ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Management’s Discussion and Analysis (“MD&A”) is intended to facilitate an understanding of our results of operations, as well as our liquidity and capital resources. Additionally, it describes accounting policies and estimates that management has deemed as “critical accounting policies and estimates.” This MD&A should be read in conjunction with our consolidated financial statements and notes included in this Annual Report on Form 10-K. The information contained in this MD&A or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, our operating expenses, and future payments under our collaboration agreements, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Such statements are based upon current expectations that involve risks and uncertainties. You should review the section entitled “Risk Factors” in Item 1A of Part I above for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. See the section entitled “Special Note regarding Forward-Looking Statements” on page 3 for more information.
Management Overview
Theravance Biopharma, Inc. (“we,” “our,” “Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the development and commercialization of medicines. Our focus is to deliver medicines thatmake a difference® in people’s lives.
In pursuit of our purpose, we leverage decades of expertise, which has led to the development of the United States (“US”) Food and Drug Administration (the “FDA”) approved YUPELRI® (revefenacin) inhalation solution indicated for the maintenance treatment of patients with chronic obstructive pulmonary disease (“COPD”).
Recent Significant Developments
Ampreloxetine Phase 3 Clinical Study Top-line Results
On March 3, 2026, we announced that our ampreloxetine Phase 3 clinical study (CYPRESS) in development for the treatment of symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy did not meet its primary endpoint in the Orthostatic Hypotension Symptom Assessment composite score. As a result of this outcome, we have decided to wind down the ampreloxetine program.
Strategic Review Committee
In connection with the CYPRESS study results, the Strategic Review Committee of our Board of Directors (the "Committee") is accelerating its ongoing review of alternatives to maximize value for shareholders. Since its formation in 2024, the Committee has been working on an ongoing basis with Lazard, its independent financial advisor, to evaluate opportunities available to the Company, including under multiple potential outcomes for the CYPRESS study. Building upon this work, the Committee will act with urgency to evaluate a broad range of value maximizing and tax efficient alternatives, including but not limited to a sale of the Company. There can be no assurance that the Committee's strategic review process will result in any transaction. We do not intend to disclose further developments on this review process unless and until it determines that such disclosure is appropriate or necessary. As we proceed with the orderly wind down of the ampreloxetine program, we will complete additional analyses of the CYPRESS dataset and Phase 3 program, in consultation with external experts, to assess whether the data merits further regulatory discussion. This assessment is intended to provide the Committee with additional clarity regarding any remaining value in ampreloxetine for our shareholders. There can be no assurance that any additional regulatory engagement will occur.
Organizational Restructure
While the Committee accelerates its review, we are implementing an organizational restructuring (the “Restructuring”) to streamline costs and align our resources with our commercial focus on YUPELRI. The Restructuring will involve winding down our R&D function and significantly reducing our G&A function. The Restructuring is
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expected to reduce operating expenses by approximately 60%, relative to 2025 operating expenses of $111.1 million. The full run-rate cost savings of approximately $70 million are expected to be realized beginning in the third quarter of 2026.
YUPELRI Net Sales Growth
In 2025, YUPELRI experienced net sales growth and reached launch-to-date highs in annual net sales and brand profitability. Through the combined commercialization efforts with our partner Viatris Inc., total YUPELRI net sales increased by 12% to $266.6 million in 2025 compared to 2024. Customer demand grew 7% in 2025 compared to 2024. In addition, in January 2026, we received a $25.0 million milestone payment for the achievement of $250.0 million in US net sales in 2025.
Sale of TRELEGY® Royalties
In June 2025, we sold our remaining royalty interest in the global net sales of TRELEGY to GSK plc for $225.0 million while retaining our right to receive up to $150.0 million in remaining potential milestone payments from Royalty Pharma Investments. The sales transaction represented the first outcome of the ongoing efforts of the Committee to assess all strategic alternatives available to us to unlock shareholder value.
Achievement of $50.0 Million TRELEGY® Royalty Milestone Payment for 2025
In February 2026, we received a $50.0 million maximum milestone payment from Royalty Pharma Investments associated with the achievement of certain minimum royalty payments related to 2025 TRELEGY global net sales. As of December 31, 2025, we are eligible to receive up to $100.0 million in remaining milestone payments related to TRELEGY’s 2026 global net sales. TRELEGY’s 2025 global net sales of $3.91 billion would exceed the thresholds required to achieve the $100.0 million milestone in 2026 (based on $3.51 billion of global net sales).
See “Item 1. Business” starting on page 4 for a more complete discussion of our business.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with US Generally Accepted Accounting Principles (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and other related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies and estimates discussed below are essential to understanding our operating results and financial condition, as these policies and estimates relate to the more significant areas involving management’s judgments.
Future Royalty Payment Contingency
We treat contingent liabilities related to sale of future royalties as debt financings, amortized under the effective interest method over the estimated life of the related expected royalty stream. The contingent liabilities related to sale of future royalties and the debt amortization are based on current estimates of the amount and timing of future royalty payments. We periodically reassess the amount and timing of probability-adjusted estimated royalty payments based on internal sales projections and external information from market data sources, which are considered Level 3 inputs. To the extent our estimates of the amount and timing of future royalty payments are materially greater or less than previous estimates, we will prospectively adjust the amortization of the contingent liability and effective interest rate.
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Results of Operations
The following tables set forth our results of operations and management’s commentary for the 2025 period compared to the 2024 period.
Revenue
While Viatris Inc. (“Viatris”) records the total net sales of YUPELRI within its own financial statements, our implied 35% YUPELRI revenue, as compared to the prior year period, was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Our recognized revenue, as compared to the prior year period, was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Licensing and milestone revenue 32,500 — 32,500 NM
NM: Not Meaningful
We are entitled to a share of US profits and losses (65% to Viatris; 35% to Theravance Biopharma) received in connection with YUPELRI net sales. In accordance with the applicable accounting guidance, amounts receivable from Viatris in connection with the commercialization of YUPELRI are recorded within the consolidated statements of operations as revenue from “Viatris collaboration agreement”. Any reimbursement from Viatris attributed to the 65% cost-sharing of our R&D expenses is characterized as a reduction of R&D expense, as we do not consider performing R&D services for reimbursement to be a part of our ordinary operations.
In 2025 and 2024, we recognized $75.0 million and $64.4 million, respectively, in revenue from the Viatris collaboration agreement, which represented an increase of 16%. The increase was primarily attributed to higher net sales of YUPELRI, which grew12% and was driven by customer demand growth of 7% and improved net pricing due to favorable channel mix. We view customer demand as the primary driver for the brand and believe improvements to net pricing will likely moderate in the future.
In 2025, we also recognized $32.5 million in licensing and milestone revenue comprised of (i) $25.0 million related to the achievement of a YUPELRI US net sales milestone and (ii) $7.5 million related to YUPELRI’s regulatory approval by China’s National Medical Products Administration (“NMPA”).
Research and Development
Our R&D expenses consist primarily of employee-related costs, external costs, and various allocable expenses. We budget total R&D expenses on an internal department level basis, and we manage and report our R&D activities across the following four cost categories:
1) Employee-related costs, which include salaries, bonuses, and benefits;
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The following table summarizes our R&D expenses incurred, net of any reimbursements from collaboration partners, as compared to the prior year period:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Facilities and other allocated expenses 3,363 3,215 148 5
Total R&D expenses decreased slightly by $0.2 million in 2025, or 1%, compared to 2024. The decrease was primarily driven by a $1.0 million reduction in share-based compensation and a $0.9 million decline in external-related expenses. The decrease in share-based compensation expense was primarily driven by fewer awards granted in 2025 compared to the prior year. The decline in external-related expenses was primarily attributed to the completion of the CYPRESS study enrollment in August 2025 which was partially offset by incremental new drug application (“NDA”) and regulatory-related activities for ampreloxetine. The decreases in share-based compensation and external-related expenses were partially offset by an $1.5 million increase in employee-related expenses.
As a result of the Restructuring announced on March 3, 2026, we expect R&D expenses to decrease beginning in the second quarter of 2026.
Selling, General and Administrative
Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and benefits, facilities and overhead costs, and other costs related to areas such as legal, finance, information technology, sales and marketing, and medical affairs.
SG&A expenses, as compared to the prior year period, were as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Total SG&A expenses were $73.7 million in 2025. Excluding share-based compensation expense (“SBC”), total SG&A expenses were $59.2 million and were comprised of $29.4 million of general and administrative (“G&A”) expenses and $29.8 million of selling, marketing & medical affairs (“SM&M”) expenses. Total SG&A expenses (excluding SBC) were $52.9 million in 2024 and were comprised of $27.2 million of G&A expenses and $25.7 million of SM&M expenses.
The $2.3 million increase in G&A expenses (excluding SBC) compared to 2024 was primarily due to one-time legal costs. Excluding the one-time legal costs, G&A expenses (excluding SBC) were 3% lower compared to 2024 driven by cost savings initiatives. SM&M expenses (excluding SBC) increased by $4.1 million compared to 2024 and was primarily due to pre-launch medical affairs and commercialization expenses associated with ampreloxetine.
Total SBC related to SG&A expenses was $14.4 million in 2025 compared to $16.3 million in 2024.
As a result of the Restructuring announced on March 3, 2026, we expect SG&A expenses to decrease beginning in the second quarter of 2026.
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Impairment of Long-Lived Assets
Impairment of long-lived assets, as compared to the prior year period, was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Impairment of long-lived assets (non-cash) $ — $ 4,513 $ (4,513) NM %
NM: Not Meaningful
In 2024, we recognized non-cash impairment charges of $4.5 million to impair the carrying value of our operating lease assets associated with our laboratory space and related leasehold improvements located in South San Francisco, California. The laboratory space had been on the sublease market since March 2023. There were no impairment charges related to our long-lived assets in 2025.
Net Gain on Realized Contingent Milestone and Royalty Assets
Net gain on realized contingent milestone and royalty assets was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
NM: Not Meaningful
In 2025, we recognized a $75.1 million net gain on contingent milestone and royalty assets resulting from the sale of our TRELEGY royalties to GSK. This net gain reflects total cash proceeds of $225.0 million from GSK, less (i) the contingent milestone and royalty assets carrying value of $144.2 million and (ii) transaction costs of $5.7 million. We received the $225.0 million from GSK in June 2025.
Although we sold the future royalties related to TRELEGY, we retained the right to receive up to the remaining $100.0 million in potential Milestone Payments from Royalty Pharma Investments (“Royalty Pharma”) if certain TRELEGY global nets sales thresholds are achieved in 2026.
TRELEGY Milestone Income
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
TRELEGY milestone income $ 50,000 $ — $ 50,000 NM %
NM: Not Meaningful
In December 2025, we recognized $50.0 million in milestone income for the achievement of certain minimum royalty payments related to 2025 TRELEGY global net sales. Although we achieved a similar $50.0 million milestone for TRELEGY global net sales in 2024, the 2024 milestone was previously recognized as income during the sale of our equity interests in Theravance Respiratory Company, LLC (“TRC”) to Royalty Pharma in July 2022.
Interest Expense
Interest expense, as compared to the prior year period, was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Interest expense in 2025 and 2024 represented non-cash interest expense associated with $25.0 million received from Royalty Pharma in July 2022 to partially fund our CYPRESS study. The increase in interest expense was primarily
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due to the compounding of non-cash interest due to Royalty Pharma. We do not anticipate having any cash interest expense in the foreseeable future.
Interest Income and Other Income, net
Interest and other income, net, as compared to the prior year period, was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
Interest and other income, net, increased by $5.3 million in 2025 compared to 2024. The increase was primarily attributable to an increase in interest income related to an increase in our cash, cash equivalents, and marketable securities balances in 2025. The increase in the balances was primarily driven by (i) proceeds of $225.0 million from the sale of TRELEGY royalties in June 2025 and (ii) a $50.0 million milestone payment from Royalty Pharma in February 2025 associated with the achievement of certain minimum royalty payments related to 2024 TRELEGY global net sales.
Provision for Income Tax Expense
The provision for income tax expense, as compared to the prior year period, was as follows:
Year Ended December 31, Change
(In thousands) 2025 2024 $ %
In 2025, we recognized income tax expense of $23.4 million compared to $11.8 million in 2024. Income tax for 2025 was primarily attributed to US federal tax on the sale of our royalty interest in TRELEGY in 2025 and the TRELEGY milestone that we earned in 2025, as well as our uncertain tax positions, including interest on historical positions. Although we achieved a TRELEGY milestone in 2024, the associated tax expense was already recognized in connection with the sale of our equity interests in TRC to Royalty Pharma in 2022. As a result, the TRELEGY milestone in 2024 did not have an impact our income tax expense in 2024.
Liquidity and Capital Resources
As of December 31, 2025, we had approximately $326.5 million in cash, cash equivalents, and investments in marketable securities (excluding restricted cash), and we had no outstanding long-term debt.
In February 2025, we received a $50.0 million milestone payment from Royalty Pharma, which was the maximum amount permitted. This milestone was associated with certain royalty thresholds that were achieved by Royalty Pharma related to 2024 TRELEGY global net sales. In June 2025, we also received $225.0 million from GSK related to the sale of our TRELEGY royalty interests.
In January 2026, we received a $25.0 million milestone payment from Viatris for the achievement of a sales threshold related to 2025 YUPELRI US net sales, and in February 2026, we received another $50.0 million milestone payment from Royalty Pharma associated with certain royalty thresholds that were achieved by Royalty Pharma related to 2025 TRELEGY global net sales. As a result of these recent cash receipts, we expect to have approximately $400 million in cash, cash equivalents, and marketable securities at the end of the first quarter of 2026.
Our strategic business plan is subject to significant uncertainties and risks as a result of, among other factors, expenses being higher than anticipated, the sales levels of YUPELRI, and the need to satisfy contingent liabilities, including tax, litigation matters, and indemnification obligations.
Adequacy of cash resources to meet future needs
We expect our cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the issuance date of our consolidated financial statements based on current operating plans and financial forecasts.
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Cash Flows
Cash flows, as compared to the prior year period, were as follows:
Year Ended December 31,
(In thousands) 2025 2024 Change
Net cash used in financing activities (3,248) (2,497) (751)
Net cash flows provided by (used in) operating activities
Net cash provided by operating activities was $238.5 million in 2025, consisting of net income of $105.9 million, a net increase in cash resulting from adjustments for non-cash and other reconciling items of $12.1 million (e.g., share-based compensation expense) and a net increase in cash resulting from changes in operating assets and liabilities of $120.5 million. The net increase in cash resulting from changes in operating assets and liabilities included a $50.0 million TRELEGY milestone payment from Royalty Pharma in February 2025 and cash proceeds of $225.0 million from GSK in June 2025 resulting from the sale of our TRELEGY royalties.
Net cash used in operating activities was $11.5 million in 2024, consisting of a net loss of $56.4 million, a net increase in cash resulting from adjustments for non-cash and other reconciling items of $24.5 million, and a net increase in cash resulting from changes in operating assets and liabilities of $20.4 million.
Net cash flows (used in) provided by investing activities
Net cash used in investing activities was $105.3 million in 2025, consisting primarily of net cash outflows from the purchase and maturities of marketable securities.
Net cash provided by investing activities was $12.3 million in 2024, consisting primarily of cash inflows from the net purchase and maturities of marketable securities of $14.9 million.
Net cash flows used in financing activities
Net cash used in financing activities was $3.2 million in 2025, consisting primarily of $4.0 million of cash outflows related to the repurchase of shares to satisfy tax withholding obligations which was partially offset by $0.8 million cash inflows related to the exercise of employee share options.
Net cash used in financing activities was $2.5 million in 2024, consisting primarily of $0.4 million of cash outflows related to the repurchase of ordinary shares as part of completion of our capital return program, $0.5 million of cash inflows related to the sale of shares through our employee share purchase program (“ESPP”) and $2.7 million of cash outflows related to the repurchase of shares to satisfy tax withholding obligations.
Contractual Obligations
The table below represents our contractual obligations, including agreements that are cancelable as of December 31, 2025. Some of the amounts are based on management’s estimates and assumptions regarding these obligations, including their duration. As our estimates and assumptions are inherently subjective, the amount of the obligations that we will pay in future periods may differ from the amounts reflected in the table.
Years
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Commitments and Contingencies
We indemnify our officers and directors for certain events or occurrences, subject to certain limits. We maintain insurance policies that may limit our exposure, and therefore, 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, 2025. However, no assurances can be given regarding the amounts that may ultimately be covered by the insurers, and we may incur substantial liabilities because of these indemnification obligations.
Recent Accounting Pronouncements
The information required by this item is included in “Item 8. Note 1. Organization and Summary of Significant Accounting Policies,” in our consolidated financial statements included in this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K. An index of those financial statements can be found in “Item 15. Exhibits and Financial Statement Schedules,” of this Annual Report on Form 10-K.
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
We conducted an evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act as of December 31, 2025, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rule 13a-15(e) of the Exchange Act), which are controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. In connection with the preparation of this Annual Report, our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). Based on its assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.
As a “smaller reporting company” and “non-accelerated filer” as defined under the rules and regulations of the SEC, we are not required to include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.
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Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Theravance Biopharma have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act, which occurred during the fourth quarter of the year ended December 31, 2025 which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal control over financial reporting despite the fact that many of our employees are working remotely.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
For the information required by this Item, see “Questions and Answers About Procedural Matters”, “Election of Directors”, “Nominees”, “Audit Committee”, “Meetings of the Board of Directors”, “Code of Conduct”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement to be filed with the SEC, which sections are incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
For the information required by this Item, see “Director Compensation”, “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” in the Proxy Statement to be filed with the SEC, which sections are incorporated herein by reference.
For the information required by this Item, see “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Proxy Statement to be filed with the SEC, which sections are incorporated herein by reference.
For the information required by this Item, see “Director Independence” and “Policies and Procedures for Related Party Transactions” in the Proxy Statement to be filed with the SEC, which sections are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
For the information required by this Item, see “Ratification of the Appointment of Independent Registered Public Accounting Firm” and “Pre-Approval of Audit and Non-Audit Services” in the Proxy Statement to be filed with the SEC, which sections are incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. Financial Statements:
The following financial statements and schedules of the Registrant have been appended to this Annual Report on Form 10-K:
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) F-2
Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4
Notes to Consolidated Financial Statements F-9
Supplementary Financial Data (unaudited) F-39
2. Financial Statement Schedules:
All schedules have been omitted because of the absence of conditions under which they are required or because the required information, where material, is shown in the financial statements, financial notes or supplementary financial information.
(b) Exhibits required by Item 601 of Regulation S-K
The information required by this Item is set forth on the exhibit index that precedes the signature page of this report.
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Exhibit Index
Incorporated by Reference
Exhibit Number Description Form FilingDate/PeriodEnd Date
3.1 Amended and Restated Memorandum and Articles of Association 8-K May 3, 2023
4.2 Shelf Rights Plan Resolution DEF 14A March 21, 2018
10.1+ Amended and Restated 2013 Equity Incentive Plan 8-K May 3, 2023
10.8+ Irish Addendum to the 2013 Equity Incentive Plan
10.11+ Theravance Biopharma, Inc. Performance Incentive Plan 8-K May 6, 2016
10.14+ Form of Notice of Restricted Share Unit Award 10-Q May 10, 2023
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Incorporated by Reference
Exhibit Number Description Form FilingDate/PeriodEnd Date
10.34+ Employment Contract with Aine Miller 10-Q May 15, 2024
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Incorporated by Reference
Exhibit Number Description Form FilingDate/PeriodEnd Date
21.1 Subsidiaries of Theravance Biopharma, Inc.
23.1 Consent of Independent Registered Public Accounting Firm
32 Certifications Pursuant to 18 U.S.C. Section 1350
Item 16. Form 10-K Summary
Not Applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THERAVANCE BIOPHARMA, INC.
Date: March 23, 2026 By: /s/ Rick E Winningham
Rick E Winningham
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Rick E Winningham as their true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to the annual report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Laurie S. Alsup, M.D.Laurie S. Alsup, M.D. Director March 23, 2026
/s/ Eran BroshyEran Broshy Director March 23, 2026
/s/ Jeremy T. GrantJeremy T. Grant Director March 23, 2026
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Signature Title Date
/s/ Jim KellyJim Kelly Director March 23, 2026
/s/ Dean J. MitchellDean J. Mitchell Director March 23, 2026
/s/ Donal O’ConnorDonal O’Connor Director March 23, 2026
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F
Theravance Biopharma, Inc.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) F-2
Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4
Notes to Consolidated Financial Statements F-9
Supplementary Financial Data (unaudited) F-39
F-1
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Theravance Biopharma, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Theravance Biopharma, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
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Management’s Estimates of the Amount and Timing of Ampreloxetine Royalties
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
San Mateo, California
March 23, 2026
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THERAVANCE BIOPHARMA, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31, December 31,
Assets
Current assets:
Receivables from collaborative arrangements 45,539 18,440
Receivables from milestones and royalty assets 50,000 50,000
Other prepaid and current assets 7,564 4,277
Long-term marketable securities 11,128 —
Property and equipment, net 5,895 7,418
Future contingent milestone and royalty assets — 144,200
Liabilities and Shareholders' Equity
Current liabilities:
Accrued personnel-related expenses 12,592 7,019
Accrued clinical and development expenses 3,373 1,058
Accrued general and administrative expenses 2,052 2,987
Other accrued liabilities 1,485 2,214
Long-term operating lease liabilities 31,758 39,108
Future royalty payment contingency 32,795 30,334
Other long-term liabilities 313 1,890
Commitments and contingencies (Note 15)
Shareholders’ Equity
Accumulated other comprehensive income 61 7
Total liabilities and shareholders’ equity $ 485,570 $ 354,161
See accompanying notes to consolidated financial statements
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THERAVANCE BIOPHARMA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended December 31,
Revenues:
Viatris collaboration agreement $ 74,964 $ 64,381
Licensing and milestone revenue 32,500 —
Expenses:
Selling, general and administrative (1) 73,652 69,174
Impairment of long-lived assets (non-cash) — 4,513
Net gain on realized contingent milestone and royalty assets 75,137 —
TRELEGY milestone income 50,000 —
Interest expense (non-cash) (2,461) (2,546)
Interest and other income, net 10,173 4,881
Provision for income tax expense (23,352) (11,804)
Net income (loss) per share:
Net income (loss) per share - basic $ 2.10 $ (1.15)
Net income (loss) per share - diluted $ 2.06 $ (1.15)
Shares used to compute net income (loss) per share - basic 50,317 48,847
(1) Amounts include share-based compensation expense as follows:
Year Ended December 31,
Research and development $ 4,081 $ 5,104
Selling, general and administrative 14,395 16,289
Total share-based compensation expense $ 18,476 $ 21,393
See accompanying notes to consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Year Ended December 31,
Other comprehensive income:
Net unrealized gain on available-for-sale investments, net of tax 54 72
See accompanying notes to consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
Accumulated
Additional Other Total
Ordinary Shares Paid-In Comprehensive Accumulated Shareholders'
Shares Amount Capital Income (Loss) Deficit Equity
Proceeds from the sale of ordinary shares 2 — 20 — — 20
Issuance of restricted shares 1,852 1 — — — 1
Option exercises 67 — 766 — — 766
Net unrealized gain on marketable securities — — — 54 — 54
Accumulated
Additional Other Total
Ordinary Shares Paid-In Comprehensive Accumulated Shareholders'
Shares Amount Capital Income (Loss) Deficit Equity
Proceeds from the sale of ordinary shares 11 — 99 — — 99
Proceeds from ESPP purchases 61 — 508 — — 508
Issuance of restricted shares 1,641 — — — — —
Net unrealized gain on marketable securities — — — 72 — 72
Net loss — — — — (56,418) (56,418)
See accompanying notes to consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
Operating activities
Depreciation and amortization 1,626 1,710
Amortization and accretion on investment securities, net (2,830) (2,509)
Future royalty payment contingency interest accretion 2,461 2,546
Loss on disposal of property and equipment 35 34
Loss on impairment of long-lived assets — 4,513
Amortization of right-of-use assets 4,015 4,414
Deferred income taxes (11,519) (7,573)
Other (89) —
Changes in operating assets and liabilities:
Receivables from collaborative arrangements (27,099) (966)
Prepaid clinical and development services 73 1,965
Other prepaid and current assets (3,360) 7,399
Right-of-use lease assets (32) (707)
Future contingent milestone and royalty assets 144,200 —
Operating lease liabilities (7,117) 661
Unrecognized tax benefits 10,481 9,906
Other long-term liabilities 67 (532)
Net cash provided by (used in) operating activities 238,541 (11,535)
Investing activities
Purchases of property and equipment (42) (332)
Purchase of derivative — (2,292)
Sale of short-term investments and marketable securities — 15,838
Net cash (used in) provided by investing activities (105,284) 12,284
Financing activities
Ordinary share repurchases — (445)
Proceeds from the sale of ordinary shares 20 99
Proceeds from ESPP purchases — 508
Proceeds from option exercises 766 —
Repurchase of shares to satisfy tax withholding (4,034) (2,659)
Net cash used in financing activities (3,248) (2,497)
Supplemental disclosure of cash flow information
Cash paid for income taxes, net $ 27,884 $ 109
See accompanying notes to consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Theravance Biopharma, Inc. (“Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the development and commercialization of medicines. The Company’s focus is to deliver medicines that make a difference® in people's lives.
Basis of Presentation
The Company’s consolidated financial statements as of December 31, 2025 and 2024, and for the year ended December 31, 2025 and 2024 have been prepared in conformity with United States (“US”) Generally Accepted Accounting Principles ("GAAP"), and the US Securities and Exchange (“SEC”) regulations for annual reporting.
Certain prior period current asset amounts on the “Consolidated Balance Sheets” have been reclassified. The reclassification had no impact on previously reported total current assets, aggregate financial position, results of operations, cash flows, or financial statement disclosures.
Principles of Consolidation
The consolidated financial statements include the accounts of Theravance Biopharma and its wholly-owned subsidiaries, all of which are denominated in US dollars. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Due to the inherent uncertainty in making estimates, actual results could differ materially from those estimates.
Liquidity and Capital Resources
The Company expects its cash, cash equivalents, and marketable securities will be sufficient to fund its operations for at least the next twelve months from the issuance date of these consolidated financial statements based on current operating plans and financial forecasts.
Segment Reporting
The Company has determined that its chief executive officer is the chief operating decision maker (“CODM”). The Company’s business offerings have similar economics and other characteristics, including the nature of products, types of customers, distribution methods, and regulatory environment. As a result, the Company has concluded that it operates in a single segment which is the development and commercialization of human therapeutics. Additional significant segment expenses are provided on a quarterly basis to the CODM to support the CODM’s decision-making process. See “Note 3. Segment Information” for more information.
Cash and Cash Equivalents
The Company considers 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 due to their short-term nature.
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Restricted Cash
The Company maintains restricted cash for certain lease agreements and letters of credit by which the Company has pledged cash and cash equivalents as collateral. See “Note 4. Cash, Cash Equivalents, and Restricted Cash” for more information.
Investments in Marketable Securities
The Company invests in marketable securities, primarily commercial paper, corporate notes, US government bonds and US government agency bonds. Marketable debt securities with original maturities of greater than three months and remaining maturities of less than 12 months are considered short-term investments. Marketable debt securities with maturities greater than 12 months are considered long-term investments. The Company determines the appropriate classification of the marketable securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The Company classifies its marketable securities as available-for-sale securities and reports them at fair value in cash and cash equivalents or marketable securities on the consolidated balance sheets.
Unrealized gains and losses are included as a component of “Accumulated other comprehensive income (loss)” in shareholders’ equity of the consolidated balance sheets and as a component of “Other comprehensive income (loss)” in the consolidated statements of operations and comprehensive income (loss). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included as a component of “Interest and other income, net” on the consolidated statements of operations.
The cost of securities sold is based on the specific identification method. Realized gains and losses and interest and dividends on securities are included in interest and other income (expense). In circumstances where the Company intends to sell, or is more likely than not required to sell, the security before it recovers its amortized cost basis, the difference between fair value and amortized cost is recognized as a loss in the consolidated statements of operations, with a corresponding write-down of the security's amortized cost.
The Company accounts for credit losses on available-for-sale debt securities in accordance with Accounting Standards Codification (“ASC”), Topic 326, Financial Instruments – Credit Losses (“ASC 326”). Under ASC 326, the Company regularly reviews its debt securities in an unrealized loss position to determine if the unrealized loss was credit-related or noncredit-related. The factors considered in determining whether credit losses exist include, but are not limited to, the creditworthiness of the security issuers, the severity and duration of the unrealized losses, any adverse conditions specifically related to the security, an industry, or geographic area, and whether the Company has the intent to sell the securities and whether it is more likely than not that the Company will be required to sell the securities before the recovery of the security’s amortized cost basis. The Company did not recognize any credit losses on available-for-sale debt securities for the year ended December 31, 2025 and 2024.
Fair Value of Financial Instruments
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 — Unadjusted 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 (e.g., interest rates, yield curves, etc.); and
Level 3 — Unobservable inputs and little, if any, market activity which require the Company to develop its own assumptions.
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The Company’s financial instruments include cash equivalents, marketable securities, derivatives, receivables from collaborative arrangements, accounts payable, and accrued liabilities. Cash equivalents and marketable securities are carried at estimated fair value and remeasured on a recurring basis. The carrying value of receivables from collaborative arrangements, accounts payable, and accrued liabilities approximate their estimated fair value due to the relatively short-term nature of these instruments.
Fair Value of Derivative
The Company utilizes a financial instrument to manage its exposure to financial risk and to mitigate potential tax liability. The Company determined that the financial instrument met the definition of a derivative under ASC Topic 815, Derivatives and Hedging.
The Company records the fair value of the derivative, on the date of issuance and at the end of each subsequent reporting period, as an asset on the consolidated balance sheets. The Company utilizes the derivative for risk management purposes and not for speculative trading or hedging purposes, and therefore, any changes in the fair value of the derivative are recorded each period within “Interest and other income, net” on the consolidated statements of operations. The cash flow effect of the derivative is included within net cash provided by (used in) investing activities on the consolidated statements of cash flows.
Receivables from Collaborative Arrangements
For the periods presented, the Company’s receivables from collaborative arrangements relate to amounts due arising from its collaboration and licensing agreements. When appropriate, the Company provides for an allowance for credit losses. The Company performs periodic credit evaluations of its customers and generally does not require collateral. For the year ended December 31, 2025 and 2024, the Company did not have any material write-offs of receivables from collaborative arrangements.
Concentration of Credit Risks
The Company invests in a variety of financial instruments and, based on its policy, limits the amount of credit exposure with any one issuer, industry, or geographic area for investments other than instruments backed by the US federal government.
The Company’s future contingent milestone and royalty assets and receivables primarily relate to amounts due under its collaboration, licensing, and other agreements. Accordingly, the Company may be exposed to credit risk generally associated with pharmaceutical companies or specific to its collaboration, licensing, and other agreements. The Company performs periodic evaluations of its customers and generally does not require collateral. For the year ended December 31, 2025 and 2024, the Company did not experience any material losses related to its receivables.
Property and Equipment
Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation, and are depreciated using the straight-line method over the estimated useful lives as presented in the table below. Upon retirement or sale, the cost of the disposed assets and the related accumulated depreciation are removed from the consolidated balance sheets and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.
Leasehold improvements Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures 5 - 7 years
Software and computer equipment 3 - 5 years
Leases
The Company determines whether a contract is or contains a lease at inception of the arrangement. In evaluating whether a contract is indicative of a lease, the Company considers all relevant facts and circumstances to assess whether the arrangement has extended to the Company the right to both (i) obtain substantially all the economic benefits from use of an identified asset and (ii) direct the use of the identified asset. To the extent that the Company determines a contract represents a lease, the arrangement is classified as either an operating lease or a finance lease, with
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the classification affecting the presentation and pattern of expense recognition in the consolidated statements of operations. As of December 31, 2025 and 2024, the Company did not have any finance leases.
Operating lease assets represent the Company’s right to use an underlying asset over the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the leasing arrangement. The Company records operating leases on the consolidated balance sheets through an operating lease asset and a corresponding short-term and long-term operating lease liability, as applicable. Lease liabilities are measured based on the present value of lease payments over the lease term discounted at the implicit interest rate at the commencement date of the leasing arrangement, when readily available or using the Company’s incremental borrowing rate, if the implicit rate is not determinable. The incremental borrowing rate is considered the estimated rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. The Company measures its operating lease assets based on the corresponding operating lease liabilities adjusted for (i) prepayments made to the lessor at or before the commencement date; (ii) any initial direct costs incurred; and (iii) tenant incentives granted under the lease contract.
In calculating operating lease assets and liabilities, the Company may elect to combine lease and non-lease components based on the asset type. When combining lease and non-lease components, the Company would account for the lease and non-lease components as a single lease component. The Company’s lease terms may include options to extend the lease only when it is reasonably certain that such options will be exercised, and the Company recognizes lease expense on a straight-line basis over the lease term.
Operating lease assets and operating lease liabilities are remeasured upon reassessment events and modifications to leases using the present value of remaining lease payments and incremental borrowing rate at the time of remeasurement, as applicable. Operating lease assets are evaluated for possible impairment in accordance with the Company’s long-lived assets policy.