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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2016	Feb. 24, 2017	Jun. 30, 2016
Document and Entity Information
Entity Registrant Name	Innoviva, Inc.
Entity Central Index Key	0001080014
Document Type	10-K
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 832,058,929
Entity Common Stock, Shares Outstanding		109,201,168
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 118,016	$ 159,180
Short-term marketable securities	32,417	28,103
Related party receivables from collaborative arrangements	46,847	26,228
Prepaid expenses and other current assets	766	814
Total current assets	198,046	214,325
Property and equipment, net	368	221
Capitalized fees paid to a related party, net	180,545	194,368
Other assets	37	18
Total assets	378,996	408,932
Current liabilities:
Accounts payable	128	818
Accrued personnel-related expenses	2,361	1,659
Accrued interest payable	7,828	7,911
Other accrued liabilities	1,095	2,218
Non-recourse notes, due 2029, current	7,752	0
Deferred revenue	885	885
Total current liabilities	20,049	13,491
Convertible subordinated notes, due 2023, net of issuance costs	237,597	250,992
Non-recourse notes, due 2029, net of issuance costs	470,744	482,139
Other long-term liabilities	1,383	1,856
Deferred revenue	2,214	3,099
Commitments and contingencies (Notes 9)
Stockholders' Deficit:
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding
Common stock: $0.01 par value, 200,000 shares authorized, 108,585 and 114,933 shares issued as of December 31, 2016 and 2015, respectively	1,085	1,149
Treasury stock: 150 shares at December 31, 2016 and 2015	(3,263)	(3,263)
Additional paid-in capital	1,282,077	1,351,898
Accumulated other comprehensive income (loss)	1	(2)
Accumulated deficit	(1,632,891)	(1,692,427)
Total stockholders' deficit	(352,991)	(342,645)
Total liabilities and stockholders' deficit	$ 378,996	$ 408,932

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	230	230
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	108,585	114,933
Treasury stock, shares	150	150

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenue:
Royalty revenue from a related party, net of amortization for capitalized fees paid to a related party of $13,823, $13,823 and $11,066 in the year ended December 31, 2016, 2015, and 2014	$ 132,684	$ 53,064	$ 7,351
Revenue from collaborative arrangements from a related party, net	885	885	1,082
Total net revenue	133,569	53,949	8,433
Operating expenses:
Research and development	1,393	2,619	7,498
General and administrative	23,188	19,750	34,864
Total operating expenses	24,581	22,369	42,362
Income (loss) from operations	108,988	31,580	(33,929)
Other income (expense), net	2,382	1,120	(3,272)
Interest income	582	343	563
Interest expense	(52,416)	(51,803)	(36,892)
Income (loss) from continuing operations before income taxes	59,536	(18,760)	(73,530)
Loss from discontinued operations (Notes 1 and 12)	0	0	(94,934)
Net income (loss)	$ 59,536	$ (18,760)	$ (168,464)
Basic net income (loss) per share:
Continuing operations (in dollars per share)	$ 0.54	$ (0.16)	$ (0.66)
Discontinued operations (in dollars per share)	0.00	0.00	(0.84)
Basic net income (loss) per share (in dollars per share)	0.54	(0.16)	(1.50)
Diluted net income (loss) per share:
Continuing operations (in dollars per share)	0.53	(0.16)	(0.66)
Discontinued operations (in dollars per share)	0.00	0.00	(0.84)
Diluted net income (loss) per share (in dollars per share)	$ 0.53	$ (0.16)	$ (1.50)
Shares used to compute basic and diluted net income (loss) per share:
Shares used to compute basic net income (loss) per share	110,280	115,372	112,059
Shares used to compute diluted net income (loss) per share	123,233	115,372	112,059
Cash dividends declared per common share (in dollars per share)	$ 0.00	$ 0.75	$ 0.50

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF OPERATIONS
Amortization of capitalized fees paid to a related party	$ 13,823	$ 13,823	$ 11,066

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$ 59,536	$ (18,760)	$ (168,464)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net	3	1,305	(4,001)
Less: realized gain on marketable securities, net	0	(1,220)	0
Add: Reclassification adjustments for other-than temporary impairment loss included in net loss	0	0	3,752
Comprehensive income (loss)	$ 59,539	$ (18,675)	$ (168,713)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (loss)	Accumulated Deficit	Treasury Stock	Total
Balance at Dec. 31, 2013	$ 1,115	$ 1,803,048	$ 162	$ (1,505,203)	$ 0	$ 299,122
Balance (in shares) at Dec. 31, 2013	111,516				0
Increase (Decrease) in Stockholders' Equity
Exercise of stock options, and issuance of common stock units, stock awards and purchase plan	$ 17	10,813	0	0	$ 0	10,830
Exercise of stock options, and issuance of common stock units, stock awards and purchase plan (in shares)	1,744				0
Issuance of common stock in private placement to a related party	$ 17	38,078	0	0	$ 0	38,095
Issuance of common stock in private placement to a related party (in shares)	1,665				0
Stock-based compensation	$ 0	27,485	0	0	$ 0	27,485
Conversion of convertible subordinated notes due 2023	$ 15	31,756	0	0	$ 0	31,771
Conversion of convertible subordinated notes due 2023 (in shares)	1,520				0
Repurchase of common stock	$ 0	3,263	0	0	$ (3,263)	0
Repurchase of common stock (in shares)	0				(150)
Guarantee issued in connection with distribution to Theravance Biopharma, Inc. related to lease agreements	$ 0	(1,300)	0	0	$ 0	(1,300)
Distribution to Theravance Biopharma, Inc.	0	(402,787)	0	0	0	(402,787)
Cash dividends declared, $0.50 per common share in 2014, and $0.75 per common share in 2015	0	(57,852)	0	0	0	(57,852)
Net income (loss)	0	0	0	(168,464)	0	(168,464)
Other comprehensive income (loss)	0	0	(249)	0	0	(249)
Balance at Dec. 31, 2014	$ 1,164	1,452,504	(87)	(1,673,667)	$ (3,263)	(223,349)
Balance (in shares) at Dec. 31, 2014	116,445				(150)
Increase (Decrease) in Stockholders' Equity
Exercise of stock options, and issuance of common stock units, stock awards and purchase plan	$ 8	(488)	0	0	$ 0	(480)
Exercise of stock options, and issuance of common stock units, stock awards and purchase plan (in shares)	740				0
Issuance of common stock in private placement to a related party	$ 4	6,524	0	0	$ 0	6,528
Issuance of common stock in private placement to a related party (in shares)	424				0
Stock-based compensation	$ 0	6,873	0	0	$ 0	6,873
Repurchase of common stock	$ (27)	(25,609)	0	0	$ 0	(25,636)
Repurchase of common stock (in shares)	(2,676)				0
Cash dividends declared, $0.50 per common share in 2014, and $0.75 per common share in 2015	$ 0	(87,906)	0	0	$ 0	(87,906)
Net income (loss)	0	0	0	(18,760)	0	(18,760)
Other comprehensive income (loss)	0	0	85	0	0	85
Balance at Dec. 31, 2015	$ 1,149	1,351,898	(2)	(1,692,427)	$ (3,263)	(342,645)
Balance (in shares) at Dec. 31, 2015	114,933				(150)
Increase (Decrease) in Stockholders' Equity
Exercise of stock options, and issuance of common stock units, stock awards and purchase plan	$ 8	(674)	0	0	$ 0	(666)
Exercise of stock options, and issuance of common stock units, stock awards and purchase plan (in shares)	853				0
Partial termination of capped call options associated with repurchases of convertible notes due 2023	$ 0	578	0	0	$ 0	578
Stock-based compensation	0	8,297	0	0	0	8,297
Repurchase of common stock	$ (72)	(78,022)	0	0	$ 0	(78,094)
Repurchase of common stock (in shares)	(7,201)				0
Net income (loss)	$ 0	0	0	59,536	$ 0	59,536
Other comprehensive income (loss)	0	0	3	0	0	3
Balance at Dec. 31, 2016	$ 1,085	$ 1,282,077	$ 1	$ (1,632,891)	$ (3,263)	$ (352,991)
Balance (in shares) at Dec. 31, 2016	108,585				(150)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - $ / shares						3 Months Ended								12 Months Ended
	Jul. 24, 2015	Apr. 24, 2015	Feb. 20, 2015	Oct. 16, 2014	Jul. 25, 2014	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Cash dividends declared per common share (in dollars per share)	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.25	$ 0.25	$ 0.25	$ 0.00	$ 0.75	$ 0.50

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities
Net income (loss)	$ 59,536	$ (18,760)	$ (168,464)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	13,954	13,933	12,175
Stock-based compensation	8,297	6,873	27,390
Amortization of premium (discount) on short term investment	(9)	583	1,742
Interest added to the principal balance of the non-recourse term notes due 2029	855	22,635	20,527
Gain on repurchase of convertible subordinated notes due 2023	(2,342)	0	0
Amortization of debt issuance costs	2,847	2,943	2,408
Other-than-temporary impairment loss on marketable securities	0	0	3,752
Realized gain on sale of marketable securities, net	0	(1,220)	0
Amortization of lease guarantee	(190)	0	0
Other non-cash items	0	(3)	(2)
Changes in operating assets and liabilities:
Accounts receivable	0	0	74
Receivables from collaborative arrangements	(20,619)	(15,678)	(7,371)
Prepaid expenses and other current assets	48	320	(338)
Inventories	0	0	(1,908)
Other assets	(19)	0	1,549
Accounts payable	(690)	818	(7,695)
Payable to Theravance Biopharma, Inc., net	0	(1,056)	(15,916)
Accrued personnel-related expenses and other accrued liabilities	276	(725)	(491)
Accrued interest payable	(83)	360	4,751
Other long-term liabilities	8	(7)	275
Deferred revenue	(885)	(885)	(3,181)
Net cash provided by (used in) operating activities	60,984	10,131	(130,723)
Cash flows from investing activities
Maturities of marketable securities	88,422	137,621	339,359
Purchases of marketable securities	(95,719)	(86,523)	(276,914)
Sales of marketable securities	2,995	108,077	7,211
Purchases of property and equipment	(278)	(7)	(689)
Capitalized fees paid to a related party	0	0	(135,000)
Change in restricted cash	0	0	833
Payments received on notes receivable	0	0	140
Net cash (used in) provided by investing activities	(4,580)	159,168	(65,060)
Cash flows from financing activities
Repurchase of common stock	(78,094)	(25,636)	0
Repurchase of convertible subordinated notes due 2023	(11,570)	0	0
Payment of principal on non-recourse notes due 2029	(6,828)	0	0
Payments of cash dividends to stockholders	(960)	(87,331)	(56,988)
Repurchase of shares to satisfy tax withholding	(1,079)	(2,192)	(5,664)
Proceeds from capped-call options	578	0	0
Cash and cash equivalents contributed to Theravance Biopharma, Inc.	0	0	(277,541)
Proceeds from issuance of notes payable, net of debt issuance costs	0	0	434,677
Proceeds from issuances of common stock, net	385	8,240	54,589
Net cash (used in) provided by financing activities	(97,568)	(106,919)	149,073
Net (decrease) increase in cash and cash equivalents	(41,164)	62,380	(46,710)
Cash and cash equivalents at beginning of period	159,180	96,800	143,510
Cash and cash equivalents at end of period	118,016	159,180	96,800
Supplemental disclosure of cash flow information
Cash paid for interest	48,797	25,863	9,208
Supplemental disclosure of noncash information
Contribution of net assets, excluding cash and cash equivalents to Theravance Biopharma, Inc.	0	0	125,337
Conversion of convertible subordinated notes to common stock	$ 0	$ 0	$ 32,391

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2016

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

Innoviva, Inc. (referred to as "Innoviva", the "Company", or "we" and other similar pronouns) is focused on bringing compelling new medicines to patients in areas of unmet need by leveraging its significant expertise in the development, commercialization and financial management of bio-pharmaceuticals. Innoviva's portfolio is anchored by 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"). Under the Long-Acting Beta2 Agonist ("LABA") Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the "GSK Agreements"), Innoviva is eligible to receive the associated royalty revenues from RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®. Innoviva is also entitled to 15% of 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 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"), which has been assigned to TRC other than RELVAR®/BREO®ELLIPTA® and ANORO® ELLIPTA®.

Business Separation

On June 1, 2014, we separated our biopharmaceutical research and drug development operations from our late-stage partnered respiratory assets by transferring our research and drug development operations into our then wholly-owned subsidiary, Theravance Biopharma, Inc. ("Theravance Biopharma") (the "Spin-Off"). The Spin-Off resulted in Theravance Biopharma operating as an independent, publicly traded company.

The results of operations for the 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 11 and 12, "Spin-Off of Theravance Biopharma, Inc.," and "Discontinued Operations" for further information.

Principles of Consolidation

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

Use of Management's Estimates

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Management evaluates its significant accounting policies and estimates on an ongoing basis. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances. These estimates also form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources.

Certain Risks and Concentrations

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits. Refer to "Segment Reporting" below for concentrations with respect to revenues and geographic locations.

Segment Reporting

We operate in a single segment, which is to provide capital return to stockholders by maximizing the potential value of our respiratory assets partnered with GSK. Revenues are generated from our collaborative arrangements and royalty payments from GSK, located in Great Britain. Our facilities are located within the United States.

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 for the periods presented.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value.

Investments in Marketable Securities

We invest in short-term investments and marketable securities, primarily corporate notes, government, government agency, and municipal bonds. We limit the amount of credit exposure with any one issuer, industry or geographic area for investments other than instruments backed by the U.S. federal government. We classify our marketable securities as available-for-sale securities and report them at fair value in cash equivalents, short-term investments or marketable securities on the consolidated balance sheets with related unrealized gains and losses included as a component of stockholders' equity (deficit). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations. Realized gains and losses, if any, on available-for-sale securities are included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income.

We regularly review all of our investments for other-than-temporary declines in estimated fair value. Our review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, the severity and duration of the unrealized losses, whether we have the intent to sell the securities and whether it is more likely than not that we will be required to sell the securities before the recovery of their amortized cost basis. When we determine that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is other-than-temporary, we reduce the carrying value of the security and record a loss for the amount of such decline to other income (expense), net.

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

Property and Equipment

Property and equipment as of December 31, 2016 and 2015, which consisted of computer equipment, software. office furniture and fixture, amounted to $0.4 million and $0.2 million, respectively.

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

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

Depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $0.1 million, $0.1 million and $1.1 million. Depreciation expense for property and equipment used by our former research and drug development operations is classified within discontinued operations in the consolidated statements of operations for the year ended December 31, 2014. The change in accumulated depreciation is net of asset retirements.

Capitalized Software

We capitalize certain costs related to direct material and service costs for software obtained for internal use. Capitalized software costs are depreciated over three years.

Capitalized Fees Paid to a Related Party

We capitalize fees paid to licensors related to agreements for approved products or commercialized products. We capitalize these fees as capitalized fees paid to a related party ("Capitalized Fees") and amortize these Capitalized Fees on a straight-line basis over their estimated useful lives upon the commercial launch of the product, which has been shortly after regulatory approval of such product. The estimated useful lives of these Capitalized Fees 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 Capitalized Fees are recognized as a reduction of royalty revenue. We review our Capitalized Fees for impairment on a product-by-product basis for each major geographic area when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of Capitalized Fees 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.

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. 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. For our arrangements with GSK, we recognize 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. We periodically review the estimated performance period of our contracts based on the progress of our programs. 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.

We account for contingent payments in accordance with Financial Accounting Standards Board (the "FASB") Subtopic Accounting Standards Codification ("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.

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 capitalized fees associated with any approval and launch milestone payments made to GSK.

Product Revenues

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

Prior to the Spin-Off, we recognized revenues from product sales when there was persuasive evidence that an arrangement existed, title and risk of loss transferred, the price was fixed and determinable, and collectability was reasonably assured. Product sales were recognized net of estimated allowances, discounts, sales returns, chargebacks and rebates. Such amounts are presented within discontinued operations in the consolidated statements of operations.

Allowance for Doubtful Accounts

We maintain 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, 2016, there were no allowances for doubtful accounts and we have not had any write-offs historically.

Fair Value of Stock-Based Compensation Awards

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

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

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

The estimated fair value of stock options, RSUs and RSAs is expensed on a ratable or straight-line basis over the expected term of the grant or expected term of the vesting and the estimated fair value of performance-contingent RSUs and RSAs is expensed using an accelerated method over the term of the award once we have determined that it is probable that performance milestones will be achieved. Compensation expense for RSUs and RSAs that contain performance conditions is based on the grant date fair value of the award. Compensation expense is recorded over the requisite service period based on management's best estimate as to whether it is probable that the shares awarded are expected to vest. We assess the probability of the performance milestones being met on a continuous basis. The grant date fair value of the RSUs and RSAs with a market condition is determined using a Monte Carlo valuation model and the compensation expense is recognized over the implied service period.

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

Amortization of Debt Issuance Costs from Non-recourse Notes Payable, due 2029

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.

We incurred approximately $15.3 million in transaction costs in connection with issuance of 2029 Notes, which we amortize to interest expense over the estimated life of the 2029 Notes based on the effective interest method. 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. We continue to assess, on an ongoing basis, our estimates on royalties from products sales as it relates to its impact on payments of principal and interest on the 2029 Notes. To the extent that the interest or principal payments are greater or less than our initial estimates or the timing of such payments is materially different than our original estimates, we prospectively adjust the amortization of the debt issuance costs.

Income Taxes

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

None of our currently unrecognized tax benefits would affect our effective income tax rate if recognized, due to the valuation allowance that currently offsets our deferred tax assets. We do not anticipate the total amount of unrecognized income tax benefits relating to uncertain tax positions existing as of December 31, 2016 will significantly increase or decrease in the next 12 months.

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

The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) consists of changes in unrealized and realized gains and losses on our marketable securities.

Related Parties

GSK owned 29.5% of our outstanding common stock as of December 31, 2016. Transactions with GSK are described in Note 3, "Collaborative Arrangements".

In filings with the Securities and Exchange Commission, BlackRock, Inc., a global provider of investment, advisory and risk management solutions, reported beneficial ownership of more than 5% of our outstanding common stock as of December 31, 2016 and 2015, respectively. We use an external asset manager, not affiliated with BlackRock, Inc., to manage a portion of our cash and investments portfolio. We had $64.3 million and $148.7 million invested in BlackRock Liquidity Money Market Fund as of December 31, 2016 and 2015, respectively, through our external asset manager. The money market fund invests in U.S. Treasury bills, notes, trust receipts and direct obligations of the U.S. Treasury and repurchase agreements relating to direct treasury obligations.

Prior to the Spin-Off, Robert V. Gunderson, Jr. was one of our directors. We have engaged Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, of which Mr. Gunderson is a partner, as our primary legal counsel. Fees incurred in the ordinary course of business were, $1.3 million in the year ended December 31, 2014. As Mr. Gunderson was not one of our directors for the years ended December 31, 2016 and 2015, he is no longer considered a related party.

Recently Issued Accounting Pronouncements Not Yet Adopted

In April 2016, the FASB issued ASU 2016-10 to clarify the implementation guidance on licensing and the identification of performance obligations consideration included in ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which is also known as ASC 606, was issued in May 2014 and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In March 2016, the FASB issued ASU 2016-08 to provide amendments to clarify the implementation guidance on principal versus agent considerations. ASU 2014-09 guidance is effective for the fiscal years and interim reporting periods beginning after December 15, 2017 (as amended through ASU 2015-14 issued in August 2015), with early adoption permitted. Companies can elect a full retrospective method to recast prior-period financial statements or a modified retrospective method to recognize the cumulative effect as an adjustment to the retained earnings in the initial year. We plan to implement the standard in the first quarter of 2018 on a modified retrospective basis and do not anticipate that this standard will have a material impact on our accounting for royalty revenues. We are continuing to assess the potential impacts of the standard on the accounting for other revenues associated with the collaboration agreements.

In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for both financing and operating leases in the consolidated balance sheets but recognize the impact on the consolidated statement of operations and cash flows in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for us at the beginning January 1, 2019 and requires transition under a modified retrospective method. The most significant impact of the update to us is that we will be required to recognize a "right-of-use" asset and lease liability for the operating lease agreement that was not previously included on the balance sheet under the existing lease guidance. We anticipate that the treatment of the lease on our consolidated statement of operations and cash flows will be the same.

Recently Adopted Accounting Pronouncement

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest ("ASU 2015-03"), to simplify the presentation of debt issuance costs. This standard amended existing guidance to require the presentation of debt issuance costs associated with term loans in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. We adopted ASU 2015-03 on January 1, 2016. Upon adoption of ASU 2015-03, we applied the guidance retrospectively to all periods presented and classified our debt issuance costs, which prior to adoption were included in other assets in the condensed consolidated financial statements, as a deduction to the respective long-term portion of our 2023 Notes and 2029 Notes.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), to simplify the accounting for the taxes related to stock based compensation, requiring excess tax benefits and deficiencies to be recognized as a component of income tax expense rather than equity. This guidance also requires excess tax benefits and deficiencies to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. We adopted ASU 2016-09 in the first quarter of 2016, which resulted in an increase in our deferred tax assets related to the tax effect on stock- based compensation in our net operating losses. The adoption did not have a material effect on our financial statements because our deferred tax assets are subject to a full valuation allowance. We elected to account for forfeitures as they occur, rather than estimate expected forfeitures.

NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2016

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE

2. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common shares outstanding. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common shares and dilutive potential common share equivalents then outstanding. Dilutive potential common share equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common shares issuable upon assumed conversion of our convertible debt using the if-converted method.

The following table shows the computation of basic and diluted net income (loss) per share for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31,
(In thousands except per share data)	2016(1)		2015			2014
Numerator:
Income (loss) from continuing operations, basic	$	59,536	$	(18,760	)	$	(73,530	)
Loss from discontinued operations, basic		—		—			(94,934	)

Net income (loss), attributable to common stockholders, basic		59,536		(18,760	)		(168,464	)
Add: Interest expense on 2023 Notes		5,790		—			—

Net income (loss) attributable to common stockholders, diluted	$	65,326	$	(18,760	)	$	(168,464	)

Denominator:
Weighted-average shares used to compute basic net income (loss) per share		110,280		115,372			112,059
Dilutive effect of 2023 Notes		12,541		—			—
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		412		—			—

Weighted-average shares used to compute diluted net income (loss) per share		123,233		115,372			112,059

Net income (loss) per share
Basic	$	0.54	$	(0.16	)	$	(1.50	)

Diluted	$	0.53	$	(0.16	)	$	(1.50	)

Anti-dilutive Securities

The following common share equivalents were not included in the computation of diluted net income (loss) per share because their effect was anti-dilutive:

	Year Ended December 31,
(In thousands)	2016(1)		2015(2)		2014
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan		4,073		6,934		8,011
Shares issuable upon conversion of 2023 Notes		—		12,904		12,329

		4,073		19,838		20,340


(1)	Includes 2.9 million options, 0.1 million restricted stock units ("RSUs"), and 0.2 million unvested restricted stock awards ("RSAs") retained by former employees who were transferred to Theravance Biopharma in connection with the Spin-Off. Subsequent to the Spin-Off, stock-based compensation expense associated with the awards held by Theravance Biopharma employees granted prior to the Spin-Off is recognized by Theravance Biopharma. Under Anti-Dilutive Securities, 2.8 million options were excluded from the diluted net income per share calculation as their effect was anti-dilutive.
(2)	Includes 4.1 million options, 0.4 million restricted stock units, and 1.0 million unvested RSAs retained by former employees who were transferred to Theravance Biopharma in connection with the Spin-Off. All of these awards were excluded from the diluted net loss per share calculation as their effect was anti-dilutive.

COLLABORATIVE ARRANGEMENTS

12 Months Ended

Dec. 31, 2016

COLLABORATIVE ARRANGEMENTS

COLLABORATIVE ARRANGEMENTS

3. COLLABORATIVE ARRANGEMENTS

Net Revenue from Collaborative Arrangements

Net revenue from collaborative arrangements from continuing operations relates to our collaborative arrangement with GSK. Net revenue from other collaborative arrangements is reflected as discontinued operations in the consolidated statements of operations. Refer to Notes 1, 11 and 12, "Description of Operations and Summary of Significant Accounting Policies," "Spin-Off of Theravance Biopharma, Inc." and "Discontinued Operations" for further information.

Net revenue recognized under our GSK Agreements was as follows:

	Year Ended December 31,
(In thousands)	2016			2015			2014
Royalties from a related party — RELVAR/BREO	$	128,638		$	59,188		$	16,635
Royalties from a related party — ANORO		17,869			7,699			1,782

Total royalties from a related party		146,507			66,887			18,417
Less: amortization of capitalized fees paid to a related party		(13,823	)		(13,823	)		(11,066	)

Royalty revenue		132,684			53,064			7,351
Strategic alliance — MABA program license		885			885			1,082

Total net revenue from GSK	$	133,569		$	53,949		$	8,433

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.

As a result of the launch and approval of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® in the U.S., Japan and Europe, we paid milestone fees to GSK totaling $220.0 million during the year ended December 31, 2014. Although we have no further milestone payment obligations to GSK pursuant to the LABA Collaboration Agreement, we continue to have ongoing participation as part of the collaboration, including joint steering and joint project committees that are expected to continue over the life of the agreements. The milestone fees paid to GSK were recognized as capitalized fees paid to a related party, which are being amortized over their estimated useful lives commencing upon the commercial launch of the product. The amortization expense is recorded as a reduction to the royalties from GSK.

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%.

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. 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 Innoviva-discovered preclinical MABA compounds (the "Additional MABAs"). The development program is fully funded by GSK and is still currently in early stages of Phase II trials. As a result of the transactions effected by the Spin-Off, we are only entitled to receive 15% of any contingent payments and royalties payable by GSK from sales of FF/UMEC/VI (and MABA, and MABA/FF) while Theravance Biopharma receives 85% of those same payments.

GSK Contingent Payments and Revenue

The potential future contingent payments receivable related to the MABA program of up to $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. The Company is entitled to 15% of any milestone payments.

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2016

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:

	December 31,
(In thousands)	2016		2015
Cash and cash equivalents	$	116,396	$	148,673
Short-term marketable securities		32,417		28,103

Total	$	148,813	$	176,776

The estimated fair value of available-for-sale 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:

	December 31, 2016
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government agencies	$	12,428	$	1	$	—	$	12,429
U.S. commercial paper		72,065		—		—		72,065
Money market funds		64,319		—		—		64,319

Total	$	148,812	$	1	$	—	$	148,813

	December 31, 2015
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government agencies	$	14,406	$	—	$	(1	)	$	14,405
U.S. corporate notes		2,702		—		(1	)		2,701
U.S. commercial paper		10,997		—		—			10,997
Money market funds		148,673		—		—			148,673

Total	$	176,778	$	—	$	(2	)	$	176,776

As of December 31, 2016, all of the available-for-sale debt securities had contractual maturities within one year and the average duration of debt securities was approximately one month.

During the year ended December 31, 2015, we recognized a gain of $1.2 million from the sale of all of the ordinary shares of Theravance Biopharma that we held as of December 31, 2014, which is included in other income (expense), net in the condensed consolidated statement of operations. In addition, we sold other available-for-sale securities totaling $100.4 million, and the related realized gains and losses were not significant during year ended December 31, 2015.

We recognized an unrealized loss of $3.8 million on our Theravance Biopharma equity securities as of December 31, 2014, which was determined to be other-than-temporary and charged to other income (expense), net on the consolidated statements of operations.

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 as of December 31, 2016 Using:
	Quoted Price in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Types of Instruments (In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government agencies	$	—	$	12,429	$	—	$	12,429
U.S. commercial paper		—		72,065		—		72,065
Money market funds		64,319		—		—		64,319

Total assets measured at estimated fair value	$	64,319	$	84,494	$	—	$	148,813

Liabilities
Convertible subordinated notes due 2023	$	—	$	202,125	$	—	$	202,125
Non-recourse notes due 2029		—		487,189		—		487,189

Total fair value of liabilities	$	—	$	689,314	$	—	$	689,314

	Estimated Fair Value Measurements as of December 31, 2015 Using:
	Quoted Price in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Types of Instruments (In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government agencies	$	—	$	14,405	$	—	$	14,405
U.S. corporate notes		—		2,701		—		2,701
U.S. commercial paper		—		10,997		—		10,997
Money market funds		148,673		—		—		148,673

Total assets measured at estimated fair value	$	148,673	$	28,103	$	—	$	176,776

Liabilities
Convertible subordinated notes due 2023	$	—	$	189,100	$	—	$	189,100
Non-recourse notes due 2029		—		470,970		—		470,970

Total fair value of liabilities	$	—	$	660,070	$	—	$	660,070

The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications.

The fair value of our 2023 Notes and 2029 Notes is based on recent trading prices of the instruments.

CAPITALIZED FEES PAID TO A RELATED PARTY

12 Months Ended

Dec. 31, 2016

CAPITALIZED FEES PAID TO A RELATED PARTY

CAPITALIZED FEES PAID TO A RELATED PARTY

5. CAPITALIZED FEES PAID TO A RELATED PARTY

(In thousands)	Amortization period		December 31, 2016			December 31, 2015
United States		2013 - 2030	$	120,000		$	120,000
Europe		2013 - 2029		60,000			60,000
Japan		2013 - 2029		40,000			40,000

Gross carrying value				220,000			220,000
Accumulated amortization				(39,455	)		(25,632	)

Net carrying value			$	180,545		$	194,368

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. As of December 31, 2016, the weighted average remaining amortization period is 13.1 years.

Additional information regarding these milestone fees is included in Note 3, "Collaborative Arrangements." Amortization expense for the years ended December 31, 2016, 2015 and 2014 were $13.8 million, $13.8 million and $11.1 million. The remaining estimated amortization expense is $13.8 million for each of the years from 2017 to 2021 and $111.4 million thereafter.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2016

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

6. STOCK-BASED COMPENSATION

Equity Incentive Plans

In May 2012, we adopted the 2012 Equity Incentive Plan (the "2012 Plan"). The 2012 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, stock unit awards and SARs to employees, non-employee directors and consultants. As of December 31, 2016, total shares remaining available for issuance under the 2012 Plan were 3,573,436.

Employee Stock Purchase Plan

Under the 2004 Employee Stock Purchase Plan (the "ESPP"), our employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The ESPP provides for consecutive and overlapping offering periods of 24 months in duration, with each offering period composed of four consecutive six-month purchase periods. The purchase periods end on either May 15 or November 15. ESPP contributions are limited to a maximum of 15% of an employee's eligible compensation. The maximum number of shares that an employee may purchase in any purchase period is 2,500. An employee may not purchase shares with a value greater than $25,000 in any calendar year.

As of December 31, 2016, total shares remaining available for issuance under the ESPP were 237,627.

Performance-Contingent RSAs and RSUs

Since 2011, 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. Recognition of stock-based compensation expense begins when the performance goals are deemed probable of achievement.

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 the total stock-based compensation expense of $7.0 million for the first tranche was fully recognized through May 2014. In connection with the Spin-Off, our Compensation Committee approved the modification of the remaining tranches related to these awards as the performance conditions associated with the remaining portions of these awards were unlikely to be consistent with the new strategies of each company following the Spin-Off. The remaining 63,000 RSAs for which service-based vesting was not triggered at the time of the Spin-Off remain subject to new performance conditions (as well as the original service conditions). In addition, the RSAs for which both the performance and service-based conditions were not achieved prior to the Spin-Off were entitled to the pro rata dividend distribution made by the Company on June 2, 2014 of one ordinary share of Theravance Biopharma for every 3.5 shares of the Company's common stock subject to their awards, which will also be subject to the same new performance and service conditions as the original RSAs to which they relate. During the year ended December 31, 2016, we determined that the achievement of the requisite performance conditions was met and, as a result, $1.3 million compensation cost was recognized for the remaining equity awards.

On January 14, 2016, the Compensation Committee approved and granted 282,394 RSAs and 46,294 RSUs to senior management. These awards include a market condition based on Relative Total Shareholder Return ("TSR") and a service condition that requires continued employment, collectively the "Performance Measures". The vesting percentages of these awards are calculated based on the two-year TSR with a catch-up provision opportunity measured on January 13, 2019 for RSAs and on September 30, 2018 for RSUs. Two-thirds of amounts earned at the end of year two will vest and be distributed on February 20, 2018, while the final one-third earned after two years as well as the catch-up amount earned will vest and be distributed on February 20, 2019 for RSAs and November 20, 2018 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 328,688 shares granted upon the actual performance against the Performance Measures. The grant date fair value of these awards is determined using a Monte Carlo valuation model. The aggregate value of $2.0 million is recognized as compensation expense over the implied service period and will not be reversed if the market condition is not met.

Director Compensation Program

Our non-employee directors receive compensation for services provided as a director. Each member of our Board of Directors who is not an employee receives an annual cash retainer for services as a director, member of a committee of the Board of Directors, lead independent director and chairman, as applicable.

Each of our independent directors receives periodic automatic grants of equity awards under a program implemented under the 2012 Plan. These grants are non-discretionary. Only our independent directors or affiliates of such directors are eligible to receive automatic grants under the 2012 Plan. Under the program, as amended following the Spin-Off, each individual who first becomes a non-employee director will, on the date such individual joins the Board of Directors, automatically be granted a one-time grant of RSUs covering a number of shares of our common stock calculated as $250,000 divided by our common stock closing share price on the date of grant as reported on The NASDAQ Global Select Market, rounded down to the nearest whole share (the "Initial RSUs"), plus a one-time grant of RSUs covering a number of shares of our common stock calculated as $250,000 divided by our common stock closing share price on the date of grant as reported on The NASDAQ Global Select Market, which would be pro-rated for the number of whole months remaining until the anniversary of the prior year's stockholders' meeting, rounded down to the nearest whole share (the "Pro Rata RSUs"). The Initial RSUs vest in two equal annual installments, while Pro-Rata RSUs vest in a single installment at the sooner of the next annual stockholder meeting or the one-year grant anniversary, in each case subject to the non-employee director's continuous service through the applicable vesting date.

Annually, upon his or her re-election to the Board at the Annual Meeting of Stockholders, each non-employee director is automatically granted an RSU covering a number of shares of our common stock calculated as $250,000 divided by our common stock closing share price on the date of grant as reported on The NASDAQ Global Select Market, rounded down to the nearest whole share. Annual RSUs will vest at the sooner of the next annual stockholder meeting or the one-year anniversary of grant, subject to the non-employee director's continuous service through the applicable vesting date.

These RSUs will vest in full upon the director's death or the occurrence of a Change in Control before the director's service terminates. All director RSUs will be settled in shares of our common stock on the vesting date. Director RSUs will carry dividend equivalent rights to be credited with an amount equal to all cash dividends paid on the underlying shares of common stock while unvested. Dividend equivalents will be subject to the same terms and conditions, including vesting, as the RSUs to which they attach and will be paid in cash upon vesting.

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 ordinary share of Theravance Biopharma for every 3.5 shares held of Innoviva 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.

Stock-based compensation expense is included in the consolidated statements of operations as follows:

	Year Ended December 31,
(In thousands)	2016		2015		2014
Research and development	$	632	$	1,036	$	2,781
General and administrative		7,665		5,837		12,980

Stock-based compensation from continuing operations		8,297		6,873		15,761
Stock-based compensation from discontinued operations		—		—		11,629

Total stock-based compensation expense	$	8,297	$	6,873	$	27,390

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

	Year Ended December 31,
(In thousands)	2016		2015		2014
Stock options	$	632	$	789	$	4,658
RSUs		1,920		2,492		4,564
RSAs		3,492		2,850		7,575
Performance-based RSUs		—		—		3
Performance-based RSAs		1,293		613		10,580
Market-based RSUs		112		—		—
Market-based RSAs		693		—		—
ESPP		155		129		10

Total stock-based compensation expense	$	8,297	$	6,873	$	27,390

As of December 31, 2016, the unrecognized stock-based compensation cost, net of expected forfeitures for awards expected to vest, including performance-contingent RSAs for which the performance milestones were determined to be probable of achievement, and the estimated weighted-average amortization period, using the straight-line attribution method, was as follows:

(In thousands)	Unrecognized Compensation Cost		Weighted- Average Amortization Period (Years)
Stock options	$	899		1.5
RSUs		1,539		1.1
RSAs		8,076		2.6
Performance-based RSAs		242		0.9
Market-based RSUs		156		1.4
Market-based RSAs		1,000		1.5

Total stock-based compensation expense	$	11,912

Compensation Awards

The following table summarizes equity award activity under the 2012 Plan and Prior Plans and related information:

(In thousands, except per share data)	Number of outstanding options			Weighted- Average Exercise Price of Outstanding Options		Number of outstanding RSUs and PSUs			Weighted- Average Fair Value per Share at Grant		Number of outstanding RSAs and PSAs			Weighted- Average Fair Value per Share at Grant
Balance as of December 31, 2015		4,262		$	23.00		459		$	18.34		1,305		$	18.00
Granted		—			—		237			11.32		645			10.36
Exercised		(19	)		9.09		—			—		—			—
Released RSUs/RSAs		—			—		(269	)		16.93		(809	)		17.86
Forfeited		(1,343	)		21.65		(14	)		16.75		(16	)		21.61

Balance as of December 31, 2016		2,900			23.72		413			15.29		1,125			13.67

As of December 31, 2016, the aggregate intrinsic value of the options outstanding was $0.1 million and the aggregate intrinsic value of the options exercisable was $0.1 million.

The total intrinsic value of the options exercised was $38,000 in the year ended December 31, 2016, $0.5 million in the year ended December 31, 2015 and $17.5 million in the year ended December 31, 2014. The total estimated fair value of options vested was $4.7 million in the year ended December 31, 2016, $10.0 million in the year ended December 31, 2015 and $5.7 million in the year ended December 31, 2014.

Valuation Assumptions

We based the range of weighted-average estimated values of employee stock option grants and rights granted under the ESPP, as well as the weighted-average assumptions used in calculating these values, on estimates as of the date of grant, as follows:

			Year Ended December 31, 2014
	Employee stock options(1)
	Risk-free interest rate		1.6% - 2.1%
	Expected term (in years)		5 - 6
	Volatility		52% - 60%
	Dividend yield		3% - 4%
	Weighted-average estimated fair value of stock options granted		$15.63


(1)	There were no stock options granted for the years ended December 31, 2016 and 2015.

	Year Ended December 31,
	2016	2015	2014
Employee stock purchase plan issuances
Risk-free interest rate	0.4% - 1.0%	0.1% - 0.9%	0.1% - 0.5%
Expected term (in years)	0.5 - 2	0.5 - 2	0.5 - 2
Volatility	39% - 66%	44% - 69%	43% - 55%
Dividend yield	0%	0% - 6%	8%
Weighted-average estimated fair value of ESPP shares granted	$4.47	$4.52	$4.49

- Definition

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

+ References + Details

DEBT

12 Months Ended

Dec. 31, 2016

DEBT

DEBT

7. DEBT

Our debt consists of:

	December 31,
(In thousands)	2016			2015
Convertible subordinated notes due 2023	$	240,984		$	255,109
Non-recourse notes due 2029		487,189			493,162

Total debt		728,173			748,271
Unamortized debt issuance cost		(12,080	)		(15,140	)
Current portion of non-recourse notes due 2029		(7,752	)		—

Net long-term debt	$	708,341		$	733,131

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 were 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.

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 initial conversion price of $27.79 per share for the underlying number of shares and a cap price of $38.00 per share, both of which are subject to adjustments consistent with the 2023 Notes. The cap component is economically equivalent to a call option sold by us for the underlying number of shares with an initial 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. Upon 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.

Following the Spin-Off of Theravance Biopharma in June 2014, the partial conversion by certain holders of the 2023 Notes in July 2014, and dividends declared and paid in 2014 and 2015, the conversion rate with respect to our 2023 Notes was adjusted in total to 50.5818 shares of our common stock per $1,000 principal amount of the 2023 Notes, which represents a conversion price of approximately $19.77 per share. As a result of the conversion rate adjustments, the capped call strike price and cap price were also adjusted accordingly to $19.77 and $27.04.

For the year ending December 31, 2016, we retired a portion of our 2023 Notes with a face value of $14.1 million and carrying value of $13.9 million by way of purchase in the open market. The 2023 Notes were purchased for a total settlement price of $11.6 million resulting in a gain of $2.3 million, which is included in other income (expense), net in the condensed consolidated statement of operations. As a result of the partial retirement of our 2023 Notes, we entered into partial termination agreement of the capped call option transaction described above. The partial termination agreement of the capped call option transaction enabled us to receive $0.6 million from the counterparty, which was recorded as an increase in additional paid-in capital in our condensed consolidated balance sheets as of December 31, 2016.

Non-Recourse Notes Due 2029

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 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. The amounts in the segregated bank account can only be used to make interest and principal payments on the 2029 Notes. As of December 31, 2016 and 2015, the balance of the segregated bank account was not material.

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 increased by the interest shortfall amount for that period, and considered as payment in kind ("PIK"). Since issuance, $44.0 million of interest expense has been added to the principal balance of the 2029 Note, of which $0.9 million and $22.7 million was added during the years ended December 31, 2016 and 2015, respectively. During the year ended December 31, 2016, the principal balance of the 2029 Notes was paid down by $6.8 million with the payments received from the royalty revenues generated in the previous quarters ended June 30 and September 30, 2016. Since the principal and interest payments on the 2029 Notes are based on royalties from product sales recorded by GSK, which will vary from quarter to quarter and are unknown to us, the 2029 Notes may be repaid prior to the final maturity date in 2029. The 2029 Notes can be prepaid subject to a prepayment premium of 5% until April 17, 2016, 2.5% thereafter until April 17, 2017, and without premium afterwards.

In connection with the sale of the 2029 Notes, we incurred approximately $15.3 million in debt issuance costs, which are being amortized to interest expense over the estimated life of the 2029 Notes.

As of December 31, 2016, the principal balance of the 2029 Notes was $487.2 million, which will be partially paid down by $7.8 million in the next quarterly payment expected to be made in February 2017. This payment is based on our royalty revenues of $46.8 million for the three months ended December 31, 2016

SHAREHOLDERS' DEFICIT

12 Months Ended

Dec. 31, 2016

SHAREHOLDERS' DEFICIT

SHAREHOLDERS' DEFICIT

8. SHAREHOLDERS' DEFICIT

Dividends

On February 20, 2015, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock to stockholders of record as of the close of business on March 12, 2015. This dividend was paid on March 31, 2015. On April 24, 2015, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock to stockholders of record as of the close of business on June 12, 2015. This dividend was paid on June 30, 2015. On July 24, 2015, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock to stockholders of record as of the close of business on September 10, 2015. This dividend was paid to our stockholders on September 30, 2015. During the year ended December 31, 2015, we paid an aggregate of $87.3 million in dividends. Unvested RSAs and certain unvested RSUs as of the record date are also entitled to dividends, which will only be paid when the RSAs and such RSUs vest and are released. For further information on the impact of the cash dividend payments on the 2023 Notes, refer to Note 7, "Debt".

On October 16, 2014, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock to stockholders of record as of the close of business on November 25, 2014. This dividend was paid on December 31, 2014. On July 25, 2014, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock to stockholders of record as of the close of business on August 28, 2014. This dividend was paid on September 18, 2014.

Share Repurchase Program

On October 28, 2015, we announced the 2016 Share Repurchase Program. As a component of the Share Repurchase Program, on October 30, 2015, we commenced a "modified Dutch auction" tender offer (the "October 2015 TO") to purchase up to $75 million of our common stock, at a price per share of not less than $8.50 and not greater than $9.25, which will be contingent upon satisfaction of customary conditions. The October 2015 TO expired on December 1, 2015. The following table shows our share repurchase activity and related information on the October 2015 TO:

	(In thousands except per share data)
	Purchase period end date		December 2015
	Shares repurchased and retired		2,576
	Amount		$ 24,641
	Average price per share		$ 9.56

Additionally, as part of the 2016 Share Repurchase Program, we repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows:

	December 31,
(In thousands except per share data)	2016		2015
Shares repurchased and retired		7,201		100
Amount	$	78,095	$	995
Average price per share	$	10.84	$	9.95

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2016

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

Operating Lease and Lease Guarantee

Upon the Spin-Off, our facility leases in South San Francisco, California were assigned to Theravance Biopharma. However, if Theravance Biopharma were to default on its lease obligations, we have in substance guaranteed the lease payments for these facilities. We would also be responsible for lease-related payments including utilities, property taxes, and common area maintenance, which may be as much as the actual lease payments. As of December 31, 2016, the total remaining lease payments, which run through May 2020, were $21.7 million. The carrying value of this lease guarantee was $1.1 million as of December 31, 2016 and is reflected in other long-term liabilities in our consolidated balance sheet. Amortization on the lease guarantee commenced in 2016 and amortization expense for the year ended December 31, 2016 was $0.2 million.

On June 10, 2016, we executed a lease for our new corporate headquarters in Brisbane, California. The term of the new lease is seven years, subject to our right to extend the lease. Minimum lease payments under the new lease are as follows as of December 31, 2016:

(In thousands)
Years ending December 31:
2017	$	380
2018		392
2019		403
2020		416
2121		428
Thereafter		642

Total	$	2,661

In connection with entering into the new lease, we terminated our sublease by and between us and Theravance Biopharma, dated June 2, 2014 (the "Gateway Sublease"). The Gateway Sublease was set to expire on May 31, 2020. On June 10, 2016, we executed a Sublease Termination Agreement with Theravance Biopharma to terminate the Gateway Sublease (the "Gateway Sublease Termination Agreement"). No termination fee was payable to Theravance Biopharma as a result of this Gateway Sublease Termination Agreement.

Guarantees and Indemnifications

We indemnify our officers and directors for certain events or occurrences, subject to certain limits. We believe the fair value of these indemnification agreements is minimal. Accordingly, we have not recognized any liabilities relating to these agreements as of December 31, 2016.

INCOME TAXES

12 Months Ended

Dec. 31, 2016

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

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

	As of December 31,
(In thousands)	2016			2015
Deferred tax assets
Net operating loss carryforwards	$	417,000		$	392,000
Deferred revenues		1,000			1,000
Research and development tax credit carryforwards		53,000			53,000
Other		13,000			17,000

Total deferred tax assets		484,000			463,000
Valuation allowance		(484,000	)		(463,000	)

Net deferred tax assets	$	—		$	—

The differences between the U.S. federal statutory income tax rate to our effective tax rate are as follows:

	As of December 31,
	2016			2015			2014
U.S. federal income tax rate		35.00	%		34.00	%		35.00	%
Non-deductible executive compensation		1.55			(1.94	)		(0.16	)
Stock-based compensation		0.09			(0.23	)		(1.11	)
Federal and state research credits		—			—			12.66
Effect of Spin-Off Transaction		—			—			(203.20	)
Other		(0.29	)		(0.56	)		(4.04	)
Change in valuation allowance		(36.19	)		(31.27	)		160.85

Effective tax rate		0.16	%		—	%		—	%

Realization of deferred tax assets is dependent on future taxable income, if any, the timing and the amount of which are uncertain. Accordingly, the deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $20.6 million in the year ended December 31, 2016, increased by $4.7 million in the year ended December 31, 2015, and decreased by $103.8 million in the year ended December 31, 2014.

The increase in the valuation allowance in the year ended December 31, 2016 was primarily due to early adoption of the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, ("ASU 2016-09"), for which we recognized additional excess stock option tax benefits of $46.9 million in net operating loss carryforwards.

The increase in the valuation allowance in the year ended December 31, 2015 was primarily a result of net operating loss carryforwards.

As of December 31, 2016, we had federal net operating loss carryforwards of approximately $1.1 billion, which will expire from 2025 through 2035, and federal research and development tax credit carryforwards of approximately $45.2 million, which will expire from 2018 through 2034. We also had state net operating loss carryforwards of approximately $674.3 million expiring in the years 2017 through 2035 and state research tax credits of approximately $32.3 million, which do not expire.

The net operating loss deferred tax asset balances as of December 31, 2016 include excess tax benefits from stock option exercises due to early adoption of ASU 2016-09.

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

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2016 and 2015, we had no accrued interest or penalties.

We conducted an analysis through the year ended December 31, 2015 to determine whether an ownership change had occurred since inception. The analysis indicated that two ownership changes occurred in prior years. However, notwithstanding the applicable annual limitations, no portion of the net operating loss or credit carryforwards are expected to expire before becoming available to reduce federal and state income tax liabilities as a result of those identified ownership changes. If we undergo another ownership change, the utilization of the pre-ownership change net operating loss carryforwards or pre-ownership change tax attributes, such as research tax credits, to offset the post-ownership change income may be subject to an annual limitation, pursuant to Section 382 and 383 of the Internal Revenue Code of 1986, as amended. Similar rules may apply under state tax laws.

Uncertain Tax Positions

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows (in thousands):

Unrecognized tax benefits as of December 31, 2013	$	57,420
Gross decrease for tax positions for prior years		(42,650	)
Gross increase in tax portions for 2014		689

Unrecognized tax benefits as of December 31, 2014		15,459
Gross increase in tax portions for 2015		29

Unrecognized tax benefits as of December 31, 2016 and 2015	$	15,488

In the event that we are able to recognize these uncertain positions, most of the $15.5 million of the unrecognized benefit would reduce our effective tax rate. We currently have a full valuation allowance against our deferred tax assets, which would impact the timing of the effective tax rate benefit, should any of these uncertain positions be favorably settled in the future. We do not believe it is reasonably possible that our unrecognized tax benefits will significantly change within the next twelve months.

We are subject to taxation in the U.S. and various state jurisdictions. The tax years 1999 and forward remain open to examination by the federal and most state tax authorities due to net operating loss and overall credit carryforward positions.

SPIN-OFF OF THERAVANCE BIOPHARMA, INC	12 Months Ended
SPIN-OFF OF THERAVANCE BIOPHARMA, INC	Dec. 31, 2016
SPIN-OFF OF THERAVANCE BIOPHARMA, INC.
SPIN-OFF OF THERAVANCE BIOPHARMA, INC.	11. SPIN-OFF OF THERAVANCE BIOPHARMA, INC. On June 1, 2014, we separated our late-stage partnered respiratory assets from our biopharmaceutical research and drug development operations. We contributed the assets and certain liabilities from the research and drug development operations and $393.0 million of cash, cash equivalents and marketable securities to Theravance Biopharma. All outstanding shares of Theravance Biopharma were then distributed to our stockholders of record on May 15, 2014 as a pro-rata dividend distribution of one ordinary share of Theravance Biopharma for every 3.5 shares held of our common stock. On June 1, 2014, we entered into a Separation and Distribution Agreement with Theravance Biopharma that set forth the terms and conditions of the separation of Theravance Biopharma from us. The Separation and Distribution Agreement sets forth a framework for the relationship between us and Theravance Biopharma following the separation regarding principal transactions necessary to separate Theravance Biopharma from us. This agreement also sets forth other provisions that govern certain aspects of our relationship with Theravance Biopharma after the completion of the separation from us and provides for the allocation of assets, liabilities and obligations between Theravance Biopharma and us in connection with the Spin-Off. In addition, we entered into other definitive agreements in connection with the Spin-Off, including (1) a Transition Services Agreement pursuant to which Theravance Biopharma and we will provide each other with a variety of administrative services, including financial, tax, accounting, information technology, legal and human resources services, for a period of time of up to 12 months following the Spin-Off, (2) a Tax Matters Agreement that generally governs the parties' respective rights, responsibilities and obligations after the separation with respect to taxes, (3) the Gateway Sublease and (4) an Employee Matters Agreement that allocates liabilities and responsibilities relating to employee compensation, benefit plans, programs and other related matters in connection with the separation, including the treatment of outstanding incentive awards and certain retirement and welfare benefit obligations. These arrangements contain the provisions related to the Spin-Off and the distribution of Theravance Biopharma's ordinary shares to our stockholders. 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. See Note 9, "Commitments and Contingencies" for further information on this lease guarantee. Theravance Biopharma's historical results of operations have been presented as discontinued operations in our consolidated statement of operations for the year ended December 31, 2014. See Note 12, "Discontinued Operations," for further information.

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2016

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

12. 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 11, "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 consolidated statements of operations for the year ended December 31, 2014, were as follows:

(In thousands)
Net revenues(1)	$	3,129
Loss from discontinued operations(2)		(94,934	)


(1)	Net revenues primarily consist of revenue from collaborative arrangements and product sales. Revenue from collaborative arrangements was recognized from our agreement with R-Pharm CJSC, which was transferred to Theravance Biopharma as a part of the Spin — Off. Product 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)	Included in the loss from discontinued operations for the year ended December 31, 2014 are external legal and accounting fees in connection with our separation strategy which we started to incur in the year ended December 31, 2013 and the additional stock-based compensation and cash bonus expense recognized due to the achievement of performance conditions under a special long-term retention and incentive equity and cash bonus awarded to certain employees in the year ended December 31, 2011, which we started to incur in the year ended December 31, 2014.

There was no impact of the discontinued operations after the Spin-Off to our revenues and expenses for the year ended December 31, 2016 and 2015.

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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+ Details

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2016

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)

The following table presents certain unaudited consolidated quarterly financial information for the eight quarters in the period ended December 31, 2016. This information has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein.

	For the Quarters Ended
	March 31			June 30			September 30			December 31
2016
Net revenue	$	24,176		$	32,472		$	33,309		$	43,612
Total operating expenses(1)		(6,644	)		(6,595	)		(5,391	)		(5,951	)
Income from operations		17,532			25,877			27,918			37,661
Net income	$	4,435		$	14,597		$	15,033		$	25,471
Basic net income per share	$	0.04		$	0.13		$	0.14		$	0.24
Diluted net income per share	$	0.04		$	0.13		$	0.13		$	0.22

	For the Quarters Ended
	March 31			June 30			September 30			December 31
2015
Net revenue	$	6,896		$	10,655		$	13,562		$	22,836
Total operationg expenses(1)		(6,151	)		(5,547	)		(5,128	)		(5,543	)
Income from operations		745			5,108			8,434			17,293
Net income (loss)	$	(10,667	)	$	(7,810	)	$	(4,584	)	$	4,301
Basic and diluted net income (loss) per share	$	(0.09	)	$	(0.07	)	$	(0.04	)	$	0.04

Cash dividends declared per common share	$	0.25		$	0.25		$	0.25		$	—


(1)	Amounts were computed independently for each quarter, and the sum of the quarters may not total the annual amounts.

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

12 Months Ended

Dec. 31, 2016

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Separation

Principles of Consolidation

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

Use of Management's Estimates

Certain Risks and Concentrations

Segment Reporting

Variable Interest Entities

Cash and Cash Equivalents

Investments in Marketable Securities

Fair Value of Financial Instruments

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

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

Property and Equipment

Property and equipment as of December 31, 2016 and 2015, which consisted of computer equipment, software. office furniture and fixture, amounted to $0.4 million and $0.2 million, respectively.

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

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

Capitalized Software

We capitalize certain costs related to direct material and service costs for software obtained for internal use. Capitalized software costs are depreciated over three years.

Capitalized Fees Paid to a Related Party

Revenue Recognition

Collaborative Arrangements and Multiple-Element Arrangements

Royalties

Product Revenues

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

Allowance for Doubtful Accounts

Fair Value of Stock-Based Compensation Awards

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

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

Amortization of Debt Issuance Costs from Non-recourse Notes Payable, due 2029

Income Taxes

The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Comprehensive Income (Loss)

Related Parties

GSK owned 29.5% of our outstanding common stock as of December 31, 2016. Transactions with GSK are described in Note 3, "Collaborative Arrangements".

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Adopted Accounting Pronouncement

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

12 Months Ended

Dec. 31, 2016

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of property, equipment and lease hold improvements useful lives

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

NET INCOME (LOSS) PER SHARE (Tables)

12 Months Ended

Dec. 31, 2016

NET INCOME (LOSS) PER SHARE

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

	Year Ended December 31,
(In thousands except per share data)	2016(1)		2015			2014
Numerator:
Income (loss) from continuing operations, basic	$	59,536	$	(18,760	)	$	(73,530	)
Loss from discontinued operations, basic		—		—			(94,934	)

Net income (loss), attributable to common stockholders, basic		59,536		(18,760	)		(168,464	)
Add: Interest expense on 2023 Notes		5,790		—			—

Net income (loss) attributable to common stockholders, diluted	$	65,326	$	(18,760	)	$	(168,464	)

Denominator:
Weighted-average shares used to compute basic net income (loss) per share		110,280		115,372			112,059
Dilutive effect of 2023 Notes		12,541		—			—
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		412		—			—

Weighted-average shares used to compute diluted net income (loss) per share		123,233		115,372			112,059

Net income (loss) per share
Basic	$	0.54	$	(0.16	)	$	(1.50	)

Diluted	$	0.53	$	(0.16	)	$	(1.50	)

Schedule of anti-dilutive securities

The following common share equivalents were not included in the computation of diluted net income (loss) per share because their effect was anti-dilutive:

	Year Ended December 31,
(In thousands)	2016(1)		2015(2)		2014
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan		4,073		6,934		8,011
Shares issuable upon conversion of 2023 Notes		—		12,904		12,329

		4,073		19,838		20,340


(1)	Includes 2.9 million options, 0.1 million restricted stock units ("RSUs"), and 0.2 million unvested restricted stock awards ("RSAs") retained by former employees who were transferred to Theravance Biopharma in connection with the Spin-Off. Subsequent to the Spin-Off, stock-based compensation expense associated with the awards held by Theravance Biopharma employees granted prior to the Spin-Off is recognized by Theravance Biopharma. Under Anti-Dilutive Securities, 2.8 million options were excluded from the diluted net income per share calculation as their effect was anti-dilutive.
(2)	Includes 4.1 million options, 0.4 million restricted stock units, and 1.0 million unvested RSAs retained by former employees who were transferred to Theravance Biopharma in connection with the Spin-Off. All of these awards were excluded from the diluted net loss per share calculation as their effect was anti-dilutive.

COLLABORATIVE ARRANGEMENTS (Tables)

12 Months Ended

Dec. 31, 2016

COLLABORATIVE ARRANGEMENTS

Schedule of net revenue recognized under GSK Agreements

	Year Ended December 31,
(In thousands)	2016			2015			2014
Royalties from a related party — RELVAR/BREO	$	128,638		$	59,188		$	16,635
Royalties from a related party — ANORO		17,869			7,699			1,782

Total royalties from a related party		146,507			66,887			18,417
Less: amortization of capitalized fees paid to a related party		(13,823	)		(13,823	)		(11,066	)

Royalty revenue		132,684			53,064			7,351
Strategic alliance — MABA program license		885			885			1,082

Total net revenue from GSK	$	133,569		$	53,949		$	8,433

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2016

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

Schedule of available-for-sale securities

	December 31,
(In thousands)	2016		2015
Cash and cash equivalents	$	116,396	$	148,673
Short-term marketable securities		32,417		28,103

Total	$	148,813	$	176,776

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

	December 31, 2016
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government agencies	$	12,428	$	1	$	—	$	12,429
U.S. commercial paper		72,065		—		—		72,065
Money market funds		64,319		—		—		64,319

Total	$	148,812	$	1	$	—	$	148,813

	December 31, 2015
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government agencies	$	14,406	$	—	$	(1	)	$	14,405
U.S. corporate notes		2,702		—		(1	)		2,701
U.S. commercial paper		10,997		—		—			10,997
Money market funds		148,673		—		—			148,673

Total	$	176,778	$	—	$	(2	)	$	176,776

Schedule of estimated fair values

	Estimated Fair Value Measurements as of December 31, 2016 Using:
	Quoted Price in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Types of Instruments (In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government agencies	$	—	$	12,429	$	—	$	12,429
U.S. commercial paper		—		72,065		—		72,065
Money market funds		64,319		—		—		64,319

Total assets measured at estimated fair value	$	64,319	$	84,494	$	—	$	148,813

Liabilities
Convertible subordinated notes due 2023	$	—	$	202,125	$	—	$	202,125
Non-recourse notes due 2029		—		487,189		—		487,189

Total fair value of liabilities	$	—	$	689,314	$	—	$	689,314

	Estimated Fair Value Measurements as of December 31, 2015 Using:
	Quoted Price in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Types of Instruments (In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government agencies	$	—	$	14,405	$	—	$	14,405
U.S. corporate notes		—		2,701		—		2,701
U.S. commercial paper		—		10,997		—		10,997
Money market funds		148,673		—		—		148,673

Total assets measured at estimated fair value	$	148,673	$	28,103	$	—	$	176,776

Liabilities
Convertible subordinated notes due 2023	$	—	$	189,100	$	—	$	189,100
Non-recourse notes due 2029		—		470,970		—		470,970

Total fair value of liabilities	$	—	$	660,070	$	—	$	660,070

- 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

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

CAPITALIZED FEES PAID TO A RELATED PARTY (Tables)

12 Months Ended

Dec. 31, 2016

CAPITALIZED FEES PAID TO A RELATED PARTY

Schedule of capitalized fees paid to a related party

(In thousands)	Amortization period		December 31, 2016			December 31, 2015
United States		2013 - 2030	$	120,000		$	120,000
Europe		2013 - 2029		60,000			60,000
Japan		2013 - 2029		40,000			40,000

Gross carrying value				220,000			220,000
Accumulated amortization				(39,455	)		(25,632	)

Net carrying value			$	180,545		$	194,368

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2016

STOCK-BASED COMPENSATION

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

	Year Ended December 31,
(In thousands)	2016		2015		2014
Research and development	$	632	$	1,036	$	2,781
General and administrative		7,665		5,837		12,980

Stock-based compensation from continuing operations		8,297		6,873		15,761
Stock-based compensation from discontinued operations		—		—		11,629

Total stock-based compensation expense	$	8,297	$	6,873	$	27,390

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

	Year Ended December 31,
(In thousands)	2016		2015		2014
Stock options	$	632	$	789	$	4,658
RSUs		1,920		2,492		4,564
RSAs		3,492		2,850		7,575
Performance-based RSUs		—		—		3
Performance-based RSAs		1,293		613		10,580
Market-based RSUs		112		—		—
Market-based RSAs		693		—		—
ESPP		155		129		10

Total stock-based compensation expense	$	8,297	$	6,873	$	27,390

Schedule of unrecognized stock-based compensation cost, net of expected forfeitures for awards expected to vest, including performance-contingent RSAs for which the performance milestones were determined to be probable of achievement, and the estimated weighted-average amortization period, using the straight-line attribution method

(In thousands)	Unrecognized Compensation Cost		Weighted- Average Amortization Period (Years)
Stock options	$	899		1.5
RSUs		1,539		1.1
RSAs		8,076		2.6
Performance-based RSAs		242		0.9
Market-based RSUs		156		1.4
Market-based RSAs		1,000		1.5

Total stock-based compensation expense	$	11,912

Summary of equity award activity under the 2012 plan and prior plans

(In thousands, except per share data)	Number of outstanding options			Weighted- Average Exercise Price of Outstanding Options		Number of outstanding RSUs and PSUs			Weighted- Average Fair Value per Share at Grant		Number of outstanding RSAs and PSAs			Weighted- Average Fair Value per Share at Grant
Balance as of December 31, 2015		4,262		$	23.00		459		$	18.34		1,305		$	18.00
Granted		—			—		237			11.32		645			10.36
Exercised		(19	)		9.09		—			—		—			—
Released RSUs/RSAs		—			—		(269	)		16.93		(809	)		17.86
Forfeited		(1,343	)		21.65		(14	)		16.75		(16	)		21.61

Balance as of December 31, 2016		2,900			23.72		413			15.29		1,125			13.67

Schedule of weighted-average assumptions used to estimate the fair value of stock options granted and employee stock purchase plan issuances

			Year Ended December 31, 2014
	Employee stock options(1)
	Risk-free interest rate		1.6% - 2.1%
	Expected term (in years)		5 - 6
	Volatility		52% - 60%
	Dividend yield		3% - 4%
	Weighted-average estimated fair value of stock options granted		$15.63


(1)	There were no stock options granted for the years ended December 31, 2016 and 2015.

	Year Ended December 31,
	2016	2015	2014
Employee stock purchase plan issuances
Risk-free interest rate	0.4% - 1.0%	0.1% - 0.9%	0.1% - 0.5%
Expected term (in years)	0.5 - 2	0.5 - 2	0.5 - 2
Volatility	39% - 66%	44% - 69%	43% - 55%
Dividend yield	0%	0% - 6%	8%
Weighted-average estimated fair value of ESPP shares granted	$4.47	$4.52	$4.49

DEBT (Tables)

12 Months Ended

Dec. 31, 2016

DEBT

Schedule of debt

	December 31,
(In thousands)	2016			2015
Convertible subordinated notes due 2023	$	240,984		$	255,109
Non-recourse notes due 2029		487,189			493,162

Total debt		728,173			748,271
Unamortized debt issuance cost		(12,080	)		(15,140	)
Current portion of non-recourse notes due 2029		(7,752	)		—

Net long-term debt	$	708,341		$	733,131

- Definition

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

+ References

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+ Details

SHAREHOLDERS' DEFICIT (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of share repurchase activity and related information

	December 31,
(In thousands except per share data)	2016		2015
Shares repurchased and retired		7,201		100
Amount	$	78,095	$	995
Average price per share	$	10.84	$	9.95

October 2015 TO

Schedule of share repurchase activity and related information

	(In thousands except per share data)
	Purchase period end date		December 2015
	Shares repurchased and retired		2,576
	Amount		$ 24,641
	Average price per share		$ 9.56

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2016

COMMITMENTS AND CONTINGENCIES

Schedule of minimum lease payments under non-cancelable operating lease

(In thousands)
Years ending December 31:
2017	$	380
2018		392
2019		403
2020		416
2121		428
Thereafter		642

Total	$	2,661

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

INCOME TAXES

Schedule of significant components of the Company's deferred tax assets

	As of December 31,
(In thousands)	2016			2015
Deferred tax assets
Net operating loss carryforwards	$	417,000		$	392,000
Deferred revenues		1,000			1,000
Research and development tax credit carryforwards		53,000			53,000
Other		13,000			17,000

Total deferred tax assets		484,000			463,000
Valuation allowance		(484,000	)		(463,000	)

Net deferred tax assets	$	—		$	—

Schedule of the differences between the U.S. federal statutory income tax rate to the Company's effective tax rate

	As of December 31,
	2016			2015			2014
U.S. federal income tax rate		35.00	%		34.00	%		35.00	%
Non-deductible executive compensation		1.55			(1.94	)		(0.16	)
Stock-based compensation		0.09			(0.23	)		(1.11	)
Federal and state research credits		—			—			12.66
Effect of Spin-Off Transaction		—			—			(203.20	)
Other		(0.29	)		(0.56	)		(4.04	)
Change in valuation allowance		(36.19	)		(31.27	)		160.85

Effective tax rate		0.16	%		—	%		—	%

Reconciliation of gross unrecognized tax benefits

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows (in thousands):

Unrecognized tax benefits as of December 31, 2013	$	57,420
Gross decrease for tax positions for prior years		(42,650	)
Gross increase in tax portions for 2014		689

Unrecognized tax benefits as of December 31, 2014		15,459
Gross increase in tax portions for 2015		29

Unrecognized tax benefits as of December 31, 2016 and 2015	$	15,488

DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2016

DISCONTINUED OPERATIONS

Schedule of discontinued operations presented on the condensed consolidated statements of operations

(In thousands)
Net revenues(1)	$	3,129
Loss from discontinued operations(2)		(94,934	)


(1)	Net revenues primarily consist of revenue from collaborative arrangements and product sales. Revenue from collaborative arrangements was recognized from our agreement with R-Pharm CJSC, which was transferred to Theravance Biopharma as a part of the Spin — Off. Product 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)	Included in the loss from discontinued operations for the year ended December 31, 2014 are external legal and accounting fees in connection with our separation strategy which we started to incur in the year ended December 31, 2013 and the additional stock-based compensation and cash bonus expense recognized due to the achievement of performance conditions under a special long-term retention and incentive equity and cash bonus awarded to certain employees in the year ended December 31, 2011, which we started to incur in the year ended December 31, 2014.

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Section 45
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-URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 205
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760

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=64862545&loc=d3e2941-110230

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
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-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760

+ Details

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2016
GSK \| LABA collaboration and Strategic Alliance agreements
Description of Operations
Percentage of economic interest in any future payments made under the agreements	15.00%

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Property and Equipment
Property and equipment, net	$ 368	$ 221
Depreciation expense	$ 100	$ 100	$ 1,100
Capitalized Fees Paid to a Related Party
Capitalized fees paid to a related party, useful life	15 years
Equipment, furniture and fixtures \| Minimum
Property and Equipment
Estimated useful life	5 years
Equipment, furniture and fixtures \| Maximum
Property and Equipment
Estimated useful life	7 years
Software and computer equipment
Property and Equipment
Estimated useful life	3 years
Capitalized software
Property and Equipment
Estimated useful life	3 years

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenues and Notes Payable (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Apr. 30, 2014
Revenue recognition
Revenue from product sales	$ 0.0
Allowance for doubtful accounts	0.0
Income Taxes
Unrecognized tax benefits would affect our effective income tax rate if recognized	$ 0.0
Non-Recourse Notes Payable due 2029 \| Private Placement
Amortization of Debt Issuance Costs from Non-recourse Notes Payable, due 2029
Non-Recourse Debt		$ 450.0
Interest rate (as a percent)	9.00%	9.00%
Transaction costs		$ 15.3

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Related Party Transactions (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2016	Dec. 31, 2015
GSK
Related Parties
Percentage of common stock owned		29.50%
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
Related Parties
Fees paid to related party	$ 1.3
BlackRock, Inc.
Related Parties
Percentage of common stock owned		5.00%	5.00%
Investments in related party		$ 64.3	$ 148.7

NET INCOME (LOSS) PER SHARE - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Numerator:
Income (loss) from continuing operations, basic									$ 59,536	$ (18,760)	$ (73,530)
Loss from discontinued operations, basic									0	0	(94,934)
Net income (loss), attributable to common stockholders, basic	$ 25,883	$ 15,033	$ 14,597	$ 4,435	$ 4,301	$ (4,584)	$ (7,810)	$ (10,667)	59,536	(18,760)	(168,464)
Add: Interest expense on 2023 Notes									5,790	0	0
Net income (loss) attributable to common stockholders, diluted									$ 65,326	$ (18,760)	$ (168,464)
Denominator:
Weighted-average shares used to compute basic net income (loss) per share									110,280	115,372	112,059
Dilutive effect of 2023 Notes									12,541	0	0
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan									412	0	0
Weighted-average shares used to compute diluted net income (loss) per share									123,233	115,372	112,059
Net income (loss) per share
Basic (in dollars per share)									$ 0.54	$ (0.16)	$ (1.50)
Diluted (in dollars per share)									$ 0.53	$ (0.16)	$ (1.50)

NET INCOME (LOSS) PER SHARE - Anti-dilutive Securities (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Anti-dilutive securities
Anti-dilutive securities (in shares)	4,073	19,838	20,340
Former Employees Transferred To Theravance Biopharma Spin Off
Anti-dilutive securities
Anti-dilutive securities (in shares)	2,800
Equity incentive plans and ESPP
Anti-dilutive securities
Anti-dilutive securities (in shares)	4,073	6,934	8,011
Unvested RSAs \| Former Employees Transferred To Theravance Biopharma Spin Off
Anti-dilutive securities
Anti-dilutive securities (in shares)	200	1,000
Conversion of 2023 Notes
Anti-dilutive securities
Anti-dilutive securities (in shares)	0	12,904	12,329
Stock options \| Former Employees Transferred To Theravance Biopharma Spin Off
Anti-dilutive securities
Anti-dilutive securities (in shares)	2,900	4,100
RSUs \| Former Employees Transferred To Theravance Biopharma Spin Off
Anti-dilutive securities
Anti-dilutive securities (in shares)	100	400

COLLABORATIVE ARRANGEMENTS (Details) $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
COLLABORATIVE ARRANGEMENTS (Details) $ in Thousands	Oct. 31, 2011 item	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Information related to collaborative arrangements
Less: amortization of capitalized fees paid to a related party										$ (13,823)	$ (13,823)	$ (11,066)
Royalty revenue										132,684	53,064	7,351
Strategic alliance - MABA program license										885	885	1,082
Total net revenue		$ 43,612	$ 33,309	$ 32,472	$ 24,176	$ 22,836	$ 13,562	$ 10,655	$ 6,896	133,569	53,949	8,433
GSK
Information related to collaborative arrangements
Total net revenue										133,569	53,949	8,433
Long-acting beta agonist (LABA) collaboration \| GSK
Information related to collaborative arrangements
Royalties from a related party		46,800								146,507	66,887	18,417
Less: amortization of capitalized fees paid to a related party										(13,823)	(13,823)	(11,066)
Royalty revenue										$ 132,684	53,064	7,351
Milestone fees paid												220,000
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
Information related to collaborative arrangements
Royalty rate for combination products (as a percent)										6.50%
Long-acting beta agonist (LABA) collaboration \| GSK \| Maximum
Information related to collaborative arrangements
Royalty rate for combination products (as a percent)										10.00%
Long-acting beta agonist (LABA) collaboration \| GSK \| RELVAR/BREO
Information related to collaborative arrangements
Royalties from a related party										$ 128,638	59,188	16,635
Long-acting beta agonist (LABA) collaboration \| GSK \| ANORO
Information related to collaborative arrangements
Royalties from a related party										17,869	7,699	1,782
Strategic alliance - MABA program license \| GSK
Information related to collaborative arrangements
Strategic alliance - MABA program license										$ 885	$ 885	$ 1,082
Number of preclinical MABA compounds discovered \| item	6
Contingent payments and royalties receivable (as a percent)										15.00%
Percentage of milestone payment										15.00%
Strategic alliance - MABA program license \| GSK \| Maximum
Information related to collaborative arrangements
Potential future contingent payments receivable		$ 363,000								$ 363,000
Strategic alliance - MABA program license \| Theravance Biopharma Spinoff
Information related to collaborative arrangements
Contingent payments and royalties receivable (as a percent)										85.00%

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS - Available-for Sale Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Available-for Sale Securities
Amortized Cost	$ 148,812	$ 176,778
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	(2)
Estimated Fair Value	148,813	176,776
Proceeds from sale of available-for-sale securities	$ 2,995	108,077	$ 7,211
Maturity period for marketable securities
Maximum contractual maturity period	1 year
Average duration	1 month
Theravance Biopharma
Available-for Sale Securities
Gain on sale		1,200
Recognized losses			$ 3,800
Issuer of available-for-securities other than Theravance Biopharma
Available-for Sale Securities
Proceeds from sale of available-for-sale securities		100,400
Cash and cash equivalents
Available-for Sale Securities
Estimated Fair Value	$ 116,396	148,673
Short-term marketable securities
Available-for Sale Securities
Estimated Fair Value	32,417	28,103
U.S. government agencies
Available-for Sale Securities
Amortized Cost	12,428	14,406
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	(1)
Estimated Fair Value	12,429	14,405
U.S. corporate notes
Available-for Sale Securities
Amortized Cost		2,702
Gross Unrealized Gains		0
Gross Unrealized Losses		(1)
Estimated Fair Value		2,701
U.S. commercial paper
Available-for Sale Securities
Amortized Cost	72,065	10,997
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	72,065	10,997
Money market funds
Available-for Sale Securities
Amortized Cost	64,319	148,673
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 64,319	$ 148,673

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS - Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Recurring basis
Assets
Total assets measured at estimated fair value	$ 148,813	$ 176,776
Recurring basis \| U.S. government agencies
Assets
Total assets measured at estimated fair value	12,429	14,405
Recurring basis \| U.S. corporate notes
Assets
Total assets measured at estimated fair value		2,701
Recurring basis \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	72,065	10,997
Recurring basis \| Money market funds
Assets
Total assets measured at estimated fair value	64,319	148,673
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value	64,319	148,673
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value		0
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| Money market funds
Assets
Total assets measured at estimated fair value	64,319	148,673
Recurring basis \| Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value	84,494	28,103
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	12,429	14,405
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value		2,701
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	72,065	10,997
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Money market funds
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value		0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Money market funds
Assets
Total assets measured at estimated fair value	0	0
Nonrecurring basis
Liabilities
Total fair value of liabilities	689,314	660,070
Nonrecurring basis \| Convertible subordinated notes due 2023
Liabilities
Convertible subordinated notes due 2023	202,125	189,100
Nonrecurring basis \| Non-Recourse Notes Payable due 2029
Liabilities
Non-recourse notes due 2029	487,189	470,970
Nonrecurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1
Liabilities
Total fair value of liabilities	0	0
Nonrecurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| Convertible subordinated notes due 2023
Liabilities
Convertible subordinated notes due 2023	0	0
Nonrecurring basis \| Quoted Prices in Active Markets for Identical Assets, Level 1 \| Non-Recourse Notes Payable due 2029
Liabilities
Non-recourse notes due 2029	0	0
Nonrecurring basis \| Significant Other Observable Inputs, Level 2
Liabilities
Total fair value of liabilities	689,314	660,070
Nonrecurring basis \| Significant Other Observable Inputs, Level 2 \| Convertible subordinated notes due 2023
Liabilities
Convertible subordinated notes due 2023	202,125	189,100
Nonrecurring basis \| Significant Other Observable Inputs, Level 2 \| Non-Recourse Notes Payable due 2029
Liabilities
Non-recourse notes due 2029	487,189	470,970
Nonrecurring basis \| Significant Unobservable Inputs, Level 3
Liabilities
Total fair value of liabilities	0	0
Nonrecurring basis \| Significant Unobservable Inputs, Level 3 \| Convertible subordinated notes due 2023
Liabilities
Convertible subordinated notes due 2023	0	0
Nonrecurring basis \| Significant Unobservable Inputs, Level 3 \| Non-Recourse Notes Payable due 2029
Liabilities
Non-recourse notes due 2029	$ 0	$ 0

CAPITALIZED FEES PAID TO A RELATED PARTY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Capitalized Fees paid to a Related Party
Capitalized fees paid to a related party, useful life	15 years
Net carrying value	$ 180,545	$ 194,368
Weighted average remaining amortization period	13 years 1 month 6 days
Amortization expense	$ 13,823	13,823	$ 11,066
Capitalized Fees paid to a Related Party, Future amortization
Estimated amortization expense for the year 2017	13,800
Estimated amortization expense for the year 2018	13,800
Estimated amortization expense for the year 2019	13,800
Estimated amortization expense for the year 2020	13,800
Estimated amortization expense for the year 2021	13,800
Estimated amortization expense thereafter	111,400
GSK
Capitalized Fees paid to a Related Party
Gross carrying value	220,000	220,000
Accumulated amortization	(39,455)	(25,632)
Net carrying value	180,545	194,368
GSK \| United States
Capitalized Fees paid to a Related Party
Gross carrying value	120,000	120,000
GSK \| Europe
Capitalized Fees paid to a Related Party
Gross carrying value	60,000	60,000
GSK \| Japan
Capitalized Fees paid to a Related Party
Gross carrying value	$ 40,000	$ 40,000

STOCK-BASED COMPENSATION - 2012 Plan and ESPP (Details)	12 Months Ended
STOCK-BASED COMPENSATION - 2012 Plan and ESPP (Details)	Dec. 31, 2016 USD ($) item shares
Employee Stock Purchase Plan
Stock-based compensation
Purchase price as a percentage of fair market value of stock	85.00%
Total duration of consecutive and overlapping offering periods	24 months
Number of offering periods \| item	4
Duration of purchase period	6 months
Maximum contributions as a percentage of employee's eligible compensation	15.00%
Maximum number of shares an employee may purchase during any purchase period	2,500
Maximum value of shares an employee may purchase in a calendar year \| $	$ 25,000
Shares remaining available for issuance	237,627
2012 Equity Incentive Plan
Stock-based compensation
Shares remaining available for issuance	3,573,436

STOCK-BASED COMPENSATION - Performance Contingent RSAs and RSUs (Details) $ in Thousands			1 Months Ended	12 Months Ended
	Jan. 14, 2016 shares	Jun. 02, 2014	May 31, 2014 USD ($)	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2011 shares
Stock-based compensation
Stock-based compensation expense				$ 8,297	$ 6,873	$ 27,390
TSR and Performance Measures \| Senior Management
Stock-based compensation
Stock-based compensation expense				$ 2,000
Minimum payout of shares (in shares) \| shares				0
Maximum payout of shares (in shares) \| shares				328,688
Timeframe for calculation of TSR				2 years
TSR and Performance Measures - to be Vested and Distributed February 20, 2018 \| Senior Management
Stock-based compensation
Vesting percentage				67.00%
TSR and Performance Measures - to be Vested and Distributed February 20, 2019 \| Senior Management
Stock-based compensation
Vesting percentage				33.00%
RSAs
Stock-based compensation
Stock-based compensation expense				$ 3,492	2,850	7,575
RSAs \| Performance-contingent
Stock-based compensation
Stock-based compensation expense				$ 1,293	613	10,580
RSAs \| Performance-contingent \| Senior Management
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			$ 7,000
Outstanding (in shares) \| shares				63,000
RSAs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares) \| shares	282,394
RSUs
Stock-based compensation
Stock-based compensation expense				$ 1,920	2,492	4,564
RSUs \| Performance-contingent
Stock-based compensation
Stock-based compensation expense				0	$ 0	$ 3
RSUs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares) \| shares	46,294
Theravance Biopharma Spinoff
Stock-based compensation
Number of shares of Theravance Biopharma issued for every share of Theravance		0.286
Special Long-Term Retention and Incentive Cash Awards Program \| RSAs \| Performance-contingent
Stock-based compensation
Stock-based compensation expense				$ 1,300

STOCK-BASED COMPENSATION - Director Compensation Program (Details) - RSUs - Non-employee director	12 Months Ended
	Dec. 31, 2016 USD ($) installment
Stock-based compensation
One time grant of shares, value	$ 250,000
Pro rata shares grant, value	$ 250,000
Number of annual installments \| installment	2
Annual grant of shares, value	$ 250,000

STOCK-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Stock-based compensation
Total stock-based compensation		$ 8,297	$ 6,873	$ 27,390
Unrecognized Compensation Cost		11,912
Stock options
Stock-based compensation
Total stock-based compensation		632	789	4,658
Unrecognized Compensation Cost		$ 899
Weighted-Average Amortization Period (Years)		1 year 6 months
RSUs
Stock-based compensation
Incremental stock-based compensation expense arising out of spin-off	$ 1,200
Share based compensation expense included in discontinued operations	$ 900
Total stock-based compensation		$ 1,920	2,492	4,564
Unrecognized Compensation Cost		$ 1,539
Weighted-Average Amortization Period (Years)		1 year 1 month 6 days
RSUs \| Performance-contingent
Stock-based compensation
Total stock-based compensation		$ 0	0	3
RSUs \| Market-based
Stock-based compensation
Total stock-based compensation		112	0	0
Unrecognized Compensation Cost		$ 156
Weighted-Average Amortization Period (Years)		1 year 4 months 24 days
RSAs
Stock-based compensation
Total stock-based compensation		$ 3,492	2,850	7,575
Unrecognized Compensation Cost		$ 8,076
Weighted-Average Amortization Period (Years)		2 years 7 months 6 days
RSAs \| Performance-contingent
Stock-based compensation
Total stock-based compensation		$ 1,293	613	10,580
Unrecognized Compensation Cost		$ 242
Weighted-Average Amortization Period (Years)		10 months 24 days
RSAs \| Market-based
Stock-based compensation
Total stock-based compensation		$ 693	0	0
Unrecognized Compensation Cost		$ 1,000
Weighted-Average Amortization Period (Years)		1 year 6 months
Employee Stock Purchase Plan
Stock-based compensation
Total stock-based compensation		$ 155	129	10
Continuing operations
Stock-based compensation
Total stock-based compensation		8,297	6,873	15,761
Discontinued operations
Stock-based compensation
Total stock-based compensation		0	0	11,629
Research and development \| Continuing operations
Stock-based compensation
Total stock-based compensation		632	1,036	2,781
General and administrative \| Continuing operations
Stock-based compensation
Total stock-based compensation		$ 7,665	$ 5,837	$ 12,980

STOCK-BASED COMPENSATION - Compensation Awards and Valuation Assumptions (Details) - USD ($) $ / shares in Units, shares in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Stock options
Number of outstanding options
Balance at the beginning of the period (in shares)	4,262
Granted (in shares)	0	0
Exercised (in shares)	(19)
Forfeited (in shares)	(1,343)
Balance at the end of the period (in shares)	2,900	4,262
Weighted-Average Exercise Price of Outstanding Options
Balance at the beginning of the period (in dollars per share)	$ 23.00
Granted (in dollars per share)	0.00
Exercised (in dollars per share)	9.09
Forfeited (in dollars per share)	21.65
Balance at the end of the period (in dollars per share)	$ 23.72	$ 23.00
Additional disclosures
Aggregate intrinsic value of options outstanding	$ 100,000
Aggregate intrinsic value of options exercisable	100,000
Total intrinsic value of options exercised	38,000	$ 500,000	$ 17,500,000
Total estimated fair value of options vested	$ 4,700,000	$ 10,000,000	$ 5,700,000
Valuation Assumptions
Weighted-average estimated fair value of shares granted (in dollars per share)			$ 15.63
Stock options \| Minimum
Valuation Assumptions
Risk-free interest rate (as a percent)			1.60%
Expected term (in years)			5 years
Volatility (as a percent)			52.00%
Dividend yield (as a percent)			3.00%
Stock options \| Maximum
Valuation Assumptions
Risk-free interest rate (as a percent)			2.10%
Expected term (in years)			6 years
Volatility (as a percent)			60.00%
Dividend yield (as a percent)			4.00%
RSUs and PSUs
Number of outstanding RSUs and PSUs/RSAs and PSAs
Balance at the beginning of the period (in shares)	459
Granted (in shares)	237
Released RSUs and RSAs (in shares)	(269)
Forfeited (in shares)	(14)
Balance at the end of the period (in shares)	413	459
Weighted-Average Fair Value per Share at Grant
Balance at the beginning of the period (in dollars per share)	$ 18.34
Granted (in dollars per share)	11.32
Released RSUs and RSAs (in dollars per share)	16.93
Forfeited (in dollars per share)	16.75
Balance at the end of the period (in dollars per share)	$ 15.29	$ 18.34
RSAs and PSAs
Number of outstanding RSUs and PSUs/RSAs and PSAs
Balance at the beginning of the period (in shares)	1,305
Granted (in shares)	645
Released RSUs and RSAs (in shares)	(809)
Forfeited (in shares)	(16)
Balance at the end of the period (in shares)	1,125	1,305
Weighted-Average Fair Value per Share at Grant
Balance at the beginning of the period (in dollars per share)	$ 18.00
Granted (in dollars per share)	10.36
Released RSUs and RSAs (in dollars per share)	17.86
Forfeited (in dollars per share)	21.61
Balance at the end of the period (in dollars per share)	$ 13.67	$ 18.00
Employee Stock Purchase Plan
Valuation Assumptions
Dividend yield (as a percent)	0.00%		8.00%
Weighted-average estimated fair value of shares granted (in dollars per share)	$ 4.47	$ 4.52	$ 4.49
Employee Stock Purchase Plan \| Minimum
Valuation Assumptions
Risk-free interest rate (as a percent)	0.40%	0.10%	0.10%
Expected term (in years)	6 months	6 months	6 months
Volatility (as a percent)	39.00%	44.00%	43.00%
Dividend yield (as a percent)		0.00%
Employee Stock Purchase Plan \| Maximum
Valuation Assumptions
Risk-free interest rate (as a percent)	1.00%	0.90%	0.50%
Expected term (in years)	2 years	2 years	2 years
Volatility (as a percent)	66.00%	69.00%	55.00%
Dividend yield (as a percent)		6.00%

DEBT - Summary (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt
Total debt	$ 728,173	$ 748,271
Unamortized debt issuance cost	(12,080)	(15,140)
Current portion of non-recourse notes due 2029	(7,752)	0
Net long-term debt	708,341	733,131
Convertible subordinated notes due 2023
Debt
Total debt	240,984	255,109
Non-Recourse Notes Payable due 2029
Debt
Total debt	$ 487,189	$ 493,162

DEBT - Convertible Subordinated Notes (Details) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Jan. 31, 2013 USD ($) item $ / shares $ / item shares	Dec. 31, 2016 USD ($) $ / shares $ / item shares	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Debt
Proceeds from issuance of notes payable, net of debt issuance costs		$ 0	$ 0	$ 434,677
Settlement amount for purchase of notes		11,570	0	0
Amount received from capped call option		$ 578	$ 0	$ 0
Convertible subordinated notes due 2023
Debt
Loan amount	$ 287,500
Proceeds from issuance of notes payable, net of debt issuance costs	$ 281,200
Interest rate (as a percent)		2.125%
Initial conversion, shares per $1,000 principal amount \| shares	35.9903
Adjusted conversion, shares per $1,000 principal amount \| shares		50.5818
Conversion price of convertible notes into common stock (in dollars per share) \| $ / shares	$ 27.79	$ 19.77
Portion of debt retired, face value		$ 14,100
Portion of debt retired, carrying value		13,900
Settlement amount for purchase of notes		11,600
Gain (Loss) on Repurchase of Debt Instrument		$ 2,300
Convertible subordinated notes due 2023 \| Privately-negotiated capped call option
Debt
Payments for capped call options	$ 36,800
Number of derivative instruments purchased \| item	2
Strike price for the underlying number of shares (in dollars per share) \| $ / shares	$ 27.79	$ 19.77
Cap price for the underlying number of shares (in dollars per share) \| $ / item	38.00	27.04
Amount received from capped call option		$ 600
Convertible subordinated notes due 2023 \| Stock prices below $27.79 per share \| Minimum
Debt
Net shares settlement payable to the entity \| shares	0
Convertible subordinated notes due 2023 \| Stock prices above $38.00 per share \| Maximum
Debt
Net shares settlement payable to the entity \| shares	2,779,659

DEBT - Non-Recourse Notes (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended				25 Months Ended	33 Months Ended
	Feb. 28, 2017	Dec. 31, 2016	Apr. 17, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Apr. 17, 2016	Dec. 31, 2016	Apr. 30, 2014
Debt
Interest added to the principal balance of the non-recourse term notes due 2029				$ 855	$ 22,635	$ 20,527
Long-term debt		$ 728,173		728,173	748,271			$ 728,173
GSK \| Long-acting beta agonist (LABA) collaboration
Debt
Royalty Revenue		46,800		146,507	66,887	$ 18,417
Non-Recourse Notes Payable due 2029
Debt
Interest added to the principal balance of the non-recourse term notes due 2029				900	22,700			44,000
Debt prepayment premium (as a percent)							5.00%
Long-term debt		$ 487,189		487,189	$ 493,162			$ 487,189
Non-Recourse Notes Payable due 2029 \| Future
Debt
Debt prepayment premium (as a percent)			2.50%
Non-Recourse Notes Payable due 2029 \| GSK
Debt
Payment of principal				$ 6,800
Non-Recourse Notes Payable due 2029 \| GSK \| Future
Debt
Payment of principal	$ 7,800
Non-Recourse Notes Payable due 2029 \| GSK \| Long-acting beta agonist (LABA) collaboration
Debt
Percentage of royalties from global net sales to secure debt									40.00%
Non-Recourse Notes Payable due 2029 \| Private Placement
Debt
Non-Recourse Debt									$ 450,000
Interest rate (as a percent)		9.00%		9.00%				9.00%	9.00%
Debt issuance costs									$ 15,300

SHAREHOLDERS' DEFICIT - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands						3 Months Ended								12 Months Ended
	Jul. 24, 2015	Apr. 24, 2015	Feb. 20, 2015	Oct. 16, 2014	Jul. 25, 2014	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
SHAREHOLDERS' DEFICIT
Cash dividends declared per common share (in dollars per share)	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.25	$ 0.25	$ 0.25	$ 0.00	$ 0.75	$ 0.50
Dividends paid														$ 960	$ 87,331	$ 56,988

SHAREHOLDERS' DEFICIT - Share Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended	12 Months Ended
	Oct. 30, 2015	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Share Repurchase Program
Shares repurchased and retired			7,201	100
Value of shares repurchased and retired			$ 78,095	$ 995
Average repurchase price per share			$ 10.84	$ 9.95
October 2015 TO
Share Repurchase Program
Shares repurchased and retired		2,576
Value of shares repurchased and retired		$ 24,641
Average repurchase price per share		$ 9.56
October 2015 TO \| Minimum
Share Repurchase Program
Price per share under share repurchase program	$ 8.50
October 2015 TO \| Maximum
Share Repurchase Program
Amount approved under share repurchase program	$ 75,000
Price per share under share repurchase program	$ 9.25

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands		12 Months Ended
	Jun. 10, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating Lease and Lease Guarantee
Lease term	7 years
Amortization of Lease Guarantee		$ (190)	$ 0	$ 0
Future minimum lease payments
2017		380
2018		392
2019		403
2020		416
2021		428
Thereafter		642
Total lease payments		2,661
Theravance Biopharma
Operating Lease and Lease Guarantee
Termination fee		0
Lease payments guarantee
Operating Lease and Lease Guarantee
Amortization of Lease Guarantee		200
Future minimum lease payments
Total lease payments		21,700
Lease payments guarantee \| Other long-term liabilities
Operating Lease and Lease Guarantee
Carrying value of lease guarantee		$ 1,100

INCOME TAXES (Details) $ in Thousands	12 Months Ended
INCOME TAXES (Details) $ in Thousands	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($) item
Income Taxes
Accrued interest or penalties due to our net operating losses	$ 0	$ 0
Number of ownership changes \| item			2
Deferred tax assets
Net operating loss carryforwards	417,000	392,000
Deferred revenues	1,000	1,000
Research and development tax credit carryforwards	53,000	53,000
Other	13,000	17,000
Total deferred tax assets	484,000	463,000
Valuation allowance	(484,000)	(463,000)
Net deferred tax assets	$ 0	$ 0
The differences between the U.S. federal statutory income tax rate to the Company's effective tax rate
U.S. federal income tax rate (as a percent)	35.00%	34.00%	35.00%
Non-deductible executive compensation (as a percent)	1.55%	(1.94%)	(0.16%)
Stock-based compensation (as a percent)	0.09%	(0.23%)	(1.11%)
Federal and state research credits (as a percent)	0.00%	0.00%	12.66%
Effect of Spin-Off Transaction (as a percent)	0.00%	0.00%	(203.20%)
Other (as a percent)	(0.29%)	(0.56%)	(4.04%)
Change in valuation allowance (as a percent)	(36.19%)	(31.27%)	160.85%
Effective tax rate (as a percent)	0.16%	0.00%	0.00%
Information related to valuation allowance
Increase (decrease) in valuation allowance	$ 20,600	$ 4,700	$ (103,800)
Gross unrecognized tax benefits
Gross unrecognized tax benefits at the beginning of the period	15,488	15,459	57,420
Gross decrease for tax positions for prior years			(42,650)
Gross increase in tax portions		29	689
Gross unrecognized tax benefits at the end of the period	15,488	$ 15,488	$ 15,459
Early adoption \| ASU 2016-09
Information related to valuation allowance
Excess stock option tax benefits	46,900
Federal
Income Taxes
Net operating loss carryforwards	1,100
Federal \| Research and development
Income Taxes
Tax credit carryforward amount	45,200
State
Income Taxes
Net operating loss carryforwards	674,300
State \| Research and development
Income Taxes
Tax credit carryforward amount	$ 32,300

SPIN-OFF OF THERAVANCE BIOPHARMA, INC. (Details) - Theravance Biopharma Spinoff $ in Millions	Jun. 02, 2014	Jun. 01, 2014 USD ($)
Spin-Off of Theravance Biopharma, Inc.
Cash, cash equivalents and marketable securities		$ 393.0
Number of shares of Theravance Biopharma issued for every share of Theravance	0.286

DISCONTINUED OPERATIONS (Details) - USD ($) $ in Thousands	12 Months Ended
DISCONTINUED OPERATIONS (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Components of research and drug development operations presented on the condensed consolidated statements of operations
Loss from discontinued operations, basic	$ 0	$ 0	$ (94,934)
Theravance Biopharma Spinoff
Components of research and drug development operations presented on the condensed consolidated statements of operations
Net revenues			3,129
Loss from discontinued operations, basic			$ (94,934)

- Definition

Amount after tax of income (loss) from a discontinued operation including the portion attributable to the noncontrolling interest. Includes, but is not limited to, the income (loss) from operations during the phase-out period, gain (loss) on disposal, gain (loss) for reversal of write-down (write-down) to fair value, less cost to sell, and adjustments to a prior period gain (loss) on disposal.

+ References + Details

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands						3 Months Ended								12 Months Ended
	Jul. 24, 2015	Apr. 24, 2015	Feb. 20, 2015	Oct. 16, 2014	Jul. 25, 2014	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)
Net revenue						$ 43,612	$ 33,309	$ 32,472	$ 24,176	$ 22,836	$ 13,562	$ 10,655	$ 6,896	$ 133,569	$ 53,949	$ 8,433
Total operating expenses						(5,596)	(5,391)	(6,595)	(6,644)	(5,543)	(5,128)	(5,547)	(6,151)	(24,581)	(22,369)	(42,362)
Income from operations						38,016	27,918	25,877	17,532	17,293	8,434	5,108	745	108,988	31,580	(33,929)
Net income (loss)						$ 25,883	$ 15,033	$ 14,597	$ 4,435	$ 4,301	$ (4,584)	$ (7,810)	$ (10,667)	$ 59,536	$ (18,760)	$ (168,464)
Basic and diluted net income (loss) per share						$ 0.24	$ 0.14	$ 0.13	$ 0.04	$ 0.04	$ (0.04)	$ (0.07)	$ (0.09)
Cash dividends declared per common share (in dollars per share)	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.25	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.25	$ 0.25	$ 0.25	$ 0.00	$ 0.75	$ 0.50