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Document and Entity Information - shares	9 Months Ended
Sep. 30, 2014	Oct. 31, 2014
Document and Entity Information
Entity Registrant Name	THERAVANCE INC
Entity Central Index Key	0001080014
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
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		115,369,046
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Sep. 30, 2014

Dec. 31, 2013

^[1]

Current assets:

Cash and cash equivalents

$ 119,575

$ 143,510

Restricted cash

5,600

Short-term marketable securities

143,536

321,615

Accounts receivable, net of allowances of $89 at December 31, 2013

199

Receivables from collaborative arrangements (including amounts from a related party of $4,012 and $2,247 at September 30, 2014 and December 31, 2013)

4,012

3,181

Prepaid expenses and other current assets

748

4,287

Inventories

10,406

Total current assets

273,471

483,198

Marketable securities

47,752

55,374

Restricted cash

833

Property and equipment, net

10,238

Intangible assets, net

211,646

124,257

Other assets

19,947

7,355

Total assets

553,713

681,255

Current liabilities:

Accounts payable

573

7,583

Payable to a related party

10,000

40,000

Accrued personnel-related expenses

1,203

10,881

Accrued clinical and development expenses

9,714

Accrued interest payable

19,467

2,800

Other accrued liabilities

3,773

4,137

Deferred revenue

1,082

9,289

Total current liabilities

36,098

84,404

Convertible subordinated notes

255,109

287,500

Non-recourse notes payable, due 2029

450,000

Deferred rent

4,774

Other long-term liabilities

1,530

Deferred revenue

4,058

5,455

Commitments and contingencies (Notes 3, 6 and 8)

Stockholders' (deficit) equity :

Common stock, $0.01 par value; authorized: 200,000 shares; issued: 115,380 and 111,516 at September 30, 2014 and December 31, 2013

1,154

1,115

Treasury stock, 150 and 0 shares at September 30, 2014 and December 31, 2013

(3,263)

Additional paid-in capital

1,466,911

1,803,048

Accumulated other comprehensive (loss) income

(197)

162

Accumulated deficit

(1,657,741)

(1,505,203)

Total stockholders' (deficit) equity

(193,136)

299,122

Total liabilities and stockholders' (deficit) equity

$ 553,713

$ 681,255

[1]	Condensed consolidated balance sheet at December 31, 2013 has been derived from audited consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2013

Revenue:

Royalty revenue from a related party, net of intangible assets amortization: three months-2014-$3,233; 2013-$0; nine months-2014-$7,611; 2013-$0 (Note 3) (1)

^[1]

$ 729

$ 0

$ 342

$ 0

Net revenue from collaborative arrangements from a related party

270

415

811

3,059

Total net revenue

999

415

1,153

3,059

Operating expenses:

Research and development

1,909

2,104

6,721

6,555

General and administrative

8,632

6,018

28,491

17,882

Total operating expenses

10,541

8,122

35,212

24,437

Loss from operations

(9,542)

(7,707)

(34,059)

(21,378)

Other income (expense), net

255

(37)

335

6,734

Interest income

192

446

567

Interest expense

(12,355)

(1,902)

(24,326)

(7,662)

Loss from continuing operations before income taxes

(21,549)

(9,454)

(57,604)

(21,739)

Income tax

278

Loss from continuing operations, net of tax

(21,271)

(9,454)

(57,604)

(21,739)

Loss from discontinued operations (Notes 10 and 11):

(37,531)

(94,934)

(99,033)

Net loss

$ (21,271)

$ (46,985)

$ (152,538)

$ (120,772)

Basic and diluted net loss per share:

Continuing operations, net of tax (in dollars per share)

$ (0.19)

$ (0.09)

$ (0.52)

$ (0.21)

Discontinued operations (in dollars per share)

0.00

(0.35)

(0.85)

(0.99)

Basic and diluted net loss per share (in dollars per share)

(0.19)

(0.44)

(1.37)

(1.20)

Cash dividends declared per common share

$ 0.25

$ 0

$ 0.25

$ 0

Shares used to compute basic and diluted net loss per share (in shares)

113,100

106,925

111,306

100,321

Gross royalty revenue from related party

$ 3,962

$ 7,953

[1]	Gross royalty revenue from a related party for the three and nine months ended September 30, 2014 is $3,962 and $7,953, respectively.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands

9 Months Ended

Sep. 30, 2014

Sep. 30, 2013

Cash flows from operating activities

Net loss

$ (152,538)

$ (120,772)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

8,720

1,959

Stock-based compensation

26,013

19,704

Amortization of premium on marketable securities

1,539

2,933

Change in fair value of capped-call derivative assets

1,422

Amortization of debt issuance costs

1,550

792

Other non-cash items

(2)

Changes in operating assets and liabilities:

Account receivables

Receivables from collaborative arrangements

(833)

(1,425)

Prepaid expenses and other current assets

(52)

(35)

Inventories

(1,908)

(2,912)

Other assets

561

Accounts payable

(7,122)

2,040

Payable to Theravance Biopharma, Inc., net

(16,166)

Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities

4,472

Accrued interest payable

16,667

(1,099)

Deferred rent

224

(416)

Deferred revenue

(2,911)

3,692

Net cash used in operating activities

(126,113)

(89,628)

Cash flows from investing activities

Purchases of property and equipment

(556)

(1,667)

Purchases of marketable securities

(228,899)

(354,583)

Maturities of marketable securities

292,666

155,396

Sales of marketable securities

5,000

22,600

Payments for intangible assets

(125,000)

(40,000)

Payments received on notes receivable

140

100

Net cash used in investing activities

(56,649)

(218,154)

Cash flows from financing activities

Cash and cash equivalents contributed to Theravance Biopharma, Inc.

(277,541)

Payments of cash dividends to stockholders

(28,338)

Proceeds from issuances of common stock, net

35,629

140,003

Purchase of capped-call options

(36,800)

Change in restricted cash

(5,600)

Proceeds from issuances of notes payable, net of debt issuance costs

434,677

281,622

Net cash provided by financing activities

158,827

384,825

Net (decrease) increase in cash and cash equivalents

(23,935)

77,043

Cash and cash equivalents at beginning of period

143,510

^[1]

94,849

Cash and cash equivalents at end of period

119,575

171,892

Supplemental disclosures of noncash information

Contribution of net assets, excluding cash and cash equivalents to Theravance Biopharma, Inc.

125,337

Conversion of convertible subordinated notes into common stock

$ 32,391

$ 172,499

[1]	Condensed consolidated balance sheet at December 31, 2013 has been derived from audited consolidated financial statements.

Description of Operations and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

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. (“Theravance”, the “Company”, or “we” and other similar pronouns) is a royalty management company focused on maximizing the potential value of the respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR®/BREO® ELLIPTA® (fluticasone furoate/ vilanterol, “FF/VI”) and ANORO® ELLIPTA® (umeclidinium bromide/ vilanterol, “UMEC/VI”), with the intention of providing capital returns to stockholders. Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the “GSK Agreements”), Theravance is eligible to receive the associated royalty revenues from RELVAR®/BREO® ELLIPTA® , ANORO® ELLIPTA® and if approved and commercialized, VI monotherapy. Theravance is also entitled to a 15% economic interest in any future payments made by GSK under its agreements originally entered into with us, and since assigned to Theravance Respiratory Company, LLC (“TRC”), relating to the combination of FF/UMEC/VI and the Bifunctional Muscarinic Antagonist-Beta2 Agonist (“MABA”) program, as monotherapy and in combination with other therapeutically active components, such as an inhaled corticosteroid, and any other product or combination of products that may be discovered and developed in the future under the LABA Collaboration Agreement (“LABA Collaboration”) with us, which has been assigned to TRC other than with respect to RELVAR®/BREO®ELLIPTA®, ANORO® ELLIPTA® and VI monotherapy.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements 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 our opinion, 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 our financial position, results of operations, comprehensive 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, 2014 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, 2013 filed with the Securities and Exchange Commission (“SEC”) on March 3, 2014.

Business Separation

On June 1, 2014, we separated our late-stage partnered respiratory assets from our biopharmaceutical research and drug development operations by transferring our research and drug development operations into a wholly-owned subsidiary. We contributed $393.0 million of cash, cash equivalents and marketable securities to Theravance Biopharma, Inc. (“Theravance Biopharma”) and all outstanding shares of Theravance Biopharma were then distributed to our stockholders as a pro-rata dividend distribution on June 2, 2014 by issuing one ordinary share of Theravance Biopharma for every 3.5 shares held of Theravance common stock to stockholders of record on May 15, 2014 (the “Spin-Off”). The Spin-Off resulted in Theravance Biopharma operating as an independent, publicly traded company.

The results of operations for our former research and drug development operations conducted by us and by Theravance Biopharma until June 1, 2014 are included as part of this report as discontinued operations. Refer to Notes 10 and 11, “Spin-Off of Theravance Biopharma, Inc.,” and “Discontinued Operations” for further information.

Pursuant to a three-way master agreement entered into by and among us, Theravance Biopharma and GSK in connection with the Spin-Off, we agreed to sell a certain number of Theravance Biopharma shares withheld from a taxable dividend of Theravance Biopharma shares to GSK. After such Theravance Biopharma shares were sent to the transfer agent, we agreed to purchase the Theravance Biopharma shares from the transfer agent, rather than have them sold on the open market, in order to satisfy tax withholdings. GSK had an option to purchase these shares of Theravance Biopharma from us, but this option expired unexercised. Accordingly, at September 30, 2014, we owned 436,802 ordinary shares of Theravance Biopharma, which are accounted for as marketable securities in the condensed consolidated balance sheet. These equity securities are discussed further in Note 4, “Available-for-Sale Securities and Fair Value Measurements”.

Fair Value of Financial Instruments

We define 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.

Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy:

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

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

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

Financial instruments include cash equivalents, marketable securities, accounts receivable, receivables from collaborative arrangements, accounts payable, and accrued liabilities. Marketable securities are carried at estimated fair value. The carrying value of cash equivalents, accounts receivable, receivables from collaborative arrangements, accounts payable, and accrued liabilities approximate their estimated fair value due to the relatively short-term nature of these instruments.

Inventories

All inventories were related to our former research and drug development operations and, thus, were contributed to Theravance Biopharma in connection with the Spin-Off. Accordingly, we have no inventories as of September 30, 2014.

Prior to the Spin-Off of Theravance Biopharma, our inventories consisted of raw materials, work-in-process and finished goods related to the production of VIBATIV® (telavancin). Raw materials include VIBATIV® active pharmaceutical ingredient (API) and other raw materials. Work-in-process and finished goods included third party manufacturing costs and labor and indirect costs incurred in the production process. Included in inventories were raw materials and work-in-process that may be used as clinical products, which were charged to research and development expense when consumed. In addition, under certain commercialization agreements, we could sell VIBATIV® packaged in unlabeled vials that are recorded in work-in-process. Inventories were stated at the lower of cost or market value. We determined the cost of inventory using the average-cost method for validation batches. We analyzed our inventory levels quarterly and wrote down any inventory that was expected to become obsolete, that had a cost basis in excess of its expected net realizable value or for inventory quantities in excess of expected requirements.

Inventories were as follows:

	December 31,
(In thousands)	2013
Raw materials	$	5,138
Work-in-process	360
Finished goods	4,908
Total inventories	$	10,406

Revenue Recognition

Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the nature of the fee charged for products or services delivered and the collectability of those fees. Where the revenue recognition criteria are not met, we defer the recognition of revenue by recording deferred revenue until such time that all criteria are met.

Collaborative Arrangements and Multiple-Element Arrangements

Revenue from nonrefundable, up-front license or technology access payments under license and collaborative arrangements that are not dependent on any future performance by us is recognized when such amounts are earned. If we have continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of continuing performance obligation.

We account for multiple element arrangements, such as license and development agreements in which a customer may purchase several deliverables, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 605-25, “Multiple Element Arrangements.” For new or materially amended multiple element arrangements, we identify the deliverables at the inception of the arrangement and each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met: (1) the delivered item or items have value to the customer on a standalone basis and (2) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control. We allocate revenue to each non-contingent element based on the relative selling price of each element. When applying the relative selling price method, we determine the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, we use the best estimated selling price for that deliverable. Revenue allocated to each element is then recognized based on when the basic four revenue recognition criteria are met for each element.

For multiple-element arrangements entered into prior to January 1, 2011, we determined the delivered items under our collaborative arrangements did not meet the criteria to be considered separate accounting units for the purposes of revenue recognition. As a result, we recognized revenue from non-refundable, upfront fees and development contingent payments in the same manner as the final deliverable, which is ratably over the expected term of our performance of research and development services under the agreements. These upfront or contingent payments received, pending recognition as revenue, are recorded as deferred revenue and are classified as a short-term or long-term liability on the consolidated balance sheets and recognized over the estimated period of performance. We periodically review the estimated performance periods of our contracts based on the progress of our programs.

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

Under certain collaborative arrangements, we have been reimbursed for a portion of our research and development expenses. These reimbursements have been reflected as a reduction of research and development expense in our consolidated statements of operations, as we do not consider performing research and development services to be a part of our ongoing and central operations. Therefore, the reimbursement of research and developmental services and any amounts allocated to our research and development services are recorded as a reduction of research and development expense.

Amounts deferred under a collaborative arrangement in which the performance obligations are terminated will result in an immediate recognition of any remaining deferred revenue and accrued liability in the period that termination occurred, provided that there are no remaining performance obligations.

We account for contingent payments in accordance with FASB Subtopic ASC 605-28 “Revenue Recognition—Milestone Method.” We recognize revenue from milestone payments when (i) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement and (ii) we do not have ongoing performance obligations related to the achievement of the milestone. Milestone payments are considered substantive if all of the following conditions are met: the milestone payment (a) is commensurate with either our performance to achieve the milestone or the enhancement of the value of the delivered item or items as a result of a specific outcome resulting from our performance to achieve the milestone, (b) relates solely to past performance, and (c) is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.

Under our collaborative arrangements with GSK, and in accordance with FASB Subtopic ASC 808-10, “Collaborative Arrangements,” royalty revenue earned is reduced by amortization expense resulting from the fees paid to GSK, which were capitalized as finite-lived intangible assets. When amortization expense exceeds amounts recognized for royalty revenues from GSK, negative revenue would be reported in our consolidated statements of operations.

Royalties

We recognize royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us and collectability is reasonably assured. Royalties are recognized net of amortization of intangible assets associated with any approval and launch milestone payments made to GSK.

Product Revenues

We currently have no product revenues following the Spin-Off of Theravance Biopharma.

Prior to the Spin-Off of Theravance Biopharma, we sold VIBATIV® in the U.S. through a limited number of distributors, and title and risk of loss transferred upon receipt of the product by these distributors. Healthcare providers ordered VIBATIV® through these distributors. Commencing in the first quarter of 2014, revenue on the sale of VIBATIV® was recorded on a sell-through basis, once the distributors sold the product to healthcare providers. As VIBATIV® is a product that is sold by Theravance Biopharma, the revenue from product sales are included within discontinued operations in the consolidated statements of operations for the nine months ended September 30, 2014. There was no revenue recognized from product sales for any period in 2013 as all amounts were deferred.

Product sales were recorded net of estimated government-mandated rebates and chargebacks, distribution fees, estimated product returns and other deductions. We reflected such reductions in revenue either as an allowance to the related account receivable from the distributor, or as an accrued liability, depending on the nature of the sales deduction. Sales deductions were based on management’s estimates that considered payer mix in target markets, industry benchmarks and experience to date. We monitored inventory levels in the distribution channel, as well as sales of VIBATIV® by distributors to healthcare providers, using product-specific data provided by the distributors. Product return allowances were based on amounts owed or to be claimed on related sales. These estimates took into consideration the terms of our agreements with customers, historical product returns of VIBATIV® experienced by our former collaborative partner, Astellas Pharma, Inc. (“Astellas”), rebates or discounts taken, estimated levels of inventory in the distribution channel, the shelf life of the product, and specific known market events, such as competitive pricing and new product introductions.

Sales Discounts: We offered cash discounts to our customers, generally 2% of the sales price, as an incentive for prompt payment. We expected our customers to comply with the prompt payment terms to earn the cash discount. We accounted for cash discounts by reducing accounts receivable by the full amount and recognizing the discount as a reduction of revenue in the same period the related revenue is recognized.

Chargebacks and Government Rebates: For VIBATIV® sales in the U.S., we estimated reductions to product sales for qualifying federal and state government programs including discounted pricing offered to Public Health Service (PHS) as well as government-managed Medicaid programs. Our reduction for PHS was based on actual chargebacks that distributors have claimed for reduced pricing offered to such health care providers. Our accrual for Medicaid was based upon statutorily-defined discounts, estimated payer mix, expected sales to qualified healthcare providers, and our expectation about future utilization. The Medicaid accrual and government rebates that were invoiced directly to us were recorded in other accrued liabilities on the consolidated balance sheet. For qualified programs that purchased our products through distributors at a lower contractual government price, the distributors charged back to us the difference between their acquisition cost and the lower contractual government price, which we recorded as an allowance against accounts receivable.

Distribution Fees and Product Returns: We had written contracts with our distributors that include terms for distribution-related fees. We recorded distribution-related fees based on a percentage of the product sales price. We offered our distributors a right to return product purchased directly from us, which was principally based upon the product’s expiration date. Additionally, we had granted more expansive return rights to our distributors following our product launch of VIBATIV®. Our policy was to accept returns for expired product during the six months prior to and twelve months after the product expiration date on product that had been sold to our distributors. We developed estimates for VIBATIV® product returns based upon historical VIBATIV® sales from our former collaborative partner, Astellas. We recorded distribution fees and product returns as an allowance against accounts receivable.

Allowance for Doubtful Accounts: We maintained a policy to record allowances for potentially doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. As of December 31, 2013, there were no allowances for doubtful accounts as we have not had any write-offs historically.

Variable Interest Entities

We evaluate our ownership, contractual and other interest in entities to determine if they are variable-interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluations, if we determine we are the primary beneficiary of such VIEs, we consolidate such entities into our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC. The financial position and results of operations of TRC are not material as of and for the three and nine months ended September 30, 2014.

Intangible Assets

We capitalize fees paid to licensors related to agreements for approved products or commercialized products. We capitalize these fees as finite-lived intangible assets and amortize these intangible assets on a straight-line basis over their estimated useful lives upon the commercial launch of the product, which is expected to be shortly after regulatory approval of such product. The estimated useful lives of these intangible assets are based on a country-by-country and product-by-product basis, as the later of the expiration or termination of the last patent right covering the compound in such product in such country and 15 years from first commercial sale of such product in such country, unless the agreement is terminated earlier. Consistent with our policy for classification of costs under the research and development collaborative arrangements, the amortization of these intangible assets will be recognized as a reduction of royalty revenue. We review our intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of finite-lived intangible assets is measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate. The determination of recoverability typically requires various estimates and assumptions, including estimating the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. We derive the required cash flow estimates from near-term forecasted product sales and long-term projected sales in the corresponding market.

Recently Issued Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which converges the FASB and the International Accounting Standards Board standards on revenue recognition. Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. This guidance is effective for the fiscal years and interim reporting periods beginning after December 15, 2016, at which time we may adopt the new standard under the full retrospective method or the modified retrospective method. Early adoption is not permitted. We are currently evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements and related disclosures.

Net Loss per Share

9 Months Ended

Sep. 30, 2014

Net Loss per Share

Net Loss per Share

2. Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding, less restricted stock awards (“RSAs”) subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common shares had been issued for other dilutive securities.

For the three months and nine months ended September 30, 2014 and 2013, diluted and basic net loss per share were identical since potential common shares were excluded from the calculation, as their effect was anti-dilutive.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except for per share amounts)	2014			2013			2014			2013
Numerator:
Loss from continuing operations, net of tax	$	(21,271	)	$	(9,454	)	$	(57,604	)	$	(21,739	)
Loss from discontinued operations	—			(37,531		)	(94,934		)	(99,033		)
Net loss	$	(21,271	)	$	(46,985	)	$	(152,538	)	$	(120,772	)

Denominator:
Weighted-average number of shares used to compute basic and diluted net loss per share	113,100			106,925			111,306			100,321

Basic and diluted net loss per share:
Continuing operations, net of tax	$	(0.19	)	$	(0.09	)	$	(0.52	)	$	(0.21	)
Discontinued operations	—			(0.35		)	(0.85		)	(0.99		)
Basic and diluted net loss per share	$	(0.19	)	$	(0.44	)	$	(1.37	)	$	(1.20	)

Anti-Dilutive Securities

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

	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2014	2013	2014	2013
Shares issuable under equity incentive plans and ESPP	6,771	3,590	6,218	4,161
Unvested RSAs	1,782	2,418	1,782	2,418
Shares issuable upon the conversion of convertible subordinated notes	12,100	10,503	12,100	16,262
Total anti-dilutive securities	20,653	16,511	20,100	22,841

Collaborative Arrangements

9 Months Ended

Sep. 30, 2014

Collaborative Arrangements

Collaborative Arrangements

3. Collaborative Arrangements

Net Revenue from Collaborative Arrangements

Net revenue from collaborative arrangements from continuing operations relates to our arrangement with GSK. Net revenue from other collaborative arrangements was reflected as discontinued operations in the consolidated statements of operations. Refer to Notes 1, 10 and 11, “Description of Operations and Summary of Significant Accounting Policies,” “Spin-Off of Theravance Biopharma, Inc.” and “Discontinued Operations” for further information.

Net Royalty Revenue from GSK

Net revenue recognized under our GSK Agreements was as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2014			2013		2014			2013
Royalty revenue	$	3,962		$	—	$	7,953		$	—
Amortization of intangible assets	(3,233		)	—		(7,611		)	—
Net royalty revenue	729			—		342			—
LABA collaboration	—			—		—			1,814
Strategic alliance—MABA program license	270			415		811			1,245
Total net revenue from GSK	$	999		$	415	$	1,153		$	3,059

LABA Collaboration

In November 2002, we entered into our LABA Collaboration Agreement 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 has developed two combination products: (1) RELVAR®/BREO® ELLIPTA® (FF/VI), a once-daily combination medicine consisting of a LABA, vilanterol (VI), and an inhaled corticosteroid (ICS), fluticasone furoate (FF) and (2) UMEC/VI, a once-daily medicine combining a long-acting muscarinic antagonist (“LAMA”), umeclidinium bromide (“UMEC”), with a LABA, VI. For the treatment of asthma, RELVAR® ELLIPTA® is approved in multiple regions outside of North America and the collaboration is further developing FF/VI for the U.S.

In the event that a product containing VI was successfully developed and commercialized, we were obligated to make milestone payments to GSK totaling $220.0 million if both a single-agent and a combination product or two different combination products were launched in multiple regions of the world. As of September 30, 2014, we have paid a total of $210.0 million of these milestones and have a payable of $10.0 million related to the launch and approval of BREO® ELLIPTA® and ANORO® ELLIPTA® in the U.S., Japan and Europe. The final milestone payment of $10.0 million was made in October 2014, which completed our obligation to GSK related to these milestone payments. These milestone fees paid or owed to GSK were capitalized as finite-lived intangible assets, which are being amortized over their estimated useful lives commencing upon the commercial launch of the product.

We are entitled to receive annual royalties from GSK on sales of RELVAR®/BREO® ELLIPTA® as follows: 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 6.5% to 10%.

Amortization expense resulting from the milestone fees paid to GSK, which are capitalized as finite-lived intangible assets, is a reduction to royalty revenue. When amortization expense exceeds amounts recognized for royalty revenue, negative revenue would be reported in our consolidated statements of operations.

2004 Strategic Alliance

In March 2004, we entered into the Strategic Alliance Agreement with GSK where GSK received an option to license exclusive development and commercialization rights to product candidates from certain of our 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, we are 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, we retain all rights to the program and may continue the program alone or with a third party. GSK has no further option rights on any of our research or development programs under the strategic alliance.

In 2005, GSK licensed our MABA program for the treatment of COPD, and in October 2011, we 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 GSK961081 (‘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 us, at which point we may develop and commercialize such Additional MABAs alone or with a third party. Both GSK and we 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, we are 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 as a combination product, such as ‘081/FF, 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, we are 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 combination, the royalty rate is 50% of the rate applicable to sales of the single-agent MABA medicine. If an MABA medicine containing ‘081 is successfully developed and commercialized in multiple regions of the world, we 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 an MABA medicine containing an Additional MABA is successfully developed and commercialized in multiple regions of the world, we could earn total contingent payments of up to $129.0 million.

Agreements Entered into with GSK in Connection with the Spin-Off

On March 3, 2014, in contemplation of the Spin-Off, we, Theravance Biopharma and GSK entered into a series of agreements clarifying how the companies would implement the Spin-Off and operate following the Spin-Off. We, Theravance Biopharma and GSK entered into a three-way master agreement providing for GSK’s consent to the Spin-Off provided certain conditions were met. In addition, we and GSK also entered into amendments of our GSK Agreements, and Theravance Biopharma and GSK entered into a governance agreement, a registration rights agreement and an extension agreement. The three-way master agreement was effective on June 1, 2014 when we transferred our research and drug development operations to Theravance Biopharma. Pursuant to a three-way master agreement entered into by and among us, Theravance Biopharma and GSK in connection with the Spin-Off, we agreed to sell a certain number of Theravance Biopharma shares withheld from a taxable dividend of Theravance Biopharma shares to GSK. After such Theravance Biopharma shares were sent to the transfer agent, we agreed to purchase the Theravance Biopharma shares from the transfer agent, rather than have them sold on the open market, in order to satisfy tax withholdings. GSK had an option to purchase these shares of Theravance Biopharma from us, but this option expired unexercised. Accordingly, at September 30, 2014, we owned 436,802 ordinary shares of Theravance Biopharma, which are accounted for as marketable securities in the condensed consolidated balance sheets.

The amendments to the GSK Agreements do not change the economics or royalty rates under the GSK Agreements, though the assignment of the Strategic Alliance Agreement and portions of the LABA Collaboration to TRC do change how the economics are allocated between Theravance Biopharma and us. The amendments to the GSK Agreements do provide that GSK’s diligent efforts obligations regarding commercialization matters under both agreements will change upon regulatory approval in either the United States or the European Union of FF/UMEC/VI or a MABA in combination with FF. Upon such regulatory approval, GSK’s diligent efforts obligations as to commercialization matters under the GSK Agreements will have the objective of focusing on the best interests of patients and maximizing the net value of the overall portfolio of products under the GSK Agreements. Since GSK’s commercialization efforts following such regulatory approval will be guided by a portfolio approach across products in which we will retain our full interests upon the Spin-Off and also products in which we will have retained only a portion of our interests upon the planned Spin-Off transaction, GSK’s commercialization efforts may have the effect of reducing the overall value of our remaining interests in the GSK Agreements after the Spin-Off.

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

During the first nine months of 2014, GSK purchased 832,650 shares of our common stock pursuant to its periodic “top-up” rights under our Amended and Restated Governance Agreement, dated as of June 4, 2004, as amended, among us, GSK and certain GSK affiliates, for an aggregate purchase price of approximately $25.3 million.

GSK Contingent Payments and Revenue

The potential future contingent payments receivable 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.

Reimbursement of Research and Development Costs

Reimbursement of research and development costs from continuing operations is solely related to the GSK Agreements. Under the GSK Agreements, we are entitled to reimbursement of certain research and development costs. For the three months and nine months ended September 30, 2014, research and development costs reimbursed from GSK were not material. For the three and nine months ended September 30, 2013, research and development costs reimbursed from GSK was $0.2 million and $0.5 million. Reimbursement of research and development costs from other collaborative arrangements has been reflected as discontinued operations in the condensed consolidated statements of operations. Refer to Notes 1, 10 and 11, “Description of Operations and Summary of Significant Accounting Policies,” “Spin-Off of Theravance Biopharma, Inc.” and “Discontinued Operations” for further information.

Available-for-Sale Securities and Fair Value Measurementss

9 Months Ended

Sep. 30, 2014

Available For Sale Securities And Fair Value Measurements

Available For Sale Securities And Fair Value Measurements

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

Available-for Sale Securities

The classification of available-for-sale securities in the consolidated balance sheets is as follows:

(In thousands)	September 30, 2014		December 31, 2013
Cash and cash equivalents	$	119,022	$	125,009
Short-term marketable securities	143,536		321,615
Marketable securities	47,752		55,374
Restricted cash	6,433		833
Total	$	316,743	$	502,831

The estimated fair value of available-for-sales securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below:

	September 30, 2014
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	33,526	$	39	$	(1	)	$	33,564
U.S. government agencies	43,611		9		(6		)	43,614
U.S. corporate notes	59,644		9		(46		)	59,607
U.S. commercial paper	44,434		—		—			44,434
Equity securities	10,269		—		(201		)	10,068
Money market funds	125,456		—		—			125,456
Total	$	316,940	$	57	$	(254	)	$	316,743

	December 31, 2013
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	42,104	$	55	$	(1	)	$	42,158
U.S. government agencies	141,278		61		(8		)	141,331
U.S. corporate notes	94,923		54		—			94,977
U.S. commercial paper	102,021		2		(1		)	102,022
Money market funds	122,343		—		—			122,343
Total	$	502,669	$	172	$	(10	)	$	502,831

Equity securities consist of ordinary shares of Theravance Biopharma owned by us as of September 30, 2014. These equity securities are restricted securities and can only be resold pursuant to a registration statement or an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). We expect to be able to sell these shares pursuant to Rule 144 promulgated under the Securities Act after the satisfaction of a six-month holding period and, therefore, have classified them as available-for-sale marketable securities.

At September 30, 2014, all of the available-for-sale securities had contractual maturities within two years and the average duration of debt securities was approximately eight months. We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We have determined that the gross unrealized losses on our marketable securities at September 30, 2014 were temporary in nature. All marketable securities with unrealized losses at September 30, 2014 have been in a loss position for less than twelve months.

During the nine months ended September 30, 2014 and 2013, we sold marketable securities totaling $5.0 million and $22.6 million, and the related realized gains and losses were not significant in any of these periods.

Fair Value Measurements

Our available-for-sale securities are measured at fair value on a recurring basis and our debt is carried at the amortized cost 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 September 30, 2014:
U.S. government securities	$	33,564	$	—	$	—	$	33,564
U.S. government agency securities	—		43,614		—		43,614
U.S. corporate notes	—		59,607		—		59,607
U.S. commercial paper	—		44,434		—		44,434
Equity securities	10,068		—		—		10,068
Money market funds	125,456		—		—		125,456
Total assets measured at estimated fair value	$	169,088	$	147,655	$	—	$	316,743
Liabilities at September 30, 2014:
Convertible subordinated notes due 2023	$	—	$	239,339	$	—	$	239,339
Non-recourse notes due 2029	—		454,500		—		454,500
Total fair value of liabilities	$	—	$	693,839	$	—	$	693,839

	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, 2013:
U.S. government securities	$	42,158	$	—	$	—	$	42,158
U.S. government agency securities	98,236		43,095		—		141,331
U.S. corporate notes	61,591		33,386		—		94,977
U.S. commercial paper	3,499		98,523		—		102,022
Money market funds	122,343		—		—		122,343
Total assets measured at estimated fair value	$	327,827	$	175,004	$	—	$	502,831
Liabilities at December 31, 2013:
Convertible subordinated notes due 2023	$	—	$	408,250	$	—	$	408,250

At September 30, 2014, securities with a total fair value of $5.4 million were measured using Level 2 inputs in comparison to December 31, 2013, at which time the securities had a fair value of $5.4 million and were measured using Level 1 inputs.

Intangible Assets

9 Months Ended

Sep. 30, 2014

Intangible Assets

Intangible Assets

5. Intangible Assets

Intangible assets, which consist of registrational and launch-related milestone fees paid or owed to GSK, were as follows:

	September 30, 2014
(In thousands)	Weighted Average Remaining Amortization Period (Years)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
FDA approval and launch of BREO® ELLIPTA® in the U.S.	16.0	$	60,000	$	(3,411	)	$	56,589
Minister of Health, Labor and Welfare (“MHLW”) approval and launch of RELVAR® ELLIPTA® in Japan	14.2	20,000		(1,111		)	18,889
European Commission approval and launch of RELVAR® ELLIPTA®	14.3	30,000		(1,500		)	28,500
FDA approval and launch of ANORO® ELLIPTA® in the U.S.	16.0	60,000		(1,565		)	58,435
European Commission approval and launch of ANORO® ELLIPTA®	14.9	30,000		(656		)	29,344
MHLW approval and launch of ANORO® ELLIPTA® in Japan	15.0	20,000		(111		)	19,889
Total intangible assets		$	220,000	$	(8,354	)	$	211,646

	December 31, 2013
(In thousands)	Weighted Average Remaining Amortization Period (Years)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
FDA approval and launch of BREO® ELLIPTA® in the U.S.	15.7	$	60,000	$	(632	)	$	59,368
MHLW approval and launch of RELVAR® ELLIPTA® in Japan	14.9	20,000		(111		)	19,889
European Commission approval of RELVAR® ELLIPTA®	15.0	15,000		—			15,000
FDA approval of ANORO® ELLIPTA® in the U.S.	15.2	30,000		—			30,000
Total intangible assets		$	125,000	$	(743	)	$	124,257

These milestone fees are being amortized over their estimated useful lives commencing upon the commercial launch of the product in their respective regions with the amortization expense recorded as a reduction in revenue from collaborative arrangements. Additional information regarding these milestone fees is included in Note 3, “Collaborative Arrangements.” Amortization expense for the three months and nine months ended September 30, 2014 was $3.2 million and $7.6 million. The amortization expense for the same periods in 2013 is zero. The remaining estimated amortization expense of intangible assets is $3.5 million for 2014, $13.8 million for each of the years from 2015 to 2018 and $152.9 million thereafter.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation

Stock-Based Compensation

6. Stock-Based Compensation

Equity Incentive Plan

The 2012 Equity Incentive Plan (“2012 Plan”) provides for the grant of stock options, time-based and performance-contingent restricted stock units (“RSUs”), time-based and performance-contingent RSAs, and stock appreciation rights to employees, non-employee directors and consultants. As of September 30, 2014, total shares remaining available for issuance under the 2012 Plan were 2,961,225.

Performance-Contingent RSAs

Over the past three years, the Compensation Committee of our Board of Directors (the “Compensation Committee”) has approved grants of performance-contingent RSAs to senior management and a non-executive officer. Generally, these awards have dual triggers of vesting based upon the achievement of certain performance goals by a pre-specified date, as well as a requirement for continued employment. When the performance goals are probable of achievement for these types of awards, time-based vesting and, as a result, recognition of stock-based compensation expense commence. Included in these performance-contingent RSAs is the grant of 1,290,000 special long-term retention and incentive performance-contingent RSAs to senior management in 2011. 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 require continued employment.

As of March 31, 2014, we determined that the achievement of the requisite performance conditions for vesting of the first tranche of these awards was probable and, as a result, $6.8 million of the total stock-based compensation expense was recognized in the first quarter of 2014. The total stock-based compensation expense of $7.0 million for the first tranche was recognized through May 2014.

In May 2014, our Compensation Committee approved the modification of the remaining tranches related to these awards contingent upon the Spin-Off as the performance conditions associated with these awards were unlikely to be consistent with the new strategies of each company following the separation. The modification acknowledged the Spin-Off and permitted recognition of achievement of the original performance conditions that were met prior to the Spin-Off, triggering service-based vesting for a portion of the equity awards, for which $3.8 million is expected to be recognized by us during the twelve-month period that commenced in June 2014. The remaining 63,000 RSAs outstanding under this equity award remain subject to performance and service conditions. In addition, the remaining RSAs outstanding under these awards are entitled to the pro rata dividend distribution made by Theravance on June 2, 2014 of one ordinary share of Theravance Biopharma for every three and one half shares of Theravance common stock, which will also be subject to the same performance and service conditions as the RSAs.

Stock-Based Compensation Expense

In connection with the Spin-Off of Theravance Biopharma, all outstanding shares of Theravance Biopharma were distributed to our stockholders as a pro-rata dividend distribution on June 2, 2014 by issuing one share of Theravance Biopharma common stock for every 3.5 shares held of Theravance common stock to stockholders of record on May 15, 2014. Outstanding stock options and RSUs that were not eligible for the dividend distribution were adjusted for the Spin-Off of Theravance Biopharma. The number of shares and exercise price for all outstanding stock options were adjusted and the number of shares for all outstanding RSUs was adjusted. All other terms of these grants remain the same; provided, however, that the vesting and expiration of these grants are based on the holder’s continuing employment or service with us or Theravance Biopharma, as applicable.

Although the anti-dilution adjustments were required pursuant to the terms of each stock plan, the anti-dilution adjustments were calculated using a volume-weighted average stock price, rather than the stock price as of the date of the dividend distribution, which resulted in incremental compensation expense. The accounting impact of the adjustment to the outstanding stock options and RSUs that occurred in connection with the Spin-Off of Theravance Biopharma was measured by comparing of the fair values of the modified stock options and RSUs to our employees and directors immediately before and after the adjustment. As a result, we recognized incremental stock-based compensation expense of $1.2 million in the second quarter of 2014, of which $0.9 million is included in discontinued operations. All remaining unrecognized stock-based compensation expense associated with this adjustment will be recognized by Theravance Biopharma as it pertains to stock options and RSUs held by individuals now employed by Theravance Biopharma or one if its affiliates.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2014		2013		2014		2013
Research and development	$	1,357	$	118	$	2,589	$	426
General and administrative	3,375		1,850		11,795		5,445
Stock-based compensation expense from continuing operations	4,732		1,968		14,384		5,871
Stock-based compensation from discontinued operations	—		4,478		11,629		13,833
Total stock-based compensation expense	$	4,732	$	6,446	$	26,013	$	19,704

Total stock-based compensation expense capitalized to inventory was not material for the three and nine months ended September 30, 2014 and 2013. Inventories were contributed to Theravance Biopharma in connection with the Spin-Off.

As of September 30, 2014, unrecognized compensation expense, net of expected forfeitures, was as follows: $3.5 million related to unvested stock options; $1.5 million related to unvested RSUs; and $3.6 million related to unvested RSAs (excludes performance-contingent RSAs).

Valuation Assumptions

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Employee stock options
Risk-free interest rate	1.97		%	1.68%-2.02		%	1.64%-2.05		%	0.76%-2.02		%
Expected term (in years)	6			6			5-6			5-6
Volatility	58		%	60		%	52%-60		%	58%-60		%
Dividend yield	4		%	—		%	4		%	—		%
Weighted-average estimated fair value of stock options granted	$	13.23		$	21.63		$	15.92		$	18.11

Stockholders’ Equity

For the nine months ended September 30, 2014, options to purchase 1,127,000 shares of our common stock were exercised at a weighted-average exercise price of $14.09 per share for total cash proceeds of approximately $15.9 million.

Long-Term Debt

9 Months Ended

Sep. 30, 2014

Long-Term Debt

Long-Term Debt

9. Long-Term Debt

Our long-term debt consists of:

(In thousands)	September 30, 2014		December 31, 2013
Convertible Subordinated Notes due 2023	$	255,109	$	287,500
Non-Recourse Notes Payable due 2029	450,000		—
Total Long-Term Debt	$	705,109	$	287,500

Convertible Subordinated Notes Due 2023

In January 2013, we completed an underwritten public offering of $287.5 million aggregate principal amount of unsecured convertible subordinated notes, which will mature on January 15, 2023 (the “2023 Notes”). The financing raised proceeds, net of issuance costs, of approximately $281.2 million, less $36.8 million to purchase two privately-negotiated capped call option transactions in connection with the issuance of the notes. The 2023 Notes bear interest at the rate of 2.125% per year that is payable semi-annually in arrears in cash on January 15 and July 15 of each year, beginning on July 15, 2013.

The 2023 Notes are convertible, at the option of the holder, into shares of our common stock at an initial conversion rate of 35.9903 shares per $1,000 principal amount of the 2023 Notes, subject to adjustment in certain circumstances, which represents an initial conversion price of approximately $27.79 per share. Holders of the notes will be able to require us to repurchase some or all of their notes upon the occurrence of a fundamental change at 100% of the principal amount of the notes being repurchased plus accrued and unpaid interest. We may not redeem the notes prior to their stated maturity date.

In connection with the offering of the 2023 Notes, we entered into two privately-negotiated capped call option transactions with a single counterparty. The capped call option transaction is an integrated instrument consisting of a call option on our common stock purchased by us with a strike price equal to the conversion price of $27.79 per share for the underlying number of shares and a cap price of $38.00 per share. The cap component is economically equivalent to a call option sold by us for the underlying number of shares with a strike price of $38.00 per share. As an integrated instrument, the settlement of the capped call coincides with the due date of the convertible debt. At settlement, we would receive from our hedge counterparty a number of shares of our common shares that would range from zero, if the stock price was below $27.79 per share, to a maximum of 2,779,659 shares, if the stock price is above $38.00 per share. However, if the market price of our common stock, as measured under the terms of the capped call transactions, exceeds $38.00 per share, there is no incremental anti-dilutive benefit from the capped call. The aggregate cost of the capped call options was $36.8 million.

In accordance with the agreement for the 2023 Notes, the conversion rate was adjusted as a result of the completion of the Spin-Off of Theravance Biopharma. The conversion rate was adjusted based on the conversion rate immediately prior to the record date for the Spin-Off and the average of the stock dividend distributed to our common stockholders and our stock prices. This resulted in an adjusted conversion rate of 46.9087 shares per $1,000 principal amount of the 2023 Notes, which represents an adjusted conversion price of approximately $21.32 per share. As a result of the conversion rate adjustment, the capped call strike price and cap price were also adjusted accordingly as $21.32 and $29.16. On July 15, 2014, certain holders of the 2023 Notes converted their notes into 1,519,402 shares of our common stock at the adjusted conversion price of $21.32 per share. In connection with the partial conversion of the 2023 Notes, we received 149,645 shares of our common stock from our capped call option counterparty and the shares of common stock received were recorded as treasury stock.

In connection with the payment of the cash dividend during the three months ended September 30, 2014, which is further discussed in Note 12, “Dividends Declared and Paid”, the adjusted conversion rate with respect to our 2023 Notes was further adjusted from 46.9087 shares of our common stock per $1,000 principal amount of the 2023 Notes to 47.4323 shares of our common stock per $1,000 principal amount of the 2023 Notes, which represents an adjusted conversion price of approximately $21.08 per share. As a result of the conversion rate adjustment, the capped call strike price and cap price were also adjusted accordingly to $21.08 and $28.83.

Private Placement of $450 Million of 9% Non-Recourse Notes

In April 2014, we entered into certain note purchase agreements relating to the private placement of $450.0 million aggregate principal amount of non-recourse 9% fixed rate term notes due 2029 (the “2029 Notes”) issued by our wholly-owned subsidiary.

The 2029 Notes are secured by a security interest in a segregated bank account established to receive 40% of royalties due to us under the LABA Collaboration with GSK commencing on April 1, 2014 and ending upon the earlier of full repayment of principal or May 15, 2029. At September 30, 2014, the balance of the segregated bank account was $1.6 million, which is classified as restricted cash in the current assets on our condensed consolidated balance sheet as these funds can only be used to make principal and interest payments on the 2029 Notes.

The 2029 Notes bear an annual interest rate of 9%, with interest and principal paid quarterly beginning November 15, 2014. The 2029 Notes may be redeemed at any time prior to maturity, in whole or in part, at specified redemption premiums. Prior to May 15, 2016, in the event that the specified portion of royalties received in a quarter is less than the interest accrued for the quarter, the principal amount of the 2029 Notes will increase by the interest shortfall amount for that period. Since the principal and interest payments on the 2029 Notes are based on royalties from product sales, which will vary from quarter to quarter, the 2029 Notes may be repaid prior to the final maturity date in 2029.

From the net proceeds of the offering of approximately $434.7 million, we established a $32.0 million milestone payment reserve account to fund 40% of any future milestone payments that could become payable under the LABA Collaboration Agreement with GSK. This milestone reserve account is a segregated bank account and at September 30, 2014, the balance of this account is $4.0 million. The milestone reserve account and royalty collection account is classified as restricted cash in the current assets on our condensed consolidated balance sheet.

As part of this sale, we incurred approximately $15.3 million in transaction costs, which will be amortized to interest expense over the estimated life of the 2029 Notes.

Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations

Discontinued Operations

11. Discontinued Operations

On June 1, 2014, we separated our research and drug development businesses from our late-stage partnered respiratory assets. For further information on the Spin-Off, refer to Notes 1 and 10, “Description of Operations and Summary of Significant Accounting Policies” and “Spin-Off of Theravance Biopharma, Inc.”. The significant components of the research and drug development operations, which are presented as discontinued operations on the condensed consolidated statements of operations, were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2014		2013			2014			2013
Net revenues (1)	$	—	$	24		$	3,129		$	51
Loss from discontinued operations (2)	$	—	$	(37,531	)	$	(94,934	)	$	(99,033	)

(1)

Net revenues primarily consist of revenue from collaborative arrangements and product sales. Revenue from collaborative arrangements was primarily related to revenue recognized from our agreement with R-Pharm CJSC, which was transferred to Theravance Biopharma as a part of the Spin-Off. Products sales were generated from sales of VIBATIV® in the U.S. through a limited number of distributors, and title and risk of loss transfer upon receipt by these distributors. Healthcare providers ordered VIBATIV® through these distributors. Commencing in the first quarter of 2014, revenue on the sale of VIBATIV® was recorded on a sell-through basis, once the distributors sold the product to healthcare providers. Product sales were recorded net of estimated government-mandated rebates and chargebacks, distribution fees, estimated product returns and other deductions.

(2)

Loss from discontinued operations includes the reimbursement of research and development costs from our former collaborative arrangements, excluding GSK, which we accounted for as reductions to research and development expense. Reimbursement of research and development costs from discontinued operations from our collaborative arrangements was $2.0 million and $5.6 million for the three and nine months ended September 30, 2013, and was not material for the nine months ended September 30, 2014.

In addition, the loss from discontinued operations for the nine months ended September 30, 2014 includes the special long-term retention and incentive cash awards program. In 2011, we 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.

As of March 31, 2014, we determined that the achievement of the requisite performance conditions for the first tranche of these awards was probable and, as a result, $9.1 million of cash bonus expense was recognized in the first quarter of 2014, the majority of which is included in discontinued operations. In May 2014, the total cash bonus of $9.5 million for the first tranche was paid.

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230

+ Details

Description of Operations and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Description of Operations and Summary of Significant Accounting Policies

Basis of Presentation

Business Separation

Fair Value of Financial Instruments

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

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

Inventories

Inventories were as follows:

	December 31,
(In thousands)	2013
Raw materials	$	5,138
Work-in-process	360
Finished goods	4,908
Total inventories	$	10,406

Revenue Recognition

Collaborative Arrangements and Multiple-Element Arrangements

Royalties

Product Revenues

We currently have no product revenues following the Spin-Off of Theravance Biopharma.

Variable Interest Entities

Intangible Assets

Recently Issued Accounting Pronouncements Not Yet Adopted

- Definition

Disclosure of accounting policy for consolidation to describe the significant judgments and assumptions made in determining whether a variable interest held by the entity requires the variable interest entity to be consolidated and (or) disclose information about its involvement with the variable interest entity; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; and the significant factors considered and judgments made in determining that the power to direct the activities that significantly impact the economic performance of the variable interest entity are shared (as defined).

+ References + 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 + Details

- Definition

Disclosure of accounting policy for revenue recognition. If the entity has different policies for different types of revenue transactions, the policy for each material type of transaction is generally disclosed. If a sales transaction has multiple element arrangements (for example, delivery of multiple products, services or the rights to use assets) the disclosure may indicate the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. The disclosure may encompass important judgment as to appropriateness of principles related to recognition of revenue. The disclosure also may indicate the entity's treatment of any unearned or deferred revenue that arises from the transaction.

+ References + Details

Net Loss per Share (Tables)

9 Months Ended

Sep. 30, 2014

Net Loss per Share

Computations for basic and diluted net loss per share

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except for per share amounts)	2014			2013			2014			2013
Numerator:
Loss from continuing operations, net of tax	$	(21,271	)	$	(9,454	)	$	(57,604	)	$	(21,739	)
Loss from discontinued operations	—			(37,531		)	(94,934		)	(99,033		)
Net loss	$	(21,271	)	$	(46,985	)	$	(152,538	)	$	(120,772	)

Denominator:
Weighted-average number of shares used to compute basic and diluted net loss per share	113,100			106,925			111,306			100,321

Basic and diluted net loss per share:
Continuing operations, net of tax	$	(0.19	)	$	(0.09	)	$	(0.52	)	$	(0.21	)
Discontinued operations	—			(0.35		)	(0.85		)	(0.99		)
Basic and diluted net loss per share	$	(0.19	)	$	(0.44	)	$	(1.37	)	$	(1.20	)

Schedule of anti-dilutive securities

	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2014	2013	2014	2013
Shares issuable under equity incentive plans and ESPP	6,771	3,590	6,218	4,161
Unvested RSAs	1,782	2,418	1,782	2,418
Shares issuable upon the conversion of convertible subordinated notes	12,100	10,503	12,100	16,262
Total anti-dilutive securities	20,653	16,511	20,100	22,841

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

9 Months Ended

Sep. 30, 2014

Available For Sale Securities And Fair Value Measurements Abstract

Schedule of available-for-sale securities

(In thousands)	September 30, 2014		December 31, 2013
Cash and cash equivalents	$	119,022	$	125,009
Short-term marketable securities	143,536		321,615
Marketable securities	47,752		55,374
Restricted cash	6,433		833
Total	$	316,743	$	502,831

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

	September 30, 2014
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	33,526	$	39	$	(1	)	$	33,564
U.S. government agencies	43,611		9		(6		)	43,614
U.S. corporate notes	59,644		9		(46		)	59,607
U.S. commercial paper	44,434		—		—			44,434
Equity securities	10,269		—		(201		)	10,068
Money market funds	125,456		—		—			125,456
Total	$	316,940	$	57	$	(254	)	$	316,743

	December 31, 2013
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government securities	$	42,104	$	55	$	(1	)	$	42,158
U.S. government agencies	141,278		61		(8		)	141,331
U.S. corporate notes	94,923		54		—			94,977
U.S. commercial paper	102,021		2		(1		)	102,022
Money market funds	122,343		—		—			122,343
Total	$	502,669	$	172	$	(10	)	$	502,831

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 September 30, 2014:
U.S. government securities	$	33,564	$	—	$	—	$	33,564
U.S. government agency securities	—		43,614		—		43,614
U.S. corporate notes	—		59,607		—		59,607
U.S. commercial paper	—		44,434		—		44,434
Equity securities	10,068		—		—		10,068
Money market funds	125,456		—		—		125,456
Total assets measured at estimated fair value	$	169,088	$	147,655	$	—	$	316,743
Liabilities at September 30, 2014:
Convertible subordinated notes due 2023	$	—	$	239,339	$	—	$	239,339
Non-recourse notes due 2029	—		454,500		—		454,500
Total fair value of liabilities	$	—	$	693,839	$	—	$	693,839

	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, 2013:
U.S. government securities	$	42,158	$	—	$	—	$	42,158
U.S. government agency securities	98,236		43,095		—		141,331
U.S. corporate notes	61,591		33,386		—		94,977
U.S. commercial paper	3,499		98,523		—		102,022
Money market funds	122,343		—		—		122,343
Total assets measured at estimated fair value	$	327,827	$	175,004	$	—	$	502,831
Liabilities at December 31, 2013:
Convertible subordinated notes due 2023	$	—	$	408,250	$	—	$	408,250

- Definition

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

+ References + Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2014		2013		2014		2013
Research and development	$	1,357	$	118	$	2,589	$	426
General and administrative	3,375		1,850		11,795		5,445
Stock-based compensation expense from continuing operations	4,732		1,968		14,384		5,871
Stock-based compensation from discontinued operations	—		4,478		11,629		13,833
Total stock-based compensation expense	$	4,732	$	6,446	$	26,013	$	19,704

Schedule of weighted-average assumptions used to estimate the fair value of stock options granted

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Employee stock options
Risk-free interest rate	1.97		%	1.68%-2.02		%	1.64%-2.05		%	0.76%-2.02		%
Expected term (in years)	6			6			5-6			5-6
Volatility	58		%	60		%	52%-60		%	58%-60		%
Dividend yield	4		%	—		%	4		%	—		%
Weighted-average estimated fair value of stock options granted	$	13.23		$	21.63		$	15.92		$	18.11

Description of Operations and Summary of Significant Accounting Policies (Details)

9 Months Ended

12 Months Ended

Jun. 02, 2014

Jun. 01, 2014

USD ($)

Sep. 30, 2014

USD ($)

Dec. 31, 2013

USD ($)

Business Separation

Cash, cash equivalents and marketable securities contributed to Theravance Biopharma

$ 393,000,000

Number of ordinary shares of Theravance Biopharma issued for every share of Theravance

0.286

Inventories

$ 5,138,000

360,000

4,908,000

$ 0

10,406,000

^[1]

Intangible Assets

Estimated useful life

15 years

VIBATIV

Allowance for doubtful accounts

Allowance for doubtful accounts

Product Revenues

Revenue from product sales

$ 0

Cash discounts (as a percent)

2.00%

Expired product return acceptance period prior to product expiration date

6 months

Expired product return acceptance period after product expiration date

12 months

Theravance Biopharma | Common stock

Business Separation

Number of ordinary shares owned as marketable securities (in shares) | shares

436,802

GSK | LABA collaboration and Strategic Alliance agreements

Description of operations and summary of significant accounting policies

Percentage of economic interest in any future payments made under the agreements

15.00%

[1]	Condensed consolidated balance sheet at December 31, 2013 has been derived from audited consolidated financial statements.

Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator:
Loss from continuing operations, net of tax	$ (21,271)	$ (9,454)	$ (57,604)	$ (21,739)
Loss from discontinued operations	0	(37,531)	(94,934)	(99,033)
Net loss	$ (21,271)	$ (46,985)	$ (152,538)	$ (120,772)
Denominator:
Weighted-average number of shares used to compute basic and diluted net loss per share	113,100	106,925	111,306	100,321
Basic and diluted net loss per share (in dollars per share)
Continuing operations, net of tax (in dollars per share)	$ (0.19)	$ (0.09)	$ (0.52)	$ (0.21)
Discontinued operations (in dollars per share)	0.00	(0.35)	(0.85)	(0.99)
Basic and diluted net loss per share (in dollars per share)	$ (0.19)	$ (0.44)	$ (1.37)	$ (1.20)
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	20,653	16,511	20,100	22,841
Equity incentive plans and ESPP
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	6,771	3,590	6,218	4,161
Convertible subordinated notes
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	12,100	10,503	12,100	16,262
RSAs
Securities that could potentially dilute basic EPS in the future
Anti-dilutive securities (in shares)	1,782	2,418	1,782	2,418

Collaborative Arrangements (Details)
$ in Thousands

1 Months Ended

3 Months Ended

9 Months Ended

Oct. 31, 2014

USD ($)

Oct. 31, 2011

item

Sep. 30, 2014

USD ($)

Sep. 30, 2013

USD ($)

Sep. 30, 2014

USD ($)

item

Sep. 30, 2013

USD ($)

Royalty revenue

$ 3,962

$ 7,953

Amortization of intangible assets

(3,233)

$ 0

(7,611)

$ 0

Net royalty revenue

^[1]

729

342

Revenue from Collaborative Arrangements

270

415

811

3,059

Total net revenue

$ 999

415

$ 1,153

3,059

Common stock | Theravance Biopharma

Number of ordinary shares owned as marketable securities (in shares) | shares

436,802

GSK

Royalty revenue

$ 3,962

$ 7,953

Amortization of intangible assets

(3,233)

(7,611)

Net royalty revenue

729

342

Total net revenue

999

415

1,153

3,059

GSK | MABA

Potential future contingent payments receivable

363,000

Long-acting beta agonist (LABA) collaboration | GSK

Revenue from Collaborative Arrangements

1,814

Obligation for milestone payments

220,000

$ 220,000

Number of combination products | item

Milestone fees paid

$ 10,000

$ 210,000

Amount of liability accrued for milestone fees

10,000

$ 10,000

Royalty rate for first level of annual global net sales (as a percent)

15.00%

Annual global sales level used to determine royalty rate

$ 3,000,000

Royalty rate for sales above first level of annual global net sales (as a percent)

5.00%

Long-acting beta agonist (LABA) collaboration | GSK | Minimum

Royalty rate for combination products (as a percent)

6.50%

Long-acting beta agonist (LABA) collaboration | GSK | Maximum

Royalty rate for combination products (as a percent)

10.00%

2004 Strategic alliance | GSK | MABA

Revenue from Collaborative Arrangements

270

$ 415

$ 811

$ 1,245

Number of preclinical MABA compounds discovered | item

Number of products which the Counterparty is obligated to use diligent efforts to discover after license of a program | item

2004 Strategic alliance | GSK | MABA containing '081 | Maximum

Potential contingent payments that the Company could receive in respect to single-agent and combination medicines

250,000

$ 250,000

2004 Strategic alliance | GSK | MABA containing '081 - single-agent

Annual global sales level used to determine royalty rate

$ 3,500,000

Royalty rate for sales above first level of annual global net sales (as a percent)

7.50%

2004 Strategic alliance | GSK | MABA containing '081 - single-agent | Minimum

Royalty rate for first level of annual global net sales (as a percent)

10.00%

2004 Strategic alliance | GSK | MABA containing '081 - single-agent | Maximum

Royalty rate for first level of annual global net sales (as a percent)

20.00%

Potential contingent payments that the Company could receive

125,000

$ 125,000

2004 Strategic alliance | GSK | MABA containing '081 - combination product

Royalty rate for combination products as a percentage of the rate applied to single products

70.00%

2004 Strategic alliance | GSK | MABA containing additional MABA | Maximum

Potential future contingent payments receivable

$ 129,000

2004 Strategic alliance | GSK | MABA containing additional MABA - single-agent

Annual global sales level used to determine royalty rate

$ 3,500,000

Royalty rate for sales above first level of annual global net sales (as a percent)

10.00%

Royalty rate for combination products as a percentage of the rate applied to single products

50.00%

2004 Strategic alliance | GSK | MABA containing additional MABA - single-agent | Minimum

Royalty rate for first level of annual global net sales (as a percent)

10.00%

2004 Strategic alliance | GSK | MABA containing additional MABA - single-agent | Maximum

Royalty rate for first level of annual global net sales (as a percent)

15.00%

Governance agreement | GSK | Common stock

Company's stock purchased by related party (in shares) | shares

832,650

Company's stock purchased by related party

$ 25,300

[1]	Gross royalty revenue from a related party for the three and nine months ended September 30, 2014 is $3,962 and $7,953, respectively.

Available-for-Sale Securities and Fair Value Measurements (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Available-for-sale securities
Amortized Cost	$ 316,940		$ 502,669
Gross Unrealized Gains	57		172
Gross Unrealized Losses	(254)		(10)
Estimated Fair Value	$ 316,743		502,831
Maturity period for marketable securities
Maximum contractual maturity period	2 years
Average contractual maturity period	8 months
Amount of marketable securities sold	$ 5,000	$ 22,600
Cash and cash equivalents
Available-for-sale securities
Estimated Fair Value	119,022		125,009
Short-term marketable securities
Available-for-sale securities
Estimated Fair Value	143,536		321,615
Marketable securities
Available-for-sale securities
Estimated Fair Value	47,752		55,374
Restricted cash
Available-for-sale securities
Estimated Fair Value	6,433		833
U.S. government securities
Available-for-sale securities
Amortized Cost	33,526		42,104
Gross Unrealized Gains	39		55
Gross Unrealized Losses	(1)		(1)
Estimated Fair Value	33,564		42,158
U.S. government agency securities
Available-for-sale securities
Amortized Cost	43,611		141,278
Gross Unrealized Gains	9		61
Gross Unrealized Losses	(6)		(8)
Estimated Fair Value	43,614		141,331
U.S. corporate notes
Available-for-sale securities
Amortized Cost	59,644		94,923
Gross Unrealized Gains	9		54
Gross Unrealized Losses	(46)		0
Estimated Fair Value	59,607		94,977
U.S. commercial paper
Available-for-sale securities
Amortized Cost	44,434		102,021
Gross Unrealized Gains	0		2
Gross Unrealized Losses	0		(1)
Estimated Fair Value	44,434		102,022
Equity securities
Available-for-sale securities
Amortized Cost	10,269
Gross Unrealized Gains	0
Gross Unrealized Losses	(201)
Estimated Fair Value	$ 10,068
Holding period for equity securities	6 months
Money market funds
Available-for-sale securities
Amortized Cost	$ 125,456		122,343
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Estimated Fair Value	$ 125,456		$ 122,343

Available-for-Sale Securities and Fair Value Measurements (Details 2) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	$ 316,743	$ 502,831
U.S. government securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	33,564	42,158
U.S. government agency securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	43,614	141,331
U.S. corporate notes
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	59,607	94,977
U.S. commercial paper
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	44,434	102,022
Equity securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	10,068
Money market funds
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	125,456	122,343
Recurring basis \| U.S. government securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	33,564	42,158
Recurring basis \| U.S. government agency securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	43,614	141,331
Recurring basis \| U.S. corporate notes
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	59,607	94,977
Recurring basis \| U.S. commercial paper
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	44,434	102,022
Recurring basis \| Equity securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	10,068
Recurring basis \| Money market funds
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	125,456	122,343
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	169,088	327,827
Fair value measured transfer to Level 2 From Level 1		5,400
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	33,564	42,158
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	0	98,236
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	0	61,591
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. commercial paper
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	0	3,499
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| Equity securities
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	10,068
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	125,456	122,343
Recurring basis \| Significant Other Observable Inputs, Level 2
Estimated fair values of entity's financial assets and liabilities
Total assets measured at fair value	147,655	175,004
Fair value measured transfer to Level 2 From Level 1	5,400
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	43,614	43,095
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	59,607	33,386
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	44,434	98,523
Nonrecurring basis
Estimated fair values of entity's financial assets and liabilities
Convertible subordinated notes due 2023	239,339	408,250
Non-recourse notes due 2029	454,500
Total fair value of liabilities	693,839
Nonrecurring basis \| Significant Other Observable Inputs, Level 2
Estimated fair values of entity's financial assets and liabilities
Convertible subordinated notes due 2023	239,339	$ 408,250
Non-recourse notes due 2029	454,500
Total fair value of liabilities	$ 693,839

Intangible Assets (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2014

Sep. 30, 2013

Sep. 30, 2014

Sep. 30, 2013

Dec. 31, 2013

Intangible assets

Net Carrying Value

$ 211,646

$ 124,257

^[1]

Amortization expense

3,233

$ 0

7,611

$ 0

Estimated amortization expense for the year 2014

3,500

Estimated amortization expense for the year 2015

13,800

Estimated amortization expense for the year 2016

13,800

Estimated amortization expense for the year 2017

13,800

Estimated amortization expense for the year 2018

13,800

Estimated amortization expense after the year 2018

152,900

GSK

Intangible assets

Gross Carrying Value

220,000

125,000

Accumulated Amortization

(8,354)

(743)

Net Carrying Value

211,646

$ 124,257

Amortization expense

3,233

$ 0

$ 7,611

$ 0

GSK | BREO ELLIPTA

Intangible assets

Weighted Average Remaining Amortization Period

16 years

15 years 8 months 12 days

Gross Carrying Value

60,000

$ 60,000

Accumulated Amortization

(3,411)

(632)

Net Carrying Value

56,589

$ 56,589

$ 59,368

GSK | RELVAR ELLIPTA Japan

Intangible assets

Weighted Average Remaining Amortization Period

14 years 2 months 12 days

14 years 10 months 24 days

Gross Carrying Value

20,000

$ 20,000

Accumulated Amortization

(1,111)

(111)

Net Carrying Value

18,889

$ 18,889

$ 19,889

GSK | RELVAR ELLIPTA Europe

Intangible assets

Weighted Average Remaining Amortization Period

14 years 3 months 18 days

15 years

Gross Carrying Value

30,000

$ 30,000

$ 15,000

Accumulated Amortization

(1,500)

Net Carrying Value

28,500

$ 28,500

$ 15,000

GSK | ANORO ELLIPTA

Intangible assets

Weighted Average Remaining Amortization Period

16 years

15 years 2 months 12 days

Gross Carrying Value

60,000

$ 60,000

$ 30,000

Accumulated Amortization

(1,565)

Net Carrying Value

58,435

$ 58,435

$ 30,000

GSK | ANORO ELLIPTA Europe

Intangible assets

Weighted Average Remaining Amortization Period

14 years 10 months 24 days

Gross Carrying Value

30,000

$ 30,000

Accumulated Amortization

(656)

Net Carrying Value

29,344

$ 29,344

GSK | ANORO ELLIPTA Japanese Minister Of Health Labour And Welfare [Member]

Intangible assets

Weighted Average Remaining Amortization Period

15 years

Gross Carrying Value

20,000

$ 20,000

Accumulated Amortization

(111)

Net Carrying Value

$ 19,889

[1]	Condensed consolidated balance sheet at December 31, 2013 has been derived from audited consolidated financial statements.

Stock-Based Compensation (Details) $ in Thousands		1 Months Ended	3 Months Ended			5 Months Ended	9 Months Ended		12 Months Ended
Stock-Based Compensation (Details) $ in Thousands	Jun. 02, 2014	May 31, 2014 USD ($)	Sep. 30, 2014 USD ($) shares	Mar. 31, 2014 USD ($)	Sep. 30, 2013 USD ($)	May 31, 2014 USD ($)	Sep. 30, 2014 USD ($) shares	Sep. 30, 2013 USD ($)	Dec. 31, 2011 shares
Stock-based compensation
Stock-based compensation expense			$ 4,732		$ 6,446		$ 26,013	$ 19,704
Number of shares of Theravance Biopharma issued for every share of Theravance	0.286
RSAs \| Performance-contingent
Stock-based compensation
Period for which compensation committee has approved grants							3 years
2012 Equity Incentive Plan
Stock-based compensation
Shares remaining available for issuance \| shares			2,961,225				2,961,225
Special Long-Term Retention and Incentive Awards Program \| RSAs \| Performance-contingent
Stock-based compensation
Shares of common stock approved and authorized for issuance \| shares									1,290,000
Timeframe for achievement of performance conditions									6 years
Stock-based compensation expense				$ 6,800
Total stock-based compensation that will be recognized in the year						$ 7,000
RSAs outstanding (in shares) \| shares			63,000				63,000
Stock-based compensation expenses expected to be recognized		$ 3,800
Vesting period		12 months

Long-Term Debt (Details)
$ / shares in Units, $ in Thousands

1 Months Ended

9 Months Ended

Jul. 15, 2014

$ / shares

Apr. 30, 2014

USD ($)

Jun. 30, 2013

$ / shares

$ / item

Jan. 31, 2013

USD ($)

item

$ / shares

$ / item

Sep. 30, 2014

USD ($)

$ / shares

$ / item

Sep. 30, 2013

USD ($)

Dec. 31, 2013

USD ($)

Debt disclosures

Convertible Subordinated Notes due 2023

$ 255,109

$ 287,500

^[1]

Non-Recourse Notes Payable due 2029

450,000

^[1]

Long-term Debt

705,109

287,500

Proceeds from issuance of debt, net of issuance costs

434,677

$ 281,622

Balance of segregated bank account classified as current restricted cash

5,600

^[1]

Convertible Subordinated Notes Due 2023

Debt disclosures

Convertible Subordinated Notes due 2023

$ 255,109

287,500

Loan amount

$ 287,500

Proceeds from issuance of debt, net of issuance costs

$ 281,200

Interest rate (as a percent)

2.125%

Conversion rate of shares

46.9087

35.9903

47.4323

Conversion price of convertible notes into common stock (in dollars per share) | $ / shares

$ 21.32

$ 27.79

$ 21.08

Percentage of principal amount at which the entity may be forced to redeem some or all notes as a result of a fundamental change (as defined)

100.00%

Number of common shares issued upon debt conversion | shares

149,645

Convertible Subordinated Notes Due 2023 | Common stock

Debt disclosures

Conversion price of convertible notes into common stock (in dollars per share) | $ / shares

$ 21.32

Number of common shares issued upon debt conversion | shares

1,519,402

Convertible Subordinated Notes Due 2023 | Privately-negotiated capped call option

Debt disclosures

Payments for capped call options

$ 36,800

Number of derivative instruments purchased | item

Strike price for the underlying number of shares (in dollars per share) | $ / shares

$ 21.32

$ 27.79

$ 21.08

Cap price for the underlying number of shares (in dollars per share) | $ / item

29.16

38.00

28.83

Convertible Subordinated Notes Due 2023 | Stock prices below $27.79 per share | Maximum

Debt disclosures

Net shares settlement payable to the entity | shares

2,779,659

Convertible Subordinated Notes Due 2023 | Stock prices below $27.79 per share | Minimum

Debt disclosures

Net shares settlement payable to the entity | shares

Convertible Subordinated Notes Due 2023 | Stock prices above $38.00 per share

Debt disclosures

Incremental anti-dilutive benefit (in shares) | shares

9% fixed rate term notes due 2029

Debt disclosures

Non-Recourse Notes Payable due 2029

$ 450,000

$ 0

9% fixed rate term notes due 2029 | GSK

Debt disclosures

Loan amount

$ 450,000

Proceeds from issuance of debt, net of issuance costs

$ 434,700

Interest rate (as a percent)

9.00%

Percentage of royalties from global net sales

40.00%

Reserve account for covering remaining milestone payments as a percentage of future milestone payments

40.00%

Transaction costs

$ 15,300

9% fixed rate term notes due 2029 | GSK | Collection Account

Debt disclosures

Balance of segregated bank account classified as current restricted cash

1,600

9% fixed rate term notes due 2029 | GSK | Milestone Reserve Account

Debt disclosures

Balance of segregated bank account classified as current restricted cash

$ 32,000

$ 4,000

[1]	Condensed consolidated balance sheet at December 31, 2013 has been derived from audited consolidated financial statements.

Spin-Off of Theravance Biopharma, Inc. (Details) $ in Thousands	Jun. 02, 2014 USD ($)	Jun. 01, 2014 USD ($)
Spin-Off of Theravance Biopharma, Inc.
Cash, cash equivalents and marketable securities		$ 393,000
Number of shares of Theravance Biopharma issued for every share of Theravance	0.286
Allocation of net book value of assets transferred pursuant to spin-off
Cash and cash equivalents	$ 277,541
Marketable investment securities	115,129
Accounts receivable	125
Reimbursement of certain liabilities	16,983
Prepaid and other current assets	3,172
Inventories	14,328
Fixed assets, net	9,580
Accrued liabilities	(22,342)
Deferred revenue	(6,694)
Other liabilities	(4,944)
Net book value of assets contributed	$ 402,878
Transition Services Agreement \| Maximum
Spin-Off of Theravance Biopharma, Inc.
Expected period within which most of various services will be provided under agreement following the spin-off		12 months

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS
Account receivable, allowance		$ 89
Receivable from related party	$ 4,012	$ 2,247
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	200,000	200,000
Common stock, shares issued	115,380	111,516
Treasury stock held	150	0

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (21,271)	$ (46,985)	$ (152,538)	$ (120,772)
Other comprehensive (loss) income:
Net unrealized (loss) gain on marketable securities	(3,903)	217	(359)	103
Comprehensive loss	$ (25,174)	$ (46,768)	$ (152,897)	$ (120,669)

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2014
Income Taxes
Income Taxes	7. Income Taxes As a part of the overall Spin-Off transaction, certain assets that were transferred by us to Theravance Biopharma resulted in taxable transfers pursuant to Section 367 of the Internal Revenue Code of 1986, as amended (the “Code”), or other applicable provisions of the Code and Treasury Regulations. The taxable gain attributable to the transfer of the certain assets to Theravance Biopharma was the excess of the fair market value of each asset transferred over our adjusted tax basis in such asset. The U.S. federal income and state tax gain on transfer of the assets to Theravance Biopharma was approximately $0.4 billion and $0.1 billion. This taxable income is expected to be substantially offset by current year losses and our net operating loss carryforwards from prior years resulting in a net impact of zero to income tax expense. As a result of the Spin-Off, we reversed approximately $0.1 billion of our valuation allowance on certain deferred tax assets, primarily federal net operating losses, as of September 30, 2014. Our ability to utilize net operating losses is dependent upon the change in control provisions in Section 382 of the Code. We are preparing a study of the potential limitation under Section 382 as of December 31, 2013. While a formal update of the study has not been completed, we believe that we will not have limitations on the use of our net operating losses under Section 382 for the purposes of computing our income tax payable for the year ended December 31, 2014. As a result of our history of prior year losses and lack of available evidence supporting future taxable income, we believe that a valuation allowance on our remaining deferred tax assets as of September 30, 2014 remains appropriate. In addition, we also transferred gross deferred tax assets of approximately $9 million with the corresponding full valuation allowance to Theravance Biopharma as a result of the Spin-Off because the underlying tax benefits have been transferred to Theravance Biopharma.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2014
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Lease Guarantee Due to the Spin-Off, the leases for the facilities in South San Francisco, California, which formerly served as our headquarters, were assigned to Theravance Biopharma. We would be held liable by the landlord if Theravance Biopharma defaults under its lease obligations, and thus, we have in substance guaranteed the payments under the lease agreements for these facilities. As of September 30, 2014, the total lease payments for the duration of the lease, which runs through May 2020, were $34.6 million. We would be responsible for lease-related payments including utilities, property taxes, and common area maintenance, which may be as much as the actual lease payments. We recorded a non-current liability of $1.3 million in our condensed consolidated balance sheet as of September 30, 2014 related to the estimated fair value of this lease guarantee. We prepared a discounted, probability-weighted cash flow analysis to calculate the estimated fair value of the lease guarantee as of the Spin-Off. We were required to make assumptions regarding the probability of Theravance Biopharma’s default on the lease payments, the likelihood of a sublease being executed, and the times at which these events could occur. The fair value of this lease guarantee was charged to additional paid in capital upon the Spin-Off, and any future adjustments to the carrying value of the obligation will be recorded in the consolidated statements of operations. Special Long-Term Retention and Incentive Cash Awards Program In 2011, we 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. As of March 31, 2014, we determined that the achievement of the requisite performance conditions for the first tranche of these awards was probable and, as a result, $9.1 million of cash bonus expense was recognized in the first quarter of 2014, the majority of which is included in discontinued operations in the condensed consolidated statements of operations. In May 2014, the total cash bonus of $9.5 million for the first tranche was paid. In May 2014, the Compensation Committee approved the modification of the remaining tranches related to these awards contingent upon the Spin-Off as the performance conditions associated with these awards were unlikely to be consistent with the new strategies of each company following the separation. The modification acknowledged the Spin-Off and permitted recognition of achievement of the original performance conditions that were met prior to the Spin-Off, triggering a twelve-month service-based vesting for a portion of the cash awards. The maximum amount payable by us under these modified cash bonus awards is $0.5 million. The remaining tranches of the cash awards were forfeited.

Dividends Declared and Paid	9 Months Ended
Dividends Declared and Paid	Sep. 30, 2014
Dividends Declared and Paid Disclosure Abstract
Dividends Declared And Paid	12. Dividends Declared and Paid On July 25, 2014, our Board of Directors declared a $0.25 per share dividend for the third quarter of 2014 for all stockholders of record as of the close of business on August 28, 2014 for a total of $28.8 million. Unvested RSAs as of the record date are also entitled to dividends, which will only be paid when the RSAs vest and are released. The dividend was paid to our stockholders on September 18, 2014. For further information on the impact of the payment of the cash dividend on the 2023 Notes, refer to Note 9, “Long-Term Debt”. On October 16, 2014, our Board of Directors declared a $0.25 per share dividend for the fourth quarter of 2014 for all stockholders of record as of the close of business on November 25, 2014, which was publicly announced on October 30, 2014. The dividend will be paid on December 23, 2014. In connection with the payment of the fourth quarter 2014 dividend, the conversion rate with respect to our 2023 Notes will be adjusted.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2014
Subsequent Events
Subsequent Events	13. Subsequent Events Purchases of Common Stock under the Company’s Governance Agreement and Common Stock Purchase Agreements with GSK In November 2014, we entered into an agreement with GSK pursuant to which GSK agreed to purchase through an affiliate, in a private placement, 832,456 shares of our common stock for an aggregate purchase price of approximately $12.8 million, pursuant to its rights under our Amended and Restated Governance Agreement, dated as of June 4, 2004, as amended.

Collaborative Arrangements (Details 2) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
GSK
Information related to collaborative arrangements
Reimbursement of certain research and development costs to the entity	$ 0.2	$ 0.5

Stock-Based Compensation (Details 2) $ in Thousands		3 Months Ended		9 Months Ended
Stock-Based Compensation (Details 2) $ in Thousands	Jun. 02, 2014	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)
Stock-based compensation
Number of shares of Theravance Biopharma issued for every share of Theravance	0.286
Incremental stock-based compensation expense arising out of spin-off		$ 1,200
Stock-based compensation expense		4,732	$ 6,446	$ 26,013	$ 19,704
Stock options
Stock-based compensation
Total unrecognized compensation cost related to unvested stock-based compensation		3,500		3,500
RSUs
Stock-based compensation
Total unrecognized compensation cost related to unvested stock-based compensation		1,500		1,500
RSAs
Stock-based compensation
Total unrecognized compensation cost related to unvested stock-based compensation		3,600		3,600
Continuing operations
Stock-based compensation
Stock-based compensation expense		4,732	1,968	14,384	5,871
Discontinued operation
Stock-based compensation
Incremental stock-based compensation expense arising out of spin-off		900
Stock-based compensation expense		0	4,478	11,629	13,833
Research and development \| Continuing operations
Stock-based compensation
Stock-based compensation expense		1,357	118	2,589	426
General and administrative \| Continuing operations
Stock-based compensation
Stock-based compensation expense		$ 3,375	$ 1,850	$ 11,795	$ 5,445

Stock-Based Compensation (Details 4) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2014 USD ($) $ / shares shares
Stockholders' Equity
Awards exercised (in shares) \| shares	1,127,000
Weighted-average exercise price of awards exercised (in dollars per share) \| $ / shares	$ 14.09
Total cash proceed \| $	$ 15.9

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes
U.S. federal income tax gain on distribution of the assets			$ 400,000
U.S. state income tax gain on distribution of the assets			100,000
Income tax expense	$ (278)	$ 0	0	$ 0
Amount of valuation allowance reversed			100,000
Gross deferred tax assets transferred as a result of spin-off			$ 9,000

Commitments and Contingencies (Details) - Lease payments guarantee - Theravance Biopharma $ in Millions	Sep. 30, 2014 USD ($)
Operating Leases
Total lease payments	$ 34.6
Other long-term liabilities	$ 1.3

Commitments and Contingencies (Details 2) - Special Long-Term Retention and Incentive Cash Awards Program - USD ($) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
	May 31, 2014	Mar. 31, 2014	Dec. 31, 2011
Special Long-Term Retention and Incentive Cash Awards Program
Period for recognition of maximum remaining potential cash bonus expense	12 months
Maximum remaining potential cash bonus expense associated with these cash bonus awards after the modification	$ 0.5
Discontinued operation
Special Long-Term Retention and Incentive Cash Awards Program
Timeframe for achievement of performance conditions			6 years
Cash bonus expense recognized		$ 9.1
Total cash bonus paid	$ 9.5

Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended		12 Months Ended
Discontinued Operations (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2011	May 31, 2014
Components of research and drug development operations presented on condensed consolidated statements of operations
Net revenues	$ 0		$ 24	$ 3,129	$ 51
Loss from discontinued operations	$ 0		(37,534)	$ (94,934)	(99,033)
Discontinued operation
Components of research and drug development operations presented on condensed consolidated statements of operations
Reimbursement of research and development costs from discontinued operations from collaborative arrangements			$ 2,000		$ 5,600
Discontinued operation \| Special Long-Term Retention and Incentive Cash Awards Program
Components of research and drug development operations presented on condensed consolidated statements of operations
Timeframe for achievement of performance conditions						6 years
Cash bonus expense recognized		$ 9,100
Total cash bonus paid							$ 9,500

Dividends Declared and Paid (Details) - USD ($) $ / shares in Units, $ in Millions	Oct. 16, 2014	Sep. 30, 2014	Jul. 25, 2014	Sep. 30, 2013
Dividends Declared and Paid Disclosure Abstract
Dividend declared (in dollars per share)	$ 0.25	$ 0.25	$ 0.25	$ 0
Dividends declared			$ 28.8

Subsequent Events (Details) - Governance agreement - GSK - Common stock - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Nov. 30, 2014	Sep. 30, 2014
Subsequent events
Common stock to be purchased (in shares)		832,650
Common stock to be purchased, aggregate purchase price		$ 25.3
Subsequent events \| Future
Subsequent events
Common stock to be purchased (in shares)	832,456
Common stock to be purchased, aggregate purchase price	$ 12.8