Theravance Biopharma, Inc. [TBPH] Filings

10-Q 1 tbph-20230930x10q.htm 10-Q UNITED STATES

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36033

THERAVANCE BIOPHARMA, INC.

(Exact Name of Registrant as Specified in its Charter)


Cayman Islands		98-1226628
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

PO Box 309
Ugland House, South Church Street
George Town, Grand Cayman, Cayman Islands		KY1-1104
(Address of Principal Executive Offices)		(Zip Code)

(650) 808-6000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary Share $0.00001 Par Value	TBPH	The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☐				Smaller Reporting Company ☒
Accelerated Filer ☐				Emerging Growth Company ☐
Non-accelerated Filer ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2023, the number of the registrant’s outstanding ordinary shares was 49,797,866.

Table of Contents

THERAVANCE BIOPHARMA, INC.

TABLE OF CONTENTS


	Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)	3
Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022	4
Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2023 and 2022	5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 6. Exhibits	64
Signatures	65

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THERAVANCE BIOPHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)


	September 30,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	71,685	$	298,172
Short-term marketable securities		62,318		29,312
Receivables from collaborative arrangements		17,057		16,785
Prepaid clinical and development services		1,634		1,513
Other prepaid and current assets		8,996		7,682
Total current assets		161,690		353,464
Property and equipment, net		9,288		11,875
Operating lease assets		37,576		40,126
Future contingent milestone and royalty assets		194,200		194,200
Restricted cash		836		836
Other assets		10,000		6,899
Total assets	$	413,590	$	607,400

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	2,368	$	1,554
Accrued personnel-related expenses		6,578		10,314
Accrued clinical and development expenses		3,272		4,932
Accrued general and administrative expenses		1,903		4,020
Operating lease liabilities		9,713		6,753
Deferred revenue		24		24
Other accrued liabilities		1,510		1,118
Total current liabilities		25,368		28,715
Long-term operating lease liabilities		41,118		45,407
Future royalty payment contingency		27,165		25,438
Long-term deferred revenue		175		192
Unrecognized tax benefits		65,955		64,191
Other long-term liabilities		7,679		1,657
Commitments and contingencies

Shareholders’ Equity
Preferred shares, $0.00001 par value: 230 shares authorized, no shares issued or outstanding		—		—
Ordinary shares, $0.00001 par value: 200,000 shares authorized; 50,819 and 65,227 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		1		1
Additional paid-in capital		1,146,948		1,295,725
Accumulated other comprehensive loss		(225)		(15)
Accumulated deficit		(900,594)		(853,911)
Total shareholders’ equity		246,130		441,800
Total liabilities and shareholders’ equity	$	413,590	$	607,400

See accompanying notes to condensed consolidated financial statements.

Table of Contents

THERAVANCE BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022

Revenue:
Viatris collaboration agreement	$	15,687	$	12,445	$	39,841	$	34,010
Collaboration revenue		6		6		18		187
Licensing revenue		—		—		—		2,500
Total revenue		15,693		12,451		39,859		36,697

Expenses:
Research and development (1)		8,311		9,867		32,308		48,044
Selling, general and administrative (1)		16,142		16,277		54,603		50,341
Restructuring and related expenses (1)		—		509		2,743		12,838
Total expenses		24,453		26,653		89,654		111,223

Loss from operations		(8,760)		(14,202)		(49,795)		(74,526)
Interest expense (2)		(609)		(1,545)		(1,727)		(5,819)
Loss on extinguishment of debt		—		(3,034)		—		(3,034)
Interest income and other income (expense), net		1,786		2,758		7,269		4,823
Loss from continuing operations before income taxes		(7,583)		(16,023)		(44,253)		(78,556)
Provision for income tax expense		(1,367)		—		(2,430)		(12)
Net loss from continuing operations		(8,950)		(16,023)		(46,683)		(78,568)

Income from discontinued operations before income taxes		—		1,115,016		—		1,143,930
Provision for income tax expense		—		(182,362)		—		(182,868)
Net income from discontinued operations		—		932,654		—		961,062

Net income (loss)	$	(8,950)	$	916,631	$	(46,683)	$	882,494

Net unrealized gain (loss) on available-for-sale investments		61		(76)		(210)		(121)
Total comprehensive income (loss)	$	(8,889)	$	916,555	$	(46,893)	$	882,373

Net income (loss) per share:
Continuing operations - basic and diluted	$	(0.17)	$	(0.21)	$	(0.81)	$	(1.04)
Discontinued operations - basic and diluted	$	—	$	12.35	$	—	$	12.70
Net income (loss) - basic and diluted	$	(0.17)	$	12.14	$	(0.81)	$	11.66

Shares used to compute basic and diluted net income (loss) per share		52,361		75,515		57,287		75,678

(1)	Amounts include share-based compensation expense as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Research and development	$	2,004	$	2,623	$	6,301	$	10,062
Selling, general and administrative		4,258		5,196		12,890		15,724
Restructuring and related expenses		—		711		356		6,998
Total share-based compensation expense	$	6,262	$	8,530	$	19,547	$	32,784

(2)	Interest expense for the three and nine months ended September 30, 2023 was comprised of non-cash interest expense only.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

THERAVANCE BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)


						Accumulated
				Additional		Other				Total
	Ordinary Shares			Paid-In		Comprehensive		Accumulated		Shareholders'
	Shares	Amount		Capital		Gain (Loss)		Deficit		Equity
Balances at June 30, 2023	53,694	$	1	$	1,172,090	$	(286)	$	(891,644)	$	280,161
Repurchase of ordinary shares, net of transaction costs	(3,178)		—		(30,891)		—		—		(30,891)
Proceeds from ESPP purchases	—		—		(1)		—		—		(1)
Employee share-based compensation expense	—		—		6,262		—		—		6,262
Issuance of restricted shares	356		—		—		—		—		—
Option exercises	—		—		—		—		—		—
Repurchase of shares to satisfy tax withholding	(53)		—		(512)		—		—		(512)
Net unrealized gain on marketable securities	—		—		—		61		—		61
Net loss	—		—		—		—		(8,950)		(8,950)
Balances at September 30, 2023	50,819	$	1	$	1,146,948	$	(225)	$	(900,594)	$	246,130

						Accumulated
				Additional		Other				Total
	Ordinary Shares			Paid-In		Comprehensive		Accumulated		Shareholders'
	Shares	Amount		Capital		Loss		Deficit		Equity
Balances at December 31, 2022	65,227	$	1	$	1,295,725	$	(15)	$	(853,911)	$	441,800
Repurchase of ordinary shares, net of transaction costs	(15,619)		—		(166,787)		—		—		(166,787)
Proceeds from ESPP purchases	63		—		445		—		—		445
Employee share-based compensation expense	—		—		19,547		—		—		19,547
Issuance of restricted shares	1,337		—		—		—		—		—
Option exercises	—		—		—		—		—		—
Repurchase of shares to satisfy tax withholding	(189)		—		(1,982)		—		—		(1,982)
Net unrealized loss on marketable securities	—		—		—		(210)		—		(210)
Net loss	—		—		—		—		(46,683)		(46,683)
Balances at September 30, 2023	50,819	$	1	$	1,146,948	$	(225)	$	(900,594)	$	246,130

						Accumulated
				Additional		Other				Total
	Ordinary Shares			Paid-In		Comprehensive		Accumulated		Shareholders'
	Shares	Amount		Capital		Loss		Deficit		Equity
Balances at June 30, 2022	76,427	$	1	$	1,410,415	$	(45)	$	(1,760,180)	$	(349,809)
Repurchase of ordinary shares	(9,645)		—		(94,037)		—		—		(94,037)
Proceeds from ESPP purchases	—		—		1		—		—		1
Employee share-based compensation expense	—		—		8,530		—		—		8,530
Issuance of restricted shares	655		—		—		—		—		—
Repurchase of shares to satisfy tax withholding	(71)		—		(662)		—		—		(662)
Net unrealized loss on marketable securities	—		—		—		(76)		—		(76)
Net income	—		—		—		—		916,631		916,631
Balances at September 30, 2022	67,366	$	1	$	1,324,247	$	(121)	$	(843,549)	$	480,578

						Accumulated
				Additional		Other				Total
	Ordinary Shares			Paid-In		Comprehensive		Accumulated		Shareholders'
	Shares	Amount		Capital		Loss		Deficit		Equity
Balances at December 31, 2021	74,435	$	1	$	1,387,469	$	—	$	(1,726,043)	$	(338,573)
Repurchase of ordinary shares	(9,645)		—		(94,037)		—		—		(94,037)
Proceeds from ESPP purchases	72		—		488		—		—		488
Employee share-based compensation expense	—		—		32,784		—		—		32,784
Issuance of restricted shares	2,764		—		—		—		—		—
Repurchase of shares to satisfy tax withholding	(260)		—		(2,457)		—		—		(2,457)
Net unrealized loss on marketable securities	—		—		—		(121)		—		(121)
Net income	—		—		—		—		882,494		882,494
Balances at September 30, 2022	67,366	$	1	$	1,324,247	$	(121)	$	(843,549)	$	480,578

See accompanying notes to condensed consolidated financial statements.

Table of Contents

THERAVANCE BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2023		2022
Operating activities
Net (loss) income	$	(46,683)	$	882,494
Less: Net income from discontinued operations		—		(961,062)
Net loss from continuing operations		(46,683)		(78,568)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,609		3,057
Amortization and accretion income, net		(1,494)		(342)
Future royalty payment contingency interest accretion		1,727		424
Share-based compensation		19,547		32,784
Gain on sale of Velusetrag		—		(2,709)
(Gain) loss on disposal of property and equipment		1,353		(96)
Amortization of right-of-use assets		2,724		2,284
Loss on extinguishment of debt		—		3,034
Changes in operating assets and liabilities:
Receivables from collaborative and licensing arrangements		(272)		(49)
Prepaid clinical and development services		(121)		7,600
Other prepaid and current assets		(1,315)		(1,148)
Right-of-use lease assets		(173)		(2,587)
Other assets		3,309		(1,743)
Accounts payable		354		2,150
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities		(6,657)		(18,465)
Accrued interest payable		—		(1,246)
Deferred revenue		(17)		(186)
Operating lease liabilities		(1,329)		(1,111)
Other long-term liabilities		1,295		(421)
Net cash used in operating activities - continuing operations		(26,143)		(57,338)
Net cash used in operating activities - discontinued operations		—		(5,598)
Net cash used in operating activities		(26,143)		(62,936)

Investing activities
Purchases of property and equipment		(1,811)		(306)
Purchases of marketable securities		(134,534)		(93,260)
Maturities of marketable securities		31,435		108,700
Sale of short-term investments and marketable securities		71,377		5
Proceeds from the sale of Velusetrag		—		2,709
Proceeds from the sale of property and equipment		1,513		1,866
Net cash (used in) provided by investing activities - continuing operations		(32,020)		19,714
Net cash provided by investing activities - discontinued operations		—		1,095,134
Net cash (used in) provided by investing activities		(32,020)		1,114,848

Financing activities
Ordinary share repurchases		(166,787)		(94,037)
Proceeds from ampreloxetine funding, net		—		24,464
Principal payment on 2035 notes		—		(399,998)
Principal payment on 2023 notes		—		(231,605)
Proceeds from ESPP purchases		445		488
Repurchase of shares to satisfy tax withholding		(1,982)		(2,457)
Net cash used in financing activities - continuing operations		(168,324)		(703,145)
Net cash used in financing activities - discontinued operations		—		(20,189)
Net cash used in financing activities		(168,324)		(723,334)

Net (decrease) increase in cash, cash equivalents, and restricted cash		(226,487)		328,578
Cash, cash equivalents, and restricted cash at beginning of period		299,008		90,796
Cash, cash equivalents, and restricted cash at end of period	$	72,521	$	419,374

Supplemental disclosure of cash flow information
Cash paid for interest	$	—	$	22,244
Cash paid for income taxes, net	$	14	$	26

Supplemental disclosure of non-cash investing and financing activities
Recognition of tenant improvement allowance assigned to sublease	$	6,490	$	—

See accompanying notes to condensed consolidated financial statements.

Table of Contents

THERAVANCE BIOPHARMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited but includes all adjustments (consisting only of normal recurring adjustments), which are considered necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with United States (“US”) generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2022 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2023.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other interim period or for any future period. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and intercompany transactions and balances have been eliminated.

On July 20, 2022, the Company completed a monetization of its ownership interests in a significant equity method investment which had a major effect on the Company’s financial results for the year ended December 31, 2022 (see “Note 7. Discontinued Operations”). In accordance with GAAP, the transaction was accounted for as a sale of a financial asset. For all periods presented, the results of the sale have been included as discontinued operations on these condensed consolidated financial statements. Certain prior year comparable operating expenses within the condensed consolidated statements of operations and comprehensive income (loss) have been reclassified as restructuring and related expenses. The reclassification had no effect on reported losses, total assets, or shareholders’ equity.

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 condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

The Company expects its cash, cash equivalents and marketable securities will be sufficient to fund its capital return program and its operations for at least the next twelve months from the issuance date of these condensed consolidated financial statements based on current operating plans and financial forecasts.

Significant Accounting Policies

There have been no material revisions in the Company’s significant accounting policies described in Note 1 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022.

Table of Contents

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company has evaluated recently issued accounting pronouncements and does not currently believe that any of these pronouncements will have a material impact on its condensed consolidated financial statements and related disclosures.

2. Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, excluding shares subject to repurchase and without consideration of potentially dilutive securities. Diluted net income (loss) per share is computed by giving effect to all potentially dilutive ordinary shares outstanding for the period, which primarily consist of instruments issued and outstanding under the Company’s equity incentive and employee share purchase plans. Ordinary share equivalents are excluded from the computation in periods in which they have an anti-dilutive effect unless the consideration of any one of them gives a dilutive effect.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share data)	2023		2022		2023		2022
Numerator:
Net loss from continuing operations	$	(8,950)	$	(16,023)	$	(46,683)	$	(78,568)
Net income from discontinued operations		—		932,654		—		961,062
Net income (loss)	$	(8,950)	$	916,631		(46,683)		882,494

Denominator:
Weighted-average ordinary shares outstanding		52,361		75,515		57,287		75,678
Less: weighted-average ordinary shares subject to forfeiture		—		—		—		—
Weighted-average ordinary shares outstanding - basic and diluted		52,361		75,515		57,287		75,678

Net income (loss) per share:
Continuing operations - basic and diluted	$	(0.17)	$	(0.21)	$	(0.81)	$	(1.04)
Discontinued operations - basic and diluted	$	—	$	12.35	$	—	$	12.70
Net income (loss) per share - basic and diluted	$	(0.17)	$	12.14	$	(0.81)	$	11.66

Anti-dilutive Securities

In accordance with Accounting Standards Codification (“ASC”) 260, Earnings Per Share, if a company incurred a loss related to its continuing operations, then potential ordinary shares are considered anti-dilutive for the periods in which the loss was recognized. For the three and nine months ended September 30, 2023 and 2022, the Company recognized losses from continuing operations. As a result, the following ordinary equivalent shares were not included in the computation of diluted net loss per share for both continuing operations and discontinuing operations:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(In thousands)	2023	2022	2023	2022
Share issuances under equity incentive plans and employee share purchase plan	3,459	5,036	3,972	7,137

Table of Contents

3. Revenue

Revenue from Collaborative Arrangements

Viatris

In January 2015, the Company and Viatris Inc. (“Viatris”) established a strategic collaboration (the “Viatris Agreement”) for the development and commercialization of revefenacin, including YUPELRI^® (revefenacin) inhalation solution. The Company entered into the collaboration to expand the breadth of its revefenacin development program and extend its commercial reach beyond the acute care setting. In November 2018, YUPELRI was approved by the US Food and Drug Administration (the “FDA”) for the maintenance treatment of patients with chronic obstructive pulmonary disease (“COPD”).

In the US, Viatris is leading the commercialization of YUPELRI, and the Company co-promotes the product under a profit and loss sharing arrangement (65% to Viatris; 35% to the Company). Outside the US (excluding China and adjacent territories), Viatris is responsible for development and commercialization and will pay the Company a tiered royalty on net sales at percentage royalty rates ranging from low double-digits to mid-teens. Viatris also holds exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories, which include Hong Kong SAR, the Macau SAR, and Taiwan, and the Company is eligible to receive low double-digit tiered royalties on net sales of nebulized revefenacin in this region, if approved. Viatris is responsible for all aspects of development and commercialization in the China and adjacent territories, including pre- and post-launch activities and product registration and all associated costs. Viatris is the principal in the sales transactions, and as a result, the Company does not reflect the product sales in its condensed consolidated financial statements.

As of September 30, 2023, the Company is eligible to receive from Viatris potential global development, regulatory and sales milestone payments (excluding China and adjacent territories) totaling up to $205.0 million in the aggregate, with $160.0 million associated with YUPELRI monotherapy and $45.0 million associated with future potential combination products. Of the $160.0 million associated with monotherapy, $150.0 million relates to sales milestones based on achieving certain levels of US net sales and $10.0 million relates to regulatory actions in the European Union (“EU”). The Company is also eligible to receive additional potential development and sales milestones totaling $52.5 million related to Viatris’ development and commercialization of nebulized revefenacin in China and adjacent territories with $45.0 million associated with YUPELRI monotherapy and $7.5 million associated with future potential combination products. Of the $45.0 million associated with monotherapy, $37.5 million relates to sales milestones based on achieving certain levels of net sales and $7.5 million relates to regulatory approval in China.

The Viatris Agreement is considered to be within the scope of ASC 808, Collaborative Arrangements, as the parties are active participants and exposed to the risks and rewards of the collaborative activity with a unit of account provided to Viatris as a customer. Under the terms of the Viatris Agreement, which included the delivery by the Company of a license to Viatris to develop and commercialize revefenacin, Viatris was responsible for reimbursement of the Company’s costs related to the registrational program up until the approval of the first new drug application in November 2018; thereafter, R&D expenses are shared. Performing R&D services for reimbursement is considered a collaborative activity under the scope of ASC 808. Reimbursable program costs are recognized proportionately with the performance of the underlying services and accounted for as reductions to R&D expense. For this unit of account, the Company did not recognize revenue or analogize to ASC 606, Revenue Recognition, and, as such, the reimbursable program costs are excluded from the original transaction price.

The future potential milestone amounts for the Viatris Agreement were not included in the original transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. As part of the Company’s evaluation of the development and regulatory milestones constraint, the Company determined that the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals which are not within its control and uncertain at this stage. The Company expects that the sales-based milestone payments and royalty arrangements will be recognized when the sales occur or the milestone is achieved.

Following the FDA approval of YUPELRI in November 2018, net amounts payable to or receivable from Viatris each quarter under the profit-sharing structure are disaggregated according to their individual components. In

Table of Contents

accordance with the applicable accounting guidance, amounts receivable from Viatris in connection with the commercialization of YUPELRI are recorded within the condensed consolidated statements of operations as revenue from “Viatris collaboration agreement” irrespective of whether the overall collaboration is profitable. Amounts payable to Viatris, if any, in connection with the commercialization of YUPELRI are recorded within the condensed consolidated statements of operations as a collaboration loss within selling, general and administrative expenses. Any reimbursement from Viatris attributed to the 65% cost-sharing of the Company’s R&D expenses is characterized as a reduction of R&D expense, as the Company does not consider performing research and development services for reimbursement to be a part of its ordinary activities. For the three and nine months ended September 30, 2023, YUPELRI continued to be profitable for the Company.

The following YUPELRI-related amounts were recognized within revenue in the Company’s condensed consolidated statements of operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Viatris collaboration agreement - Amounts receivable from Viatris	$	15,687	$	12,445	$	39,841	$	34,010

While Viatris records total YUPELRI net sales within its own condensed consolidated financial statements, Viatris collaboration agreement revenue on the Company’s condensed consolidated statements of operations included the Company’s implied 35% share of total YUPELRI net sales, before deducting shared expenses, as presented below:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
YUPELRI net sales (Theravance Biopharma implied 35%)	$	20,414	$	18,698	$	56,111	$	51,158

Other Collaborative Arrangement Revenues

The Company’s other collaborative arrangement revenues consisted of:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2023

2022

2023

2022

Viatris