0001558370-23-018612 | 10-Q | XBRL Viewer

Revenue

9 Months Ended

Sep. 30, 2023

3. Revenue

Revenue from Collaborative Arrangements

Viatris

In January 2015, the Company and Viatris Inc. (“Viatris”) established a strategic collaboration (the “Viatris 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 acute care setting. In November 2018, YUPELRI was approved by the US Food and Drug Administration (the “FDA”) for the maintenance treatment of patients with chronic obstructive pulmonary disease (“COPD”).

In the US, Viatris is leading the commercialization of YUPELRI, and the Company co-promotes the product under a profit and loss sharing arrangement (65% to Viatris; 35% to the Company). Outside the US (excluding China and adjacent territories), Viatris is responsible for development and commercialization and will pay the Company a tiered royalty on net sales at percentage royalty rates ranging from low double-digits to mid-teens. Viatris also holds exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories, which include Hong Kong SAR, the Macau SAR, and Taiwan, and the Company is eligible to receive low double-digit tiered royalties on net sales of nebulized revefenacin in this region, if approved. Viatris is responsible for all aspects of development and commercialization in the China and adjacent territories, including pre- and post-launch activities and product registration and all associated costs. Viatris is the principal in the sales transactions, and as a result, the Company does not reflect the product sales in its condensed consolidated financial statements.

As of September 30, 2023, the Company is eligible to receive from Viatris potential global development, regulatory and sales milestone payments (excluding China and adjacent territories) 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 US net sales and $10.0 million relates to regulatory actions in the European Union (“EU”). The Company is also eligible to receive additional potential development and sales milestones totaling $52.5 million related to Viatris’ development and commercialization of nebulized revefenacin in China and adjacent territories with $45.0 million associated with YUPELRI monotherapy and $7.5 million associated with future potential combination products. Of the $45.0 million associated with monotherapy, $37.5 million relates to sales milestones based on achieving certain levels of net sales and $7.5 million relates to regulatory approval in China.

The Viatris Agreement is considered to be within the scope of ASC 808, Collaborative Arrangements, as the parties are active participants and exposed to the risks and rewards of the collaborative activity with a unit of account provided to Viatris as a customer. Under the terms of the Viatris Agreement, which included the delivery by the Company of a license to Viatris to develop and commercialize revefenacin, Viatris 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 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, Revenue Recognition, and, as such, the reimbursable program costs are excluded from the original transaction price.

The future potential milestone amounts for the Viatris Agreement were not included in the original 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 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.

Following the FDA approval of YUPELRI in November 2018, net amounts payable to or receivable from Viatris each quarter under the profit-sharing structure are disaggregated according to their individual components. In

accordance with the applicable accounting guidance, amounts receivable from Viatris in connection with the commercialization of YUPELRI are recorded within the condensed consolidated statements of operations as revenue from “Viatris collaboration agreement” irrespective of whether the overall collaboration is profitable. Amounts payable to Viatris, if any, in connection with the commercialization of YUPELRI are recorded within the condensed consolidated statements of operations as a collaboration loss within selling, general and administrative expenses. Any reimbursement from Viatris 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 ordinary activities. For the three and nine months ended September 30, 2023, YUPELRI continued to be profitable for the Company.

The following YUPELRI-related amounts were recognized within revenue in the Company’s condensed consolidated statements of operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris collaboration agreement - Amounts receivable from Viatris	$	15,687	$	12,445	$	39,841	$	34,010

While Viatris records total YUPELRI net sales within its own condensed consolidated financial statements, Viatris collaboration agreement revenue on the Company’s condensed consolidated statements of operations included the Company’s implied 35% share of total YUPELRI net sales, before deducting shared expenses, as presented below:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
YUPELRI net sales (Theravance Biopharma implied 35%)	$	20,414	$	18,698	$	56,111	$	51,158

Other Collaborative Arrangement Revenues

The Company’s other collaborative arrangement revenues consisted of:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris	$	6	$	6	$	18	$	18
Alfasigma		—		—		—		169
Total collaboration revenue	$	6	$	6	$	18	$	187

All of the recognized revenues from the Company’s other collaborative arrangements presented in the table above were included in deferred revenue at the beginning of the respective periods.

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:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris	$	1,340	$	1,657	$	5,041	$	4,736

Revenue from Licensing Arrangements

Pfizer

In December 2019, the Company entered into a global license agreement with Pfizer Inc. (“Pfizer”) 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 had an exclusive license to develop, manufacture and commercialize certain compounds for all uses other than gastrointestinal, ophthalmic, and respiratory applications. The Company received an upfront cash payment of $10.0 million in 2019, and for the nine months ended September 30, 2022, the Company recognized $2.5 million in licensing revenue related to a development milestone payment from Pfizer for the dosing of the first patient in the Phase 1 clinical trial. In June 2023, the Company received notice from Pfizer terminating the Pfizer Agreement, effective as of October 7, 2023, at which time the skin-selective pan-JAK inhibitor program was returned to the Company.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Discontinued Operations (Details) $ in Thousands	1 Months Ended
Discontinued Operations (Details) $ in Thousands	Jul. 31, 2022 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Theravance Respiratory Company, LLC
Fair value of contingent consideration		$ 194,200	$ 194,200
Royalty Pharma \| Disposed of by Sale \| TRC
Theravance Respiratory Company, LLC
Fair value of contingent consideration	$ 194,200
Royalty Pharma \| Disposed of by Sale \| TRC \| Measurement Input, Discount Rate [Member]
Theravance Respiratory Company, LLC
Equity method investment, contingent consideration	7.83
Royalty Pharma \| Purchase Agreement to Sell Units in Theravance Respiratory Company, LLC
Theravance Respiratory Company, LLC
Percentage of Right to Receive Royalty Transferring	85
Proceeds from sale of units.	$ 1,100,000
Consideration Receivable at closing	$ 250,000
TRC
Theravance Respiratory Company, LLC
Percentage of economic interest	85.00%

Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Investments and Fair Value Measurements

Investments and Fair Value Measurements

5. 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:


		September 30, 2023
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	29,604	$	—	$	(94)	$	29,510
US government agency securities	Level 2		4,385		—		(22)		4,363
Corporate notes	Level 2		28,554		—		(109)		28,445
Marketable securities			62,543		—		(225)		62,318
Money market funds	Level 1		58,575		—		—		58,575
Total		$	121,118	$	—	$	(225)	$	120,893


		December 31, 2022
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	24,873	$	8	$	—	$	24,881
US government agency securities	Level 2		20,869		4		—		20,873
Commercial paper	Level 2		37,307		—		(27)		37,280
Marketable securities			83,049		12		(27)		83,034
Money market funds	Level 1		220,508		—		—		220,508
Total		$	303,557	$	12	$	(27)	$	303,542

As of September 30, 2023, all of the Company’s available-for-sale securities had contractual maturities within nine 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 three and nine months ended September 30, 2023.

Available-for-sale debt securities with unrealized losses are summarized below:


	September 30, 2023
	Less than 12 Months				Greater than 12 Months				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
US government securities	$	29,510	$	(94)	$	—	$	—	$	29,510	$	(94)
US government agency securities		4,363		(22)		—		—		4,363		(22)
Corporate notes		28,445		(109)		—		—		28,445		(109)
Total	$	62,318	$	(225)	$	—	$	—	$	62,318	$	(225)


	December 31, 2022
	Less than 12 Months				Greater than 12 Months				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Commercial paper	$	37,280	$	(27)	$	—	$	—	$	37,280	$	(27)
Total	$	37,280	$	(27)	$	—	$	—	$	37,280	$	(27)

The Company invests primarily in high credit quality and short-term maturity 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 at maturity. The Company reviewed its available-for-sale debt securities and determined that there were no credit-related losses to be recognized as of September 30, 2023.

As of September 30, 2023, the Company’s accumulated other comprehensive loss on its condensed consolidated balance sheets consisted of net unrealized losses on available-for-sale investments. For the nine months

ended September 30, 2023, the Company sold marketable securities for total proceeds of $71.4 million. The sales were based on the specific identification method, and the realized net gain from the sale was immaterial. For the three months ended September 30, 2023, and for the three and nine months ended September 30, 2022, the Company did not sell any marketable securities.

Net Income (Loss) per Share

9 Months Ended

Sep. 30, 2023

Net Income (Loss) per Share

Net Income (Loss) per Share

2. Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, excluding shares subject to repurchase and without consideration of potentially dilutive securities. Diluted net income (loss) per share is computed by giving effect to all potentially dilutive ordinary shares outstanding for the period, which primarily consist of instruments issued and outstanding under the Company’s equity incentive and employee share purchase plans. Ordinary share equivalents are excluded from the computation in periods in which they have an anti-dilutive effect unless the consideration of any one of them gives a dilutive effect.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share data)	2023		2022		2023		2022
Numerator:
Net loss from continuing operations	$	(8,950)	$	(16,023)	$	(46,683)	$	(78,568)
Net income from discontinued operations		—		932,654		—		961,062
Net income (loss)	$	(8,950)	$	916,631		(46,683)		882,494

Denominator:
Weighted-average ordinary shares outstanding		52,361		75,515		57,287		75,678
Less: weighted-average ordinary shares subject to forfeiture		—		—		—		—
Weighted-average ordinary shares outstanding - basic and diluted		52,361		75,515		57,287		75,678

Net income (loss) per share:
Continuing operations - basic and diluted	$	(0.17)	$	(0.21)	$	(0.81)	$	(1.04)
Discontinued operations - basic and diluted	$	—	$	12.35	$	—	$	12.70
Net income (loss) per share - basic and diluted	$	(0.17)	$	12.14	$	(0.81)	$	11.66

Anti-dilutive Securities

In accordance with Accounting Standards Codification (“ASC”) 260, Earnings Per Share, if a company incurred a loss related to its continuing operations, then potential ordinary shares are considered anti-dilutive for the periods in which the loss was recognized. For the three and nine months ended September 30, 2023 and 2022, the Company recognized losses from continuing operations. As a result, the following ordinary equivalent shares were not included in the computation of diluted net loss per share for both continuing operations and discontinuing operations:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(In thousands)	2023	2022	2023	2022
Share issuances under equity incentive plans and employee share purchase plan	3,459	5,036	3,972	7,137

Discontinued Operations - Summary of financial information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Summary financial information
Revenues.	$ 15,693	$ 12,451	$ 39,859	$ 36,697
Income from continuing operations	(8,950)	(16,023)	(46,683)	(78,568)
Net (loss) income	$ (8,950)	$ 916,631	$ (46,683)	882,494
TRC
Summary financial information
Income from continuing operations				71,693
Net (loss) income				62,632
TRC \| Royalties
Summary financial information
Revenues.				$ 72,029

- Definition

Amount after tax of income (loss) from continuing operations attributable to the parent.

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- Definition

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

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+ Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Ordinary Shares	Additional Paid-in Capital	Accumulated Other Comprehensive Gain (Loss)	Accumulated Deficit	Total
Balances at Dec. 31, 2021	$ 1	$ 1,387,469		$ (1,726,043)	$ (338,573)
Balances (in shares) at Dec. 31, 2021	74,435
Increase (Decrease) in Stockholders' Equity
Repurchase of ordinary shares, net of transaction costs		(94,037)			(94,037)
Repurchase of ordinary shares, net of transaction costs (in shares)	(9,645)
Proceeds from ESPP purchases		488			488
Proceeds from ESPP purchases (in shares)	72
Employee share-based compensation expense		32,784			32,784
Issuance of restricted shares (in shares)	2,764
Repurchase of shares to satisfy tax withholding		(2,457)			(2,457)
Repurchase of shares to satisfy tax withholding (in shares)	(260)
Net unrealized gain (loss) on marketable securities			$ (121)		(121)
Net income (loss)				882,494	882,494
Balances at Sep. 30, 2022	$ 1	1,324,247	(121)	(843,549)	480,578
Balances (in shares) at Sep. 30, 2022	67,366
Balances at Jun. 30, 2022	$ 1	1,410,415	(45)	(1,760,180)	(349,809)
Balances (in shares) at Jun. 30, 2022	76,427
Increase (Decrease) in Stockholders' Equity
Repurchase of ordinary shares, net of transaction costs		(94,037)			(94,037)
Repurchase of ordinary shares, net of transaction costs (in shares)	(9,645)
Proceeds from ESPP purchases		1			1
Employee share-based compensation expense		8,530			8,530
Issuance of restricted shares (in shares)	655
Repurchase of shares to satisfy tax withholding		(662)			(662)
Repurchase of shares to satisfy tax withholding (in shares)	(71)
Net unrealized gain (loss) on marketable securities			(76)		(76)
Net income (loss)				916,631	916,631
Balances at Sep. 30, 2022	$ 1	1,324,247	(121)	(843,549)	480,578
Balances (in shares) at Sep. 30, 2022	67,366
Balances at Dec. 31, 2022	$ 1	1,295,725	(15)	(853,911)	$ 441,800
Balances (in shares) at Dec. 31, 2022	65,227				65,227
Increase (Decrease) in Stockholders' Equity
Repurchase of ordinary shares, net of transaction costs		(166,787)			$ (166,787)
Repurchase of ordinary shares, net of transaction costs (in shares)	(15,619)				(15,620)
Proceeds from ESPP purchases		445			$ 445
Proceeds from ESPP purchases (in shares)	63
Employee share-based compensation expense		19,547			19,547
Issuance of restricted shares (in shares)	1,337
Repurchase of shares to satisfy tax withholding		(1,982)			(1,982)
Repurchase of shares to satisfy tax withholding (in shares)	(189)
Net unrealized gain (loss) on marketable securities			(210)		(210)
Net income (loss)				(46,683)	(46,683)
Balances at Sep. 30, 2023	$ 1	1,146,948	(225)	(900,594)	$ 246,130
Balances (in shares) at Sep. 30, 2023	50,819				50,819
Balances at Jun. 30, 2023	$ 1	1,172,090	(286)	(891,644)	$ 280,161
Balances (in shares) at Jun. 30, 2023	53,694
Increase (Decrease) in Stockholders' Equity
Repurchase of ordinary shares, net of transaction costs		(30,891)			$ (30,891)
Repurchase of ordinary shares, net of transaction costs (in shares)	(3,178)				(3,180)
Proceeds from ESPP purchases		(1)			$ (1)
Employee share-based compensation expense		6,262			6,262
Issuance of restricted shares (in shares)	356
Repurchase of shares to satisfy tax withholding		(512)			(512)
Repurchase of shares to satisfy tax withholding (in shares)	(53)
Net unrealized gain (loss) on marketable securities			61		61
Net income (loss)				(8,950)	(8,950)
Balances at Sep. 30, 2023	$ 1	$ 1,146,948	$ (225)	$ (900,594)	$ 246,130
Balances (in shares) at Sep. 30, 2023	50,819				50,819

Cash, Cash Equivalents, and Restricted Cash

9 Months Ended

Sep. 30, 2023

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

4. Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the current period and comparable prior year period condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.


	September 30,
(In thousands)	2023		2022
Cash and cash equivalents	$	71,685	$	418,538
Restricted cash		836		836
Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows	$	72,521	$	419,374

The Company maintains restricted cash for certain lease agreements and letters of credit by which the Company has pledged cash and cash equivalents as collateral. The cash-related amounts reported in the table above exclude the Company’s investments in short and long-term marketable securities, if any, that are reported separately on the condensed consolidated balance sheets.

The decrease in cash and cash equivalents, compared to the prior year period, was primarily due the Company’s capital return program that was initiated in September 2022 (see Note 10. Strategic Actions for further information).

The Company periodically engages in foreign exchange transactions as a part of its operations. For the three and nine months ended September 30, 2023, the Company’s net realized and unrealized foreign currency gains were not material, and for the three and nine months ended September 30, 2022, the Company recognized net realized and unrealized foreign currency losses of $0.4 million and $1.5 million, respectively. These amounts are included in the Company’s condensed consolidated statements of operations within “Interest income and other income (expense), net”.

Subleases

9 Months Ended

Sep. 30, 2023

Subleases

Subleases

6. Subleases

In July 2021 and June 2022, the Company entered into two non-cancelable agreements under which it subleased a total of approximately 99,000 square feet of its South San Francisco office and laboratory space to two unaffiliated companies. The Company recognizes the sublease income on a straight-line basis over the term of its two subleases which is reflected as a reduction of R&D expense and selling, general and administrative expenses in the condensed consolidated statements of operations.

The Company’s sublease income is summarized below:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Sublease income	$	2,090	$	2,090	$	6,270	$	3,330

During the first quarter of 2023, the Company also recognized increases to other assets and other long-term liabilities of approximately $6.5 million for lessor tenant improvement allowances that have been assigned to its sublessees and are recognized over the term of the related sublease agreements.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2023	Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
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	50,819	65,227
Ordinary shares, shares outstanding	50,819	65,227

Revenue - Other Collaborative Arrangement Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Collaboration revenue recognized in the period from:
Revenue from collaborative arrangements	$ 6	$ 6	$ 18	$ 187
Viatris
Collaboration revenue recognized in the period from:
Revenue from collaborative arrangements	$ 6	$ 6	$ 18	18
Alfasigma
Collaboration revenue recognized in the period from:
Revenue from collaborative arrangements				$ 169

Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents	$ 71,685	$ 418,538	$ 71,685	$ 418,538	$ 298,172
Restricted cash	836	836	836	836
Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows	72,521	419,374	72,521	419,374	$ 299,008	$ 90,796
Realized and unrealized foreign currency losses	$ 0	$ (400)	$ 0	$ (1,500)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
Operating activities
Net (loss) income	$ (46,683)	$ 882,494
Less: Net income from discontinued operations		(961,062)
Net loss from continuing operations	(46,683)	(78,568)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,609	3,057
Amortization and accretion income, net	(1,494)	(342)
Future royalty payment contingency interest accretion	1,727	424
Share-based compensation	19,547	32,784
Gain on sale of Velusetrag		(2,709)
(Gain) loss on disposal of property and equipment	1,353	(96)
Amortization of right-of-use assets	2,724	2,284
Loss on extinguishment of debt		3,034
Changes in operating assets and liabilities:
Receivables from collaborative and licensing arrangements	(272)	(49)
Prepaid clinical and development services	(121)	7,600
Other prepaid and current assets	(1,315)	(1,148)
Right-of-use lease assets	(173)	(2,587)
Other assets	3,309	(1,743)
Accounts payable	354	2,150
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities	(6,657)	(18,465)
Accrued interest payable		(1,246)
Deferred revenue	(17)	(186)
Operating lease liabilities	(1,329)	(1,111)
Other long-term liabilities	1,295	(421)
Net cash used in operating activities - continuing operations	(26,143)	(57,338)
Net cash used in operating activities - discontinued operations		(5,598)
Net cash used in operating activities	(26,143)	(62,936)
Investing activities
Purchases of property and equipment	(1,811)	(306)
Purchases of marketable securities	(134,534)	(93,260)
Maturities of marketable securities	31,435	108,700
Sale of short-term investments and marketable securities	71,377	5
Proceeds from the sale of Velusetrag		2,709
Proceeds from the sale of property and equipment	1,513	1,866
Net cash (used in) provided by investing activities - continuing operations	(32,020)	19,714
Net cash provided by investing activities - discontinued operations		1,095,134
Net cash (used in) provided by investing activities	(32,020)	1,114,848
Financing activities
Ordinary share repurchases	(166,787)	(94,037)
Proceeds from ampreloxetine funding, net		24,464
Proceeds from ESPP purchases	445	488
Repurchase of shares to satisfy tax withholding	(1,982)	(2,457)
Net cash used in financing activities - continuing operations	(168,324)	(703,145)
Net cash used in financing activities - discontinued operations		(20,189)
Net cash used in financing activities	(168,324)	(723,334)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(226,487)	328,578
Cash, cash equivalents, and restricted cash at beginning of period	299,008	90,796
Cash, cash equivalents, and restricted cash at end of period	72,521	419,374
Supplemental disclosure of cash flow information
Cash paid for interest		22,244
Cash paid for income taxes, net	14	26
Supplemental disclosure of non-cash investing and financing activities
Recognition of tenant improvement allowance assigned to sublease	$ 6,490
2035 notes
Financing activities
Principal payment on notes		(399,998)
2023 notes
Financing activities
Principal payment on notes		$ (231,605)

Income Taxes

9 Months Ended

Sep. 30, 2023

Income Taxes

Income Taxes

9. Income Taxes

For the three and nine months ended September 30, 2023, the Company recognized an income tax expense of $1.4 million and $2.4 million, respectively. Although the Company incurred net operating losses on a consolidated basis, the income tax expense for the nine months ended September 30, 2023 was primarily due to uncertain tax positions taken with respect to transfer pricing in 2023.

The Company's provision for income taxes during interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to ordinary income (loss) (pre-tax income (loss) excluding unusual or infrequently occurring discrete items) for the reporting period. For the nine months ended September 30, 2023, and in accordance with paragraph 82 of FASB interpretation No. 18, "Accounting for Income Taxes in Interim Periods" ("FIN 18"), the Company computed its provision for income taxes based on the actual effective tax rate for the year-to-date period by applying the discrete method. As small changes in estimated ordinary income may result in a significant change in the estimated annual effective tax rate, the Company determined that the historical method would not provide a reliable estimate for the nine months ended September 30, 2023.

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.

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. In 2022, the Company released its valuation allowance for federal purposes stemming from the effects of the TRC Transaction. As of September 30, 2023, the Company does not believe a valuation allowance should be re-established to offset it deferred tax assets for federal

tax purposes. As of September 30, 2023, the Company continues to maintain a full valuation allowance on its California, other states, and foreign deferred tax assets.

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 condensed consolidated statements of operations.

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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Revenue - Reimbursement of R and D Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Viatris
Research and Development Reimbursement
Total reduction to R and D expense	$ 1,340	$ 1,657	$ 5,041	$ 4,736

Investments and Fair Value Measurements - Available-for-sale securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Available for sale securities:
Amortized Cost	$ 121,118	$ 303,557
Gross Unrealized Gains		12
Gross Unrealized Losses	(225)	(27)
Estimated Fair Value	120,893	303,542
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract]
Estimated Fair Value lesser than 12 months	62,318	37,280
Fair value of assets transferred from Level 1 to Level 2	0
Fair value of assets transferred from Level 2 to Level 1	0
Estimated Fair Value Total	62,318	37,280
Gross unrealized lesser than 12 months	(225)	(27)
Gross unrealized loss, Total	(225)	(27)
Marketable securities
Available for sale securities:
Amortized Cost	62,543	83,049
Gross Unrealized Gains		12
Gross Unrealized Losses	(225)	(27)
Estimated Fair Value	62,318	83,034
U.S. government securities
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract]
Estimated Fair Value lesser than 12 months	29,510
Estimated Fair Value Total	29,510
Gross unrealized lesser than 12 months	(94)
Gross unrealized loss, Total	(94)
U.S. government securities \| Quoted Prices in Active Markets for Identical Assets, Level 1
Available for sale securities:
Amortized Cost	29,604	24,873
Gross Unrealized Gains		8
Gross Unrealized Losses	(94)
Estimated Fair Value	29,510	24,881
U.S. corporate notes
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract]
Estimated Fair Value lesser than 12 months	28,445
Estimated Fair Value Total	28,445
Gross unrealized lesser than 12 months	(109)
Gross unrealized loss, Total	(109)
U.S. corporate notes \| Significant Other Observable Inputs, Level 2
Available for sale securities:
Amortized Cost	28,554
Gross Unrealized Losses	(109)
Estimated Fair Value	28,445
U.S. commercial paper
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract]
Estimated Fair Value lesser than 12 months		37,280
Estimated Fair Value Total		37,280
Gross unrealized lesser than 12 months		(27)
Gross unrealized loss, Total		(27)
U.S. commercial paper \| Significant Other Observable Inputs, Level 2
Available for sale securities:
Amortized Cost		37,307
Gross Unrealized Losses		(27)
Estimated Fair Value		37,280
U.S. government agency securities
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract]
Estimated Fair Value lesser than 12 months	4,363
Estimated Fair Value Total	4,363
Gross unrealized lesser than 12 months	(22)
Gross unrealized loss, Total	(22)
U.S. government agency securities \| Significant Other Observable Inputs, Level 2
Available for sale securities:
Amortized Cost	4,385	20,869
Gross Unrealized Gains		4
Gross Unrealized Losses	(22)
Estimated Fair Value	4,363	20,873
Money market funds \| Quoted Prices in Active Markets for Identical Assets, Level 1
Available for sale securities:
Amortized Cost	58,575	220,508
Estimated Fair Value	$ 58,575	$ 220,508

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Nov. 01, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
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	PO 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 Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
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 Common Stock, Shares Outstanding		49,797,866
Entity Central Index Key	0001583107
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Investments and Fair Value Measurements

Schedule of available-for-sale securities


		September 30, 2023
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	29,604	$	—	$	(94)	$	29,510
US government agency securities	Level 2		4,385		—		(22)		4,363
Corporate notes	Level 2		28,554		—		(109)		28,445
Marketable securities			62,543		—		(225)		62,318
Money market funds	Level 1		58,575		—		—		58,575
Total		$	121,118	$	—	$	(225)	$	120,893


		December 31, 2022
				Gross		Gross
		Amortized		Unrealized		Unrealized		Estimated
(In thousands)		Cost		Gains		Losses		Fair Value
US government securities	Level 1	$	24,873	$	8	$	—	$	24,881
US government agency securities	Level 2		20,869		4		—		20,873
Commercial paper	Level 2		37,307		—		(27)		37,280
Marketable securities			83,049		12		(27)		83,034
Money market funds	Level 1		220,508		—		—		220,508
Total		$	303,557	$	12	$	(27)	$	303,542

Schedule of Available for sale debt securities with unrealized losses


	September 30, 2023
	Less than 12 Months				Greater than 12 Months				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
US government securities	$	29,510	$	(94)	$	—	$	—	$	29,510	$	(94)
US government agency securities		4,363		(22)		—		—		4,363		(22)
Corporate notes		28,445		(109)		—		—		28,445		(109)
Total	$	62,318	$	(225)	$	—	$	—	$	62,318	$	(225)


	December 31, 2022
	Less than 12 Months				Greater than 12 Months				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Commercial paper	$	37,280	$	(27)	$	—	$	—	$	37,280	$	(27)
Total	$	37,280	$	(27)	$	—	$	—	$	37,280	$	(27)

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-9

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
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-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (aaa)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
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-Section 50
-Paragraph 3
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

+ Details

Discontinued Operations - Summary of discontinued operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Schedule of Equity Method Investments [Line Items]
Provision for income tax expense		$ (182,362)		$ (182,868)
Net income from discontinued operations		$ 932,654		$ 961,062
9.5% Non-Recourse 2035 Notes
Schedule of Equity Method Investments [Line Items]
Interest rate (as a percent)	9.50%	9.50%	9.50%	9.50%
Disposed of by Sale \| TRC \| Royalty Pharma
Schedule of Equity Method Investments [Line Items]
Income from investments in TRC, LLC				$ 53,237
Transaction-related legal expenses (prior to July 20, 2022)				(5,057)
Loss on extinguishment of debt		$ (24,022)		(24,022)
Net gain from sale of equity interests in TRC, LLC		1,141,084		1,141,084
Provision for income tax expense		(182,362)		(182,868)
Net income from discontinued operations		932,654		961,062
Disposed of by Sale \| TRC \| Royalty Pharma \| 9.5% Non-Recourse 2035 Notes
Schedule of Equity Method Investments [Line Items]
Interest expense on 9.5% Non-recourse notes due 2035		$ (2,046)		$ (21,312)

Strategic Actions

9 Months Ended

Sep. 30, 2023

Strategic Actions

Strategic Actions

10. Strategic Actions

In February 2023, the Company announced and has since largely completed the following strategic actions (the “2023 Strategic Actions”):

Capital Return Program Increase

The Company’s board of directors authorized a $75.0 million increase to the existing $250.0 million capital return program initiated in September 2022, bringing the total capital return program to $325.0 million. For the three and nine months ended September 30, 2023, the Company repurchased 3.18 million shares and 15.62 million shares, respectively, on the open market at a weighted average cost of $9.70 per share and $10.65 per share, respectively. For the three and nine months ended September 30, 2023, the total aggregate cost of the repurchases, excluding fees and expenses, was $30.8 million and $166.4 million, respectively. Since the initiation of the capital return program in September 2022, the Company has repurchased $294.6 million of shares, as of September 30, 2023, and the Company had approximately $30.4 million remaining in the capital return program which is expected to be completed by the end of 2023. In October 2023, the Company repurchased an additional 1.02 million shares on the open market at a weighted average cost of $9.09 per share for a total aggregate cost of $9.3 million, excluding fees and expenses. The Company had approximately $21.1 million remaining in the capital return program, as of October 31, 2023.

Discontinued Investment in Research Activities

The Company discontinued its research activities, including the inhaled Janus kinase (JAK) inhibitor program, resulting in a 17% reduction in headcount in March 2023. The Company plans to seek a partnership to continue progression of its inhaled JAK inhibitor program. In order to support the timely progression of the ampreloxetine Phase 3 study (CYPRESS) and the completion of the YUPELRI Peak Inspiratory Flow Rate (PIFR-2) Phase 4 study, the Company has prioritized its R&D resource allocation to these two programs.

As a result of the Company’s discontinued investment in research activities, the Company incurred restructuring and related expenses of $2.7 million for the nine months ended September 30, 2023, primarily related to R&D expenses. Of the total $2.7 million incurred for the nine months ended September 30, 2023, cash-related expenses were $1.2 million and non-cash expenses were $1.5 million which were primarily related to the loss on the sale of R&D laboratory equipment and the modification of equity-based awards for employees affected by the reduction in headcount. The R&D laboratory equipment sold had a carrying value of $2.7 million, and the sale generated net cash proceeds of $1.5 million. There were no restructuring and related expenses recognized for the three months ended September 30, 2023, and the Company does not expect to recognize any additional employee-related expenses, including share-based compensation, related to the 2023 Strategic Actions.

As a result of the broader corporate restructuring announcement in September 2021 (the “2021 Restructuring”) for the three and nine months ended September 30, 2022, the Company incurred restructuring and related expenses of

$0.5 million and $12.8 million, respectively. Of the $0.5 million incurred for the three months ended September 30, 2022, $0.1 million was related to R&D expenses and $0.4 million was related to selling, general and administrative expenses. Of the $12.8 million incurred for the nine months ended September 30, 2022, $5.9 million was related to R&D expenses and $6.9 million was related to selling, general and administrative expenses. Of the total $12.8 million incurred for the nine months ended September 30, 2022, cash-related expenses were $5.8 million and non-cash expenses were $7.0 million which were primarily related to the modification of equity-based awards for employees affected by the 2021 Restructuring and certain related awards for other employees.

Selected information relating to accrued cash-related restructuring expenses from the recently announced 2023 Strategic Actions was as follows:


(In thousands)
Balance at December 31, 2022	$	—
Net accruals		1,188
Cash paid		(1,188)
Balance at September 30, 2023	$	—

All of the restructuring expenses from the 2021 Restructuring were fully recognized and paid in 2022.

The Company also evaluated the impact of the 2023 Strategic Actions on the carrying value of its long-lived assets, such as property and equipment and operating lease assets. This process included evaluating the estimated remaining lives, significant changes in the use, and potential impairment charges related to its long-lived assets.

In March 2023, the Company placed approximately 42,000 square feet of its vacant office and laboratory space in South San Francisco (“Sublease Assets”) on the market for sublease. The Company’s impairment evaluation process for the Sublease Assets consisted of comparing the estimated undiscounted future sublease income of the Sublease Assets to its carrying value. The Company estimated the sublease income using market participant assumptions, including the length of time to enter into a sublease and sublease payments, which the Company evaluated using recent sublease negotiations and current local subleasing trends. While the Company has not yet completed a new sublease, based on its evaluation, the Company determined that the estimated undiscounted future sublease income exceeds the Sublease Assets’ carrying value, and as a result, the Company did not recognize an impairment charge as of September 30, 2023. The Company will continue to update its sublease cash flow estimates based on changes in market conditions, and the Company may record a non-cash impairment charge in future periods as these estimates change.

Organization and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Organization and Summary of Significant Accounting Policies.
Basis of Presentation	Basis of Presentation The Company’s condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited but includes all adjustments (consisting only of normal recurring adjustments), which are considered necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with United States (“US”) generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2022 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2023. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other interim period or for any future period. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and intercompany transactions and balances have been eliminated. On July 20, 2022, the Company completed a monetization of its ownership interests in a significant equity method investment which had a major effect on the Company’s financial results for the year ended December 31, 2022 (see “Note 7. Discontinued Operations”). In accordance with GAAP, the transaction was accounted for as a sale of a financial asset. For all periods presented, the results of the sale have been included as discontinued operations on these condensed consolidated financial statements. Certain prior year comparable operating expenses within the condensed consolidated statements of operations and comprehensive income (loss) have been reclassified as restructuring and related expenses. The reclassification had no effect on reported losses, total assets, or shareholders’ equity.
Use of Estimates	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 condensed 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. The Company expects its cash, cash equivalents and marketable securities will be sufficient to fund its capital return program and its operations for at least the next twelve months from the issuance date of these condensed consolidated financial statements based on current operating plans and financial forecasts.
Significant Accounting Policies	Significant Accounting Policies There have been no material revisions in the Company’s significant accounting policies described in Note 1 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022.
Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncements Not Yet Adopted The Company has evaluated recently issued accounting pronouncements and does not currently believe that any of these pronouncements will have a material impact on its condensed consolidated financial statements and related disclosures.

Revenue - Revenue from Licensing Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2019
Collaborative Arrangements and Co-Promote Agreement
Total revenue	$ 15,693	$ 12,451	$ 39,859	$ 36,697
Pfizer
Collaborative Arrangements and Co-Promote Agreement
Initial cash payment					$ 10,000
Total revenue				$ 2,500

- Definition

+ References

+ Details

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2023

Discontinued Operations

Summary of discontinued operations


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Income from investments in TRC, LLC	$	—	$	—	$	—	$	53,237
Transaction-related legal expenses (prior to July 20, 2022)		—		—		—		(5,057)
Interest expense on 9.5% Non-recourse notes due 2035		—		(2,046)		—		(21,312)
Loss on extinguishment of debt		—		(24,022)		—		(24,022)
Net gain from sale of equity interests in TRC, LLC		—		1,141,084		—		1,141,084
Provision for income tax expense		—		(182,362)		—		(182,868)
Net income from discontinued operations	$	—	$	932,654	$	—	$	961,062

Summary of TRC's Statement of income and equity Interest


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(In thousands)	2022		2022
Royalty revenue and gross profit	$	—	$	72,029
Income from continuing operations		—		71,693
Net income		—		62,632

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-SubTopic 10
-Topic 360
-Publisher FASB
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+ Details

Strategic Actions (Tables)

9 Months Ended

Sep. 30, 2023

Strategic Actions

Schedule of information related to accrued restructuring, severance costs and one-time termination


(In thousands)
Balance at December 31, 2022	$	—
Net accruals		1,188
Cash paid		(1,188)
Balance at September 30, 2023	$	—

Share-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Compensation

Share-Based Compensation

8. Share-Based Compensation

Market and Performance-Contingent Awards

The Company periodically grants market-based performance-contingent share awards to employees. For the three months ended September 30, 2023, no such market-based restricted share units (“RSUs”) were granted, and for the nine months ended September 30, 2023, the Company granted 165,000 of such RSUs. The 165,000 RSUs had a fair value of $1.4 million that vest upon the Company’s ordinary shares meeting certain market-based price targets followed by a service period. The fair value of these market-based RSUs is being recognized through February 2027. For the three and nine months ended September 30, 2023, the Company recognized $0.2 million and $0.5 million, respectively, of share-based compensation expense related to the awards.

For the three months ended September 30, 2023, the Company did not grant any performance-contingent RSUs, and for the nine months ended September 30, 2023, the Company granted 367,000 of such RSUs. The 367,000 RSUs had a fair value of $3.7 million with performance vesting dates through February 2026. In September 2023, the Company concluded that 52,500 of the RSUs were probable of achievement, and as a result, the Company recognized $0.3 million of cumulative catch-up share-based compensation expense for the three and nine months ended September 30, 2023.

Amendment and Restatement of 2013 Equity Incentive Plan

At the Company’s Annual General Meeting of Shareholders on May 2, 2023, the Company’s shareholders approved an amendment and restatement of the Company’s 2013 Equity Incentive Plan (the “2013 EIP”) to effect the following material changes to the existing plan (i) extend the term of the 2013 EIP by an additional ten years; (ii) eliminate the provision that provided for automatic annual increases in the number of shares available for issuance under the 2013 EIP; (iii) reduce the number of shares reserved for issuance by 3,808,287 shares; (iv) eliminate the Company’s ability to reprice options and share appreciation rights without first obtaining shareholder approval; and (v) remove certain provisions no longer necessary since the repeal of the exemption from the annual deduction limitation imposed by Section 162(m) of the Internal Revenue Code for performance-based compensation.

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

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 biopharmaceutical company primarily focused on the development and commercialization of medicines. The Company’s focus is to deliver medicines that make a difference^® in people's lives.

Basis of Presentation

The Company’s condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited but includes all adjustments (consisting only of normal recurring adjustments), which are considered necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with United States (“US”) generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2022 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2023.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other interim period or for any future period. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and intercompany transactions and balances have been eliminated.

On July 20, 2022, the Company completed a monetization of its ownership interests in a significant equity method investment which had a major effect on the Company’s financial results for the year ended December 31, 2022 (see “Note 7. Discontinued Operations”). In accordance with GAAP, the transaction was accounted for as a sale of a financial asset. For all periods presented, the results of the sale have been included as discontinued operations on these condensed consolidated financial statements. Certain prior year comparable operating expenses within the condensed consolidated statements of operations and comprehensive income (loss) have been reclassified as restructuring and related expenses. The reclassification had no effect on reported losses, total assets, or shareholders’ equity.

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 condensed 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.

The Company expects its cash, cash equivalents and marketable securities will be sufficient to fund its capital return program and its operations for at least the next twelve months from the issuance date of these condensed consolidated financial statements based on current operating plans and financial forecasts.

Significant Accounting Policies

There have been no material revisions in the Company’s significant accounting policies described in Note 1 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022.

Recently Issued Accounting Pronouncements Not Yet Adopted

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

Strategic Actions - Accrued restructuring, severance costs and one-time termination costs (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Restructuring Reserve [Roll Forward]
Net accruals	$ 1,188
Cash paid	$ (1,188)

Share-Based Compensation (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
Share-Based Compensation (Details) - USD ($) $ in Thousands	May 02, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation
Stock-based compensation expense		$ 6,262	$ 8,530	$ 19,547	$ 32,784
2013 Equity Incentive Plan
Share-Based Compensation
Extended term of the equity incentive plan	10 years
Number of shares reserved for issuance reduced	3,808,287
Restructuring and related expenses
Share-Based Compensation
Stock-based compensation expense			$ 711	$ 356	$ 6,998
Performance-Contingent Awards - RSUs
Share-Based Compensation
Granted (in shares)		0		367,000
Fair value				$ 3,700
Share-based compensation expense		$ 300		$ 300
Shares approved for grant (in shares)		52,500		52,500
RSUs
Share-Based Compensation
Granted (in shares)		0		165,000
Fair value				$ 1,400
Share-based compensation expense		$ 200		$ 500

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 71,685	$ 298,172
Short-term marketable securities	62,318	29,312
Receivables from collaborative arrangements	17,057	16,785
Prepaid clinical and development services	1,634	1,513
Other prepaid and current assets	8,996	7,682
Total current assets	161,690	353,464
Property and equipment, net	9,288	11,875
Operating lease assets	37,576	40,126
Future contingent milestone and royalty assets	194,200	194,200
Restricted cash	836	836
Other assets	10,000	6,899
Total assets	413,590	607,400
Current liabilities:
Accounts payable	2,368	1,554
Accrued personnel-related expenses	6,578	10,314
Accrued clinical and development expenses	3,272	4,932
Accrued general and administrative expenses	1,903	4,020
Operating lease liabilities	9,713	6,753
Deferred revenue	24	24
Other accrued liabilities	1,510	1,118
Total current liabilities	25,368	28,715
Long-term operating lease liabilities	41,118	45,407
Future royalty payment contingency	27,165	25,438
Long-term deferred revenue	175	192
Unrecognized tax benefits	65,955	64,191
Other long-term liabilities	7,679	1,657
Commitments and contingencies
Shareholders' Equity
Preferred shares, $0.00001 par value: 230 shares authorized, no shares issued or outstanding
Ordinary shares, $0.00001 par value: 200,000 shares authorized; 50,819 and 65,227 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	1	1
Additional paid-in capital	1,146,948	1,295,725
Accumulated other comprehensive loss	(225)	(15)
Accumulated deficit	(900,594)	(853,911)
Total shareholders' equity	246,130	441,800
Total liabilities and shareholders' equity	$ 413,590	$ 607,400

Strategic Actions (Details)
$ / shares in Units, shares in Thousands, $ in Thousands

1 Months Ended

3 Months Ended

9 Months Ended

Feb. 27, 2023

USD ($)

Oct. 31, 2023

USD ($)

$ / shares

Sep. 30, 2023

USD ($)

Mar. 31, 2023

ft²

Sep. 30, 2023

USD ($)

$ / shares

Sep. 30, 2022

USD ($)

Sep. 30, 2023

USD ($)

$ / shares

Sep. 30, 2022

USD ($)

Strategic Actions

Share repurchase authorized amount

$ 75,000

Share repurchase authorized amount

$ 325,000

$ 250,000

$ 325,000

$ 250,000

Consideration for repurchase

$ 166,787

94,037

Share price (in dollars per share) | $ / shares

$ 9.70

$ 10.65

Aggregate costs

$ 30,800

$ 166,400

Repurchase of ordinary shares (in shares) | shares

294,600

3,180

15,620

Remaining repurchase amount

$ 30,400

Percent of Employee Reduction

Restructuring costs

$ 0

509

^[1]

2,743

^[1]

12,838

^[1]

Net cash proceeds from sale of R&D laboratory equipment

1,513

1,866

Research and Development Laboratory Equipment

Strategic Actions

R&D laboratory equipment carrying value

2,700

Net cash proceeds from sale of R&D laboratory equipment

1,500

Office and Laboratory Space, South San Francisco

Strategic Actions

Area of land in sublease | ft²

42,000

Severance

Strategic Actions

Employee-related separation costs

2,700

12,800

1,200

5,800

Non-cash charges related to modification of equity-awards for terminated and remaining employee

1,500

7,000

Selling, general and administrative

Strategic Actions

Restructuring costs

400

6,900

Research and development

Strategic Actions

Restructuring costs

$ 100

$ 2,700

$ 5,900

Subsequent Event [Member]

Strategic Actions

Share price (in dollars per share) | $ / shares

$ 9.09

Aggregate costs

$ 9,300

Repurchase of ordinary shares (in shares) | shares

1,020

Remaining repurchase amount

$ 21,100

[1]	Amounts include share-based compensation expense as follows:

Revenue (Tables)

9 Months Ended

Sep. 30, 2023

Revenue

Schedule of revenue recognized from collaborative arrangements


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris collaboration agreement - Amounts receivable from Viatris	$	15,687	$	12,445	$	39,841	$	34,010


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
YUPELRI net sales (Theravance Biopharma implied 35%)	$	20,414	$	18,698	$	56,111	$	51,158

Schedule of collaborative amounts were recorded in the Company's condensed consolidated statements of operations


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris	$	6	$	6	$	18	$	18
Alfasigma		—		—		—		169
Total collaboration revenue	$	6	$	6	$	18	$	187

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris	$	1,340	$	1,657	$	5,041	$	4,736

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Total share-based compensation expense	$ 6,262	$ 8,530	$ 19,547	$ 32,784
Research and development
Total share-based compensation expense	2,004	2,623	6,301	10,062
Selling, general and administrative
Total share-based compensation expense	$ 4,258	5,196	12,890	15,724
Restructuring and related expenses
Total share-based compensation expense		$ 711	$ 356	$ 6,998

Net Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2023

Net Income (Loss) per Share

Schedule of basic and diluted net income (loss) per share


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share data)	2023		2022		2023		2022
Numerator:
Net loss from continuing operations	$	(8,950)	$	(16,023)	$	(46,683)	$	(78,568)
Net income from discontinued operations		—		932,654		—		961,062
Net income (loss)	$	(8,950)	$	916,631		(46,683)		882,494

Denominator:
Weighted-average ordinary shares outstanding		52,361		75,515		57,287		75,678
Less: weighted-average ordinary shares subject to forfeiture		—		—		—		—
Weighted-average ordinary shares outstanding - basic and diluted		52,361		75,515		57,287		75,678

Net income (loss) per share:
Continuing operations - basic and diluted	$	(0.17)	$	(0.21)	$	(0.81)	$	(1.04)
Discontinued operations - basic and diluted	$	—	$	12.35	$	—	$	12.70
Net income (loss) per share - basic and diluted	$	(0.17)	$	12.14	$	(0.81)	$	11.66

Schedule of anti-dilutive securities


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(In thousands)	2023	2022	2023	2022
Share issuances under equity incentive plans and employee share purchase plan	3,459	5,036	3,972	7,137

Cash, Cash Equivalents, and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2023

Cash, Cash Equivalents, and Restricted Cash

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


	September 30,
(In thousands)	2023		2022
Cash and cash equivalents	$	71,685	$	418,538
Restricted cash		836		836
Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows	$	72,521	$	419,374

Revenue - Viatris Agreement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Collaborative Arrangements and Co-Promote Agreement
Percentage of profit share			35.00%
Upfront payment receivable			$ 205,000
Revefenacin Monotherapy (TD-4208)
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			160,000
Revefenacin Monotherapy (TD-4208) \| Success Based Development Regulatory And Sales Milestones
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			10,000
Revefenacin Monotherapy (TD-4208) \| Sales milestones
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			150,000
Future potential combination products
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			45,000
YUPELRI Monotherapy
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			$ 160,000
Viatris
Collaborative Arrangements and Co-Promote Agreement
Percentage of profit share			65.00%
Upfront payment receivable			$ 52,500
Viatris \| Future potential combination products
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			$ 7,500
Viatris \| YUPELRI Monotherapy
Collaborative Arrangements and Co-Promote Agreement
Percentage of profit share	35.00%	35.00%	35.00%	35.00%
Upfront payment receivable			$ 45,000
Revenues	$ 20,414	$ 18,698	56,111	$ 51,158
Viatris \| YUPELRI Monotherapy \| Success Based Development Regulatory And Sales Milestones
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			7,500
Viatris \| YUPELRI Monotherapy \| Sales milestones
Collaborative Arrangements and Co-Promote Agreement
Upfront payment receivable			37,500
Viatris \| Collaborative Arrangement \| Collaboration revenue
Collaborative Arrangements and Co-Promote Agreement
Revenues	$ 15,687	$ 12,445	$ 39,841	$ 34,010

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

Legal Proceedings

In January 2023, the Company received notice from Accord Healthcare, Inc.; Cipla USA, Inc. and Cipla Limited; Eugia Pharma Specialties Ltd.; Lupin Inc.; Mankind Pharma Ltd.; Orbicular Pharmaceutical Technologies Private Limited; and Teva Pharmaceuticals, Inc. (collectively, the “generic companies”), that they have each filed with FDA an abbreviated new drug application (“ANDA”), for a generic version of YUPELRI. The notices from the generic companies each included a paragraph IV certification with respect to five of the Company’s patents listed in FDA’s Orange Book for YUPELRI on the date of the Company’s receipt of the notice. The asserted patents relate generally to polymorphic forms of and a method of treatment using YUPELRI. In February 2023, the Company filed patent infringement suits against the generic companies in federal district courts, including the United States District Court for the District of New Jersey, the U.S. District Court for the District of Delaware, and the U.S. District Court for the Middle District of North Carolina. The suits in Delaware and North Carolina have been dismissed, as all generic companies have agreed to venue in New Jersey. The complaint alleges that by filing the ANDAs, the generic companies have infringed five of the Company’s Orange Book listed patents. The Company is seeking a permanent injunction to prevent the generic companies from introducing a generic version of YUPELRI that would infringe its patents. As a result of this lawsuit, a stay of approval through May 2026 has been imposed by the FDA on the generic companies’ ANDAs pending any adverse court decision. An additional patent covering YUPELRI granted on July 4, 2023 was subsequently listed in FDA’s Orange Book. The Company filed an additional patent infringement suit against all of the above generic

companies in the U.S. District Court for the District of New Jersey during August 2023. This suit has been consolidated with the above action.

On October 27, 2023, subsidiaries of the Company and Mylan Ireland Limited and Mylan Specialty L.P. (together, “Viatris entities”), entered into a Settlement Agreement (“Settlement Agreement”) with Teva Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc. (together, “Teva”). The Settlement Agreement resolves ongoing patent litigation described above with respect to these parties. Under the Settlement Agreement, the Company and Viatris entities granted Teva a royalty-free, non-exclusive, non-sublicensable, non-transferable license to manufacture and market Teva’s generic version of YUPELRI^® (revefenacin) inhalation solution in the United States on or after the licensed launch date of April 23, 2039, subject to certain exceptions as is customary in these types of agreements. As required by law, the settlement is subject to review by the U.S. Department of Justice and the Federal Trade Commission. The patent litigation against the other generic companies, along with certain affiliates, remains pending.

Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net loss from continuing operations	$ (8,950)	$ (16,023)	$ (46,683)	$ (78,568)
Net income from discontinued operations		932,654		961,062
Net income (loss)	$ (8,950)	$ 916,631	$ (46,683)	$ 882,494
Denominator:
Weighted-average ordinary shares outstanding	52,361	75,515	57,287	75,678
Weighted-average ordinary shares outstanding - basic	52,361	75,515	57,287	75,678
Weighted-average ordinary shares outstanding - diluted	52,361	75,515	57,287	75,678
Continuing operations - basic	$ (0.17)	$ (0.21)	$ (0.81)	$ (1.04)
Continuing operations - diluted	(0.17)	(0.21)	(0.81)	(1.04)
Discontinued operations - basic		12.35		12.70
Discontinued operations - diluted		12.35		12.70
Net income (loss) per share - basic	(0.17)	12.14	(0.81)	11.66
Net income (loss) per share - diluted	$ (0.17)	$ 12.14	$ (0.81)	$ 11.66

Net Income (Loss) per Share - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share issuances under equity incentive plans and employee share purchase plans
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	3,459	5,036	3,972	7,137

Subleases (Details) $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended
Subleases (Details) $ in Thousands	Jun. 30, 2022 ft² item	Jul. 31, 2021 ft² item	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) item	Sep. 30, 2022 USD ($)	Mar. 31, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Number of Non- cancelable agreements	2	2
Area of subleased property \| ft²	99,000	99,000
Number of unaffiliated companies					2
Operating sublease income \| $			$ 2,090	$ 2,090	$ 6,270	$ 3,330
Tenant improvement allowance \| $			$ 6,490		$ 6,490		$ 6,500
South San Francisco \| Sublease
Lessee, Lease, Description [Line Items]
Number of buildings in which office and laboratory space leased					2

Subleases (Tables)

9 Months Ended

Sep. 30, 2023

Subleases

Schedule of company's sublease income

The Company’s sublease income is summarized below:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Sublease income	$	2,090	$	2,090	$	6,270	$	3,330

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Revenue:

Total revenue

$ 15,693

$ 12,451

$ 39,859

$ 36,697

Expenses:

Research and development (1)

^[1]

8,311

9,867

32,308

48,044

Selling, general and administrative (1)

^[1]

16,142

16,277

54,603

50,341

Restructuring and related expenses (1)

509

^[1]

2,743

^[1]

12,838

^[1]

Total expenses

24,453

26,653

89,654

111,223

Loss from operations

(8,760)

(14,202)

(49,795)

(74,526)

Interest expense (2)

(609)

(1,545)

(1,727)

(5,819)

Loss on extinguishment of debt

(3,034)

Interest income and other income (expense), net

1,786

2,758

7,269

4,823

Loss from continuing operations before income taxes

(7,583)

(16,023)

(44,253)

(78,556)

Provision for income tax expense

(1,367)

(2,430)

(12)

Net loss from continuing operations

(8,950)

(16,023)

(46,683)

(78,568)

Income from discontinued operations before income taxes

1,115,016

1,143,930

Provision for income tax expense

(182,362)

(182,868)

Net income from discontinued operations

932,654

961,062

Net income (loss)

(8,950)

916,631

(46,683)

882,494

Net unrealized gain (loss) on available-for-sale investments

(76)

(210)

(121)

Total comprehensive income (loss)

$ (8,889)

$ 916,555

$ (46,893)

$ 882,373

Net income (loss) per share:

Continuing operations - basic

$ (0.17)

$ (0.21)

$ (0.81)

$ (1.04)

Continuing operations - diluted

(0.17)

(0.21)

(0.81)

(1.04)

Discontinued operations - basic

12.35

12.70

Discontinued operations - diluted

12.35

12.70

Net income (loss) - basic

(0.17)

12.14

(0.81)

11.66

Net income (loss) - diluted

$ (0.17)

$ 12.14

$ (0.81)

$ 11.66

Shares used to compute net income (loss) per share - basic

52,361

75,515

57,287

75,678

Shares used to compute net income (loss) per share - diluted

52,361

75,515

57,287

75,678

Viatris collaboration agreement

Revenue:

Total revenue

$ 15,687

$ 12,445

$ 39,841

$ 34,010

Collaboration revenue

Revenue:

Total revenue

$ 6

$ 18

187

Licensing revenue

Revenue:

Total revenue

$ 2,500

[1]	Amounts include share-based compensation expense as follows:

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Provision for income tax (expense) benefit
Income tax expense	$ 1,367	$ 2,430	$ 12

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Discontinued Operations

9 Months Ended

Sep. 30, 2023

Discontinued Operations

Discontinued Operations

7. Discontinued Operations

Background

In July 2022, the Company completed the sale of all of its equity interests in Theravance Respiratory Company, LLC (“TRC”) representing its 85% economic interest in the sales-based royalty rights on worldwide net sales of Assigned Collaboration Products, primarily comprised of GSK's TRELEGY ELLIPTA (“TRELEGY”) to Royalty Pharma Investments 2019 ICAV, an Irish collective asset-management vehicle (“Royalty Pharma”), pursuant to the Equity Purchase and Funding Agreement, dated as of July 13, 2022 (including the schedules and exhibits thereto, the “Purchase Agreement”), by and between the Company and Royalty Pharma (collectively with the other transactions contemplated by the Purchase Agreement, the “TRC Transaction”).

At the closing of the TRC Transaction, the Company received approximately $1.1 billion in cash. From and after January 1, 2023, for any calendar year starting with the year ending December 31, 2023 and ending with the year December 31, 2026, upon certain milestone minimum royalty amounts for Assigned Collaboration Products being met, Royalty Pharma is obligated to make certain cash payments to the Company (the “Milestone Payments”), which are not to exceed $250.0 million in aggregate. Additionally, the Company will receive from Royalty Pharma 85% of the royalty payments on the Assigned Collaboration Products payable (a) for sales or other activities occurring on and after January 1, 2031 related to the Assigned Collaboration Products in the US, and (b) for sales or other activities occurring on and after July 1, 2029 related to the Assigned Collaboration Products outside of the US (collectively with the Milestone Payments, the “Contingent Consideration”).

The Contingent Consideration was initially fair valued at $194.2 million utilizing a Monte Carlo simulation model to calculate the present value of the risk-adjusted cash flows estimated to be received from the Contingent Consideration. The discount rate utilized in the valuation model was 7.83%. The fair value model involved significant unobservable inputs derived using management’s estimates. Management’s estimates were based in part on external data and reflected management’s judgements and forecasts. The primary significant unobservable input was the estimate of forecasted TRELEGY net revenues which is considered a Level 3 fair value input. The Company reassesses the carrying value of the Contingent Consideration when indicators of impairment are identified and will recognize any increases in the carrying value of the asset when such contingent gains are realized. As of September 30, 2023, there have been no

indicators of impairment identified, and as a result, there have been no changes to the carrying value of the Contingent Consideration since its initial fair value in July 2022.

The Contingent Consideration is subject to counterparty credit risk, and the carrying value of the Contingent Consideration represents the maximum amount of potential loss due to credit risk. To date, the Company has not recorded any credit losses related to the Contingent Consideration. The Contingent Consideration is presented on the condensed consolidated balance sheets as future contingent milestone and royalty assets.

Discontinued Operations

The TRC Transaction represented a monetization of a significant equity method investment that had a major effect on the Company’s financial results. In accordance with ASC 860, Transfers and Servicing of Financial Assets, the TRC Transaction was accounted for as a sale of a financial asset. For all periods presented, the balances and the results related to TRC have been classified as discontinued operations on the Company’s condensed consolidated financial statements.

The results of discontinued operations consisted of the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Income from investments in TRC, LLC	$	—	$	—	$	—	$	53,237
Transaction-related legal expenses (prior to July 20, 2022)		—		—		—		(5,057)
Interest expense on 9.5% Non-recourse notes due 2035		—		(2,046)		—		(21,312)
Loss on extinguishment of debt		—		(24,022)		—		(24,022)
Net gain from sale of equity interests in TRC, LLC		—		1,141,084		—		1,141,084
Provision for income tax expense		—		(182,362)		—		(182,868)
Net income from discontinued operations	$	—	$	932,654	$	—	$	961,062

TRC Summary Financial Information

Prior to the TRC Transaction, the Company analyzed its ownership, contractual and other interests in TRC to determine if it was a variable-interest entity (“VIE”), whether the Company had a variable interest in TRC and the nature and extent of that interest. The Company determined that TRC was 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 was 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 was not the primary beneficiary of TRC, and, as a result, the Company did not consolidate TRC in its condensed consolidated financial statements. The Company’s maximum exposure to loss, as a result of its involvement with TRC, were the amounts recorded in the condensed consolidated balance sheets within “Equity in net assets of TRC, LLC”. TRC was recognized in the Company’s condensed consolidated financial statements under the equity method of accounting.

Rule 4-08(g) of Regulation S-X requires that a company include summary financial information for equity method investees when such investees are individually significant for a company. For the prior year comparable period, the income from the Company’s investment in TRC was determined to be significant. As a result, TRC’s summary financial information, including the portion of equity interest that the Company did not own, was as follows:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(In thousands)	2022		2022
Royalty revenue and gross profit	$	—	$	72,029
Income from continuing operations		—		71,693
Net income		—		62,632

Investments and Fair Value Measurements - Convertible senior notes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Maturity period for marketable securities
Maximum contractual maturity period			9 months
Weighted average contractual maturity period			3 months
Unrealized losses
Net unrealized losses	$ 0		$ 0
Available-for-sale securities sold	$ 0	$ 0	$ 71,400	$ 0