Laboratory equipment		30,546		31,164
Leasehold improvements		22,164		21,849
Subtotal		60,212		62,871
Less: accumulated depreciation		(47,568)		(49,695)
Property and equipment, net	$	12,644	$	13,176

Income Taxes - US Tax Reform (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2017
Income Taxes
Provision at statutory income tax rate (as a percent)		21.00%	35.00%
Provisional tax amount	$ 12.4

Organization and Summary of Significant Accounting Policies - Advertising Expenses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Organization and Summary of Significant Accounting Policies
Advertising expenses	$ 2.4	$ 1.9	$ 3.2

Share-Based Compensation - Valuation Assumptions (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Options
Weighted-average assumptions
Risk-free interest rate, minimum (as a percent)	1.60%	2.30%	2.00%
Risk-free interest rate, maximum (as a percent)	2.50%	3.00%	2.10%
Expected term (in years)	6 years	6 years	6 years
Expected volatility, minimum (as a percent)	51.00%	53.00%	54.00%
Expected volatility, maximum (as a percent)	53.00%	54.00%	56.00%
Weighted-average estimated fair value (in dollars per share)	$ 10.20	$ 14.32	$ 17.29
2013 ESPP
Weighted-average assumptions
Risk-free interest rate, minimum (as a percent)	1.50%	2.10%	0.90%
Risk-free interest rate, maximum (as a percent)	2.40%	2.80%	1.70%
Expected volatility, minimum (as a percent)	40.00%	42.00%	41.00%
Expected volatility, maximum (as a percent)	48.00%	53.00%	56.00%
Weighted-average estimated fair value (in dollars per share)	$ 6.17	$ 9.13	$ 7.09
2013 ESPP \| Minimum
Weighted-average assumptions
Expected term (in years)	6 months	6 months	6 months
2013 ESPP \| Maximum
Weighted-average assumptions
Expected term (in years)	2 years	2 years	2 years

Leases - General (Details) $ in Thousands	12 Months Ended
Leases - General (Details) $ in Thousands	Dec. 31, 2019 USD ($) ft² building Option
Lessee, Lease, Description [Line Items]
Area of leased space	170,000
Number of building leased \| building	2
Tenant improvement allowance \| $	$ 15,561
Number of options to extend \| Option	2
Renewal term	5 years
Option to terminate	true
Ireland
Lessee, Lease, Description [Line Items]
Area of leased space	6,100
Option to terminate	true

Organization and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Organization and Summary of Significant Accounting Policies
Restricted cash	$ 0.8	$ 0.8

Revenue - Development and Collaboration Agreement (Details) $ in Thousands	1 Months Ended		3 Months Ended								12 Months Ended
	Apr. 30, 2018 USD ($) plan	Jan. 31, 2015 USD ($) plan	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2015 USD ($)
Development and Collaboration Agreement
Revenue			$ 29,499	$ 12,427	$ 26,150	$ 5,338	$ 15,737	$ 12,838	$ 23,476	$ 8,319	$ 73,414	$ 60,370	$ 15,386
Alfasigma
Development and Collaboration Agreement
Revenue											125	$ 10,678
Deferred revenue			200								200
Performance period (in years)												7 years
Number of performance obligations \| plan	5
Mylan
Development and Collaboration Agreement
Transaction price		$ 34,200
Deferred revenue			$ 300								$ 300
Performance period (in years)		17 years									12 years
Number of performance obligations \| plan		2
Development and Collaboration Agreement \| Alfasigma
Development and Collaboration Agreement
Maximum potential payments receivable												$ 26,800
Collabration transaction price	$ 11,000
Option exercise fee	10,000
Non-refundable reimbursement fee	$ 1,000
Development and Commercialization Agreement \| Alfasigma
Development and Collaboration Agreement
Revenue											$ 100	$ 10,700
Development and Commercialization Agreement \| Mylan
Development and Collaboration Agreement
Revenue														$ 15,000

Investments and Fair Value Measurements - Convertible senior notes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Maturity period for marketable securities
Maximum contractual maturity period	16 months
Weighted average contractual maturity period	3 months
Fair value transfers
Fair value of assets transferred from Level 1 to Level 2	$ 0	$ 0
Fair value of assets transferred from Level 2 to Level 1	0	0
Fair value of liabilities transferred from Level 1 to Level 2	0	0
Fair value of liabilities transferred from Level 2 to Level 1	0	0
Unrealized losses
Net unrealized losses	$ 0	$ 0

Sale of VIBATIV

12 Months Ended

Dec. 31, 2019

Sale of VIBATIV

Sale of VIBATIV

3. Sale of VIBATIV

On November 12, 2018, the Company completed the sale of its assets related to the manufacture, marketing and sale of VIBATIV to Cumberland pursuant to the Asset Purchase Agreement dated November 1, 2018 (the “APA”). Under the APA, Cumberland paid the Company $20.0 million at the closing of the transaction and $5.0 million in April 2019. In addition, Cumberland will pay the Company tiered royalties of up to 20% of US net sales of VIBATIV until such time as royalties cumulatively total $100.0 million.

In connection with the closing of the transaction, Cumberland acquired, among other things, (i) intellectual property rights relating to VIBATIV; (ii) active pharmaceutical ingredient for VIBATIV, work-in-process and finished drug product; (iii) the US marketing authorization for VIBATIV; (iv) certain assigned contracts relating to the manufacture and commercialization of VIBATIV; and (v) books and records related to VIBATIV. Cumberland also assumed certain clinical study obligations related to VIBATIV and certain post-closing liabilities and obligations as described in the APA.

The Company retained financial responsibility for any liabilities relating to products sold prior to the closing of the transaction, and Cumberland assumed financial responsibility for any liabilities relating to products sold on or after the closing of the transaction. The Company has agreed to provide transition services to Cumberland for limited periods of time following the closing of the transaction. The Company has also agreed for a limited period not to engage in specified activities that would compete with the manufacture, marketing and sale of VIBATIV.

The Company recognized a net gain of approximately $6.1 million upon the sale of VIBATIV within “interest and other income, net” on the consolidated statements of operations for the year ended December 31, 2018. The Company will record the royalties receivable from future US net sales by Cumberland within other income. Transition-related costs of approximately $1.1 million were recognized concurrently and included as a reduction to the net gain on the sale.

Organization and Summary of Significant Accounting Policies - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2019
Furniture and fixtures \| Minimum
Property and Equipment
Estimated useful life	5 years
Furniture and fixtures \| Maximum
Property and Equipment
Estimated useful life	7 years
Software and computer equipment \| Minimum
Property and Equipment
Estimated useful life	3 years
Software and computer equipment \| Maximum
Property and Equipment
Estimated useful life	5 years

Theravance Respiratory Company, LLC (Details) $ in Thousands	1 Months Ended		3 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($)	May 31, 2019	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2019 USD ($)
Theravance Respiratory Company, LLC
Income (Loss) from Equity Method Investments				$ 33,705	$ 11,182	$ 170
Amounts due from TRC, LLC				$ 28,574	5,422
Arbitration against Innoviva and TRC
Theravance Respiratory Company, LLC
Amount of distribution withheld			$ 6,900
Partial distribution received			10,600
Amounts due from TRC, LLC	$ 20,000		20,000				$ 20,000
Legal related expenses			2,500
TRC
Theravance Respiratory Company, LLC
Percentage of equity interest				85.00%
Percentage of economic interest				85.00%
Number of fiscal quarters \| item				4
Equity method investments				$ 28,600	5,400
Royalty payments				33,700	$ 11,200
Royalty expenses				2,700
TRC \| Arbitration against Innoviva and TRC
Theravance Respiratory Company, LLC
Percentage of economic interest		85.00%
Amount of distribution withheld	$ 8,000		8,000
Innoviva
Theravance Respiratory Company, LLC
Royalty payments				15,800
Proceeds From Previously Withheld Amount			$ 6,900
Amounts due from TRC, LLC				$ 28,600

Long-Term Debt (Details) - USD ($)	1 Months Ended			3 Months Ended	12 Months Ended
Long-Term Debt (Details) - USD ($)	Sep. 30, 2019	Nov. 30, 2018	Nov. 30, 2016	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Long-Term Debt
Total long-term debt					$ 455,041,000	$ 454,353,000
Long-term debt interest expense
Stated coupon interest					28,811,000	9,316,000	$ 7,475,000
Amortization of debt issuance costs					3,051,000	1,166,000	1,072,000
Total long-term debt interest expense					31,862,000	10,482,000	$ 8,547,000
9.0% non-recourse notes due 2033
Long-Term Debt
Principal amount					235,347,000	237,500,000
Unamortized debt issuance costs					$ (6,196,000)	$ (7,965,000)
Long-term debt interest expense
Proceeds from issuance of debt		$ 250,000,000.0
Interest rate (as a percent)		9.00%			9.00%	9.00%
Notes net principal amount					$ 235,300,000
Percentage of equity interest		63.75%
9.0% non-recourse notes due 2033 \| Level 2
Long-term debt interest expense
Notes fair value					228,300,000	$ 237,500,000
3.25% Convertible Senior Notes Due 2023
Long-Term Debt
Principal amount					230,000,000	230,000,000
Unamortized debt issuance costs					$ (4,110,000)	$ (5,182,000)
Long-term debt interest expense
Proceeds from issuance of debt			$ 222,500,000
Interest rate (as a percent)			3.25%		3.25%	3.25%
Transaction costs			$ 7,500,000
Conversion rate, in shares					29.0276
Principal amount for conversion rate					$ 1,000
Conversion price (in dollars per share)					$ 34.45
Redemption price to principal amount, in percent					100.00%
3.25% Convertible Senior Notes Due 2023 \| Level 2
Long-term debt interest expense
Notes fair value					$ 236,000,000.0	$ 235,000,000.0
Arbitration against Innoviva and TRC
Long-term debt interest expense
Amount of distribution withheld				$ 6,900,000
TRC
Long-term debt interest expense
Percentage of equity interest					85.00%
TRC \| Arbitration against Innoviva and TRC
Long-term debt interest expense
Amount of distribution withheld	$ 8,000,000.0			$ 8,000,000.0
Theravance Biopharma R&D, Inc. \| 9.0% non-recourse notes due 2033
Long-term debt interest expense
Interest rate (as a percent)		5.00%
Percentage of note to be retained		5.00%

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2019

Long-Term Debt

Schedule of long-term debt


	December 31,
(In thousands)	2019		2018
3.25% Convertible notes due 2023
Principal amount	$	230,000	$	230,000
Unamortized debt issuance costs		(4,110)		(5,182)
9.0% Non-recourse notes due 2033
Principal amount, net of 5% retained by the Company		235,347		237,500
Unamortized debt issuance costs		(6,196)		(7,965)
Total long-term debt	$	455,041	$	454,353

Schedule of long-term debt interest expense


	Year Ended December 31,
(In thousands)	2019		2018		2017
Stated coupon interest	$	28,811	$	9,316	$	7,475
Amortization of debt issuance costs		3,051		1,166		1,072
Total long-term debt interest expense	$	31,862	$	10,482	$	8,547

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
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-Name Accounting Standards Codification
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Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 505
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-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Cash, Cash Equivalents, and Restricted Cash

12 Months Ended

Dec. 31, 2019

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

5. Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown on the consolidated statements of cash flows.


	December 31,
(In thousands)	2019		2018		2017
Cash and cash equivalents	$	58,064	$	378,021	$	88,980
Restricted cash		833		833		833
Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows	$	58,897	$	378,854	$	89,813

The Company maintains restricted cash to secure a line of credit and debt servicing of its 9.0% non-recourse notes, due on or before 2033. See “Note 7. Long-Term Debt” for further information regarding the Company’s 9.0% non-recourse notes, due on or before 2033.

Organization and Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Organization and Summary of Significant Accounting Policies
US federal, state and foreign unrecognized tax benefits	$ 58,763	$ 52,404	$ 41,794

Share-Based Compensation - Summary of Other Individual Outstanding Performance-Contingent RSUs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 60,450	$ 51,313	$ 49,145
Employee Performance Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	173,000
Total Max. Expense	$ 2,000

Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Feb. 12, 2020	Dec. 31, 2017	Feb. 20, 2020
Subsequent Events
Proceeds from sale of ordinary shares		$ 1
Subsequent Events
Subsequent Events
Number of shares sold	5,500,000
Share price (in dollars per share)	$ 27.00
Proceeds from sale of ordinary shares	$ 148,500
Subsequent Events \| Norecourse 2035 notes
Subsequent Events
Principal amount			$ 400,000
Interest rate (as a percent)			9.50%
Percentage of note to be sold			95.00%
Percentage of note to be retained			5.00%
Percentage of equity interest			63.75%

Share-Based Compensation - Innoviva's Equity Plans (Details) - plan	Sep. 25, 2015	Jun. 02, 2014
Share-Based Compensation
Number of plans		3
Vesting period	3 years
2012 Equity Incentive Plan
Share-Based Compensation
Number of plans		1
2012 Equity Incentive Plan \| Options
Share-Based Compensation
Term (in years)		10 years
Vesting period		4 years
Period of forfeiture of unvested option upon termination of service		3 months
Vesting after one year \| 2012 Equity Incentive Plan \| Options
Share-Based Compensation
Vesting of RSU (as a percent)		25.00%
Monthly vesting over the remaining three years \| 2012 Equity Incentive Plan \| Options
Share-Based Compensation
Vesting of RSU (as a percent)		75.00%