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Document and Entity Information - shares	3 Months Ended
Mar. 31, 2013	Apr. 25, 2013
Document and Entity Information
Entity Registrant Name	THERAVANCE INC
Entity Central Index Key	0001080014
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
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		99,453,571
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 266,070	$ 94,849
Short-term investments	192,986	153,640
Receivable from collaboration arrangements (including amounts from a related party of $254 at March 31, 2013 and $123 at December 31, 2012)	2,217	1,064
Notes receivable, current		100
Prepaid expenses and other current assets	5,190	3,966
Inventories	8,049	7,514
Total current assets	474,512	261,133
Marketable securities	99,342	95,194
Restricted cash	833	833
Property and equipment, net	9,010	9,154
Notes receivable, non-current	140	140
Other assets, non-current	7,682	2,128
Total assets	591,519	368,582
Current liabilities:
Accounts payable	3,525	5,377
Accrued personnel-related expenses	5,128	9,002
Accrued clinical and development expenses	6,054	6,550
Other accrued liabilities	2,678	2,072
Accrued interest on convertible subordinated notes	2,198	2,372
Deferred revenue, current	9,881	4,593
Total current liabilities	29,464	29,966
Convertible subordinated notes	460,000	172,500
Deferred rent	4,872	5,074
Deferred revenue, non-current	5,672	6,014
Commitments and contingencies (Notes 3, 7 and 9)
Stockholders' equity:
Common stock, $0.01 par value; authorized: 200,000 shares; outstanding: 99,304 at March 31, 2013 and 98,379 at December 31, 2012	993	984
Additional paid-in capital	1,462,288	1,488,447
Accumulated other comprehensive income	92	99
Accumulated deficit	(1,371,862)	(1,334,502)
Total stockholders' equity	91,511	155,028
Total liabilities and stockholders' equity	$ 591,519	$ 368,582

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue from collaborative arrangements (including amounts from a related party of $1,322 for the three months ended March 31, 2013, and $1,430 for the three months ended March 31, 2012)	$ 1,344	$ 127,099
Operating expenses:
Research and development	26,416	33,202
General and administrative	8,315	7,857
Total operating expenses	34,731	41,059
Income (loss) from operations	(33,387)	86,040
Interest and other income (expense), net	(1,237)	56
Interest expense	(2,736)	(1,502)
Net income (loss)	$ (37,360)	$ 84,594
Net income (loss) per share:
Basic (in dollars per share)	$ (0.39)	$ 1.01
Diluted (in dollars per share)	$ (0.39)	$ 0.93
Weighted-average number of shares used in per share calculations:
Basic (in shares)	96,379	83,590
Diluted (in shares)	96,379	92,080

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities
Net income (loss)	$ (37,360)	$ 84,594
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	1,898	1,910
Stock-based compensation	6,095	6,235
Gain on sale of available-for-sale securities	(1)
Change in capped call option valuation	1,422
Changes in operating assets and liabilities:
Receivables from collaboration arrangements	(1,153)	160
Prepaid expenses and other current assets	(1,224)	(375)
Inventories	(2,481)
Accounts payable	(221)	48
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities	(3,176)	(5,363)
Accrued interest on convertible subordinated notes	(174)	(1,294)
Deferred rent	(202)	(143)
Deferred revenue	4,946	(127,100)
Net cash used in operating activities	(31,631)	(41,328)
Cash flows from investing activities
Purchases of property and equipment	(740)	(1,103)
Purchases of available-for-sale securities	(104,125)	(35,671)
Maturities of available-for-sale securities	54,753	45,158
Sale of available-for-sale securities	5,000
Payments received on notes receivable	100
Net cash provided by (used in) investing activities	(45,012)	8,384
Cash flows from financing activities
Payments on note payable and capital lease		(56)
Proceeds from issuances of common stock, net	2,991	2,532
Payments for capped calls	(36,800)
Proceeds from issuances of convertible subordinated notes, net	281,673
Net cash provided by financing activities	247,864	2,476
Net increase (decrease) in cash and cash equivalents	171,221	(30,468)
Cash and cash equivalents at beginning of period	94,849	44,778
Cash and cash equivalents at end of period	$ 266,070	$ 14,310

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

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, Inc. (the Company or Theravance) is a biopharmaceutical company with a pipeline of internally discovered product candidates and strategic collaborations with pharmaceutical companies. Theravance is focused on the discovery, development and commercialization of small molecule medicines across a number of therapeutic areas including respiratory disease, bacterial infections, and central nervous system (CNS)/pain.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations, comprehensive income (loss) and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2013 or any other period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (SEC) on February 26, 2013.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Management’s Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Segment Reporting

The Company has determined that it operates in a single segment which is the discovery (research), development and commercialization of human therapeutics. Revenues are generated primarily from the Company’s collaboration arrangements with GlaxoSmithKline plc (GSK), located in the United Kingdom, Astellas Pharma Inc. (Astellas) (through January 6, 2012), located in Japan, and Merck, located in the United States. All long-lived assets, which were comprised of property and equipment, are maintained in the United States.

Investments in Marketable Securities

The Company invests in short-term and long-term marketable securities, primarily corporate notes, government, government agency, and municipal bonds. The Company classifies its marketable securities as available-for-sale securities and reports them at fair value in cash equivalents, short-term investments or marketable securities on the condensed consolidated balance sheets with related unrealized gains and losses included as a component of stockholders’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest and other income, on the condensed consolidated statements of operations. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in interest and other income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest and other income.

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

Inventories

Inventories consist of raw materials and work-in-process related to the production of VIBATIV® (telavancin). Raw materials include VIBATIV® active pharmaceutical ingredient (API). Work-in-process includes third party manufacturing and associated labor costs relating to the Company’s personnel directly involved in the production process. Included in inventories are raw materials and work-in-process that may be used as clinical products, which are charged to research and development (R&D) expense when consumed. In addition, under certain commercialization agreements, the Company may sell VIBATIV® packaged in unlabeled vials that are recorded in work-in-process.

Inventories are stated at the lower of cost or market value. If information becomes available that suggests the inventories may not be realizable, the Company may be required to expense a portion or all of the previously capitalized inventories.

	March 31,		December 31,
(in thousands)	2013		2012
Raw materials	$	3,531	$	5,668
Work-in-process	4,518		1,846
Finished goods	—		—
Total inventory	$	8,049	$	7,514

Fair Value of Stock-Based Compensation Awards

The Company uses the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under its equity incentive plans and rights to acquire stock granted under its employee stock purchase plan (ESPP). The Black-Scholes-Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. The Company used the “simplified” method as described in Staff Accounting Bulletin No. 107, “Share-Based Payment,” for the expected option term because the usage of its historical option exercise data is limited due to post-IPO exercise restrictions. Beginning April 1, 2011, the Company used its historical volatility to estimate expected stock price volatility. Prior to April 1, 2011, the Company used peer company price volatility to estimate expected stock price volatility due to the Company’s limited historical common stock price volatility since its initial public offering in 2004.

Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs) are measured based on the fair market values of the underlying stock on the dates of grant.

Stock-based compensation expense was calculated based on awards ultimately expected to vest and was reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. The Company’s estimated annual forfeiture rates for stock options, RSUs and RSAs are based on its historical forfeiture experience.

The estimated fair value of stock options, RSUs and RSAs is expensed on a straight-line basis over the expected term of the grant and the estimated fair value of performance-contingent RSUs and RSAs is expensed using an accelerated method over the term of the award once the Company’s management has determined that it is probable that performance milestones will be achieved. Compensation expense for RSUs and RSAs that contain performance conditions is based on the grant date fair value of the award. Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable that the shares awarded are expected to vest. The Company’s management assesses the probability of the performance milestones being met on a continuous basis.

Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan.

The Company has not recognized, and does not expect to recognize in the near future, any tax benefit related to employee stock-based compensation expense as a result of the full valuation allowance on the Company’s deferred tax assets including deferred tax assets related to its net operating loss carryforwards.

- Definition

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References + Details

NET INCOME (LOSS) PER SHARE

3 Months Ended

Mar. 31, 2013

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE

2. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share for each period presented was computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding, less RSAs subject to forfeiture.

For the three months ended March 31, 2013, diluted net loss per share was identical to basic net loss per share since potential common shares were excluded from the calculation, as their effect was anti-dilutive.

For the three months ended March 31, 2012, diluted net income per share was computed by dividing net income plus interest on dilutive convertible subordinated notes by the weighted-average number of shares of common stock outstanding during the period, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding assuming dilutive potential common shares had been issued for dilutive convertible notes (see Note 6) and other dilutive securities.

Dilutive potential common shares were calculated based on the “if-converted” method. Under the “if-converted” method, when computing the dilutive effect of convertible notes, net income was adjusted to add back the amount of interest and debt issuance costs recognized in the period and the denominator was adjusted to add back the number of shares that would be issued if the convertible notes were settled in shares.

Dilutive potential common shares also include the dilutive effect of the common stock underlying in-the-money stock options and ESPP shares, and were calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an option and the average amount of compensation cost, if any, for future service that the Company has not yet recognized when the option is exercised, are assumed to be used to repurchase shares in the current period. Dilutive potential common shares also reflect the dilutive effect of unvested restricted stock units.

The computations for basic and diluted net income (loss) per share were as follows:

	Three Months Ended March 31,
(in thousands, except for per share amounts)	2013			2012
Numerator:
Net income (loss) — basic	$	(37,360	)	$	84,594
Add: interest and issuance costs related to convertible notes	—			1,500
Net income (loss) — diluted	$	(37,360	)	$	86,094

Denominator:
Weighted-average common shares outstanding	99,181			86,292
Less: unvested RSAs	(2,802		)	(2,702		)
Weighted-average common shares outstanding — basic	96,379			83,590
Dilutive effect of equity incentive plans and ESPP	—			1,822
Dilutive effect of convertible subordinated notes	—			6,668
Weighted-average common shares outstanding and dilutive potential common shares — diluted	96,379			92,080

Anti-Dilutive Securities

Common equivalent shares not included in the computation of diluted net income (loss) per share because their effect was anti-dilutive were as follows:

	Three Months Ended March 31,
(in thousands)	2013	2012
Shares issuable under Equity Incentive Plans and ESPP	5,469	4,641
Shares issuable upon the conversion of convertible subordinated notes	14,256	—
Total anti-dilutive securities	19,725	4,641

COLLABORATIVE ARRANGEMENTS

3 Months Ended

Mar. 31, 2013

COLLABORATIVE ARRANGEMENTS

COLLABORATIVE ARRANGEMENTS

3. COLLABORATIVE ARRANGEMENTS

GSK

LABA collaboration

In November 2002, the Company entered into its long-acting beta2 agonist (LABA) collaboration with GSK to develop and commercialize once-daily LABA products for the treatment of chronic obstructive pulmonary disease (COPD) and asthma. For the treatment of COPD, the collaboration is developing two combination products: (1) RELVAR™ or BREO™ ELLIPTA™ (FF/VI), an investigational once-daily combination medicine consisting of a LABA, vilanterol (VI), and an inhaled corticosteroid (ICS), fluticasone furoate (FF) and (2) ANORO™ ELLIPTA™ (UMEC/VI), a once-daily investigational medicine combining a long-acting muscarinic antagonist (LAMA), umeclidinium bromide (UMEC), with a LABA, VI. For the treatment of asthma, the collaboration is developing FF/VI.

In the event that a product containing VI is successfully developed and commercialized, the Company will be obligated to make milestone payments to GSK which could total as much as $220.0 million if both a single-agent and a combination product or two different combination products are launched in multiple regions of the world. Of these potential milestone payments, the Company estimates up to $140.0 million could be payable during 2013 and all the milestone payments could be payable by the end of 2014. The Company is entitled to receive annual royalties from GSK of 15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion. Sales of single-agent LABA medicines and combination medicines would be combined for the purposes of this royalty calculation. For other products combined with a LABA from the LABA collaboration, such as ANORO™ ELLIPTA™, royalties are upward tiering and range from the mid-single digits to 10%. However, if GSK is not selling a LABA/ICS combination product (e.g., FF/VI) at the time that the first other LABA combination (e.g., UMEC/VI) is launched, then the royalties described above for the LABA/ICS combination (e.g., FF/VI) medicine would be applicable.

2004 Strategic Alliance

In March 2004, the Company entered into its strategic alliance with GSK. Under this alliance, GSK received an option to license exclusive development and commercialization rights to product candidates from certain of the Company’s discovery programs on pre-determined terms and on an exclusive, worldwide basis. Upon GSK’s decision to license a program, GSK is responsible for funding all future development, manufacturing and commercialization activities for product candidates in that program. In addition, GSK is obligated to use diligent efforts to develop and commercialize product candidates from any program that it licenses. If the program is successfully advanced through development by GSK, the Company is entitled to receive clinical, regulatory and commercial milestone payments and royalties on any sales of medicines developed from the program. If GSK chooses not to license a program, the Company retains all rights to the program and may continue the program alone or with a third party.

In 2005, GSK licensed the Company’s bifunctional muscarinic antagonist-beta2 agonist (MABA) program for the treatment of COPD, and in October 2011, the Company and GSK expanded the MABA program by adding six additional Theravance-discovered preclinical MABA compounds (the “Additional MABAs”). GSK’s development, commercialization, milestone and royalty obligations under the strategic alliance remain the same with respect to ‘081, the lead compound in the MABA program. GSK is obligated to use diligent efforts to develop and commercialize at least one MABA within the MABA program, but may terminate progression of any or all Additional MABAs at any time and return them to the Company, at which point the Company may develop and commercialize such Additional MABAs alone or with a third party. Both GSK and the Company have agreed not to conduct any MABA clinical studies outside of the strategic alliance so long as GSK is in possession of the Additional MABAs. If a single-agent MABA medicine containing ‘081 is successfully developed and commercialized, the Company is entitled to receive royalties from GSK of between 10% and 20% of annual global net sales up to $3.5 billion, and 7.5% for all annual global net sales above $3.5 billion. If a MABA medicine containing ‘081 is commercialized only as a combination product, such as a MABA/ICS, the royalty rate is 70% of the rate applicable to sales of the single-agent MABA medicine. For single-agent MABA medicines containing an Additional MABA, the Company is entitled to receive royalties from GSK of between 10% and 15% of annual global net sales up to $3.5 billion, and 10% for all annual global net sales above $3.5 billion. For combination products containing an Additional MABA, such as a MABA/ICS, the royalty rate is 50% of the rate applicable to sales of the single-agent MABA medicine. If a MABA medicine containing ‘081 is successfully developed and commercialized in multiple regions of the world, the Company could earn total contingent payments of up to $125.0 million for a single-agent medicine and up to $250.0 million for both a single-agent and a combination medicine. If a MABA medicine containing an Additional MABA is successfully developed and commercialized in multiple regions of the world, the Company could earn total contingent payments of up to $129.0 million. GSK has no further option rights on any of the Company’s research or development programs under the strategic alliance.

Purchase of Common Stock under the Company’s Governance Agreement and Common Stock Purchase Agreement with GSK

In the first quarter of 2013, Glaxo Group Limited, an affiliate of GSK, purchased 116,527 shares of the Company’s common stock at $22.03 per share, for an aggregate purchase price of approximately $2.6 million, pursuant to its periodic “top-up” rights under the Company’s governance agreement with GSK dated June 4, 2004, as amended.

GSK Contingent Payments and Revenue

The potential future contingent payments related to the MABA program of $363.0 million are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to GSK’s performance of future development, manufacturing and commercialization activities for product candidates after licensing the program.

Revenue recognized from GSK under the LABA collaboration and strategic alliance agreements was as follows:

	Three Months Ended March 31,
(in thousands)	2013		2012
LABA collaboration	$	907	$	907
Strategic alliance—MABA program license	415		523
Total revenue	$	1,322	$	1,430

Under the GSK collaboration arrangements, the Company is reimbursed for R&D expenses. These reimbursements have been reflected as a reduction of R&D expense. Reduction of R&D expense was $0.2 million for the three months ended March 31, 2013 and $45,000 for the three months ended March 31, 2012.

Merck

Research Collaboration and License Agreement

In October 2012, the Company entered into a research collaboration and license agreement with Merck, known as MSD outside the United States and Canada, to discover, develop and commercialize novel small molecule therapeutics directed towards a target being investigated for the treatment of hypertension and heart failure. Under the agreement, the Company granted Merck a worldwide, exclusive license to the Company’s therapeutic candidates. The Company received a $5.0 million upfront payment in November 2012. Also, the Company will receive funding for research and be eligible for potential future contingent payments totaling up to $148.0 million for the first indication and royalties on worldwide annual net sales of any products derived from the collaboration. The contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to Merck’s performance of future development and commercialization activities. The initial research term is twelve months, with optional extensions by mutual agreement, and Merck can terminate the agreement at any time.

The Company identified the deliverables at the inception of the agreement. Under the agreement, the significant deliverables were determined to be the license, research services and committee participation. The Company determined that the license represents a separate unit of accounting as the license, which includes rights to the Company’s underlying technologies for its therapeutic candidates, has standalone value because the rights conveyed permit Merck to perform all efforts necessary to use the Company’s technologies to bring a therapeutic candidate through development and, upon regulatory approval, commercialization. Also, the Company determined that the research services and committee participation each represent separate units of accounting. The Company determined the best estimate of selling price for the license based on potential future cash flows under the arrangement over the estimated development period and determined the best estimate of selling price of the research services and committee participation based on the nature and timing of the services to be performed.

The $5.0 million upfront payment received in November 2012 was allocated to three units of accounting based on the relative selling price method as follows: $4.4 million to the license, $0.4 million to the research services and $0.2 million to the committee participation. The Company recognized revenue of $4.4 million from the license in 2012 as the technical transfer activities were completed and the associated unit of accounting was delivered. The amount of the upfront payment allocated to the committee participation was deferred and is being recognized as revenue over the estimated performance period. The amount of the upfront payment allocated to the research services was deferred and is being recognized as a reduction of R&D expense as the underlying services are performed, as the nature of the research services is more appropriately characterized as R&D expense, consistent with the research reimbursements being received.

Revenue recognized from Merck under the collaboration agreement was $5,000 for the three months ended March 31, 2013. Amounts received and reflected as a reduction of R&D expense were $1.5 million for the three months ended March 31, 2013.

R-Pharm CJSC

Development and Commercialization Agreements

In October 2012, the Company entered into a development and commercialization agreement with R-Pharm CJSC (R-Pharm) to develop and commercialize TD-1792, the Company’s investigational glycopeptide-cephalosporin heterodimer antibiotic for the treatment of resistant Gram-positive infections, and a development and commercialization agreement with R-Pharm to develop and commercialize VIBATIV® (telavancin). Under each agreement, the Company granted R-Pharm exclusive development and commercialization rights in Russia, Ukraine, other member countries of the Commonwealth of Independent States, and Georgia. The Company received $1.1 million in upfront payments for each agreement. Also, the Company is eligible to receive potential future contingent payments totaling up to $10.0 million for both agreements and royalties on net sales by R-Pharm of 15% from TD-1792 and 25% from VIBATIV®. The contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to R-Pharm’s performance of future development and commercialization activities.

TD-1792

The Company identified two deliverables at the inception of the TD-1792 agreement, the license and committee participation. Additionally, at inception of the development and commercialization agreement, the Company had a contingent obligation to supply R-Pharm with API compound at R-Pharm’s expense, either directly or through the Company’s contract manufacturer, subject to entering into a future supply agreement. The Company determined that the license represents a separate unit of accounting as the license, which includes rights to the Company’s underlying technologies for TD-1792, has standalone value because the rights conveyed permit R-Pharm to perform all efforts necessary to use the Company’s technologies to bring the compounds through development and, upon regulatory approval, commercialization. Also, the Company determined that the committee participation represents a separate unit of accounting as R-Pharm could negotiate for and/or acquire these services from other third parties. In March 2013, the Company entered into a supply agreement for TD-1792 API compound under which the Company will sell its existing API compound to R-Pharm. Upon execution of this supply agreement, the Company determined that the supply agreement represents a separate unit of accounting under the development and commercialization arrangement. The Company determined the best estimate of selling price for the license agreement based on potential future cash flows under the arrangement over the estimated performance period. The Company determined the best estimate of selling price of the committee participation based on the nature and timing of the services to be performed and the best estimate of selling price for the supply agreement based on its fully burdened cost to manufacture the underlying API.

The $1.1 million upfront payment for the TD-1792 agreement was allocated to the license and committee participation units of accounting based on the relative selling price method as follows: $0.9 million to the license and $0.1 million to the committee participation. The amount allocated to the license was deferred and will be recognized as revenue upon completion of technical transfer for the underlying license. The amount allocated to committee participation was deferred and is being recognized as revenue over the estimated performance period. Amounts to be received under the supply agreement described above will be recognized as revenue to the extent R-Pharm purchases API compound from the Company.

VIBATIV®

The Company identified the deliverables at the inception of the VIBATIV® agreement. Under the agreement, the significant deliverables were determined to be the license, committee participation and a contingent obligation to supply R-Pharm with the API compound at R-Pharm’s expense, subject to entering into a future supply agreement. The Company determined that the license represents a separate unit of accounting as the license, which includes rights to the Company’s underlying technologies for VIBATIV®, has standalone value because the rights conveyed permit R-Pharm to perform all efforts necessary to use the Company’s technologies to bring the compounds through development and, upon regulatory approval, commercialization. Also, the Company determined that the committee participation represents a separate unit of accounting as R-Pharm could negotiate for and/or acquire these services from other third parties. The Company determined the best estimate of selling price for the license based on potential future cash flows under the arrangement over the estimated performance period. The Company determined the best estimate of selling price of the committee participation based on the nature and timing of the services to be performed.

The $1.1 million upfront payment for the VIBATIV® agreement was allocated to two units of accounting based on the relative selling price method as follows: $1.0 million to the license and $33,000 to the committee participation. The amount allocated to the license was deferred and will be recognized as revenue upon completion of technical transfer. The amount allocated to committee participation was deferred and is being recognized as revenue over the estimated performance period.

Alfa Wassermann

Development and Commercialization Agreement

In October 2012, the Company entered into a development and commercialization agreement with Alfa Wassermann società per azioni (S.p.A.) (Alfa Wassermann) for velusetrag (or TD-5108), the Company’s investigational 5-HT4 agonist in development for gastrointestinal motility disorders. Under the agreement, the Company will 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. Alfa Wassermann has an exclusive option to develop and commercialize velusetrag in the European Union, Russia, China, Mexico and certain other countries, while the Company retains full rights to velusetrag in the US, Canada, Japan and certain other countries. The Company is entitled to receive funding for the Phase 2a study and a subsequent Phase 2b study if the parties agree to proceed. If Alfa Wassermann exercises its license option at the completion of the Phase 2 program, then the Company is entitled to receive a $10.0 million option fee. If velusetrag is successfully developed and commercialized, the Company is entitled to receive potential future contingent payments totaling up to $53.5 million, and royalties on net sales by Alfa Wassermann ranging from the low teens to 20%. The contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to Alfa Wassermann’s performance of future development and commercialization activities. At March 31, 2013, Alfa Wassermann’s option right had not been exercised. The option right could be exercised within the next two years.

Reduction of R&D expense was $0.2 million for the three months ended March 31, 2013.

Clinigen Group

Commercialization Agreement

In March 2013, the Company entered into a commercialization agreement with Clinigen Group plc (Clinigen) to commercialize VIBATIV® for the treatment of nosocomial pneumonia (hospital acquired), including ventilator-associated pneumonia, known or suspected to be caused by methicillin resistant Staphylococcus aureus (MRSA) when other alternatives are not suitable. Under the agreement, the Company granted Clinigen exclusive commercialization rights in the European Union and certain other European countries (including Switzerland and Europe). The Company received a $5.0 million upfront payment in March 2013. Also, the Company is eligible to receive tiered royalty payments on net sales of VIBATIV®, ranging from 20% to 30%. The Company is responsible, either directly or through its vendors or contractors, for supplying at Clinigen’s expense both API and finished drug product for Clinigen’s commercialization activities. The agreement has a term of at least 15 years, with an option to extend exercisable by Clinigen. However, Clinigen may terminate the agreement at any time after it has initiated commercialization upon 12 months’ advance notice.

The Company identified the deliverables at the inception of the agreement. Under the agreement, the significant deliverables were determined to be the license, manufacturing supply and committee participation. The Company determined that the license represents a separate unit of accounting as the license, which includes rights to the Company’s underlying technologies for VIBATIV®, has standalone value because the rights conveyed permit Clinigen to perform all efforts necessary to use the Company’s technologies to bring the compound through commercialization. Also, the Company determined that the committee participation represents a separate unit of accounting as Clinigen could negotiate for and/or acquire these services from other third parties. The Company determined the best estimate of selling price for the license based on potential future cash flows under the arrangement over the estimated commercialization period. The Company determined the best estimate of selling price for the manufacturing supply based on a fully burdened cost to purchase and transfer the underlying API and finished goods from the Company’s third party contract manufacturer. The Company determined the best estimate of selling price of the committee participation based on the nature and timing of the services to be performed.

The $5.0 million upfront payment will be allocated to two units of accounting based on the relative selling price method. The Company did not recognize any revenue from the license and committee participation as the technical transfer activities were not completed as of March 31, 2013 and the associated units of accounting were not delivered. The amount of the upfront payment allocated to the committee participation was deferred and will be recognized as revenue over the estimated performance period. Amounts received related to supply of API and finished goods supply, which will be manufactured by the Company’s third party contract manufacturers, will be subject to a separate arrangement and will be recognized as revenue to the extent of future API and finished goods inventory sales.

Former Collaboration Arrangement with Astellas

License, Development and Commercialization Agreement

In November 2005, the Company entered into a global collaboration arrangement with Astellas for the license, development and commercialization of VIBATIV®. Under this agreement, Astellas paid the Company non-refundable cash payments totaling $191.0 million. In January 2012, Astellas exercised its right to terminate the collaboration agreement. The rights previously granted to Astellas ceased upon termination of the agreement and Astellas stopped all promotional sales efforts. Pursuant to the terms of the agreement, Astellas is entitled to a ten-year, 2% royalty on future net sales of VIBATIV®. Net revenue recognized under this collaboration agreement was $125.7 million for the three months ended March 31, 2012, and the Company is no longer eligible to receive any further contingent payments from Astellas.

AVAILABLE-FOR-SALE SECURITIES

3 Months Ended

Mar. 31, 2013

AVAILABLE-FOR-SALE SECURITIES

AVAILABLE-FOR-SALE SECURITIES

4. AVAILABLE-FOR-SALE SECURITIES

Securities classified as available-for-sale at March 31, 2013 and December 31, 2012 are summarized below. Estimated fair value is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service:

	March 31, 2013
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	22,157	$	13	$	—		$	22,170
U.S. government agencies	152,828		69		(13		)	152,884
U.S. corporate notes	82,278		39		(16		)	82,301
U.S. commercial paper	59,120		—		—			59,120
Money market funds	233,827		—		—			233,827
Total	$	550,210	$	121	$	(29	)	$	550,302

	December 31, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	27,197	$	10	$	(2	)	$	27,205
U.S. government agencies	115,397		85		(16		)	115,466
U.S. corporate notes	91,544		32		(10		)	91,566
U.S. commercial paper	23,082		—		—			23,082
Money market funds	78,646		—		—			78,646
Total	$	335,866	$	127	$	(28	)	$	335,965

The following table summarizes the classification of the available-for-sale securities on the Company’s condensed consolidated balance sheets:

(in thousands)	March 31, 2013		December 31, 2012
Cash and cash equivalents	$	257,141	$	86,298
Short-term investments	192,986		153,640
Long-term marketable securities	99,342		95,194
Restricted cash	833		833
Total	$	550,302	$	335,965

At March 31, 2013, all of the marketable securities have contractual maturities within two years and the average duration of marketable securities was approximately nine months. The Company does not intend to sell the investments which are in an unrealized loss position and it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. The Company has determined that the gross unrealized losses on its marketable securities at March 31, 2013, were temporary in nature. All marketable securities with unrealized losses have been in a loss position for less than twelve months.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

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+ Details

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS

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

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

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

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

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

The Company’s available-for-sale securities are measured at fair value on a recurring basis and the Company’s convertible subordinated notes are not measured at fair value on a recurring basis. The estimated fair values were as follows:

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Level 1		Level 2		Level 3		Total
Assets at March 31, 2013:
U.S. government securities	$	22,170	$	—	$	—	$	22,170
U.S. government agency securities	81,260		71,624		—		152,884
U.S. corporate notes	56,259		26,042		—		82,301
U.S. commercial paper	—		59,120		—		59,120
Money market funds	233,827		—		—		233,827
Total assets measured at estimated fair value	$	393,516	$	156,786	$	—	$	550,302
Liabilities at March 31, 2013:
Convertible subordinated notes due 2015	$	204,413	$	—	$	—	$	204,413
Convertible subordinated notes due 2023	—		313,573		—		313,573
Total convertible subordinated notes	$	204,413	$	313,573	$	—	$	517,986

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Level 1		Level 2		Level 3		Total
Assets at December 31, 2012:
U.S. government securities	$	27,205	$	—	$	—	$	27,205
U.S. government agency securities	56,969		58,497		—		115,466
U.S. corporate notes	40,472		51,094		—		91,566
U.S. commercial paper	—		23,082		—		23,082
Money market funds	78,646		—		—		78,646
Total assets measured at estimated fair value	$	203,292	$	132,673	$	—	$	335,965
Liabilities at December 31, 2012:
Convertible subordinated notes due 2015	$	—	$	194,050	$	—	$	194,050

At March 31, 2013, securities with a total fair value of $11.5 million were measured using Level 1 inputs in comparison to December 31, 2012, at which time the securities had a fair value of $11.4 million and were measured using Level 2 inputs. The transfer to Level 1 from Level 2 was primarily the result of increased trading volume of the securities at and around March 31, 2013, compared to December 31, 2012.

At March 31, 2013, securities with a total fair value of $10.1 million were measured using Level 2 inputs in comparison to December 31, 2012, at which time the securities had a fair value of $10.1 million and were measured using Level 1 inputs. The transfer to Level 2 from Level 1 was primarily the result of decreased trading volume of the securities at and around March 31, 2013, compared to December 31, 2012.

At March 31, 2013, convertible subordinated notes with a total fair value of $204.4 million were measured using Level 1 inputs in comparison to December 31, 2012, at which time the convertible subordinated notes had a fair value of $194.1 million and were measured using Level 2 inputs. The transfer to Level 1 from Level 2 was primarily the result of increased trading volume of the securities at and around March 31, 2013, compared to December 31, 2012.

Due to their short-term maturities, the Company believes that the fair value of its bank deposits, receivables from collaboration partners, accounts payable and accrued expenses approximate their carrying value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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+ Details

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

7. STOCK-BASED COMPENSATION

Equity Incentive Plan

The 2012 Equity Incentive Plan (2012 Plan) provides for the granting of stock options, time-based and performance-contingent restricted stock units, time-based and performance-contingent restricted stock awards, and stock appreciation rights to employees, officers, directors and consultants of the Company. As of March 31, 2013, total shares remaining available for issuance under the 2012 Plan were 3,683,117.

Employee Stock Purchase Plan

The 2004 Employee Stock Purchase Plan (ESPP) provides for the purchase of the Company’s common stock to the Company’s non-officer employees. As of March 31, 2013, total shares remaining available for issuance under the ESPP were 423,575.

Performance-Contingent Restricted Stock Awards

In 2013, the Compensation Committee of the Company’s Board of Directors approved the grant of 44,500 performance-contingent RSAs to senior management. These awards have dual triggers of vesting based upon the achievement of one of three possible performance goals by December 31, 2014, as well as a requirement for continued employment through early 2017. As of March 31, 2013, the Company had determined that the achievement of the requisite performance condition was not probable and, as a result, no compensation expense has been recognized.

In 2012, the Compensation Committee of the Company’s Board of Directors approved the grant of 44,500 performance-contingent RSAs to senior management. These awards have dual triggers of vesting based upon the achievement of one of three possible performance goals by December 31, 2013, as well as a requirement for continued employment through early 2016. As of October 15, 2012, one of the performance goals had been deemed achieved and time-based vesting commenced with respect to these awards. As a result, compensation expense of $87,000 was recognized for the three months ended March 31, 2013, and the remaining unrecognized expense will be recognized over the remaining vesting period using the graded vesting expense attribution method.

In 2011, the Compensation Committee of the Company’s Board of Directors approved the grant of 1,290,000 performance-contingent RSAs to senior management. These awards have dual triggers of vesting based upon the achievement of certain performance conditions over a six-year timeframe from 2011-2016 and continued employment, both of which must be satisfied in order for the RSAs to vest. Expense associated with these RSAs would be recognized, if at all, during these years depending on the probability of meeting the performance conditions. The maximum potential expense associated with the RSAs could be up to approximately $31.9 million (allocated as $6.3 million for research and development expense and $25.6 million for general and administrative expense) if all of the performance conditions are achieved on time. As of March 31, 2013, the Company had determined that the achievement of the requisite performance conditions was not probable and, as a result, no compensation expense has been recognized. As the RSAs are dependent upon the achievement of certain performance conditions, the expense associated with the RSAs may vary significantly from period to period. If sufficient performance conditions are achieved in the remainder of 2013, then the Company would recognize up to $15.6 million in stock-based compensation expense associated with these RSAs.

In 2011, the Compensation Committee of the Company’s Board of Directors approved the grant of a 25,000 performance-contingent RSA to a non-executive officer that has dual triggers of vesting based upon the achievement of a performance condition over a timeframe from 2012-2013 and continued employment through 2014, both of which must be satisfied in order for the award to vest in full. The maximum potential expense associated with this award is approximately $475,000, which would be recognized in increments based on the achievement of the performance condition. As of March 31, 2013, the Company had determined that the achievement of the requisite performance condition was not probable and, as a result, no compensation expense has been recognized.

Performance-Contingent Restricted Stock Units

In 2010, the Compensation Committee of the Company’s Board of Directors approved the grant of 210,000 performance-contingent RSUs to senior management. These awards have dual triggers of vesting based upon the successful achievement of certain corporate operating milestones during 2010 and 2011, as well as a requirement for continued employment through early 2014. As of February 11, 2011, both performance milestones had been deemed achieved, and time-based vesting commenced with respect to all of the performance-contingent RSU shares. As a result, compensation expense was $41,000 for the three months ended March 31, 2013 and $96,000 for the three months ended March 31, 2012, and the remaining unrecognized expense will be recognized over the remaining vesting period using the graded vesting expense attribution method.

Stock-Based Compensation Expense

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

	Three Months Ended March 31,
(in thousands)	2013		2012
Research and development	$	3,797	$	3,529
General and administrative	2,298		2,706
Total stock-based compensation expense	$	6,095	$	6,235

Total stock-based compensation expense capitalized to inventory was $0.1 million for the three months ended March 31, 2013, and none for the three months ended March 31, 2012.

As of March 31, 2013, unrecognized compensation expense, net of expected forfeitures, was as follows: $5.9 million related to unvested stock options; $21.5 million related to unvested RSUs; and $30.7 million related to unvested RSAs (excludes performance-contingent RSAs).

Valuation Assumptions

The range of weighted-average assumptions used to estimate the fair value of stock options granted was as follows:

	Three Months Ended March 31,
	2013			2012
*Employee stock options*
Risk-free interest rate	1.01%-1.14		%	1.00%-1.17		%
Expected life (in years)	6			6
Volatility	58		%	55		%
Dividend yield	—		%	—		%
Weighted-average estimated fair value of stock options granted	$	12.32		$	9.88

Stockholders’ Equity

For the three months ended March 31, 2013, approximately 119,490 shares were exercised at a weighted-average exercise price of $8.00 per share, for total cash proceeds of approximately $955,974.

- 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

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-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2013

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Management's Estimates

Use of Management’s Estimates

Segment Reporting

Segment Reporting

Investments in Marketable Securities

Investments in Marketable Securities

Inventories

Inventories

	March 31,		December 31,
(in thousands)	2013		2012
Raw materials	$	3,531	$	5,668
Work-in-process	4,518		1,846
Finished goods	—		—
Total inventory	$	8,049	$	7,514

Fair Value of Stock-Based Compensation Awards

Fair Value of Stock-Based Compensation Awards

Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs) are measured based on the fair market values of the underlying stock on the dates of grant.

Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan.

- Definition

Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting. The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 10
-URI http://asc.fasb.org/subtopic&trid=2197480

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-Name Accounting Standards Codification
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-Section 45
-URI http://asc.fasb.org/section&trid=2197723

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-Paragraph 2
-Subparagraph (SX 210.3A-02)
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph k
-Article 1

Reference 17: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 140
-Paragraph 46
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-Number 210
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

Disclosure of accounting policy for major classes of inventories, bases of stating inventories (for example, lower of cost or market), methods by which amounts are added and removed from inventory classes (for example, FIFO, LIFO, or average cost), loss recognition on impairment of inventories, and situations in which inventories are stated above cost. If inventory is carried at cost, this disclosure includes the nature of the cost elements included in inventory.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.6(b))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

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-Paragraph 1
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-Publisher AICPA
-Name Statement of Position (SOP)
-Number 81-1
-Paragraph 69-75
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-Name Accounting Research Bulletin (ARB)
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-Chapter 4
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Financial Reporting Release (FRR)
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 6
-Subparagraph a
-Article 5

+ Details

- Definition

Disclosure of accounting policy for investments in debt and equity securities that have readily determinable fair values (marketable securities). At a minimum, the disclosure might address accounting policies for investments classified as trading, available for sale, or held to maturity and may include how the entity determines whether impairments of available for sale or held to maturity investments are other than temporary, how the fair values of the entity's securities are determined, and the entity's accounting treatment for transfers between investment categories.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-URI http://asc.fasb.org/subtopic&trid=2196929

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 115
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Staff Accounting Bulletin (SAB)
-Number Topic 5
-Section M

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 2, 12
-Article 5

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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

Disclosure of accounting policy for stock option and stock incentive plans. This disclosure may include (1) the types of stock option or incentive plans sponsored by the entity (2) the groups that participate in (or are covered by) each plan (3) significant plan provisions and (4) how stock compensation is measured, and the methodologies and significant assumptions used to determine that measurement.

+ References + Details

AVAILABLE-FOR-SALE SECURITIES (Tables)

3 Months Ended

Mar. 31, 2013

AVAILABLE-FOR-SALE SECURITIES

Schedule of amortized cost and estimated fair values for available-for-sale securities

	March 31, 2013
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	22,157	$	13	$	—		$	22,170
U.S. government agencies	152,828		69		(13		)	152,884
U.S. corporate notes	82,278		39		(16		)	82,301
U.S. commercial paper	59,120		—		—			59,120
Money market funds	233,827		—		—			233,827
Total	$	550,210	$	121	$	(29	)	$	550,302

	December 31, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	27,197	$	10	$	(2	)	$	27,205
U.S. government agencies	115,397		85		(16		)	115,466
U.S. corporate notes	91,544		32		(10		)	91,566
U.S. commercial paper	23,082		—		—			23,082
Money market funds	78,646		—		—			78,646
Total	$	335,866	$	127	$	(28	)	$	335,965

Schedule of classification of the available-for-sale debt securities

(in thousands)	March 31, 2013		December 31, 2012
Cash and cash equivalents	$	257,141	$	86,298
Short-term investments	192,986		153,640
Long-term marketable securities	99,342		95,194
Restricted cash	833		833
Total	$	550,302	$	335,965

- 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

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 19, 20, 21
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+ Details

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

Schedule of estimated fair values

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Level 1		Level 2		Level 3		Total
Assets at March 31, 2013:
U.S. government securities	$	22,170	$	—	$	—	$	22,170
U.S. government agency securities	81,260		71,624		—		152,884
U.S. corporate notes	56,259		26,042		—		82,301
U.S. commercial paper	—		59,120		—		59,120
Money market funds	233,827		—		—		233,827
Total assets measured at estimated fair value	$	393,516	$	156,786	$	—	$	550,302
Liabilities at March 31, 2013:
Convertible subordinated notes due 2015	$	204,413	$	—	$	—	$	204,413
Convertible subordinated notes due 2023	—		313,573		—		313,573
Total convertible subordinated notes	$	204,413	$	313,573	$	—	$	517,986

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Level 1		Level 2		Level 3		Total
Assets at December 31, 2012:
U.S. government securities	$	27,205	$	—	$	—	$	27,205
U.S. government agency securities	56,969		58,497		—		115,466
U.S. corporate notes	40,472		51,094		—		91,566
U.S. commercial paper	—		23,082		—		23,082
Money market funds	78,646		—		—		78,646
Total assets measured at estimated fair value	$	203,292	$	132,673	$	—	$	335,965
Liabilities at December 31, 2012:
Convertible subordinated notes due 2015	$	—	$	194,050	$	—	$	194,050

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

+ References + Details

NET INCOME (LOSS) PER SHARE (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Numerator
Net income (loss) - basic	$ (37,360)	$ 84,594
Add: interest and issuance costs related to convertible notes		1,500
Net income (loss) - diluted	$ (37,360)	$ 86,094
Denominator
Weighted-average common shares outstanding	99,181	86,292
Less: unvested RSAs (in shares)	(2,802)	(2,702)
Weighted-average common shares outstanding - basic	96,379	83,590
Dilutive effect of equity incentive plans and ESPP (in shares)		1,822
Dilutive effect of convertible subordinated notes (in shares)		6,668
Weighted-average common shares outstanding and dilutive potential common shares - diluted	96,379	92,080
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	19,725	4,641
Equity Incentive Plans and ESPP
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	5,469	4,641
Convertible subordinated notes
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	14,256

COLLABORATIVE ARRANGEMENTS (Details)		1 Months Ended		3 Months Ended
COLLABORATIVE ARRANGEMENTS (Details)	Oct. 31, 2012 USD ($) Item	Nov. 30, 2012 USD ($) Item	Jan. 31, 2012 USD ($)	Mar. 31, 2013 USD ($) Item $ / shares shares	Mar. 31, 2012 USD ($)
GSK
Net revenue recognized under the collaboration
Revenues				$ 1,322,000	$ 1,430,000
Research reimbursement recognized as a reduction of research and development expense				200,000	45,000
MABA \| GSK
Information related to collaboration arrangements
Potential future contingent payments that may be received				$ 363,000,000
Long-acting beta agonist (LABA) collaboration \| GSK
Information related to collaboration arrangements
Number of combination products \| Item				2
Long-acting beta agonist (LABA) collaboration \| GSK \| Maximum
Information related to collaboration arrangements
Obligation for milestone payments to GSK				$ 220,000,000
Portion of potential milestone payments payable by end of 2013				$ 140,000,000
Long-acting beta agonist (LABA) collaboration \| LABA collaboration \| GSK
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for first level of annual global net sales (as a percent)				15.00%
Royalty rate for sales above first level of annual global net sales (as a percent)				5.00%
Annual global sales level used to determine royalty rate				$ 3,000,000,000
Net revenue recognized under the collaboration
Revenues				$ 907,000	907,000
2004 Strategic alliance \| MABA \| GSK
Upfront License Fees, Milestone Payments and Revenue
Number of combination products to be developed and commercialized \| Item				1
Net revenue recognized under the collaboration
Revenues				$ 415,000	523,000
2004 Strategic alliance \| MABA containing '081 \| GSK
Upfront License Fees, Milestone Payments and Revenue
Potential contingent payments that the Company could receive in respect to single-agent and combination medicines				$ 250,000,000
2004 Strategic alliance \| MABA containing '081 - single-agent \| GSK
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for sales above first level of annual global net sales (as a percent)				7.50%
Annual global sales level used to determine royalty rate				$ 3,500,000,000
Potential contingent payments that the Company could receive				$ 125,000,000
2004 Strategic alliance \| MABA containing '081 - single-agent \| GSK \| Maximum
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for first level of annual global net sales (as a percent)				20.00%
2004 Strategic alliance \| MABA containing '081 - single-agent \| GSK \| Minimum
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for first level of annual global net sales (as a percent)				10.00%
2004 Strategic alliance \| MABA containing '081 - combination product \| GSK
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for combination products as a percentage of the rate applied to single products				70.00%
2004 Strategic alliance \| MABA containing additional MABA \| GSK
Upfront License Fees, Milestone Payments and Revenue
Number of products which Company is obligated to use diligent efforts to discover after license of a program \| Item				6
2004 Strategic alliance \| MABA containing additional MABA \| GSK \| Maximum
Information related to collaboration arrangements
Potential future contingent payments that may be received				$ 129,000,000
2004 Strategic alliance \| MABA containing additional MABA - single-agent \| GSK
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for sales above first level of annual global net sales (as a percent)				10.00%
Annual global sales level used to determine royalty rate				$ 3,500,000,000
2004 Strategic alliance \| MABA containing additional MABA - single-agent \| GSK \| Maximum
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for first level of annual global net sales (as a percent)				15.00%
2004 Strategic alliance \| MABA containing additional MABA - single-agent \| GSK \| Minimum
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for first level of annual global net sales (as a percent)				10.00%
2004 Strategic alliance \| MABA containing additional MABA - combination product \| GSK
Upfront License Fees, Milestone Payments and Revenue
Royalty rate for combination products as a percentage of the rate applied to single products				50.00%
Common stock purchase agreement \| Common stock \| GSK
Upfront License Fees, Milestone Payments and Revenue
Company's stock purchased by related party (in shares) \| shares				116,527
Company's stock purchased by related party, price (in dollars per share) \| $ / shares				$ 22.03
Company's stock purchased by related party				$ 2,600,000
Development and Commercialization Agreement \| R-Pharm CJSC
Information related to collaboration arrangements
Potential future contingent payments that may be received				10,000,000
Net revenue recognized under the collaboration
Upfront payment received for agreement				1,100,000
Number of separate development and commercialization agreements \| Item	2
Development and Commercialization Agreement \| VIBATIV \| R-Pharm CJSC
Net revenue recognized under the collaboration
Upfront payment received for agreement				1,100,000
Upfront payment received allocated to license				1,000,000
Upfront payment received allocated to committee participation				$ 33,000
Royalty rate, as a percentage of net sales	25.00%
Development and Commercialization Agreement \| Velusetrag (or TD-5108) \| Alfa Wassermann
Upfront License Fees, Milestone Payments and Revenue
Option right exercise period				2 years
Net revenue recognized under the collaboration
Research reimbursement recognized as a reduction of research and development expense				$ 200,000
Option fee funding amount	$ 10,000,000
Development and Commercialization Agreement \| Velusetrag (or TD-5108) \| Alfa Wassermann \| Maximum
Net revenue recognized under the collaboration
Potential development, regulatory and sales milestone payments eligible to receive	$ 53,500,000
Royalty rate, as a percentage of net sales	20.00%
Development and Commercialization Agreement \| TD-1792 \| R-Pharm CJSC
Net revenue recognized under the collaboration
Upfront payment received for agreement				1,100,000
Upfront payment received allocated to license				900,000
Upfront payment received allocated to committee participation				100,000
Royalty rate, as a percentage of net sales	15.00%
Number of deliverables identified at inception of the agreement \| Item	2
Research Collaboration and License Agreement \| Novel small molecule therapeutics \| Merck
Net revenue recognized under the collaboration
Revenues				5,000
Upfront payment received allocated to license		$ 4,400,000
Upfront payment received allocated to research services		400,000
Upfront payment received allocated to committee participation		200,000
Research reimbursement recognized as a reduction of research and development expense				1,500,000
Arrangement consideration, upfront license payment received		$ 5,000,000
Number of units of accounting based on the relative selling price method \| Item		3
Research Collaboration and License Agreement \| Novel small molecule therapeutics \| Merck \| Maximum
Information related to collaboration arrangements
Potential future contingent payments that may be received	$ 148,000,000
Commercialization Agreement \| VIBATIV \| Clinigen
Upfront License Fees, Milestone Payments and Revenue
Upfront License Fees				$ 5,000,000
Period of advance notice to terminate the agreement				12 months
Net revenue recognized under the collaboration
Arrangement consideration, upfront license payment received				$ 5,000,000
Number of units of accounting based on the relative selling price method \| Item				2
Commercialization Agreement \| VIBATIV \| Clinigen \| Maximum
Net revenue recognized under the collaboration
Royalty rate, as a percentage of net sales				30.00%
Commercialization Agreement \| VIBATIV \| Clinigen \| Minimum
Upfront License Fees, Milestone Payments and Revenue
Term of royalty payment				15 years
Net revenue recognized under the collaboration
Royalty rate, as a percentage of net sales				20.00%
License, Development and Commercialization Agreement With Astellas \| VIBATIV \| Astellas
Upfront License Fees, Milestone Payments and Revenue
Percentage of royalties payable to Astellas			2.00%
Non-refundable, cash payments			$ 191,000,000
Term of royalty payment			10 years
Net revenue recognized under the collaboration
Revenues					$ 125,700,000

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2013	Dec. 31, 2012
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	$ 550,302	$ 335,965
Fair value measurements transfer to Level 1 From Level 2	11,500
Fair value measured transfer to Level 2 From Level 1	10,100
Fair value Level 2 securities		11,400
Fair value Level 1 securities		10,100
U.S. government securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	22,170	27,205
U.S. government agency securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	152,884	115,466
U.S. corporate notes
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	82,301	91,566
U.S. commercial paper
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	59,120	23,082
Money market funds
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	233,827	78,646
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	393,516	203,292
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. government securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	22,170	27,205
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. government agency securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	81,260	56,969
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. corporate notes
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	56,259	40,472
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| Money market funds
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	233,827	78,646
Recurring basis \| Significant Other Observable Inputs, Level 2
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	156,786	132,673
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government agency securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	71,624	58,497
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. corporate notes
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	26,042	51,094
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. commercial paper
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	59,120	23,082
Recurring basis \| Total
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	550,302	335,965
Recurring basis \| Total \| U.S. government securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	22,170	27,205
Recurring basis \| Total \| U.S. government agency securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	152,884	115,466
Recurring basis \| Total \| U.S. corporate notes
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	82,301	91,566
Recurring basis \| Total \| U.S. commercial paper
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	59,120	23,082
Recurring basis \| Total \| Money market funds
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	233,827	78,646
Nonrecurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	204,413
Nonrecurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| Convertible Subordinated Notes Due 2015
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	204,413
Nonrecurring basis \| Significant Other Observable Inputs, Level 2
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	313,573
Nonrecurring basis \| Significant Other Observable Inputs, Level 2 \| Convertible Subordinated Notes Due 2015
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes		194,050
Nonrecurring basis \| Significant Other Observable Inputs, Level 2 \| Convertible Subordinated Notes Due 2023
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	313,573
Nonrecurring basis \| Total
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	517,986
Nonrecurring basis \| Total \| Convertible Subordinated Notes Due 2015
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	204,413	$ 194,050
Nonrecurring basis \| Total \| Convertible Subordinated Notes Due 2023
Estimated fair values of entity's financial assets and liabilities
Total convertible subordinated notes	$ 313,573

LONG-TERM DEBT (Details) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended
	Jan. 31, 2013 USD ($)	Jan. 31, 2008 USD ($)	Mar. 31, 2013 USD ($) shares / $ Item $ / shares shares	Mar. 31, 2012 USD ($)	Dec. 31, 2012 USD ($)
Debt disclosures
Convertible subordinated notes			$ 460,000		$ 172,500
Change in fair value between the trade dates and the date at which the capped call derivative assets were reclassified to stockholders' equity			$ 1,400
Privately-negotiated capped call option
Debt disclosures
Number of derivative instruments purchased \| Item			2
Convertible Subordinated Notes Due 2015
Debt disclosures
Convertible subordinated notes			$ 172,500		$ 172,500
Loan amount		$ 172,500
Net proceeds from issuance of debt		$ 166,700
Interest rate (as a percent)			3.00%
Unamortized issuance costs			$ 1,500
Amortization expense			$ 200	$ 200
Initial conversion rate of shares \| shares / $			38.6548
Initial conversion price of convertible notes into common stock (in dollars per share) \| $ / shares			$ 25.87
Percentage of principal amount at which the entity may redeem some or all notes			100.00%
Percentage of closing sales price of the entity's common stock the conversion price must exceed in order for the notes to be convertible			130.00%
Number of days within 30 consecutive trading days in which the closing price of the entity's common stock must exceed the conversion price for the notes to be redeemable			20 days
Number of consecutive trading days during which the closing price of the entity's common stock must exceed the conversion price for at least 20 days in order for the notes to be redeemable			30 days
Convertible Subordinated Notes Due 2023
Debt disclosures
Convertible subordinated notes			$ 287,500
Loan amount	$ 287,500
Net proceeds from issuance of debt	$ 281,200
Interest rate (as a percent)	2.125%		2.125%
Unamortized issuance costs			$ 6,200
Amortization expense			$ 100
Initial conversion rate of shares \| shares / $			35.9903
Initial conversion price of convertible notes into common stock (in dollars per share) \| $ / shares			$ 27.79
Percentage of principal amount at which the entity may redeem some or all notes			100.00%
Convertible Subordinated Notes Due 2023 \| Privately-negotiated capped call option
Debt disclosures
Payments on capped call option transactions			$ 36,800
Strike price for the underlying number of shares (in dollars per share) \| $ / shares			27.79
Cap price for the underlying number of shares (in dollars per share) \| $ / shares			38.00
Convertible Subordinated Notes Due 2023 \| Stock prices below $27.79 per share \| Minimum
Debt disclosures
Net shares settlement payable to the entity \| shares			0
Convertible Subordinated Notes Due 2023 \| Stock prices above $38.00 per share
Debt disclosures
Strike price for the underlying number of shares (in dollars per share) \| $ / shares			38.00
Incremental anti-dilutive benefit \| shares			0
Convertible Subordinated Notes Due 2023 \| Stock prices above $38.00 per share \| Maximum
Debt disclosures
Net shares settlement payable to the entity \| shares			2,779,659

STOCK-BASED COMPENSATION (Details 2) - USD ($)	3 Months Ended		12 Months Ended
STOCK-BASED COMPENSATION (Details 2) - USD ($)	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2010
Allocation of stock-based compensation expense
Stock-based compensation expense	$ 6,095,000	$ 6,235,000
Information related to share-based compensation
Total stock-based compensation expense capitalized to inventory	100,000	0
Stock options
Information related to share-based compensation
Total unrecognized compensation cost related to unvested stock-based compensation	5,900,000
RSUs
Information related to share-based compensation
Total unrecognized compensation cost related to unvested stock-based compensation	21,500,000
RSUs \| Employee \| Performance-contingent \| Senior management
Allocation of stock-based compensation expense
Shares of common stock approved and authorized for issuance					210,000
Stock-based compensation expense	41,000	96,000
RSAs
Information related to share-based compensation
Total unrecognized compensation cost related to unvested stock-based compensation	30,700,000
RSAs \| Performance-contingent \| Maximum
Information related to share-based compensation
Stock-based compensation expenses that will be recognized subject to sufficient performance conditions	15,600,000
RSAs \| Performance-contingent \| Non-executive officer
Allocation of stock-based compensation expense
Shares of common stock approved and authorized for issuance			25,000
Stock-based compensation expense	$ 0
Information related to share-based compensation
Maximum potential expense associated with incentive compensation program			$ 475,000
RSAs \| Employee \| Performance-contingent \| Senior management
Allocation of stock-based compensation expense
Shares of common stock approved and authorized for issuance	44,500		1,290,000	44,500
Stock-based compensation expense	$ 87,000
Information related to share-based compensation
Timeframe for achievement of performance conditions			6 years
Maximum potential expense associated with incentive compensation program			$ 31,900,000
Research and development
Allocation of stock-based compensation expense
Stock-based compensation expense	3,797,000	3,529,000
Research and development \| RSAs \| Employee \| Performance-contingent \| Senior management
Information related to share-based compensation
Maximum potential expense associated with incentive compensation program			6,300,000
General and administrative
Allocation of stock-based compensation expense
Stock-based compensation expense	$ 2,298,000	$ 2,706,000
General and administrative \| RSAs \| Employee \| Performance-contingent \| Senior management
Information related to share-based compensation
Maximum potential expense associated with incentive compensation program			$ 25,600,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2013	Dec. 31, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS
Receivable from related party	$ 254	$ 123
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	200,000	200,000
Common stock, outstanding shares	99,304	98,379

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$ (37,360)	$ 84,594
Other comprehensive income:
Net unrealized loss on available-for-sale securities, net of tax	(7)	(25)
Comprehensive income (loss)	$ (37,367)	$ 84,569

INCOME TAXES	3 Months Ended
INCOME TAXES	Mar. 31, 2013
INCOME TAXES
INCOME TAXES	8. INCOME TAXES The Company did not record a provision for income taxes for the three months ended March 31, 2012, because it expected to generate a taxable net operating loss for the fiscal year ending December 31, 2012. In addition, the deferred tax assets continue to be treated as having no current value and remain fully reserved.

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 2013
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	9. COMMITMENTS AND CONTINGENCIES Special Long-Term Retention and Incentive Equity Awards Program In 2011, the Company granted special long-term retention and incentive cash bonus awards to certain employees. The awards have dual triggers of vesting based upon the achievement of certain performance conditions over a six-year timeframe from 2011 through December 31, 2016 and continued employment. The maximum potential cash bonus expense associated with this program is $38.2 million, which would be recognized in increments based on achievement of the performance conditions. As of March 31, 2013, the Company’s management determined that the achievement of the requisite performance conditions was not probable and, as a result, no bonus expense has been recognized. If sufficient performance conditions are achieved in the remainder of 2013, then the Company would recognize up to $18.7 million cash bonus expense in 2013. Guarantees and Indemnifications The Company indemnifies its officers and directors for certain events or occurrences, subject to certain limits. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recognized any liabilities relating to these agreements as of March 31, 2013.

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 31, 2013
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	10. SUBSEQUENT EVENTS Business Separation Announcement On April 25, 2013, the Company announced that its Board of Directors approved plans to separate its businesses into two independent publicly traded companies. One company will continue to manage all development and commercial responsibilities under the LABA collaboration with GSK and associated potential royalty revenues from RELVAR™ or BREO™ ELLIPTA™, ANORO™ ELLIPTA™ and VI monotherapy with the intention of providing a consistent return of capital to stockholders, and one company will be a separate biopharmaceutical company focusing on the discovery, development and commercialization of small-molecule medicines in areas of significant unmet medical need. Sale of Stock On April 30, 2013, the Company and Glaxo Group Limited, an affiliate of GSK, entered into an agreement to purchase 193,563 shares of the Company’s common stock at $34.61 per share, for an aggregate purchase price of approximately $6.7 million, pursuant to its rights under the Company’s governance agreement with GSK dated June 4, 2004, as amended.

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Mar. 31, 2013	Dec. 31, 2012
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Raw materials	$ 3,531	$ 5,668
Work-in-process	4,518	1,846
Total inventory	$ 8,049	$ 7,514

STOCK-BASED COMPENSATION (Details)	3 Months Ended
STOCK-BASED COMPENSATION (Details)	Mar. 31, 2013 USD ($) Item shares	Mar. 31, 2012 USD ($)	Oct. 12, 2012 Item
Information related to stock-based compensation
Compensation expense	$ 6,095,000	$ 6,235,000
Employee stock purchase plan
Information related to stock-based compensation
Shares remaining available for issuance \| shares	423,575
RSUs \| Performance-contingent \| Senior management \| Employee
Information related to stock-based compensation
Compensation expense	$ 41,000	$ 96,000
RSAs \| Performance-contingent \| Senior management \| Employee
Information related to stock-based compensation
Compensation expense	$ 87,000
Number of possible performance conditions, achievement of which not probable \| Item	1
Number of possible performance conditions \| Item	3
Number of performance goals deemed achieved \| Item			1
RSAs \| Performance-contingent \| Non-executive officer
Information related to stock-based compensation
Compensation expense	$ 0
2012 Employee Incentive Plan
Information related to stock-based compensation
Shares remaining available for issuance \| shares	3,683,117

STOCK-BASED COMPENSATION (Details 3) - Stock options - USD ($)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Weighted-average assumptions
Risk-free interest rate, minimum (as a percent)	1.01%	1.00%
Risk-free interest rate, maximum (as a percent)	1.14%	1.17%
Expected life	6 years	6 years
Volatility (as a percent)	58.00%	55.00%
Weighted-average estimated fair value of stock options (in dollars per share)	$ 12.32	$ 9.88
Stockholders' equity:
Options exercised (in shares)	119,490
Exercised, Weighted-Average Exercise Price of Outstanding Options (in dollars per share)	$ 8.00
Total cash proceed	$ 955,974

COMMITMENTS AND CONTINGENCIES (Details) - Special Long-Term Retention and Incentive Equity Awards Program - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2011
Special Long-Term Retention and Incentive Equity Awards Program
Timeframe for achievement of performance conditions		6 years
Cash bonus expense
Special Long-Term Retention and Incentive Equity Awards Program
Maximum compensation expense to be recognized if sufficient performance conditions are achieved	$ 38,200,000
Long-term retention program bonus expense recognized during the period	0
Compensation expenses related to cash bonus to be recognized in next fiscal year if sufficient performance conditions are achieved	$ 18,700,000

SUBSEQUENT EVENTS (Details) - Subsequent events $ / shares in Units, $ in Millions	Apr. 30, 2013 USD ($) $ / shares shares	Apr. 25, 2013 Item
Subsequent events
Number of independent publicly traded companies created as a result of the separation of businesses as approved by the Board of Directors under a business separation announcement		2
Number of companies, which will continue to manage all development and commercial responsibilites under the LABA collaboration with GSK and associated potential royalty revenues		1
Number of newly created separate biopharmaceutical companies focusing on the discovery, development and commercialization of small-molecule medicines in areas of significant unmet medical need		1
Common stock \| Future Sale of Stock \| GSK
Subsequent events
Agreement to issue stock, number of shares \| shares	193,563
Agreement to issue stock in private placement, price per shares (in dollars per share) \| $ / shares	$ 34.61
Agreement to issue stock in private placement, aggregate purchase price \| $	$ 6.7