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Document and Entity Information - shares	6 Months Ended
Jun. 30, 2017	Aug. 01, 2017
Document and Entity Information
Entity Registrant Name	Theravance Biopharma, Inc.
Entity Central Index Key	0001583107
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		53,829,472
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 139,626	$ 344,709
Short-term marketable securities	222,194	156,387
Accounts receivable, net of allowances of $757 and $779 at June 30, 2017 and December 31, 2016, respectively	1,346	646
Receivables from collaborative arrangements	5,318	9,076
Prepaid taxes	242	3,060
Other prepaid and current assets	4,030	2,405
Inventories	12,126	12,220
Total current assets	384,882	528,503
Property and equipment, net	8,679	8,460
Long-term marketable securities	136,445	91,565
Other investments	8,000	8,000
Restricted cash	833	833
Other assets	5,047	1,893
Total assets	543,886	639,254
Current liabilities:
Accounts payable	6,406	1,733
Accrued personnel-related expenses	15,800	14,021
Accrued clinical and development expenses	26,386	25,064
Other accrued liabilities	8,369	8,298
Deferred revenue	142	152
Total current liabilities	57,103	49,268
Convertible senior notes, net	223,210	222,676
Deferred rent	3,450	3,966
Other long-term liabilities	18,996	13,113
Commitments and contingencies
Shareholders' equity
Preferred shares, $0.00001 par value: 230 shares authorized, no shares issued or outstanding at June 30, 2017 and December 31, 2016, respectively
Ordinary shares, $0.00001 par value: 200,000 shares authorized at June 30, 2017 and December 31, 2016; 53,829 and 52,833 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	1	1
Additional paid-in capital	885,315	862,708
Accumulated other comprehensive loss	(248)	(253)
Accumulated deficit	(643,941)	(512,225)
Total shareholders' equity	241,127	350,231
Total liabilities and shareholders' equity	$ 543,886	$ 639,254

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
CONDENSED CONSOLIDATED BALANCE SHEETS
Account receivable, allowance	$ 757	$ 779
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	53,829	52,833
Ordinary shares, outstanding shares	53,829	52,833

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue:
Product sales	$ 3,474	$ 5,359	$ 6,524	$ 8,670
Revenue from collaborative arrangements	35	112	72	15,211
Total revenue	3,509	5,471	6,596	23,881
Costs and expenses:
Cost of goods sold	1,364	638	1,929	1,416
Research and development	42,927	32,069	83,492	67,748
Selling, general and administrative	24,339	20,261	45,125	43,857
Total costs and expenses	68,630	52,968	130,546	113,021
Loss from operations	(65,121)	(47,497)	(123,950)	(89,140)
Interest expense	(2,137)	0	(4,274)	0
Interest and other income (loss), net	1,425	308	2,455	495
Loss before income taxes	(65,833)	(47,189)	(125,769)	(88,645)
Provision for income taxes	454	36	5,837	730
Net loss	(66,287)	(47,225)	(131,606)	(89,375)
Share-based compensation expense	$ 10,398	$ 9,904	$ 20,667	$ 21,234
Net loss per share:
Basic and diluted net loss per share (in dollars per share)	$ (1.27)	$ (1.06)	$ (2.53)	$ (2.16)
Shares used to compute basic and diluted net loss per share (in shares)	52,255	44,407	51,938	41,366
Net unrealized gain (loss) on available-for-sale investments	$ 24	$ 55	$ 5	$ 251
Total comprehensive loss	(66,263)	(47,170)	(131,601)	(89,124)
Research and development
Costs and expenses:
Share-based compensation expense	4,917	4,959	10,018	10,119
Selling, general and administrative
Costs and expenses:
Share-based compensation expense	$ 5,481	$ 4,945	$ 10,649	$ 11,115

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities
Net loss	$ (131,606)	$ (89,375)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,059	1,153
Share-based compensation	20,667	21,234
Inventory write-down	642	119
Other	262	0
Changes in operating assets and liabilities:
Accounts receivable	(700)	66
Receivables from collaborative arrangements	3,758	152
Prepaid taxes	(212)	9,614
Other prepaid and current assets	(1,857)	1,566
Inventories	(497)	157
Other assets	(128)	711
Accounts payable	4,798	(10,757)
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities	2,905	5,732
Deferred rent	(516)	(229)
Deferred revenue	15	905
Other long-term liabilities	5,859	508
Net cash used in operating activities	(94,551)	(58,444)
Investing activities
Purchases of property and equipment	(1,325)	(1,322)
Purchases of marketable securities	(231,991)	(91,382)
Maturities of marketable securities	120,970	40,514
Net cash used in investing activities	(112,346)	(52,190)
Financing activities
Proceeds from sale of ordinary shares, net	0	145,224
Proceeds from ESPP purchases	2,657	1,944
Proceeds from option exercises	5,320	1,346
Repurchase of shares to satisfy tax withholding	(6,163)	(2,224)
Net cash provided by financing activities	1,814	146,290
Net (decrease) increase in cash and cash equivalents	(205,083)	35,656
Cash and cash equivalents at beginning of period	344,709	112,707
Cash and cash equivalents at end of period	139,626	148,363
Supplemental disclosure of cash flow information
Cash paid for interest	3,717	0
Cash paid (received) for income taxes, net	$ (2,985)	$ (9,488)

Description of Operations and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
Description of Operations and Summary of Significant Accounting Policies
Description of Operations and Summary of Significant Accounting Policies	1. Description of Operations and Summary of Significant Accounting Policies Description of Operations Theravance Biopharma, Inc. (“Theravance Biopharma”, the “Company”, or “we” and other similar pronouns) is a diversified biopharmaceutical company with the core purpose of creating medicines that help improve the lives of patients suffering from serious illness. Our pipeline of internally discovered product candidates includes potential best-in-class medicines to address the unmet needs of patients being treated for serious conditions primarily in the acute care setting. VIBATIV® (telavancin), our first commercial product, is a once-daily dual-mechanism antibiotic approved in the U.S., Europe and certain other countries for certain difficult-to-treat infections. Revefenacin (TD-4208) is a long-acting muscarinic antagonist (“LAMA”) being developed as a potential once-daily, nebulized treatment for chronic obstructive pulmonary disease (“COPD”). Our neprilysin (“NEP”) inhibitor program is designed to develop selective NEP inhibitors for the treatment of a range of major cardiovascular and renal diseases, including acute and chronic heart failure, hypertension and chronic kidney diseases such as diabetic nephropathy. Our research efforts are focused in the areas of inflammation and immunology, with the goal of designing medicines that provide targeted drug delivery to tissues in the lung and gastrointestinal tract in order to maximize patient benefit and minimize risk. The first program to emerge from this research is designed to develop intestinally restricted pan-Janus kinase (“JAK”) inhibitors for the treatment of a range of inflammatory intestinal diseases. In addition, we have an economic interest in future payments that may be made by Glaxo Group Limited or one of its affiliates (“GSK”) pursuant to its agreements with Innoviva, Inc. (“Innoviva”) (known as Theravance, Inc. prior to January 7, 2016) relating to certain drug development programs, including the Closed Triple (the combination of fluticasone furoate, umeclidinium, and vilanterol), currently in development for the treatment of COPD and asthma. Basis of Presentation Our condensed consolidated financial information as of June 30, 2017, and the three and six months ended June 30, 2017 and 2016 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which we consider 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 U.S. 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, 2016 financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017. On January 1, 2017, we adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). Under ASU 2016-09, excess tax benefits from share-based compensation are now included on the Consolidated Statements of Cash Flows as an operating activity rather than a financing activity. This change has been applied prospectively as allowed under ASU 2016-09 and prior periods have not been adjusted on the Consolidated Statements of Cash Flows. Significant Accounting Policies Other than the below, there have been no material revisions in our significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Share-Based Compensation In connection with the adoption of ASU 2016-09, we elected to change our accounting policy for recognizing share-based compensation expense by replacing the practice of estimating forfeitures to utilizing actual forfeitures as they occur. The change was applied on a modified retrospective basis, and the cumulative effect adjustment recorded to retained earnings, as of January 1, 2017, was immaterial. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09” or “Topic 606”), which will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-09’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, companies may need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since ASU 2014-09 was issued, several additional ASUs have been issued and incorporated within Topic 606 to clarify various elements of the guidance. Topic 606 differs from the current accounting standard in many respects, such as in the accounting for variable consideration, including milestone payments. Since the separation from our former parent, Innoviva, in June 2014, our revenues have been derived primarily from collaboration agreements. The consideration we are eligible to receive under these agreements includes upfront payments, research and development funding, milestone payments, and royalties. Each collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. Under our current accounting policy, we recognize milestone revenue using the milestone method specified in ASC 605-28, which generally results in the recognition of the milestone payment as revenue in the period that the milestone is achieved. However, under the new accounting standard, it is possible to start to recognize milestone revenue before the milestone is achieved, subject to management’s assessment of whether it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This aspect of Topic 606 may have a material effect on our financial statements. We also recognize revenues from product sales. Although we have not yet completed our final review of the impact of Topic 606, we currently do not anticipate a material impact on our revenue recognition practices for product sales. We will adopt Topic 606 in the first quarter of 2018 using the modified retrospective method which consists of applying and recognizing the cumulative effect of Topic 606 at the date of initial application and providing certain additional disclosures as defined per Topic 606. We are in the process of reviewing variable consideration, potential disclosures, and our method of adoption to complete our evaluation of the impact on our consolidated financial statements prior to the end of 2017. In addition, we continue to monitor additional changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our current conclusions. In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10) (“ASU 2016-01”), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income, simplifies the impairment assessment of certain equity investments, and updates certain presentation and disclosure requirements. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance is effective for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is not permitted. We have evaluated the potential impact of ASU 2016-01, and we do not believe the adoption of ASU 2016-01 will have a material impact on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) (“ASU 2016-16”). ASU 2016-16 requires immediate recognition of income tax consequences of intra-company asset transfers, other than inventory transfers. Existing GAAP prohibits recognition of income tax consequences of intra-company asset transfers whereby the seller defers any net tax effect and the buyer is prohibited from recognizing a deferred tax asset on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the consolidated financial statements. ASU 2016-16 specifically excludes from its scope intra-company inventory transfers whereby the recognition of tax consequences will take place when the inventory is sold to third parties. Two common examples of assets included in ASU 2016-16’s scope are intellectual property and property, plant and equipment. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption is permitted. We expect to adopt ASU 2016-16 in the first quarter of 2018 using the modified retrospective method. Currently, we do not anticipate a material impact on our consolidated financial statements and related disclosures upon adoption due to a full valuation allowance on our deferred tax assets. However, the ultimate impact of adopting ASU 2016-16 will depend on the balance of intercompany sales transactions, if any, between our subsidiaries as of the adoption date and our continued full valuation allowance position. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a share-based payment award. ASU 2017-09 also provides guidance about the types of changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting in accordance with Topic 718. The provisions of ASU 2017-09 are effective for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. We plan to adopt ASU 2017-09 on its effective date and apply the new guidance to evaluate future changes, if any, to the terms and conditions of our share-based payment awards. We have evaluated other recently issued accounting pronouncements and do not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.

Collaborative Arrangements

6 Months Ended

Jun. 30, 2017

Collaborative Arrangements

Collaborative Arrangements

3. Collaborative Arrangements

Revenue from Collaborative Arrangements

We recognized the following revenues from our collaborative arrangements:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Mylan	$	26	$	25	$	52	$	15,051
Other	9		87		20		160

Total revenue from collaborative arrangements	$	35	$	112	$	72	$	15,211

Mylan

Development and Commercialization Agreement

In January 2015, we established a strategic collaboration with Mylan Ireland Limited (“Mylan”) for the development and, subject to regulatory approval, commercialization of revefenacin (TD-4208), our investigational LAMA in development for the treatment of COPD. We entered into this collaboration to expand the breadth of our revefenacin development program and extend our commercial reach beyond the acute care setting where we currently market VIBATIV.

For the three and six months ended June 30, 2017, we recognized $26,000 and $52,000, respectively, in revenue primarily from the amortization of previously deferred revenue. For the three and six months ended June 30, 2016, we recognized $25,000 and $15.0 million of revenue, respectively. The $25,000 resulted from amortization of previously deferred revenue and the $15.0 million resulted from the achievement of 50% enrollment in the Phase 3 twelve-month safety study which triggered a milestone payment to Theravance Biopharma by Mylan.

As of June 30, 2017, we are eligible to receive from Mylan additional potential development, regulatory and sales milestone payments totaling up to $205.0 million in the aggregate, with $160.0 million associated with revefenacin monotherapy and $45.0 million for future potential combination products. Of the $160.0 million associated with monotherapy, $150.0 million relates to commercialization and $10.0 million relates to regulatory actions in the European Union (“EU”). Development and regulatory milestones are deemed to be substantive milestones and will be recognized as revenue in the period upon achievement of each respective milestone. Sales milestones are considered contingent payments and are not deemed to be substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to Mylan’s performance of future commercial activities. We do not expect to earn any milestone payments from Mylan in 2017.

Alfasigma (formerly Alfa Wassermann)

Development and Collaboration Agreement

Under an October 2012 development and collaboration agreement for velusetrag, we and Alfasigma S.p.A (“Alfasigma”) (formerly Alfa Wassermann S.p.A.) agreed to collaborate in the execution of a two-part Phase 2 program to test the efficacy, safety and tolerability of velusetrag in the treatment of patients with gastroparesis (a medical condition consisting of a paresis (partial paralysis) of the stomach, resulting in food remaining in the stomach for a longer time than normal). Alfasigma has an exclusive option to develop and commercialize velusetrag in the EU, Russia, China, Mexico and certain other countries, while we retain full rights to velusetrag in the United States, Canada, Japan and certain other countries. As part of this agreement, Alfasigma funded the majority of the costs associated with the Phase 2 gastroparesis program, which consisted of a Phase 2 study focused on gastric emptying and a Phase 2 study focused on symptoms. If Alfasigma exercises its license option at the completion of the Phase 2 program, then we are entitled to receive a $10.0 million option fee. If velusetrag is successfully developed and commercialized, we are entitled to receive potential future contingent payments totaling up to $53.5 million, and royalties on net sales by Alfasigma ranging from the low teens to 20%.

Reimbursement of R&D Costs

Under certain collaborative arrangements, we are entitled to reimbursement of certain R&D costs. Our policy is to account for the reimbursement payments by our collaboration partners as reductions to R&D expense.

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Mylan	$	4,768	$	25,971	$	11,857	$	57,144
Alfasigma	—		2,601		—		3,786
Other	4		110		41		123

Total reduction to R&D expense	$	4,772	$	28,682	$	11,898	$	61,053

Available-for-Sale Securities and Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Available-for-Sale Securities and Fair Value Measurements

Available-for-Sale Securities and Fair Value Measurements

4. Available-for-Sale Securities and Fair Value Measurements

Our available-for-sale securities include:

	Fair Value
	Hierarchy	Estimated Fair Value
(In thousands)	Level	June 30, 2017		December 31, 2016
U.S. government securities	Level 1	$	84,884	$	69,955
U.S. government agency securities	Level 2	69,200		60,747
Corporate notes	Level 2	181,593		98,313
Commercial paper	Level 2	35,953		18,937

Marketable securities		371,630		247,952
Money market funds	Level 1	92,493		323,602

Total		$	464,123	$	571,554

The estimated fair value of marketable securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. The fair value of our marketable securities classified within Level 2 is based upon observable inputs that 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. Net unrealized losses were $0.4 million as of June 30, 2017 and $0.3 million as of December 31, 2016.

As of June 30, 2017, all of the marketable securities had contractual maturities within two years and the weighted average maturity of the marketable securities was approximately 10 months. There were no transfers between Level 1 and Level 2 during the periods presented and there have been no changes to our valuation techniques during the three and six months ended June 30, 2017.

We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis which may be maturity. We have determined that the gross unrealized losses on our marketable securities as of June 30, 2017 were temporary in nature. The gross unrealized loss on marketable securities held for greater than twelve months was immaterial, as of June 30, 2017.

As of June 30, 2017, our accumulated other comprehensive loss on our condensed consolidated balance sheets consisted of net unrealized losses on available-for-sale investments. During the three and six months ended June 30, 2017, we did not sell any of our marketable securities.

Restricted cash pertained to certain lease agreements and letters of credit where we have pledged cash and cash equivalents as collateral.

In November 2016, we completed an underwritten public offering of $230.0 million of 3.250% convertible senior notes, due 2023 (the “Notes”). The estimated fair value of our Notes was $310.2 million as of June 30, 2017 and was primarily based upon the underlying price of Theravance Biopharma’s publicly traded shares and other observable inputs. The inputs to determine fair value of the Notes are categorized as Level 2 inputs. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

As of June 30, 2017, we reviewed our $8.0 million investment in Trek Therapeutics, PBC (“TREKtx”), a non-marketable equity security that we acquired in September 2015, for impairment and believe the current liquidity of TREKtx is an indicator of impairment in our investment. However, based on TREKtx’s current financing plans, we believe that the impairment is temporary. The realization of the value in TREKtx is dependent upon TREKtx’s ability to continue to raise capital to pursue their business plan. TREKtx faces development risks and the outcome of the development is inherently uncertain, and the ultimate commercialization of their product is further dependent upon regulatory approvals, product pricing and reimbursements. As a result of these risks, it is possible that impairments of the carrying value of TREKtx can arise in future reporting periods.

Share-Based Compensation

6 Months Ended

Jun. 30, 2017

Share-Based Compensation

Share-Based Compensation

6. Share-Based Compensation

Share-Based Compensation Expense Allocation

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Research and development	$	4,917	$	4,959	$	10,018	$	10,119
Selling, general and administrative	5,481		4,945		10,649		11,115

Total share-based compensation expense	$	10,398	$	9,904	$	20,667	$	21,234

Performance-Contingent Awards

In the first quarter of 2016, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved the grant of 1,575,000 performance-contingent restricted share awards (“RSAs”) and 135,000 performance-contingent restricted share units (“RSUs”) to senior management. The vesting of such awards is dependent on the Company meeting its critical operating goals and objectives during a five-year period from 2016 to December 31, 2020. These goals are strategically important for the Company, and management believes the goals, if achieved, will increase shareholder value. The awards have dual triggers of vesting based upon the achievement of these goals and continued employment. As of June 30, 2017, there were 1,305,000 performance-contingent RSAs and 135,000 performance-contingent RSUs outstanding, and as of June 30, 2016, there were 1,440,000 performance-contingent RSAs and 135,000 performance-contingent RSUs outstanding.

Expense associated with these awards is broken into three separate tranches and may be recognized during the years 2016 to 2020 depending on the probability of meeting the performance conditions. Compensation expense relating to awards subject to performance conditions is recognized if it is considered probable that the performance goals will be achieved. The probability of achievement is reassessed at each quarter-end reporting period. The maximum potential expense associated with the awards could be up to $35.5 million (allocated as $13.3 million for research and development expense and $22.2 million for selling, general and administrative expense) if all of the performance conditions are achieved.

As of June 30, 2017, we determined that the achievement of the requisite performance conditions for the first tranche of the awards is probable due to multiple advancements of programs within our development pipeline over the course of 2017. For the three and six months ended June 30, 2017, we recognized $0.5 million and $0.9 million of share-based compensation expense from the first tranche of the awards, respectively.

We have determined that the remaining second and third tranches are not probable of vesting and, as a result, no compensation expense related to these tranches has been recognized as of June 30, 2017.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Description of Operations and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
Description of Operations and Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation Our condensed consolidated financial information as of June 30, 2017, and the three and six months ended June 30, 2017 and 2016 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which we consider 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 U.S. 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, 2016 financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017. On January 1, 2017, we adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). Under ASU 2016-09, excess tax benefits from share-based compensation are now included on the Consolidated Statements of Cash Flows as an operating activity rather than a financing activity. This change has been applied prospectively as allowed under ASU 2016-09 and prior periods have not been adjusted on the Consolidated Statements of Cash Flows.
Significant Accounting Policies	Significant Accounting Policies Other than the below, there have been no material revisions in our significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Share-Based Compensation In connection with the adoption of ASU 2016-09, we elected to change our accounting policy for recognizing share-based compensation expense by replacing the practice of estimating forfeitures to utilizing actual forfeitures as they occur. The change was applied on a modified retrospective basis, and the cumulative effect adjustment recorded to retained earnings, as of January 1, 2017, was immaterial.
Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09” or “Topic 606”), which will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-09’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, companies may need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since ASU 2014-09 was issued, several additional ASUs have been issued and incorporated within Topic 606 to clarify various elements of the guidance. Topic 606 differs from the current accounting standard in many respects, such as in the accounting for variable consideration, including milestone payments. Since the separation from our former parent, Innoviva, in June 2014, our revenues have been derived primarily from collaboration agreements. The consideration we are eligible to receive under these agreements includes upfront payments, research and development funding, milestone payments, and royalties. Each collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. Under our current accounting policy, we recognize milestone revenue using the milestone method specified in ASC 605-28, which generally results in the recognition of the milestone payment as revenue in the period that the milestone is achieved. However, under the new accounting standard, it is possible to start to recognize milestone revenue before the milestone is achieved, subject to management’s assessment of whether it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This aspect of Topic 606 may have a material effect on our financial statements. We also recognize revenues from product sales. Although we have not yet completed our final review of the impact of Topic 606, we currently do not anticipate a material impact on our revenue recognition practices for product sales. We will adopt Topic 606 in the first quarter of 2018 using the modified retrospective method which consists of applying and recognizing the cumulative effect of Topic 606 at the date of initial application and providing certain additional disclosures as defined per Topic 606. We are in the process of reviewing variable consideration, potential disclosures, and our method of adoption to complete our evaluation of the impact on our consolidated financial statements prior to the end of 2017. In addition, we continue to monitor additional changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our current conclusions. In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10) (“ASU 2016-01”), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income, simplifies the impairment assessment of certain equity investments, and updates certain presentation and disclosure requirements. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance is effective for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is not permitted. We have evaluated the potential impact of ASU 2016-01, and we do not believe the adoption of ASU 2016-01 will have a material impact on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) (“ASU 2016-16”). ASU 2016-16 requires immediate recognition of income tax consequences of intra-company asset transfers, other than inventory transfers. Existing GAAP prohibits recognition of income tax consequences of intra-company asset transfers whereby the seller defers any net tax effect and the buyer is prohibited from recognizing a deferred tax asset on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the consolidated financial statements. ASU 2016-16 specifically excludes from its scope intra-company inventory transfers whereby the recognition of tax consequences will take place when the inventory is sold to third parties. Two common examples of assets included in ASU 2016-16’s scope are intellectual property and property, plant and equipment. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption is permitted. We expect to adopt ASU 2016-16 in the first quarter of 2018 using the modified retrospective method. Currently, we do not anticipate a material impact on our consolidated financial statements and related disclosures upon adoption due to a full valuation allowance on our deferred tax assets. However, the ultimate impact of adopting ASU 2016-16 will depend on the balance of intercompany sales transactions, if any, between our subsidiaries as of the adoption date and our continued full valuation allowance position. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a share-based payment award. ASU 2017-09 also provides guidance about the types of changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting in accordance with Topic 718. The provisions of ASU 2017-09 are effective for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. We plan to adopt ASU 2017-09 on its effective date and apply the new guidance to evaluate future changes, if any, to the terms and conditions of our share-based payment awards. We have evaluated other recently issued accounting pronouncements and do not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.

Collaborative Arrangements (Tables)

6 Months Ended

Jun. 30, 2017

Collaborative Arrangements

Schedule of revenue recognized from collaborative arrangements

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Mylan	$	26	$	25	$	52	$	15,051
Other	9		87		20		160

Total revenue from collaborative arrangements	$	35	$	112	$	72	$	15,211

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

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Mylan	$	4,768	$	25,971	$	11,857	$	57,144
Alfasigma	—		2,601		—		3,786
Other	4		110		41		123

Total reduction to R&D expense	$	4,772	$	28,682	$	11,898	$	61,053

Available-for-Sale Securities and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Available-for-Sale Securities and Fair Value Measurements

Schedule of available-for-sale securities

	Fair Value
	Hierarchy	Estimated Fair Value
(In thousands)	Level	June 30, 2017		December 31, 2016
U.S. government securities	Level 1	$	84,884	$	69,955
U.S. government agency securities	Level 2	69,200		60,747
Corporate notes	Level 2	181,593		98,313
Commercial paper	Level 2	35,953		18,937

Marketable securities		371,630		247,952
Money market funds	Level 1	92,493		323,602

Total		$	464,123	$	571,554

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details

Available-for-Sale Securities and Fair Value Measurements (Details) - USD ($) $ in Thousands		6 Months Ended
	Nov. 02, 2016	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2015
Marketable securities
Marketable securities (including commercial paper classified as cash equivalents)		$ 371,630	$ 247,952
Total		464,123	571,554
Net unrealized gains and losses		$ 400	300
Maturity period for marketable securities
Maximum contractual maturity period		2 years
Weighted average contractual maturity period		10 months
Fair value transfers
Fair value of assets transferred from Level 1 to Level 2		$ 0
Fair value of assets transferred from Level 2 to Level 1		0
Fair value of liabilities transferred from Level1 to Level2		0
Fair value of liabilities transferred from Level 2 to Level 1		0
TREKtx
Fair value transfers
Investment				$ 8,000
Level 1
Marketable securities
Money market funds		92,493	323,602
U.S. government securities \| Level 1
Marketable securities
Marketable securities (including commercial paper classified as cash equivalents)		84,884	69,955
U.S. government agency securities \| Level 2
Marketable securities
Marketable securities (including commercial paper classified as cash equivalents)		69,200	60,747
Corporate notes \| Level 2
Marketable securities
Marketable securities (including commercial paper classified as cash equivalents)		181,593	98,313
Commercial paper \| Level 2
Marketable securities
Marketable securities (including commercial paper classified as cash equivalents)		35,953	$ 18,937
Convertible senior notes due 2023
Fair value transfers
Proceeds from issuance of debt	$ 230,000
Interest rate (as a percent)	3.25%
Convertible senior notes due 2023 \| Level 2
Fair value transfers
Notes fair value		$ 310,200

Share-Based Compensation (Details)	3 Months Ended			6 Months Ended
Share-Based Compensation (Details)	Jun. 30, 2017 USD ($) shares	Jun. 30, 2016 USD ($) shares	Mar. 31, 2016 shares	Jun. 30, 2017 USD ($) tranche shares	Jun. 30, 2016 USD ($) shares
Share-Based Compensation
Share-based compensation expense	$ 10,398,000	$ 9,904,000		$ 20,667,000	$ 21,234,000
Number of Tranches for Recognition of Share Based Compensation Expenses \| tranche				3
First tranche
Share-Based Compensation
Share-based compensation expense	500,000			$ 900,000
Second tranche
Share-Based Compensation
Share-based compensation expense				0
Third tranche
Share-Based Compensation
Share-based compensation expense				0
Research and development
Share-Based Compensation
Share-based compensation expense	4,917,000	4,959,000		10,018,000	10,119,000
Selling, general and administrative
Share-Based Compensation
Share-based compensation expense	$ 5,481,000	$ 4,945,000		10,649,000	$ 11,115,000
Maximum potential expense
Share-Based Compensation
Share-based compensation expense				35,500,000
Maximum potential expense \| Research and development
Share-Based Compensation
Share-based compensation expense				13,300,000
Maximum potential expense \| Selling, general and administrative
Share-Based Compensation
Share-based compensation expense				$ 22,200,000
RSA
Share-Based Compensation
Shares approved for grant (in shares) \| shares			1,575,000
Shares outstanding \| shares	1,305,000	1,440,000		1,305,000	1,440,000
Vesting period			5 years
RSU
Share-Based Compensation
Shares approved for grant (in shares) \| shares			135,000
Shares outstanding \| shares	135,000	135,000		135,000	135,000
Vesting period			5 years

Operating Leases (Details)	1 Months Ended	6 Months Ended
Operating Leases (Details)	Apr. 30, 2017 USD ($) ft²	Jun. 30, 2017 USD ($) ft² item
Future minimum lease payments
Six months ending December 31,2017		$ 3,305,000
2018		6,748,000
2019		6,937,000
2020		3,201,000
2021		443,000
Thereafter		2,333,000
Total		$ 22,967,000
United States
Operating Leases
Square feet of office and laboratory space \| ft²		150,000
Number of buildings \| item		2
Number of lease terms \| item		2
Additional lease period		5 years
Ireland
Operating Leases
Square feet of office and laboratory space \| ft²	6,100
Lease period	10 years
Initial base rent	$ 443,000

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2017
Income Taxes
Income Taxes	7. Income Taxes The income tax provision was $0.5 million and $5.8 million for the three and six months ended June 30, 2017, respectively, although we incurred operating losses on a consolidated basis. The provision for income tax was primarily due to recording contingent tax liabilities pertaining primarily to uncertain tax positions taken with respect to transfer pricing and tax credits. No provision for income taxes has been recognized on undistributed earnings of our foreign subsidiaries because we consider such earnings to be indefinitely reinvested. We follow the accounting guidance related to accounting for income taxes which requires that a company reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. As of June 30, 2017, our deferred tax assets were offset in full by a valuation allowance. We record 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. We include any applicable interest and penalties within the provision for income taxes in the condensed consolidated statements of operations. The difference between the Irish statutory rate and our effective tax rate was primarily due to the valuation allowance on deferred tax assets and the liabilities recorded for the uncertain tax position related to transfer pricing and tax credits. Our future income tax expense may be affected by such factors as changes in tax laws, our 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, our international organization, shifts in the amount of income before tax earned in the U.S. as compared with other regions in the world, the timing and amounts of releases of our valuation allowance and changes in overall levels of income before tax.

Description of Operations and Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2017 item
Description of Operations and Summary of Significant Accounting Policies
Number of affiliates of Glaxo Group the Company has economic interest	1

Net Loss per Share (Details) - shares	3 Months Ended		6 Months Ended
Net Loss per Share (Details) - shares	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Anti-Dilutive Securities
Shares not included in the computation of diluted net loss per share (in shares)	9,376,000	4,798,000	9,660,000	4,905,000
Share issuances under equity incentive plan and ESPP
Anti-Dilutive Securities
Shares not included in the computation of diluted net loss per share (in shares)	2,674,000	3,310,000	2,958,000	3,417,000
Restricted shares
Anti-Dilutive Securities
Shares not included in the computation of diluted net loss per share (in shares)	26,000	1,488,000	26,000	1,488,000
Share issuances upon the conversion of convertible senior notes
Anti-Dilutive Securities
Shares not included in the computation of diluted net loss per share (in shares)	6,676,000	0	6,676,000	0
RSA
Anti-Dilutive Securities
Shares not included in the computation of diluted net loss per share (in shares)			1,305,000	1,440,000

Collaborative Arrangements - Development and Commercialization Agreement (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Collaborative Arrangements
Revenue from collaborative arrangements	$ 35,000	$ 112,000	$ 72,000	$ 15,211,000
Mylan
Collaborative Arrangements
Revenue from collaborative arrangements	$ 26,000	25,000	52,000	15,051,000
Amortization of deferred revenue		$ 25,000
Milestone payment				$ 15,000,000
Achievement in enrollment (as a percent)				50.00%
Mylan \| Maximum
Collaborative Arrangements
Potential development, regulatory and sales milestone payments			205,000,000
Mylan \| Revefenacin Monotherapy
Collaborative Arrangements
Potential development, regulatory and sales milestone payments			160,000,000
Potential commercialization milestone payments			150,000,000
Potential regulatory milestone payments			10,000,000
Mylan \| Future Potential Combination Products
Collaborative Arrangements
Potential development, regulatory and sales milestone payments			$ 45,000,000

Collaborative Arrangements - Development and Collaboration Agreement (Details) - Alfasigma $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($)
Collaborative Arrangements
Entitled to receive option fee	$ 10.0
Maximum
Collaborative Arrangements
Potential future contingent payments receivable	$ 53.5
Royalty rate, as a percentage of net sales	20.00%

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventories
Raw materials	$ 6,749	$ 6,067
Work-in-process	3,384	2,627
Finished goods	1,993	3,526
Total inventories	$ 12,126	$ 12,220

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Taxes
Provision for income taxes	$ 454	$ 36	$ 5,837	$ 730
Provision for income taxes on undistributed earnings of foreign subsidiaries	$ 0		$ 0