TBPH 10-Q
Theravance Biopharma, Inc. (TBPH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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:
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
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(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 | |
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.
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).
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 | ||||
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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
As of July 31, 2026, the number of the registrant’s outstanding ordinary shares was
THERAVANCE BIOPHARMA, INC.
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THERAVANCE BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
June 30, | December 31, | |||||
| 2026 | | 2025 | |||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Short-term marketable securities |
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Receivables from collaborative arrangements |
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Receivables from milestones and royalty assets | — | | ||||
Other prepaid and current assets | | | ||||
Total current assets |
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Long-term marketable securities |
| — |
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Property and equipment, net |
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Operating lease assets | | | ||||
Restricted cash |
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Other assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and Shareholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued personnel-related expenses |
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Accrued clinical and development expenses |
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Accrued general and administrative expenses | | | ||||
Operating lease liabilities | | | ||||
Income tax payable | — | | ||||
Other accrued liabilities |
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Total current liabilities |
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Long-term operating lease liabilities | | | ||||
Future royalty payment contingency | | | ||||
Unrecognized tax benefits | | | ||||
Other long-term liabilities | | | ||||
Commitments and contingencies (Note 11) | ||||||
Shareholders’ Equity | ||||||
Preferred shares, $ |
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Ordinary shares, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
| ( |
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Accumulated deficit |
| ( |
| ( | ||
Total shareholders’ equity |
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Total liabilities and shareholders’ equity | $ | | $ | | ||
See accompanying notes to condensed consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
Revenues: | ||||||||||||
Viatris collaboration agreement | $ | | $ | | $ | | $ | | ||||
Licensing and milestone revenue | — | | — | | ||||||||
Total revenues |
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Expenses: | ||||||||||||
Research and development (1) |
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Selling, general and administrative (1) | | | | | ||||||||
Restructuring expenses (1) (2) | | — | | — | ||||||||
Transaction-related expenses | | — | | — | ||||||||
Total expenses |
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Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Net gain on realized contingent milestone and royalty assets | — | | — | | ||||||||
Interest expense (non-cash) | — | ( | — | ( | ||||||||
Interest and other income, net |
| | | | | |||||||
Income (loss) before income taxes |
| ( |
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| ( |
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Provision for income tax (expense) benefit |
| ( | ( | | ( | |||||||
Net income (loss) | ( | | $ | ( | $ | | ||||||
Net unrealized loss on available-for-sale investments | ( | ( | ( | ( | ||||||||
Total comprehensive income (loss) | $ | ( | $ | | $ | ( | $ | | ||||
Net income (loss) per share: | ||||||||||||
Net income (loss) per share - basic | $ | ( | $ | | $ | ( | $ | | ||||
Net income (loss) per share - diluted | $ | ( | $ | | $ | ( | $ | | ||||
Shares used to compute net income (loss) per share - basic | | | | | ||||||||
Shares used to compute net income (loss) per share - diluted | | | | | ||||||||
| (1) | Amounts include share-based compensation expense as follows: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | | 2026 | | 2025 | 2026 | | 2025 | |||||
Research and development | $ | | $ | | $ | | $ | | ||||
Selling, general and administrative |
| |
| |
| |
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Restructuring expenses | | — | | — | ||||||||
Total share-based compensation expense | $ | | $ | | $ | | $ | | ||||
| (2) | Restructuring expenses were comprised of the following: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | | 2026 | | 2025 | 2026 | | 2025 | |||||
Cash-related expenses | $ | | $ | — | $ | | $ | — | ||||
Non-cash related expenses | | — | | — | ||||||||
Total restructuring expenses | $ | | $ | — | $ | | $ | — | ||||
See accompanying notes to condensed consolidated financial statements.
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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 | | Income (Loss) | | Deficit | | Equity | |||||||
Balances at March 31, 2026 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Employee share-based compensation expense | — | — | | — | — | | |||||||||||
Issuance of restricted shares | | — | — | — | — | — | |||||||||||
Option exercises | | — | | — | — | | |||||||||||
Repurchase of shares to satisfy tax withholding | ( | — | ( | — | — | ( | |||||||||||
Net unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balances at June 30, 2026 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Ordinary Shares | Paid-In | Comprehensive | Accumulated | Shareholders' | |||||||||||||
Shares | | Amount | | Capital | | Income (Loss) | | Deficit | | Equity | |||||||
Balances at December 31, 2025 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Employee share-based compensation expense | — | — | | — | — | | |||||||||||
Issuance of restricted shares | | — | — | — | — | — | |||||||||||
Option exercises | | — | | — | — | | |||||||||||
Repurchase of shares to satisfy tax withholding | ( | — | ( | — | — | ( | |||||||||||
Net unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balances at June 30, 2026 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Ordinary Shares | Paid-In | Comprehensive | Accumulated | Shareholders' | |||||||||||||
Shares | | Amount | | Capital | | Income (Loss) | | Deficit | | Equity | |||||||
Balances at March 31, 2025 | | $ | | $ | | $ | — | $ | ( | $ | | ||||||
Employee share-based compensation expense | — | — | | — | — | | |||||||||||
Issuance of restricted shares | | — | — | — | — | — | |||||||||||
Repurchase of shares to satisfy tax withholding | ( | — | ( | — | — | ( | |||||||||||
Net unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Net income | — | — | — | — | | | |||||||||||
Balances at June 30, 2025 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Ordinary Shares | Paid-In | Comprehensive | Accumulated | Shareholders' | |||||||||||||
Shares | | Amount | | Capital | | Income (Loss) | | Deficit | | Equity | |||||||
Balances at December 31, 2024 | | $ | — | $ | | $ | | $ | ( | $ | | ||||||
Proceeds from the sale of ordinary shares | | — | | — | — | | |||||||||||
Employee share-based compensation expense | — | — | | — | — | | |||||||||||
Issuance of restricted shares | | | — | — | — | | |||||||||||
Repurchase of shares to satisfy tax withholding | ( | — | ( | — | — | ( | |||||||||||
Net unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Net income | — | — | — | — | | | |||||||||||
Balances at June 30, 2025 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
See accompanying notes to condensed consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June 30, | ||||||
| 2026 | | 2025 | |||
Operating activities | ||||||
Net income (loss) | $ | ( | $ | | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Depreciation and amortization |
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Amortization and accretion on investment securities, net | ( | ( | ||||
Future royalty payment contingency interest accretion | — | | ||||
Share-based compensation |
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Loss on disposal of property and equipment | — | | ||||
Amortization of right-of-use assets | | | ||||
Deferred income taxes | ( | ( | ||||
Other | | ( | ||||
Changes in operating assets and liabilities: | ||||||
Receivables from collaborative and licensing arrangements |
| |
| ( | ||
Receivables from milestones and royalty assets | | | ||||
Prepaid clinical and development services | — | | ||||
Other prepaid and current assets | | ( | ||||
Right-of-use lease assets | | ( | ||||
Future contingent milestone and royalty assets | — | | ||||
Other assets | | ( | ||||
Accounts payable |
| ( |
| ( | ||
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities |
| ( |
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Operating lease liabilities | ( | ( | ||||
Unrecognized tax benefits | | | ||||
Income tax payable | ( | | ||||
Other long-term liabilities |
| ( |
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Net cash provided by operating activities |
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Investing activities | ||||||
Purchases of property and equipment |
| — |
| ( | ||
Purchases of marketable securities |
| ( |
| ( | ||
Maturities of marketable securities |
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Net cash used in investing activities |
| ( |
| ( | ||
Financing activities | ||||||
Proceeds from the sale of ordinary shares | — | | ||||
Proceeds from option exercises | | — | ||||
Repurchase of shares to satisfy tax withholding | ( | ( | ||||
Net cash used in financing activities |
| ( |
| ( | ||
Net increase in cash, cash equivalents, and restricted cash |
| |
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Cash, cash equivalents, and restricted cash at beginning of period |
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Cash, cash equivalents, and restricted cash at end of period | $ | | $ | | ||
Supplemental disclosure of cash flow information | ||||||
Cash paid (received) for income taxes, net | $ | | $ | | ||
See accompanying notes to condensed consolidated financial statements.
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THERAVANCE BIOPHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Agreement to be Acquired by Zymeworks Inc.
On
Basis of Presentation
The Company’s condensed consolidated financial statements as of June 30,
The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026, 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.
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. 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 condensed consolidated financial statements based on its current operating plans and financial forecasts which assume the completion of the pending Merger.
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Significant Accounting Policies
Other than an update to the “Future Royalty Payment Contingency” accounting policy below, 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 as of and for the year ended December 31, 2025.
Future Royalty Payment Contingency
The Company treats 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. The Company periodically reassesses 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 the Company’s estimates of the amount and timing of future royalty payments are materially greater or less than previous estimates, the Company will prospectively adjust the amortization of the contingent liability and effective interest rate.
In periods in which updated estimates of the amount or timing of future royalty payments result in the undiscounted cash flows payable to be less than the current net carrying amount of the debt, the Company ceases the recognition of interest expense on the royalty liability. Consistent with the accounting guidance applicable to debt financings, the Company does not reduce the net carrying amount of the royalty liability below its initial carrying amount, which represents the original proceeds received.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 modifies the rules on income statement disclosures to enhance the transparency of and include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. ASU 2024-03 will be effective for annual periods beginning after December 15, 2026. The Company is
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. ASU 2025-11 will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is evaluating the impact of adopting ASU 2025-11 on its consolidated financial statements and related disclosures.
The Company has evaluated other recently issued accounting pronouncements and does not currently believe that any of these pronouncements will have a material impact on its consolidated financial statements and related disclosures.
2. Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding during the period. Diluted net loss per share is computed by increasing the weighted-average number of shares outstanding for the dilutive effect of potential ordinary shares. The Company’s potential ordinary shares include outstanding options to purchase ordinary shares and restricted share units (“RSUs”), including market-based and performance-contingent awards. See “Note 8. Share-Based Compensation” for information related to outstanding options and RSUs as of June 30, 2026 and 2025.
In accordance with Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share, if a company incurred a net loss, then potential ordinary shares are considered anti-dilutive for the periods in which the net loss was
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recognized. For the three and six months ended June 30, 2026, the Company recognized net losses. As a result, the potential ordinary shares as described above were not included in the computation of diluted net loss per share, as presented below, due to their anti-dilutive effects.
For the three and six months ended June 30, 2025, the Company recognized net income. Potential ordinary shares excluded from the computation of diluted net income per share because their effect would have been anti-dilutive, consist of
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands, except per share data) | | 2026 | | 2025 | 2026 | | 2025 | |||||
Numerator: | ||||||||||||
Net income (loss) | $ | ( | $ | | $ | ( | $ | | ||||
Denominator: |
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Weighted-average ordinary shares outstanding - basic | | | | | ||||||||
Dilutive effect of options and awards | — | | — | | ||||||||
Weighted-average ordinary shares outstanding - diluted | | | | | ||||||||
Net income (loss) per share: | ||||||||||||
Net income (loss) per share - basic | $ | ( | $ | | $ | ( | $ | | ||||
Net income (loss) per share - diluted | $ | ( | $ | | $ | ( | $ | | ||||
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. 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 (
As of June 30, 2026, the Company is eligible to receive from Viatris potential global sales and regulatory milestone payments (excluding the China Region) up to $
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milestones based on achieving certain levels of net sales in the China Region, and the $
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 by both parties according to the profit and loss sharing percentages noted above. Performing R&D services for reimbursement is considered a collaborative activity under the scope of ASC 808. Reimbursable program costs, if any, are recognized proportionately with the performance of the underlying services and accounted for as reductions to R&D expense.
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, Revenue from Contracts with Customers. As part of the Company’s evaluation of the constraint on development and regulatory milestones, 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. In June 2025, YUPELRI received regulatory approval by China’s National Medical Products Administration (“NMPA”) which triggered a $
Sales-based milestone payments and royalty arrangements will be recognized when the sales occur or the milestone is achieved. In December 2025, the Company recognized a $
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 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.
The following YUPELRI-related amounts were recognized within revenue in the Company’s condensed consolidated statements of operations:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||
Viatris collaboration agreement – Amounts receivable from Viatris | $ | | $ | | $ | | $ | | ||||
Licensing revenue – China Region regulatory approval milestone | — | | — | | ||||||||
Total | $ | | $ | | $ | | $ | | ||||
While Viatris records total YUPELRI net sales within its own consolidated financial statements, Viatris collaboration agreement revenue on the Company’s condensed consolidated statements of operations included the Company’s implied
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
YUPELRI net sales (Theravance Biopharma implied | $ | | $ | | $ | | $ | | ||||
4. Segment Information
The Company operates in a single segment, which is the development and commercialization of human therapeutics. The Company has determined that its chief executive officer is the Chief Operating Decision Maker (“CODM”). When evaluating the Company’s financial performance, the CODM reviews total revenues and total
10
expenses and makes financial decisions using this information on a consolidated net loss basis. The measure of segment assets is the Company’s total assets which are reported on the condensed consolidated balance sheets. The Company’s segment revenue and long-lived assets are primarily generated and maintained in the US.
The following table summarizes significant segment expenses:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
$ | | $ | | $ | | $ | | |||||
Licensing revenue | — | | - | | ||||||||
Total revenue | | | | | ||||||||
Employee-related (Research and development) 1 | | | | | ||||||||
External-related (Research and development) |
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Facilities and other allocated expenses (Research and development) |
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Supporting general and administration functions 1 | | | | | ||||||||
Sales and marketing, and medical affairs 1 | | | | | ||||||||
Share-based compensation |
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Total recurring operating expenses | | | | | ||||||||
Restructuring expenses (including share-based compensation) | | — | | — | ||||||||
Transaction-related expenses | | — | | — | ||||||||
Total operating expenses | | | | | ||||||||
Loss from operations | ( | ( | ( | ( | ||||||||
Net gain on realized contingent milestone and royalty assets | — | | — | | ||||||||
Interest expense (non-cash) | — | ( | — | ( | ||||||||
Interest and other income, net | | | | | ||||||||
Provision for income tax (expense) benefit | ( | ( | | ( | ||||||||
Net income (loss) | $ | ( | $ | | $ | ( | $ | | ||||
1 Excludes share-based compensation
5. Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the current period and comparable prior year period condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.
June 30, | ||||||
(In thousands) | 2026 | 2025 | ||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Total cash, cash equivalents, and 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. The cash-related amounts reported in the table above exclude the Company’s investments in short-term marketable securities that are reported separately on the condensed consolidated balance sheets.
The Company periodically engages in foreign exchange transactions as a part of its operations. The Company’s recognized net realized and unrealized foreign currency losses were immaterial for the three and six months ended June 30, 2026 and 2025. These amounts are included in the Company’s condensed consolidated statements of operations within “Interest income and other income, net”.
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6. Investments and Fair Value Measurements
Available-for-Sale Securities
The estimated fair value of marketable securities is based on quoted market prices for these or similar investments obtained from a commercial pricing service. The fair market value of marketable securities classified within Level 1 is based on quoted prices for identical instruments in active markets. The fair value of marketable securities classified within Level 2 is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-driven valuations whose inputs are observable or whose significant value drivers are observable. Observable inputs 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.
Available-for-sale securities are summarized below:
June 30, 2026 | ||||||||||||||
| | | Gross | | Gross | | ||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
(In thousands) | Cost | Gains | Losses | Fair Value | ||||||||||
US government securities | $ | | $ | — | $ | ( | $ | | ||||||
Corporate notes |
| | — | ( |
| | ||||||||
Commercial paper | | | ( | | ||||||||||
Marketable securities | | | ( | | ||||||||||
Money market funds | Level 1 | | — | — | | |||||||||
Total | $ | | $ | | $ | ( | $ | | ||||||
December 31, 2025 | ||||||||||||||
| | | Gross | | Gross | | ||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||
(In thousands) | Cost | Gains | Losses | Fair Value | ||||||||||
US government securities | $ | | $ | | $ | ( | $ | | ||||||
Corporate notes |
| |
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| ( |
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Commercial paper |
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| ( |
| | ||||||
Marketable securities | | | ( | | ||||||||||
Money market funds | Level 1 | | — | — | | |||||||||
Total | $ | | $ | | $ | ( | $ | | ||||||
As of June 30, 2026, all of the Company’s available-for-sale securities had contractual maturities within
Available-for-sale securities with unrealized losses as of June 30, 2026 are summarized below:
June 30, 2026 | ||||||||||||||||||
Less than 12 Months | Greater than 12 Months | Total | ||||||||||||||||
| | Gross | | Gross | | Gross | ||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||
(In thousands) | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||
US government securities | $ | | $ | ( | $ | — | $ | — | $ | | $ | ( | ||||||
Corporate notes | | ( | — | — | | ( | ||||||||||||
Commercial paper | | ( | — | — | | ( | ||||||||||||
Total | $ | | $ | ( | $ | — | $ | — | $ | | $ | ( | ||||||
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Available-for-sale securities with unrealized losses as of December 31, 2025 are summarized below:
December 31, 2025 | ||||||||||||||||||
Less than 12 Months | Greater than 12 Months | Total | ||||||||||||||||
| | Gross | | Gross | | Gross | ||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||
(In thousands) | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||
US government securities | $ | | $ | ( | $ | — | $ | — | $ | | $ | ( | ||||||
Corporate notes |
| | ( |
| — | — |
| | ( | |||||||||
Commercial paper | | ( | — | — | | ( | ||||||||||||
Total | $ | | $ | ( | $ | — | $ | — | $ | | $ | ( | ||||||
The Company invests primarily in high credit quality and short-term maturity debt securities with the intent to hold such securities until maturity at par value. The Company does not intend to sell the investments that are currently in an unrealized loss position, and it is unlikely that it will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity. The Company reviewed its available-for-sale debt securities and determined that there were
For the three and six months ended June 30, 2026 and 2025, the Company did
Ampreloxetine Funding
The Company recognizes a contingent liability related to funding received from Royalty Pharma Investments (“Royalty Pharma”) in exchange for certain future royalty rights to ampreloxetine. The contingent liability consists of an upfront $
There are a number of factors that could materially affect the amount and timing of the contingent $
On March 3, 2026, the Company announced that its ampreloxetine Phase 3 clinical study (CYPRESS) did not meet its primary endpoint. As a result of this outcome, the Company is winding down the CYPRESS program while continuing targeted regulatory, scientific and intellectual property research and development activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets. In accordance with accounting guidance under ASC 470, Debt, the Company ceased recognizing interest expense on the contingent liability balance beginning in the first quarter of 2026.
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Contract Derivative
On December 27, 2024, the Company purchased a contract derivative to manage its exposure to financial risk and to mitigate potential tax liability. The Company determined that the contract derivative met the definition of a derivative under ASC 815, Derivatives and Hedging.
The contract derivative is measured at fair value using the discounted cash flow method and includes unobservable inputs derived from management’s estimates and assumptions. Management’s estimates and assumptions are based in part on external data and internal data and involve a significant degree of judgment. The primary unobservable inputs, classified as Level 3 under the fair value hierarchy, include the remote possibility of a future payout of taxes. The utilized in the fair value model was
The contract derivative was recognized within non-current “Other assets” on the condensed consolidated balance sheets and changes to the contract derivative fair value were as follows for the six months ended June 30, 2026:
(In thousands) | | ||
Balance at December 31, 2025 | $ | | |
| ( | ||
Balance at June 30, 2026 | $ | |
For the six months ended June 30, 2026, the decrease in the contract derivative’s fair value was driven by an increase in the estimated discount rate, and the unrealized loss was recognized within “Interest and other income, net” on the condensed consolidated statements of operations.
7. Subleases
Sublease Income
As of June 30, 2026, the Company has subleased approximately
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Sublease income | $ | | $ | | $ | | $ | | ||||
8. Share-Based Compensation
Share-Based Compensation Expense
Share-based compensation expense included in the condensed consolidated statements of operations was recognized as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands) | | 2026 | | 2025 | 2026 | | 2025 | |||||
Research and development | $ | | $ | | $ | | $ | | ||||
Selling, general and administrative |
| |
| |
| |
| | ||||
Restructuring expenses | | — | | — | ||||||||
Total share-based compensation expense | $ | | $ | | $ | | $ | | ||||
Share-Based Compensation Modification Due to Organizational Restructuring
As a result of the Restructuring announcement on March 3, 2026 (see “Note 10. Organizational Restructuring” for information), the Board of Directors’ Compensation Committee approved the acceleration of certain equity awards for employees affected by the Restructuring. The Company accounted for the acceleration as a Type III modification
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(improbable to probable) under applicable share-based compensation accounting guidance. The modification occurred on different dates for US and Ireland employees and resulted in aggregate incremental fair value of approximately $
The incremental compensation cost associated with the modified awards is recognized on a straight-line basis over the requisite service period of the modified awards and is included in “Restructuring expenses” within the condensed consolidated statements of operations. Recognition of the modification expense began in the three months ended March 31, 2026 for awards held by US employees and in the three months ended June 30, 2026 for awards held by Ireland employees, reflecting the respective modification dates. For the three and six months ended June 30, 2026, the Company recognized $
Share-Based Compensation Option and Award Activity
The following tables summarize option and RSU activity (including market-based and performance-contingent RSUs) for the three and six months ended June 30, 2026 and 2025:
Weighted-Average | Weighted- Average | |||||||||
| Number of Shares | Remaining | Exercise Price of | Number of Shares | | |||||
Subject to | Contractual | Outstanding Options | Subject to | |||||||
Outstanding Options | Term (Years) | (in dollars) | Outstanding RSUs | |||||||
Outstanding at December 31, 2025 | | $ | | |
| |||||
Granted | — | — | | |||||||
Exercised/Released | ( | | ( | |||||||
Forfeited | ( | | ( | |||||||
Expired | ( | | — | |||||||
Outstanding at March 31, 2026 | | | | |||||||
Granted | | | | |||||||
Exercised/Released | ( | | ( | |||||||
Forfeited | ( | | ( | |||||||
Expired | ( | | — | |||||||
Outstanding at June 30, 2026 | | $ | | |
|
Weighted-Average | Weighted- Average | ||||||||
| Number of Shares | Remaining | Exercise Price of | Number of Shares | |||||
Subject to | Contractual | Outstanding Options | Subject to | ||||||
Outstanding Options | Term (Years) | (in dollars) | Outstanding RSUs | ||||||
Outstanding at December 31, 2024 | | $ | | | |||||
Granted | — | — | | ||||||
Exercised/Released | — | — | ( | ||||||
Forfeited | — | — | ( | ||||||
Outstanding at March 31, 2025 | | | | ||||||
Granted | | — | | ||||||
Exercised/Released | — | — | ( | ||||||
Forfeited | — | — | ( | ||||||
Expired | ( | — | — | ||||||
Outstanding at June 30, 2025 | | $ | | | |||||
9. Income Taxes
For the six months ended June 30, 2026, the Company recognized an income tax benefit of $
15
The Company follows the accounting guidance related to accounting for income taxes which requires that a company reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. In 2022, the Company released its valuation allowance for US federal tax purposes stemming from the effects of the Company’s sale of its equity interests in Theravance Respiratory Company, LLC in July 2022. As of June 30, 2026, the Company does not believe a valuation allowance against its deferred tax assets should be re-established to offset its deferred tax assets for US federal tax purposes. As of June 30, 2026, the Company continues to maintain a full valuation allowance in certain states, including California, and other jurisdictions.
The Company records liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. The Company includes any applicable interest and penalties related to income tax matters in income tax expense.
The Company’s future income tax expense may be affected by such factors as changes in tax laws, regulations, its business, tax rates, interpretation of existing laws or regulations, the impact of accounting for share-based compensation, the impact of accounting for business combinations and other transactions, its international organization, shifts in the amount of income before tax earned in the US as compared with other regions in the world, and changes in overall levels of income before tax.
10. Organizational Restructuring
On March 3, 2026, the Company announced that its 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, the Company is winding down the CYPRESS program, subject to certain restrictions set forth in the Merger Agreement between the Company and Zymeworks, while continuing certain targeted regulatory, scientific and intellectual property R&D activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets.
To align its resources with its commercial focus on YUPELRI, the Company initiated the Restructuring to streamline costs. As part of the Restructuring, the Company is reducing its headcount of
Certain employees have departed the Company as of June 30, 2026, and the remainder of the impacted employees are expected to depart the Company over the second half of 2026. For the three months ended June 30, 2026, the Company incurred a total of $
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Selected information related to accrued cash-related Restructuring expenses (excluding share-based compensation expenses) was as follows and included in the condensed consolidated balance sheets within “Accrued personnel-related expenses”:
(In thousands) | | ||
Balance at December 31, 2025 | $ | | |
Net accruals | | ||
Cash paid |
| ( | |
Balance at June 30, 2026 | $ | |
As of June 30, 2026, the Company did not recognize any material impairment charges associated with its property and equipment or operating lease assets as a result of the Restructuring.
11. Commitments and Contingencies
Legal Proceedings
In the ordinary course of business, the Company may be subject to legal claims and regulatory actions that could have a material adverse effect on its business or financial position. The Company assesses its potential liability in such situations by analyzing the possible outcomes of various litigation, regulatory, and settlement strategies. If the Company determines that a material loss is probable and its amount can be reasonably estimated, it will accrue an amount equal to the estimated loss. As of June 30, 2026, the Company did
Litigation – Patent Infringement
During January 2023, the Company received notice from Accord Healthcare, Inc.; Cipla USA, Inc. and Cipla Limited; Eugia Pharma Specialties Ltd.; Lupin Inc.; Mankind Pharma Ltd.; Orbicular Pharmaceutical Technologies Private Limited; and Teva Pharmaceuticals, Inc. (collectively, the “generic companies”), that they have each filed with the FDA an abbreviated new drug application (“ANDA”), for a generic version of YUPELRI. The notices from the generic companies each included a paragraph IV certification with respect to
In May 2024, the Company received notice from Qilu Pharmaceuticals Co., Ltd. (“subsequent ANDA filer”), that it had filed with the FDA an ANDA for a generic version of YUPELRI. The notice from the subsequent ANDA filer included a paragraph IV certification with respect to certain of the Company’s patents listed in FDA’s Orange Book for YUPELRI. The asserted patents relate generally to polymorphic forms of and a method of treatment using YUPELRI. In June 2024, the Company filed a patent infringement suit against the subsequent ANDA filer in the US District Court for the Eastern District of Pennsylvania. The complaint alleges that by filing the ANDA, the subsequent ANDA filer has infringed certain of the Company’s Orange Book listed patents.
As of March 31, 2026, the Company has settled all litigation with all of the parties listed above pursuant to individual agreements in which the Company granted these companies a royalty-free, non-exclusive, non-sublicensable, non-transferable license to manufacture and market their respective generic versions of YUPELRI inhalation solution in the US on or after the licensed launch date of April 23, 2039, subject to certain exceptions and other provisions customary for agreements of this type. As required by law, the settlements are subject to review by the US Department of Justice and the Federal Trade Commission.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
You should read the following discussion in conjunction with our condensed consolidated financial statements (unaudited) and related notes included elsewhere in this report. This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements involve risks, uncertainties, and assumptions. All statements in this report, other than statements of historical facts, including, without limitation, the statements in Note 1 of the Notes to Condensed Consolidated Financial Statements, Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part II, Item 1A. “Risk Factors” included in this Form 10-Q regarding the pending merger of a wholly owned subsidiary of Zymeworks Inc. (“Zymeworks”) with and into Theravance Biopharma, Inc. (“we,” “our,” “Theravance Biopharma” or the “Company”), with the Company continuing as the surviving company and becoming a wholly owned subsidiary of Zymeworks as a result of the merger, and statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, intentions, designs, expectations, and objectives are forward-looking statements. The words “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “designed,” “developed,” “drive,” “estimate,” “expect,” “forecast,” “goal,” “indicate,” “intend,” “may,” “mission,” “opportunities,” “plan,” “possible,” “potential,” “predict,” “project,” “pursue,” “represent,” “seek,” “suggest,” “should,” “target,” “will,” “would,” and similar expressions (including the negatives thereof) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements reflect our current views with respect to future events or our future financial performance, are based on assumptions, and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We may not actually achieve the plans, intentions, expectations or objectives disclosed in our forward-looking statements and the assumptions underlying our forward-looking statements may prove incorrect. Therefore, you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, expectations, and objectives disclosed in the forward-looking statements that we make. Factors that we believe could cause actual results or events to differ materially from our forward-looking statements include, but are not limited to those discussed in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. Our forward-looking statements in this report are based on current expectations, and we do not assume any obligation to update any forward-looking statements for any reason, even if new information becomes available in the future. When used in this report, all references to “Theravance Biopharma”, the “Company”, or “we” and other similar pronouns refer to Theravance Biopharma, Inc. collectively with its subsidiaries.
Management Overview
Theravance Biopharma is a biopharmaceutical company primarily focused on the development and commercialization of medicines. Our focus is to deliver medicines that make 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”).
Significant Developments - First Half of 2026
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 are winding down the CYPRESS program, subject to certain restrictions set forth in the Merger Agreement
18
between us and Zymeworks, while continuing certain targeted regulatory, scientific and intellectual property research and development activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets, including with respect to the CVR pursuant to the Merger Agreement (each defined below).
Strategic Review Committee
In connection with the CYPRESS study results, the Strategic Review Committee of our Board of Directors (the "Committee") accelerated 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 has been acting with urgency to evaluate a broad range of value maximizing and tax efficient alternatives, including but not limited to a sale of the Company.
Organizational Restructuring
Beginning in March 2026, we began implementing an organizational restructuring (the “Restructuring”) to streamline costs and align our resources with our commercial focus on YUPELRI. The Restructuring involves winding down our R&D function and significantly reducing our G&A function. The Restructuring is 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 second half of 2026.
Agreement to be Acquired by Zymeworks
On June 28, 2026, the Company entered into an Agreement and Plan of Merger with Zymeworks and Zymeworks Merger Sub 1, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Zymeworks (“Merger Sub”). Such Agreement and Plan of Merger, as may be amended, supplemented and restated from time to time, including the disclosure letters thereto, is referred to herein as the “Merger Agreement.” Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving company and becoming a wholly owned subsidiary of Zymeworks as a result of the Merger (the “Surviving Company”).
At the effective time of the Merger (the “Effective Time”), each ordinary share issued and outstanding immediately prior to the Effective Time (other than each ordinary share (i) owned by the Company as a treasury share or by any direct or indirect subsidiary of the Company immediately prior to or at the Effective Time, (ii) held by Zymeworks or any direct or indirect subsidiary of Zymeworks immediately prior to or at the Effective Time, and (iii) that is issued and outstanding immediately prior to the Effective Time and is held by a shareholder who has validly exercised and not withdrawn or lost such shareholder’s right to dissent from the Merger pursuant to Section 238 of the Companies Act (As Revised) of the Cayman Islands) will be canceled and converted into the right to receive (i) $17.00 in cash, without interest and less any applicable withholding taxes (the “Per Share Cash Consideration”), and (ii) one contingent value right per ordinary share (each, a “CVR”), which will represent the right to receive a contingent payment equal to the CVR Payment Amount (as described below), if any, at the times and subject to the terms and conditions provided for in the Merger Agreement and the CVR Agreement (as defined in the Merger Agreement), in cash, without interest and less any applicable withholding taxes. Each CVR represents the contingent right to receive, subject to the terms and conditions of the Merger Agreement and the CVR Agreement:
| ● | a pro rata share of 80% of the net proceeds (the “License Proceeds”) received by Zymeworks or its affiliates (including the Surviving Company), if any, from any license, divestiture or other monetization transaction of ampreloxetine executed within the ten-year period following the Effective Time (the “CVR License Expiration Date”); |
| ● | a pro rata share of $50.0 million in cash (the “First Commercial Sale Milestone Payment”) upon the first commercial sale of ampreloxetine by Zymeworks or its affiliates (including the Surviving Company) in the US, UK, Spain, France, Germany or Italy on or prior to the CVR License Expiration Date, if any; and |
| ● | a pro rata share of 10% of the net sales (the “Royalties” and, together with the License Proceeds and the First |
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| Commercial Sale Milestone Payment, the “CVR Payment Amount” and, together with the Per Share Cash Consideration, the “Per Share Merger Consideration”) received by Zymeworks or its affiliates (including the Surviving Company), if any, on a country-by-country basis, from the date of the first commercial sale until the later of the tenth anniversary of such date, patent expiration or the loss of exclusivity. |
The CVRs and the possibility of receiving any payment pursuant to the CVRs are highly speculative and subject to numerous factors outside the control of Zymeworks or its affiliates. There can be no assurance that any transaction that may give rise to any payment pursuant to the CVRs will be executed or that any payment pursuant to the CVRs will ever be paid.
The consummation of the Merger is subject to certain customary closing conditions, including, among others, (i) approval of the Merger Agreement by the affirmative vote of holders of ordinary shares representing at least two-thirds of the ordinary shares who, being entitled to do so, attend in person or by proxy and vote as a single class at an extraordinary general meeting where a quorum is present, (ii) the absence of a law or order remaining in effect which prohibits, restrains, makes illegal or enjoins the consummation of the Merger, (iii) the expiration or termination of the waiting period (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the Merger, (iv) the accuracy of the parties’ respective representations and warranties contained in the Merger Agreement (subject in certain instances to customary materiality thresholds), (v) the performance of the parties’ respective covenants contained in the Merger Agreement in all material respects, and (vi) solely as relates to Zymeworks’ obligation to consummate the Merger, the absence of any Material Adverse Effect (as defined in the Merger Agreement).
Entry into the Merger Agreement was the culmination of a comprehensive strategic review process conducted by the Strategic Review Committee of our Board of Directors. The Merger is currently expected to be consummated in the second half of 2026. If the Merger is completed, the Company will continue its operations as a privately held company and will be a wholly owned subsidiary of Zymeworks and our ordinary shares will no longer be listed on the Nasdaq Global Market. The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on June 29, 2026 and is incorporated herein by reference. For additional information regarding the Merger and the terms of the Merger Agreement, see also the definitive proxy statement on Schedule 14A to be filed with the SEC (as it may be amended or supplemented from time to time).
Core Program Updates
YUPELRI (revefenacin) Inhalation Solution
YUPELRI (revefenacin) inhalation solution is a once-daily, nebulized long-acting muscarinic antagonist (“LAMA”) approved for the maintenance treatment of COPD in the US. LAMAs are recognized by international COPD treatment guidelines as a cornerstone of maintenance therapy for COPD, regardless of severity of disease. Our market research indicates there is an enduring population of COPD patients in the US that either need or prefer nebulized delivery for maintenance therapy. The stability of revefenacin in both metered dose inhaler and dry powder inhaler (“MDI/DPI”) formulations suggests that revefenacin could also serve as a foundation for novel handheld combination products.
We co-developed YUPELRI with our collaboration partner, Viatris Inc. (“Viatris”). Under the terms of the Viatris Development and Commercialization Agreement (the “Viatris Agreement”), we led the US Phase 3 development program for YUPELRI in COPD, and Viatris was responsible for reimbursement of our costs related to the registrational program up until the approval of the first new drug application, after which costs were shared. YUPELRI was approved by the FDA for the maintenance treatment of patients with COPD in November 2018. In the US, Viatris is leading the commercialization of YUPELRI, and we co-promote the product under a profit and loss sharing arrangement (65% to Viatris; 35% to us). Outside the US (excluding China and adjacent territories), Viatris is responsible for development and commercialization and will pay us a tiered royalty on net sales at percentage royalty rates ranging from low double-digits to mid-teens. We retain worldwide rights to revefenacin delivered through other dosage forms, such as a MDI/DPI.
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Under the terms of the Viatris Agreement, as amended, we received a $25.0 million milestone payment for the achievement of $250.0 million in net sales in 2025. As of June 30, 2026, we were eligible to receive from Viatris potential global sales and regulatory milestone payments (excluding China and adjacent territories) of up to $180.0 million in the aggregate with $135.0 million associated with YUPELRI monotherapy and $45.0 million associated with future potential combination products. Of the $135.0 million associated with monotherapy, $10.0 million relates to regulatory actions in the European Union (“EU”) and $125.0 million relates to sales milestones based on achieving certain levels of annual aggregate US net sales as follows:
YUPELRI US Net Sales | Sales Milestones |
(In a Calendar Year) | Due from Viatris |
$500.0 million | $50.0 million |
$750.0 million | $75.0 million |
While Viatris records total YUPELRI net sales, we are entitled to a 35% share of the net profit (loss). Our implied 35% share of total YUPELRI net sales is presented below:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
YUPELRI net sales (100% recorded by Viatris) | $ | 70,666 | $ | 66,330 | $ | 4,336 | 7 | % | $ | 133,097 | $ | 124,674 | $ | 8,423 | 7 | % | ||||||||
YUPELRI net sales (Theravance Biopharma implied 35%) | 24,733 | 23,216 | 1,517 | 7 | 46,584 | 43,636 | 2,948 | 7 | ||||||||||||||||
In 2019, we granted Viatris exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories, which include the Hong Kong SAR, the Macau SAR, and Taiwan (collectively, the “China Region”). In November 2023, we learned that Viatris’ Phase 3 study of YUPELRI in China was positive, and the data were consistent with previous findings of YUPELRI’s strong efficacy. In June 2024, Viatris completed a registrational filing for YUPELRI in China, and in June 2025, we announced that Viatris had secured regulatory approval from China’s National Medical Products Administration (“NMPA”) for YUPELRI. The regulatory approval triggered a one-time $7.5 million milestone payment from Viatris which we received in July 2025. Viatris is responsible for all aspects of development and commercialization of YUPELRI in the China Region, including pre- and post-launch activities and product registration and all associated costs.
With respect to the China Region royalties, we are also eligible to receive tiered royalties on net sales of nebulized revefenacin as follows:
YUPELRI China Region Net Sales Thresholds | Royalty Rate |
(Annual) | Due from Viatris |
≤ $75.0 million | 14% |
> $75.0 million to ≤ $150.0 million | 17% |
> $150.0 million | 20% |
As of June 30, 2026, we were also eligible to receive additional potential sales and regulatory milestones of up to $45.0 million related to Viatris’ development and commercialization of nebulized revefenacin in the China Region with $37.5 million associated with YUPELRI monotherapy and $7.5 million associated with achieving regulatory milestones related to future potential combination products. The $37.5 million relates to sales milestones based on achieving certain levels of cumulative net sales in the China Region as follows:
YUPELRI China Region Net Sales | Sales Milestones |
(Cumulative) | Due from Viatris |
$100.0 million | $2.5 million |
$200.0 million | $5.0 million |
$400.0 million | $10.0 million |
$800.0 million | $20.0 million |
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Ampreloxetine
Ampreloxetine is an investigational, once-daily norepinephrine reuptake inhibitor (“NRI”) intended for the treatment of multiple system atrophy (“MSA”) patients with symptomatic neurogenic orthostatic hypotension (“nOH”). nOH is caused by primary autonomic failure conditions and the majority of patients with MSA experience symptoms of nOH. Ampreloxetine has high affinity for binding to the norepinephrine (“NE”) transporter. By blocking the action of the NE transporter, ampreloxetine causes an increase in extracellular concentrations of norepinephrine. Ampreloxetine is wholly owned by Theravance Biopharma.
Based on positive results from a small exploratory Phase 2 study in nOH and discussions with the FDA, we advanced ampreloxetine into a Phase 3 program. We announced the initiation of patient dosing in the study in early 2019. The Phase 3 program consisted of two pivotal studies and one non-pivotal study. The first pivotal study (SEQUOIA), a four-week, randomized double-blind, placebo-controlled study, was designed to evaluate the efficacy and safety of ampreloxetine in Parkinson’s disease (“PD”), pure autonomic failure (“PAF”) and MSA patients with symptomatic nOH. The second pivotal study (REDWOOD), a four-month open label study followed by a six-week randomized withdrawal phase was designed to evaluate the durability of the same patient group’s response to ampreloxetine. The protocol for the pivotal studies stipulated an enrollment threshold of 40% MSA patients based on the hypothesis ampreloxetine would work the best in patients with MSA because they have more intact nerves on which ampreloxetine can exert its effect, relative to the other patient types in the study. The third, non-pivotal study (OAK), was a three-and-a-half-year long-term extension study.
In September 2021, we reported that the SEQUOIA Phase 3 clinical study did not meet its primary endpoint. Most treatment-related adverse events were mild or moderate in severity. Serious adverse events occurred in two patients on placebo and four on ampreloxetine, none of which were considered related to the study drug. No deaths were reported, and there was no signal for supine hypertension.
In April 2022, we reported that the REDWOOD Phase 3 clinical study did not meet its primary endpoint as the results were not statistically significant for the overall population of patients which included patients with PD, PAF, and MSA. The pre-specified subgroup analysis by disease type suggested that the average benefit seen in patients receiving ampreloxetine was largely driven by a benefit to MSA patients. The benefit to MSA patients in the study was observed in multiple endpoints including Orthostatic Hypotension Symptom Assessment Scale (“OHSA”) composite, Orthostatic Hypotension Daily Activities Scale (“OHDAS”) composite, Orthostatic Hypotension Questionnaire (“OHQ”) composite and OHSA #1. Throughout the study, there was no indication of worsening of supine hypertension among any of the patient sub-groups. Data suggest that ampreloxetine was well-tolerated and no new safety signals were identified among any of the patient sub-groups.
In June 2022, we held a Type C meeting with the FDA. From this meeting, we aligned on a path to a New Drug Application (“NDA”) filing with one additional Phase 3 clinical study (CYPRESS) in MSA patients with symptomatic nOH, using the OHSA composite score as the primary endpoint. This Phase 3 study was initiated in the first quarter of 2023, and the last patient was enrolled in the open label period of the study in late-August 2025. In May 2023, we announced that the FDA granted Orphan Drug Designation status to ampreloxetine for the treatment of symptomatic nOH in patients with MSA.
In July 2022, Royalty Pharma Investments (“Royalty Pharma”) agreed to invest up to $40.0 million to advance the development of ampreloxetine in MSA in exchange for unsecured low single-digit royalties. Royalty Pharma’s $40.0 million investment in ampreloxetine included a $25.0 million upfront payment received in July 2022 and an additional $15.0 million payment upon the first regulatory approval of ampreloxetine. In exchange, Royalty Pharma would receive future unsecured royalties of 2.5% on annual ampreloxetine global net sales up to $500.0 million and 4.5% on annual global net sales over $500.0 million. If ampreloxetine regulatory approval is not achieved or if ampreloxetine sales are never recognized, the amounts invested by Royalty Pharma would not be repaid by us.
On March 3, 2026, we announced that the CYPRESS study did not meet its primary endpoint in the OHSA composite score. The primary endpoint, the change in OHSA composite score at Week 8 during the double-blind randomized withdrawal period, was not statistically significant. Similar trends were observed in the secondary endpoints
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at week 8. Changes in blood pressure, heart rate and norepinephrine levels confirmed a consistent pressor effect and reaffirmed ampreloxetine's biological activity. Ampreloxetine was generally well tolerated, with safety findings consistent with prior studies, including no signal of worsening of supine hypertension.
As a result of the CYPRESS study results, we have decided to wind down the CYPRESS program, subject to certain restrictions set forth in the Merger Agreement between us and Zymeworks, while continuing certain targeted regulatory, scientific and intellectual property research and development activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets, including with respect to the CVR pursuant to the Merger Agreement. Although the Phase 3 CYPRESS Study did not meet its primary endpoint, analysis of the overall dataset provided additional lines of evidence supporting a potential pharmacologic and clinically meaningful treatment effect of ampreloxetine. We held a Type B meeting with the FDA regarding the interpretation of the complete Phase 3 CYPRESS Study dataset, at which the agency indicated that, while the existing clinical data package would not support approval on the current data, an additional pivotal trial leveraging data from the previous studies could offer a potential path forward, subject to the opportunities, challenges and uncertainties associated with further clinical development. We have requested a Type C meeting to discuss the design of a future clinical study, including the extent of regulatory flexibility the FDA may consider appropriate, to support a potential future marketing application.
Economic Interests
TRELEGY®
In July 2022, we completed the sale of all of our equity interests in Theravance Respiratory Company, LLC (“TRC”) representing our 85% economic interest in the sales-based royalty rights on worldwide net sales of GSK plc's (“GSK”) TRELEGY ELLIPTA (“TRELEGY”) to Royalty Pharma for approximately $1.11 billion in upfront cash while retaining future value through the right to receive contingent milestone payments and certain outer year-royalties.
From and after January 1, 2023, for any calendar year starting with the year ended December 31, 2023 and ending with the year ending December 31, 2026, upon certain milestone minimum royalty amounts for TRELEGY being met, Royalty Pharma is obligated to make certain cash payments to us (the “Milestone Payments(s)”). In February 2025, we were informed by Royalty Pharma that the 2024 minimum royalty amount for TRELEGY was achieved based on $3.46 billion of 2024 TRELEGY global net sales, and we received the maximum $50.0 million Milestone Payment from Royalty Pharma in February 2025. Furthermore, in February 2026, we were informed by Royalty Pharma that the 2025 minimum royalty amount for TRELEGY was also achieved based on $3.91 billion of 2025 TRELEGY global net sales, and we received the maximum $50.0 million Milestone Payment from Royalty Pharma in February 2026.
As of June 30, 2026, a total of up to $100.0 million in potential Milestone Payments remain available to us. For the next potential Milestone Payment, we are eligible to receive either (i) $50.0 million if Royalty Pharma receives $270.0 million or more in royalty payments from GSK with respect to 2026 TRELEGY global net sales, which we would expect to occur in the event TRELEGY global net sales are approximately $3.16 billion or (ii) $100.0 million if Royalty Pharma receives $305.0 million or more in royalty payments from GSK with respect to 2026 TRELEGY global net sales, which we would expect to occur in the event TRELEGY global net sales exceed approximately $3.51 billion.
Achievement of either the $50.0 million or $100.0 million milestone in 2026 would not require an increase in global net sales compared to 2025, as the $3.91 billion in global net sales achieved in 2025 exceeds the thresholds necessary to trigger either Milestone Payment in 2026. Total 2025 TRELEGY global net sales represented a 13% increase compared to 2024. TRELEGY global net sales for the three and six months ended June 30, 2026 were $1.0 billion and $1.9 billion, respectively.
In addition to potential Milestone Payments, we were eligible to receive from Royalty Pharma 85% of the royalty payments on TRELEGY payable to Royalty Pharma for: (a) sales or other activities occurring on and after January 1, 2031 related to TRELEGY in the US; and (b) sales or other activities occurring on and after July 1, 2029 related to TRELEGY outside of the US. On a country-by-country basis, we were entitled to royalties until the expiration of the longest-lived patent or 15 years after commercial launch, whichever comes later. The TRELEGY royalties that were payable to us by Royalty Pharma are country specific. Total royalty rates were upward tiering from 6.5% to 10% and based on total annual global net sales as follows:
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TRELEGY Global Net Sales Thresholds | Royalty Rate |
(Annual) | Due from GSK to Royalty Pharma |
≤ $750.0 million | 6.5% |
> $750.0 million to ≤ $1,250.0 million | 8.0% |
> $1,250.0 million to ≤ $2,250.0 million | 9.0% |
> $2,250.0 million | 10.0% |
In June 2025, we announced that we had entered into a definitive agreement to sell our remaining royalty interest in the global net sales of TRELEGY (as described above) to GSK for $225.0 million (the “TRELEGY Royalty Sales Agreement”) while retaining our right to receive the remaining potential Milestone Payments related to 2025 and 2026 TRELEGY global net sales from Royalty Pharma. We received the $225.0 million cash payment from GSK in June 2025 and, as noted above, we received a $50.0 million Milestone Payment from Royalty Pharma in February 2026.
The TRELEGY Royalty Sales Agreement transaction represented the first outcome of the ongoing efforts of the Committee to assess all strategic alternatives available to us to unlock shareholder value.
The following information regarding the TRELEGY program is based solely upon publicly available information and may not reflect the most recent developments under the program.
TRELEGY provides the activity of an inhaled corticosteroid (FF) plus two bronchodilators (UMEC, a LAMA, and VI, a long-acting beta2 agonist, or LABA) in a single delivery device administered once-daily. TRELEGY is approved for use in the US, EU, and other countries for the long-term, once-daily, maintenance treatment of patients with COPD. Additionally, the FDA approved an sNDA for the use of TRELEGY to treat asthma in adults in September 2020 making TRELEGY the first once-daily single inhaler triple therapy for the treatment of both asthma and COPD in the US. GSK continues to pursue approval for the asthma indication in additional markets.
See “Risk Factors—We do not control the commercialization of TRELEGY; accordingly, our receipt of Milestone Payments will depend on, among other factors, GSK’s ability to further commercialize TRELEGY” for additional information.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our condensed 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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In periods in which updated estimates of the amount or timing of future royalty payments result in the undiscounted cash flows payable to be less than the current net carrying amount of the debt, we cease the recognition of interest expense on the royalty liability. Consistent with the accounting guidance applicable to debt financings, we do not reduce the net carrying amount of the royalty liability below its initial carrying amount, which represents the original proceeds received.
Results of Operations
Revenue
While Viatris records the total net sales of YUPELRI within its own financial statements, our implied 35% YUPELRI revenue, as compared to the prior year comparable periods, was as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
YUPELRI net sales (100% recorded by Viatris) | $ | 70,666 | $ | 66,330 | $ | 4,336 | 7 | % | $ | 133,097 | $ | 124,674 | $ | 8,423 | 7 | % | ||||||||
YUPELRI net sales (Theravance Biopharma implied 35%) | 24,733 | 23,216 | 1,517 | 7 | 46,584 | 43,636 | 2,948 | 7 | ||||||||||||||||
Our recognized revenue, as compared to the prior year comparable periods, was as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | $ | | % | | |||||||
Viatris collaboration agreement | $ | 20,731 | $ | 18,695 | $ | 2,036 | 11 | % | $ | 38,430 | $ | 34,083 | $ | 4,347 | 13 | % | ||||||||
Licensing revenue | — | 7,500 | (7,500) | NM | — | 7,500 | (7,500) | NM | ||||||||||||||||
Total revenues | $ | 20,731 | $ | 26,195 | $ | (5,464) | (21) | % | $ | 38,430 | $ | 41,583 | $ | (3,153) | (8) | % | ||||||||
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 condensed 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.
For the three and six months ended June 30, 2026, we recognized revenue of $20.7 million and $38.4 million, respectively, under the Viatris collaboration agreement. These amounts represented increases of 11% and 13%, respectively, compared to the corresponding periods in the prior year. The increases were primarily attributed to higher net sales of YUPELRI, which grew 7% and 7% year-over-year, respectively, and were driven by customer demand growth of 10% and 7%, respectively.
For the three and six months ended June 30, 2025, we also recognized $7.5 million in licensing revenue related to YUPELRI’s regulatory approval by China’s National Medical Products Administration (“NMPA”) in June 2025.
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; |
| 2) | Share-based compensation, which includes expenses associated with our equity plans; |
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| 3) | External-related costs, which include clinical trial related expenses, other contract research fees, consulting fees, and contract manufacturing fees; and |
| 4) | Facilities and other allocated expenses, such as general and administrative support functions, office rent, software subscriptions, and insurance. |
The following table summarizes our R&D expenses incurred, net of any reimbursements from collaboration partners, as compared to the prior year comparable periods:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
Employee-related | $ | 1,984 | $ | 3,535 | $ | (1,551) | (44) | % | $ | 4,431 | $ | 7,466 | $ | (3,035) | (41) | % | ||||||||
Share-based compensation |
| 566 |
| 987 |
| (421) | (43) |
| 1,193 |
| 2,057 | (864) | (42) | |||||||||||
External-related |
| 1,600 |
| 5,190 |
| (3,590) | (69) |
| 3,552 |
| 10,755 | (7,203) | (67) | |||||||||||
Facilities and other allocated expenses |
| 562 |
| 778 |
| (216) | (28) |
| 1,365 |
| 1,664 | (299) | (18) | |||||||||||
Total research & development | $ | 4,712 | $ | 10,490 | $ | (5,778) | (55) | % | $ | 10,541 | $ | 21,942 | $ | (11,401) | (52) | % | ||||||||
R&D expenses decreased by $5.8 million and $11.4 million for the three and six months ended June 30, 2026, respectively, compared to the prior year periods. The decreases were primarily attributed to decreases in employee-related and external-related expenses and were related to cost savings associated with the Restructuring announced in March 2026 and the winding down of the CYPRESS program.
As a result of the Restructuring, we expect quarterly R&D expenses to continue to decrease year-over-year into the second half 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 comparable periods, were as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
Selling, general and administrative | $ | 14,176 | $ | 18,430 | $ | (4,254) | (23) | % | $ | 31,896 | $ | 36,800 | $ | (4,904) | (13) | % | ||||||||
Total SG&A expenses decreased by $4.3 million for the three months ended June 30, 2026. Excluding share-based compensation expense (“SBC”), total SG&A expenses were $10.6 million for the second quarter of 2026 and were comprised of $5.6 million of general and administrative (“G&A”) expenses and $5.0 million of selling, marketing & medical affairs (“SM&M”) expenses. Total SG&A expenses (excluding SBC) were $14.9 million for the second quarter of 2025 and were comprised of $8.2 million of G&A expenses and $6.7 million of SM&M expenses.
Second quarter of 2026 G&A expenses (excluding SBC) decreased by $2.6 million, or 32% compared to the prior year period and was primarily due to cost savings associated with the Restructuring. SM&M expenses (excluding SBC) decreased by $1.7 million, or 25%, in the second quarter of 2026 compared to the prior year period and was primarily due to lower pre-commercial launch expenses related to the winding down of the CYPRESS program.
Total SG&A expenses decreased by $4.9 million for the six months ended June 30, 2026. Excluding SBC, total SG&A expenses were $25.5 million and were comprised of $13.6 million of G&A expenses and $11.9 million of SM&M expenses. Total SG&A expenses (excluding SBC) were $29.4 million for the prior year period and were comprised of $15.5 million of G&A expenses and $13.9 million of SM&M expenses.
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The $1.9 million decrease in year-to-date G&A expenses (excluding SBC) compared to the prior year period was primarily due to cost savings associated with the Restructuring offset by one-time legal costs. Excluding the one-time legal costs, G&A expenses (excluding SBC) decreased by $1.6 million, or 12%, compared to the prior year period. SM&M expenses (excluding SBC) decreased by $2.0 million, or 15% year-to-date 2026 compared to the prior year period and was primarily due to lower employee-related costs and the winding down of the CYPRESS program.
Total SBC related to SG&A expenses were $3.6 million and $6.4 million for the three and six months ended June 30, 2026, respectively, and $3.6 million and $7.4 million for the three and six months ended June 30, 2025, respectively.
As a result of the Restructuring, we expect quarterly SG&A expenses to continue to decrease year-over-year into the second half of 2026.
Restructuring Expenses
Restructuring expenses, as compared to the prior year comparable periods, were as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
Restructuring expenses | $ | 2,179 | $ | — | $ | 2,179 | NM | % | $ | 4,784 | $ | — | $ | 4,784 | NM | % | ||||||||
Share-based compensation expense (non-cash) | 1,852 | — | 1,852 | NM | 2,880 | — | 2,880 | NM | ||||||||||||||||
Total restructuring expenses | $ | 4,031 | $ | — | $ | 4,031 | NM | % | $ | 7,664 | $ | — | $ | 7,664 | NM | % | ||||||||
NM: Not Meaningful
Total Restructuring expenses were $4.0 million and $7.7 million for the three and six months ended June 30, 2026, respectively, and were primarily comprised of one-time severance costs and other employee-related separation costs.
We estimate that we will incur total cash expenses of approximately $6.0 million to $7.0 million related to one-time severance costs which are expected to be incurred and paid through the second half of 2026. We estimate that we will also incur total non-cash Restructuring charges related to the modification of equity-based awards of approximately $4.5 million to $5.5 million through the second half of 2026.
We may also incur additional costs not currently contemplated due to events that may occur because of, or that are associated with, the Restructuring.
Transaction-Related Expenses
Transaction-related expenses, as compared to the prior year comparable periods, were as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
Transaction-related expenses | $ | 6,089 | $ | — | $ | 6,089 | NM | % | $ | 6,089 | $ | — | $ | 6,089 | NM | % | ||||||||
NM: Not Meaningful
On June 28, 2026, we entered into the Merger Agreement. The Merger is currently expected to be consummated in the second half of 2026, subject to approval by our shareholders, receipt of applicable regulatory approvals and satisfaction of other customary closing conditions.
For the three and six months ended June 30, 2026, we incurred $6.1 million in transaction-related expenses primarily related to legal and financial advisory services in respect of the Merger. We expect to incur additional material
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transaction-related expenses during the second half of 2026.
Net Gain on Realized Contingent Milestone and Royalty Assets
Net gain on realized contingent milestone and royalty assets, as compared to the prior year comparable periods, was as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | 2026 | | 2025 | | $ | | % | | |||||||
Net gain on realized contingent milestone and royalty assets | $ | — | $ | 75,137 | $ | (75,137) | NM | % | $ | — | $ | 75,137 | $ | (75,137) | NM | % | ||||||||
NM: Not Meaningful
For the three and six months ended June 30, 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 the 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.
Although we sold the future royalties related to TRELEGY, we retained the right to receive the potential remaining $100.0 million in Milestone Payments from Royalty Pharma if certain TRELEGY global net sales thresholds are achieved in 2026.
Interest Expense
Interest expense, as compared to the prior year comparable periods, was as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | 2026 | | 2025 | | $ | | % | | 2026 | | 2025 | | $ | | % | | ||||||||
Ampreloxetine royalty contingency (non-cash) | $ | — | $ | (663) | $ | 663 | NM | % | $ | — | $ | (1,306) | $ | 1,306 | NM | % | ||||||||
NM: Not Meaningful
On March 3, 2026, we announced that our CYPRESS results did not meet its primary endpoint. As a result of this outcome, we decided to wind down the CYPRESS program, and in accordance with accounting guidance under ASC 470, Debt, we ceased recognizing interest expense on the ampreloxetine contingent liability balance beginning in the first quarter of 2026. As a result, there was no interest expense recognized for the three and six months ended June 30, 2026.
Interest and Other Income, Net
Interest and other income, net, as compared to the prior year comparable periods, was as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | 2026 | | 2025 | | $ | | % | | |||||||
Interest and other income, net | $ | 3,486 | $ | 1,457 | $ | 2,029 | 139 | % | $ | 6,499 | $ | 2,396 | $ | 4,103 | 171 | % | ||||||||
Interest and other income, net, increased by $2.0 million and $4.1 million for the three and six months ended June 30, 2026, respectively, compared to the prior year periods. The increases were primarily attributable to increases in interest income related to an increase in our cash, cash equivalents, and marketable securities balances. The increase in the balances was primarily driven by (i) proceeds of $225.0 million from the sale of TRELEGY royalties received in June 2025; (ii) a $25.0 million milestone payment from Viatris in January 2026 associated with the achievement of certain minimum thresholds related to 2025 YUPELRI US net sales; and (iii) a $50.0 million milestone payment from
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Royalty Pharma in February 2026 associated with the achievement of certain minimum royalty payments related to 2025 TRELEGY global net sales.
Provision for Income Tax (Expense) Benefit
The provision for income tax (expense) benefit, as compared to the prior year comparable periods, was as follows:
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||
(In thousands) | | 2026 | | 2025 | | $ | | % | | | 2026 | | 2025 | | $ | | % | | ||||||
Provision for income tax (expense) benefit | $ | (1,107) | $ | (18,371) | $ | 17,264 | (94) | % | $ | 430 | $ | (17,812) | $ | 18,242 | (102) | % | ||||||||
For the six months ended June 30, 2026, we recognized an income tax benefit of $0.4 million primarily due to the Company’s pre-tax loss for the year-to-date period. For the prior year comparable period, the $17.8 million income tax expense was primarily attributed to the net gain on realized contingent milestone and royalty assets arising from the sale of our TRELEGY royalties in May 2025.
Liquidity and Capital Resources
As of June 30, 2026, we had approximately $387.7 million in cash, cash equivalents, and investments in marketable securities (excluding restricted cash) and no long-term debt.
In January 2026, we received a $25.0 million milestone payment from Viatris for the achievement of certain minimum US net sales thresholds in 2025, and in February 2026, we received a $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.
On June 28, 2026, we entered into the Merger Agreement whereby we agreed to be acquired by Zymeworks. In the Merger Agreement, we have agreed to various covenants, including, among others, agreements to use commercially reasonable efforts to conduct our business in the ordinary course of business in all material respects from the date of the Merger Agreement until the earlier of the Effective Time and the valid termination of the Merger Agreement in accordance with its terms. Outside of certain limited exceptions, we may not take, authorize, or agree or commit to take, certain actions without Zymeworks’ consent, including, but not limited to, (i) acquiring businesses and disposing significant assets, (ii) incurring capital expenditures above specified thresholds, (iii) issuing equity, (iv) incurring indebtedness and (v) repurchasing or paying dividends on ordinary shares. We do not believe these restrictions will prevent us from meeting our obligations, ongoing costs of operations, working capital needs or capital expenditure requirements. In addition, if the Merger Agreement is terminated under certain specified circumstances, each of the Company and Zymeworks is required to pay the other party a termination fee of $32.5 million.
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 condensed 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 comparable periods, were as follows:
Six Months Ended June 30, | |||||||||
(In thousands) | | 2026 | | 2025 | | Change | |||
Net cash provided by operating activities | $ | 66,314 | $ | 251,113 | $ | (184,799) | |||
Net cash used in investing activities |
| (7,810) |
| (5,626) |
| (2,184) | |||
Net cash used in financing activities |
| (6,544) |
| (1,357) |
| (5,187) | |||
Net cash flows provided by operating activities
Net cash provided by operating activities was $66.3 million for the six months ended June 30, 2026, consisting of a net loss of $10.8 million, a net increase in cash resulting from adjustments for non-cash and other reconciling items of $8.7 million and a net increase in cash resulting from changes in operating assets and liabilities of $68.4 million. The net increase in cash resulting from changes in operating assets and liabilities included $75.0 million in milestone payments from Viatris and Royalty Pharma as noted above.
Net cash provided by operating activities was $251.1 million for the six months ended June 30, 2025, consisting of net income of $41.3 million, a net increase in cash resulting from adjustments for non-cash and other reconciling items of $0.1 million and a net increase in cash resulting from changes in operating assets and liabilities of $209.7 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 flows used in investing activities
Net cash used in investing activities was $7.8 million for the six months ended June 30, 2026, consisting of net cash outflows from the purchase and maturities of marketable securities.
Net cash used in investing activities was $5.6 million for the six months ended June 30, 2025, consisting primarily of net cash outflows from the purchase and maturities of marketable securities.
Net cash flows used in financing activities
Net cash used in financing activities was $6.5 million for the six months ended June 30, 2026, consisting of $1.4 million of cash inflows related to option exercises and $7.9 million of cash outflows related to the repurchase of shares to satisfy tax withholding obligations.
Net cash used in financing activities was $1.4 million for the six months ended June 30, 2025, consisting primarily of cash outflows related to the repurchase of shares to satisfy tax withholding obligations.
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 June 30, 2026. 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.
ITEM 3. 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.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation required by paragraph (b) of Rule 13a-15 of the Exchange Act as of June 30, 2026, 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.
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 errors 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 second quarter of the year ending December 31, 2026, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During January 2023, we received notice from Accord Healthcare, Inc.; Cipla USA, Inc. and Cipla Limited; Eugia Pharma Specialties Ltd.; Lupin Inc.; Mankind Pharma Ltd.; Orbicular Pharmaceutical Technologies Private Limited; and Teva Pharmaceuticals, Inc. (collectively, the “generic companies”), that they have each filed with the FDA an abbreviated new drug application (“ANDA”), for a generic version of YUPELRI. The notices from the generic companies each included a paragraph IV certification with respect to five of our patents listed in the FDA’s Orange Book for YUPELRI on the date of our receipt of the notice. The asserted patents relate generally to polymorphic forms of and a method of treatment using YUPELRI. In February 2023, we filed patent infringement suits against the generic companies in federal district courts, including the US District Court for the District of New Jersey, the US District Court for the District of Delaware, and the US District Court for the Middle District of North Carolina. The suits in Delaware and North Carolina have been dismissed, as all generic companies have agreed to venue in New Jersey. The complaint alleges that by filing the ANDAs, the generic companies have infringed five of our Orange Book listed patents. Additional patents covering YUPELRI, granted on July 4, 2023, January 2, 2024, July 30, 2024 and April 29, 2025, were subsequently listed in FDA’s Orange Book. We filed additional patent infringement suits in the US District Court for the District of New Jersey against generic companies who had not settled at those times, and these suits were consolidated with the above action.
In May 2024, we received notice from Qilu Pharmaceuticals Co., Ltd. (“subsequent ANDA filer”), that it had filed with the FDA an ANDA for a generic version of YUPELRI. The notice from the subsequent ANDA filer included a paragraph IV certification with respect to certain of our patents listed in FDA’s Orange Book for YUPELRI. The asserted patents relate generally to polymorphic forms of and a method of treatment using YUPELRI. In June 2024, we
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filed a patent infringement suit against the subsequent ANDA filer in the US District Court for the Eastern District of Pennsylvania. The complaint alleges that by filing the ANDA, the subsequent ANDA filer has infringed certain of our Orange Book listed patents.
As of March 31, 2026, we have settled all litigation with all of the companies listed above pursuant to individual agreements in which we granted these companies a royalty-free, non-exclusive, non-sublicensable, non-transferable license to manufacture and market their respective generic versions of YUPELRI inhalation solution in the US on or after the licensed launch date of April 23, 2039, subject to certain exceptions and other provisions customary for agreements of this type. As required by law, the settlements are subject to review by the US Department of Justice and the Federal Trade Commission.
Please also see “Item 1, Business – Patents and Proprietary Rights -- Patent Term Restoration, Regulatory Exclusivities, and Hatch-Waxman Litigation” in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information. In addition, this litigation and the related risks are described in greater detail under the risk factor “Litigation to protect or defend our intellectual property or third-party claims of intellectual property infringement will require us to divert resources and may prevent or delay our drug development and commercialization efforts” of this Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
The risks described below and elsewhere in this Quarterly Report on Form 10-Q and in our other public filings with the SEC are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Summary of Principal Risks Related to Our Pending Merger with Zymeworks Inc.
| ● | The conditions under the Merger Agreement for completion of the Merger may not be satisfied at all or in the anticipated timeframe; |
| ● | The pendency of the Merger could adversely affect our business, financial results and/or operations; |
| ● | While the Merger Agreement is in effect, we are subject to restrictions on our business activities; |
| ● | In certain instances, the Merger Agreement requires us to pay a termination fee to Zymeworks, which could require us to use available cash that would have otherwise been available for general corporate purposes; and |
| ● | We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger with Zymeworks. |
Summary of Principal Risks Associated with Theravance Biopharma’s Business
| ● | If YUPELRI’s acceptance by physicians, patients, third-party payors, or the medical community in general does not continue to grow, we may not receive significant additional revenues from sales of this product; |
| ● | In collaboration with Viatris, we are responsible for marketing and sales of YUPELRI in the US, which subjects us to certain risks; |
| ● | If our partners do not satisfy their obligations under our agreements with them, or if they terminate our partnerships with us, we may not be able to develop or commercialize our partnered products as planned; |
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| ● | We face substantial competition from companies with more resources and experience than we have, which may result in others discovering, developing, receiving approval for or commercializing products more successfully than we do; |
| ● | Our strategic review process may not result in a consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or its conclusion could adversely affect our business and our shareholders; |
| ● | We are subject to extensive and ongoing regulation, oversight and other requirements by the FDA and failure to comply with these regulations and requirements may subject us to penalties that may adversely affect our financial condition or our ability to commercialize products; |
| ● | We and/or our collaboration partners and those commercializing products with respect to which we have an economic interest may face competition from companies seeking to market generic versions of any approved products in which we have an interest, such as YUPELRI; and |
| ● | We may not sustain profitability from our operations. |
RISKS RELATED TO OUR PENDING MERGER WITH ZYMEWORKS INC.
The conditions under the Merger Agreement for completion of the Merger may not be satisfied at all or in the anticipated timeframe.
The consummation of the Merger is subject to certain customary closing conditions, including, among others, (i) approval of the Merger Agreement by the affirmative vote of holders of ordinary shares representing at least two-thirds of the ordinary shares who, being entitled to do so, attend in person or by proxy and vote as a single class at an extraordinary general meeting where a quorum is present, (ii) the absence of a law or order remaining in effect which prohibits, restrains, makes illegal or enjoins the consummation of the Merger, (iii) the expiration or termination of the waiting period (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the Merger, (iv) the accuracy of the parties’ respective representations and warranties contained in the Merger Agreement (subject in certain instances to customary materiality thresholds), (v) the performance of the parties’ respective covenants contained in the Merger Agreement in all material respects, and (vi) solely as relates to Zymeworks’ obligation to consummate the Merger, the absence of any Parent Material Adverse Effect (as defined in the Merger Agreement).
There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all. We may be subject to several risks as a result of a failure to complete, or a significant delay in completing, the Merger, including, but not limited to, the following:
| ● | the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Merger, and other restrictions on our ability to conduct our business during the pendency of the Merger; |
| ● | our inability to solicit other acquisition proposals during the pendency of the Merger; |
| ● | if the Merger is not completed or is significantly delayed, the trading price of our shares may decrease or change to the extent that the current trading price of our shares reflects an assumption that the Merger will be completed, or completed in a timely manner; |
| ● | the amount of certain costs, fees and expenses related to the Merger that must be paid by us whether or not the Merger is consummated; |
| ● | if the Merger Agreement is terminated under certain specified circumstances, we will be required to pay Zymeworks a termination fee of $32.5 million; |
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| ● | the attention of our management may be directed toward the consummation of the Merger and related matters, and their focus may be diverted from our day-to-day business operations, including from other opportunities that might otherwise be beneficial to us; and |
| ● | the inability to attract and retain key personnel, and the possibility that our current employees could be distracted, and their productivity decline as a result, due to uncertainty regarding the Merger. |
Any failure to complete or a significant delay in completing the Merger could negatively impact our business.
The pendency of the Merger could adversely affect our business, financial results and/or operations.
Our efforts to consummate the Merger could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operation and our business. Uncertainty as to whether the Merger will be consummated may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the transaction is pending because employees may experience uncertainty about their roles following consummation of the Merger. A substantial amount of our management’s and employees’ attention is being directed toward the consummation of the Merger and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and our relationship with our business partners, including with respect to the Company’s collaboration with Viatris. For example, our business partners may defer decisions concerning working with us, or seek to change existing business relationships with us. The adverse effects of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or termination of the Merger Agreement.
While the Merger Agreement is in effect, we are subject to restrictions on our business activities.
In the Merger Agreement, we have agreed to various covenants, including, among others, agreements to use commercially reasonable efforts to conduct our business in the ordinary course of business in all material respects from the date of the Merger Agreement until the earlier of the Effective Time and the valid termination of the Merger Agreement in accordance with its terms. Outside of certain limited exceptions, we may not take, authorize, or agree or commit to take, certain actions without Zymeworks’ consent, including, but not limited to, (i) acquiring businesses and disposing significant assets, (ii) incurring capital expenditures above specified thresholds, (iii) issuing equity, (iv) incurring indebtedness and (v) repurchasing or paying dividends on ordinary shares. These restrictions could prevent us from pursuing strategic business opportunities and taking actions with respect to our business, including effectively responding to competitive pressures and industry developments, that we may consider advantageous and may, as a result, materially and adversely affect our business, results of operations and financial condition.
In certain instances, the Merger Agreement requires us to pay a termination fee to Zymeworks, which could require us to use available cash that would have otherwise been available for general corporate purposes.
Under the terms of the Merger Agreement, we are required to pay to Zymeworks a cash termination fee in an amount equal to $32.5 million under specific circumstances described in the Merger Agreement. If the Merger Agreement is terminated under such circumstances, the termination fee we may be required to pay under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes and other uses. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business operations and financial condition, which in turn would materially and adversely affect the price of our ordinary shares.
We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger with Zymeworks.
We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the pending Merger. We must pay substantially all of these costs and expenses whether or not the Merger is completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses.
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RISKS RELATING TO THE COMPANY
If YUPELRI’s acceptance by physicians, patients, third-party payors, or the medical community in general does not continue to grow, we may not receive significant additional revenues from sales of this product.
The commercial success of YUPELRI depends upon its acceptance by physicians, patients, third-party payors and the medical community in general. YUPELRI’s acceptance by these parties may not continue to grow as we have planned. YUPELRI competes predominately with short-acting nebulized bronchodilators that are dosed three to four times per day. See the Risk Factor entitled “We face substantial competition from companies with more resources and experience than we have, which may result in others discovering, developing, receiving approval for or commercializing products more successfully than we do” for additional information regarding the competitive landscape in which we operate. If physicians, patients, third-party payors, or the medical community in general believe that YUPELRI is not a preferred treatment option for those with COPD, do not continue to prescribe, fill prescriptions for, cover, or reimburse for YUPELRI, we may see declines, or fail to grow. In addition, we have experienced headwinds from an evolved channel mix and a lower realized net price. While we anticipate a more stable pricing environment and continued YUPELRI demand growth in 2026 and beyond, there can be no assurance that our and our partner Viatris’ efforts to improve our current pricing dynamics will be successful. See the Risk Factor entitled “Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor and distributor cost containment initiatives, may negatively impact us, our collaboration partners, or those commercializing products with respect to which we have an economic interest or right to receive royalties” for additional information regarding elements of the pricing landscape in which we operate. If YUPELRI’s acceptance and net price does not grow, or declines from previous levels, our business and financial results could be materially harmed.
In collaboration with Viatris, we are responsible for marketing and sales of YUPELRI in the US, which subjects us to certain risks.
We currently maintain a sales force in the US to support our co-promotion obligations for YUPELRI under our agreement with Viatris. The risks of fulfilling our US co-promotion obligations to Viatris include:
| ● | costs and expenses associated with maintaining an independent sales and marketing organization with appropriate technical expertise and supporting infrastructure, including third-party vendor logistics and consultant support, which costs and expenses could, depending on the scope and method of the marketing effort, exceed any product revenue; |
| ● | our ability to retain effective sales and marketing personnel and medical science liaisons in the US; |
| ● | the ability of our sales and marketing personnel to obtain access to, and educate adequate numbers of prescribers about prescribing YUPELRI, in appropriate clinical situations; and |
| ● | the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines. |
If we are not successful in maintaining a sales and marketing organization with appropriate experience, technical expertise, supporting infrastructure and the ability to obtain access to and educate adequate numbers of physicians about prescribing YUPELRI in appropriate clinical situations, we will have difficulty maintaining effective commercialization of YUPELRI in the hospital setting, which would adversely affect our business and financial results, and the condition and the price of our securities could fall.
If our partners do not satisfy their obligations under our agreements with them, or if they terminate our partnerships with us, we may not be able to develop or commercialize our partnered products as planned.
In January 2015, we entered into a collaboration agreement with Viatris for the development and commercialization of a nebulized formulation of our LAMA revefenacin, including YUPELRI. Under the terms of the
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agreement, we and Viatris co-develop nebulized revefenacin, including YUPELRI, for COPD and other respiratory diseases. Viatris is the NDA holder and is responsible for manufacturing, pricing and compliance matters as well as sales and marketing in the community setting. We are responsible for sales and marketing in the hospital setting. In 2019, we granted Viatris exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories and we are eligible to receive low double-digit tiered royalties on any net sales of nebulized revefenacin. Viatris is responsible for all aspects of development and commercialization of nebulized revefenacin in China and adjacent territories. In connection with these agreements, Viatris has certain rights regarding the use of patents and technology with respect to the compounds in our development programs, including development and marketing rights.
Our partner may not fulfill its obligations under our agreements, and, in certain circumstances, they or we may terminate our partnership with them. For example, in June 2023, we received notice from Pfizer terminating the License Agreement (the “Pfizer Agreement”) with Pfizer Inc. (“Pfizer”) regarding our preclinical program for skin targeted, locally acting pan Janus kinase (JAK) inhibitors that can be rapidly metabolized as of October 2023. We have discontinued our JAK inhibitor research program. We may be unable to assume the development and commercialization responsibilities covered by the agreements or enter into alternative arrangements with a third party to develop and commercialize such product candidates. If a partner elected to promote alternative products and product candidates such as its own products and product candidates in preference to those licensed from us, does not devote an adequate amount of time and resources to our product or product candidates or is otherwise unsuccessful in its efforts with respect to our products or product candidates, the development and commercialization of products and product candidates covered by the agreements could be delayed or terminated, and future payments to us could be delayed, reduced or eliminated and our business and financial condition could be materially and adversely affected. Accordingly, our ability to receive any revenue from the products and product candidates covered by these agreements is dependent on the efforts of our partners. If a partner terminates or breaches its agreements with us, otherwise fails to complete its obligations in a timely manner or alleges that we have breached our contractual obligations under these agreements, the chances of successfully developing or commercializing products and product candidates under the collaboration could be materially and adversely affected. In addition, effective collaboration with a partner requires coordination to achieve complex and detail-intensive goals between entities that potentially have different priorities, capabilities and processes and successful navigation of the challenges such coordination entails. We could also become involved in disputes with a partner, which could lead to delays in or termination of our development and commercialization programs and time-consuming and expensive litigation or arbitration. Furthermore, termination of an agreement by a partner could have an adverse effect on the price of our ordinary shares or other securities even if not material to our business.
We face substantial competition from companies with more resources and experience than we have, which may result in others discovering, developing, receiving approval for or commercializing products more successfully than we do.
Our ability to succeed in the future depends on our ability to demonstrate and maintain a competitive advantage with respect to our approach to the development and commercialization of medicines. Our objective has been to develop and commercialize small molecule medicines with superior efficacy, convenience, tolerability and/or safety. Medicine that we commercialize with our collaborative partner competes with existing, and we expect will compete with future, market-leading medicines.
Many of our current and potential competitors have substantially greater financial, technical and personnel resources than we have. In addition, many of these competitors have significantly greater commercial infrastructures than we have. Our ability to compete successfully will depend largely on our ability to leverage our experience in drug development and commercialization to:
| ● | deliver medicines that are superior to other products in the market; |
| ● | attract and retain qualified personnel; |
| ● | maintain and enforce patent and/or other proprietary protection for our medicines and technologies; |
| ● | maintain required regulatory approvals; |
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| ● | develop and effectively implement commercialization strategies, with or without collaborative partners; and |
| ● | successfully collaborate with pharmaceutical companies in the development and commercialization of new medicines. |
Pharmaceutical companies, including companies with which we collaborate, may invest heavily to quickly discover and develop or in-license novel compounds that could make our product obsolete. Accordingly, other companies may succeed in obtaining patent protection, conducting clinical trials, receiving FDA or equivalent regulatory approval outside the US or discovering, developing and commercializing medicines more successfully than we do. Other companies are engaged in the discovery of medicines that would compete with our product.
Any medicine that competes with a generic or proprietary market leading medicine must demonstrate compelling advantages in efficacy, convenience, tolerability and/or safety in order to overcome severe price competition and be commercially successful. For example, YUPELRI competes predominately with short acting nebulized bronchodilators that are dosed three to four times per day. Merck’s ensifentrine, a selective inhaled dual inhibitor of PDE3 and PDE4, was launched in the US in June 2024 as a maintenance treatment for adults with COPD and Sanofi and Regeneron Pharmaceutical, Inc.’s IL-4/IL-13 monoclonal antibody (mAb) Dupixent® (dupilumab) recently received approval in the US for COPD for maintenance treatment for patients with moderate-to-severe COPD, who are uncontrolled with current SOC triple therapy (LAMA + LABA + ICS) and have evidence of Type 2 inflammation and frequent exacerbation history. If we are not able to compete effectively against our current and future competitors, our business will not grow, our financial condition and operations will suffer, and the price of our securities could fall.
Our strategic review process may not result in a consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or its conclusion could adversely affect our business and our shareholders.
In November 2024, the board of directors announced the formation of a Strategic Review Committee of our Board of Directors (the "Committee") composed entirely of independent directors to assess all strategic alternatives to the Company, including those related to YUPELRI, ampreloxetine, and TRELEGY, with the objective of unlocking shareholder value. In March 2026, in connection with the announcement that our Phase 3 CYPRESS study did not meet its primary endpoint, the Committee accelerated its ongoing review of alternatives to maximize value for shareholders. Since its formation, the Committee has been working on an ongoing basis with Lazard, its independent financial advisor, to evaluate opportunities available to us, including under multiple potential outcomes for our Phase 3 CYPRESS study of ampreloxetine in patients with neurogenic orthostatic hypotension due to multiple system atrophy.
On June 28, 2026, following a comprehensive strategic review process conducted by the Company's Strategic Review Committee and Board of Directors, Theravance Biopharma entered into a definitive agreement pursuant to which Zymeworks Inc. will acquire the Company for $17.00 per share in cash, plus a contingent value right (CVR) entitling shareholders to 80% of net proceeds realized from any future license, divestiture or other monetization of ampreloxetine over the next ten years. As we wind down the CYPRESS program, subject to certain restrictions set forth in the Merger Agreement between us and Zymeworks, we are continuing certain targeted regulatory, scientific and intellectual property research and development activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets, including with respect to the CVR pursuant to the Merger Agreement. There can be no assurance as to the outcome of any regulatory engagement or the value of the program and related assets. The CVRs and the possibility of receiving any payment pursuant to the CVRs are highly speculative. There can be no assurance that any transaction that may give rise to any payment pursuant to the CVRs will be executed or that any payment pursuant to the CVRs will ever be paid. In addition, the conditions for completion of the Merger may not be satisfied, or may not be satisfied within the anticipated timeframe, and, while the Merger Agreement is in effect, we are subject to restrictions on our business activities that could adversely affect our business, results of operations, and financial condition. See the Risk Factors entitled “The conditions under the Merger Agreement for completion of the Merger may not be satisfied at all or in the anticipated timeframe” and “While the Merger Agreement is in effect, we are subject to restrictions on our business activities” for additional information regarding risks related to the Merger.
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If the Merger is not consummated, the process of reviewing strategic alternatives is time-consuming and may be distracting and disruptive to our business operations, which may cause concern to our employees, investors, strategic partners, and other constituencies and may have a material impact on our business and operating results and/or result in increased volatility in our share price. We have and, if the Merger is not consummated, would continue to incur substantial expenses associated with identifying, evaluating, and negotiating potential strategic alternatives. There can be no assurance that the Committee's strategic review process will result in a consummated transaction. There can be no assurance that the Merger, if consummated, will provide greater value to our shareholders than that reflected in the current price of our ordinary shares. Until the process is concluded, perceived uncertainties related to our future may result in the loss of potential business opportunities and volatility in the market price of our ordinary shares and may make it more difficult for us to attract and retain qualified personnel and business partners.
We may not sustain profitability from our operations.
First as part of Innoviva, Inc., and since June 2, 2014 as Theravance Biopharma, we have been engaged in pharmaceutical discovery and development since 1997. We may never generate sufficient cash or revenue to sustain positive cash flow or profitability from our operations. For the three and six months ended June 30, 2026, we recognized net losses of $5.9 million and $10.8 million, respectively. For the year ended December 31, 2025, we recognized net income of $105.9 million, and our profitability was largely driven by (i) a one-time net gain resulting from the sale of our TRELEGY royalties in May 2025 and (ii) the achievement of sales-related milestones for YUPELRI and TRELEGY in December 2025. For comparison, we recognized net losses of $56.4 million and $55.2 million for the year ended December 31, 2024 and 2023, respectively. We reflect the cumulative net loss incurred after June 2, 2014, the effective date of our spin-off from Innoviva, Inc. (the “Spin-Off”), as accumulated deficit on our condensed consolidated balance sheets, which was $870.5 million as of June 30, 2026. While our YUPELRI operations have been profitable on a brand basis since the third quarter of 2020, we will continue to incur costs and expenses associated with the commercialization of YUPELRI in the US, including the maintenance of an independent sales and marketing organization with appropriate technical expertise, and a medical affairs presence and consultant support. Our operating expenses also will increase if, among other things:
| ● | we pursue clinical development of our products in new indications; |
| ● | we increase the number of patents we are prosecuting or maintaining or otherwise expend additional resources on patent prosecution or defense or patent litigation; or |
| ● | we acquire or in-license additional technologies, product candidates, products or businesses. |
While we generate revenues and income from sales of YUPELRI and our economic and royalty interests, we may not generate significant profit from our operations in the near future. We could fail to meet our revenue expectations. If we or our collaborators or licensees are not able to successfully manufacture products at an acceptable cost or with appropriate quality, or successfully market and sell such products, and do so with desired margins, our expenses may exceed any revenues we may receive in the future.
Our strategic business plan is subject to significant uncertainties and risks as a result of, among other factors, the sales levels of our approved product, unplanned expenses, expenses being higher than anticipated, revenue and cash receipts being lower than anticipated, and the need to satisfy contingent liabilities. Our ability to reach, and the time required to reach, and then to sustain, profitability from operations is uncertain. As a result, we may incur substantial losses in the future. Failure to become and remain profitable from operations would adversely affect the price of our securities and our ability to continue operations as planned.
There is a single source of supply for YUPELRI, and our business will be harmed if manufacturers are not able to satisfy demand and alternative sources are not available.
There is a single supplier of YUPELRI API, a single supplier of YUPELRI drug product and YUPELRI is warehoused in a single facility. We also depend on a number of third-party Active Pharmaceutical Ingredient (“API”) and drug product manufacturers for clinical study purposes, and we depend on third-party suppliers for warehousing and storage of our existing API and drug product. We may not have long-term agreements with these third parties and our agreements with these parties may be terminable at will by either party at any time. If, for any reason, any of these third-
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party manufacturers are unable or unwilling to perform, or if their performance does not meet regulatory requirements, alternative manufacturers may not be available or may not be available on acceptable terms. For example, while we have not been directly or indirectly materially impacted, manufacturers, warehousing suppliers, and shipping suppliers are periodically impacted by natural disasters, accidents, labor disputes, labor shortages, regulatory actions, public health emergencies and geopolitical factors. Any inability to acquire sufficient quantities of API and drug product in a timely manner from these third parties could delay clinical studies or prevent us from developing any product candidate in a cost-effective manner or on a timely basis or adversely impact YUPELRI sales. In addition, manufacturers of our API and drug product are subject to the FDA’s current Good Manufacturing Practice (“cGMP”) regulations and similar foreign standards and we do not have control over compliance with these regulations by our manufacturers.
Our manufacturing strategy presents the following additional risks:
| ● | because of the complex nature of many compounds, our manufacturers may not be able to successfully manufacture our APIs and/or drug products in a cost-effective and/or timely manner and changing manufacturers for our APIs or drug products could involve lengthy technology transfer, validation and regulatory qualification activities for the new manufacturer; |
| ● | the processes required to manufacture certain APIs and drug products are specialized and available only from a limited number of third-party manufacturers; and |
| ● | the availability of specialized materials needed to manufacture our APIs and drug products or YUPELRI. |
We are subject to extensive and ongoing regulation, oversight and other requirements by the FDA and failure to comply with these regulations and requirements may subject us to penalties that may adversely affect our financial condition or our ability to commercialize any approved products.
Prescription drug advertising and promotion are closely scrutinized by the FDA, including substantiation of promotional claims, disclosure of risks and safety information, and the use of themes and imagery in advertising and promotional materials. As with all companies selling and marketing products regulated by the FDA in the US, we are prohibited from promoting any uses of an approved product, such as YUPELRI, that are outside the scope of those uses that have been expressly approved by the FDA as safe and effective on the product’s label.
The manufacturing, labeling, packaging, adverse event reporting, advertising, promotion, and recordkeeping for an approved product remain subject to extensive and ongoing regulatory requirements. If we become aware of previously unknown problems with an approved product in the US or overseas or at a contract manufacturer’s facilities, a regulatory authority may impose restrictions on the product, the contract manufacturers or on us, including requiring us to reformulate the product, conduct additional clinical studies, change the labeling of the product, withdraw the product from the market or require the contract manufacturer to implement changes to its facilities.
We are also subject to regulation by regional, national, state, and local agencies, including the Department of Justice, the Federal Trade Commission, the Office of Inspector General of the US Department of Health and Human Services (“OIG”) and other regulatory bodies with respect to any approved product, such as YUPELRI, as well as governmental authorities in those foreign countries in which any product is approved for commercialization. The Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and other federal and state statutes and regulations govern to varying degrees the research, development, manufacturing, and commercial activities relating to prescription pharmaceutical products, including non-clinical and clinical testing, approval, production, labeling, sale, distribution, import, export, post-market surveillance, advertising, dissemination of information and promotion. If we or any third parties that provide these services for us are unable to comply, we may be subject to regulatory or civil actions or penalties that could significantly and adversely affect our business.
Regulatory approval for any product candidate, if any, may include similar or other limitations on the indicated uses for which we can market our medicines or the patient population that may utilize our medicines, which may limit the market for our medicines or put us at a competitive disadvantage relative to alternative therapies. Failure to satisfy required post-approval requirements and/or commitments may have implications for a product’s approval and may carry civil monetary penalties.
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Any failure to maintain regulatory approval will materially limit the ability to commercialize a product or any future product candidates and if we fail to comply with FDA regulations and requirements, the FDA could potentially take a number of enforcement actions against us, including the issuance of untitled letters, warning letters, preventing the introduction or delivery of the product into interstate commerce in the US, misbranding charges, product seizures, injunctions, and civil monetary penalties, which would materially and adversely affect our business and financial condition and may cause the price of our securities to fall.
The risks identified in this risk factor relating to regulatory actions and oversight by agencies in the US and throughout the world also apply to the commercialization of any partnered products by our collaboration partners and those commercializing products with respect to which we have an economic interest or right to receive royalties, including GSK, and such regulatory actions and oversight may limit those parties’ ability to commercialize such products, which could materially and adversely affect our business and financial condition, and which may cause the price of our securities to fall.
We and/or our collaboration partners and those commercializing products with respect to which we have an economic interest or right to receive royalties may face competition from companies seeking to market generic versions of any approved products in which we have an interest, such as YUPELRI.
Under the Drug Price Competition and Patent Term Restoration Act of 1984, a company may submit an abbreviated new drug application (“ANDA”) under section 505(j) of the Federal Food, Drug, and Cosmetic Act to market a generic version of an approved drug. Because a generic applicant does not conduct its own clinical studies, but instead relies on the FDA’s finding of safety and effectiveness for the approved drug, it is able to introduce a competing product into the market at a cost significantly below that of the original drug. Although we have multiple patents protecting YUPELRI with expiration dates ranging from 2028 to 2039 that are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book, generic applicants have submitted, and could potentially submit additional, “Paragraph IV certifications” to FDA stating that such patents are invalid or will not be infringed by the applicant’s product. For example, on January 10, 2023, the FDA included seven ANDAs that referred to YUPELRI (revefenacin) inhalation solution and contained a Paragraph IV certification on its Paragraph IV Certifications List and, in May 2024, we received notice from a subsequent filer that it had filed with the FDA an ANDA for a generic version of YUPELRI and included a Paragraph IV certification with respect to certain of our patents listed in FDA’s Orange Book for YUPELRI. As of March 31, 2026, we have settled litigation with all of the generic applicants, and pursuant to individual agreements, we granted these companies a royalty-free, non-exclusive, non-sublicensable, non-transferable license to manufacture and market their respective generic versions of YUPELRI inhalation solution in the US on or after the licensed launch date of April 23, 2039, subject to certain exceptions and other provisions customary for agreements of this type. Our collaboration partner, Viatris, is responsible for enforcing our Orange Book patents relating to YUPELRI, in consultation with us, and our views may differ from theirs with respect to process or strategy, and we have a reduced ability to control the outcome of any litigation. If any competitors successfully challenge the patents related to these products, including YUPELRI, we and/or our collaboration partners and those commercializing products with respect to which we have an economic interest or right to receive royalties would face substantial competition. If we are not able to compete effectively against such future competition, our business will not grow, our financial condition and operations will suffer, and the price of our securities could fall.
For additional discussion of the risk of generic competition to YUPELRI, please see the risk factor below entitled “If our efforts to protect the proprietary nature of the intellectual property related to our technologies are not adequate, we may not be able to compete effectively in our current or future markets” and “Litigation to protect or defend our intellectual property or third-party claims of intellectual property infringement will require us to divert resources and may prevent or delay our drug development and commercialization efforts.”
If we are unable to enter into future collaboration arrangements or if any such collaborations are unsuccessful, we may be unable to fully develop and commercialize products and our business will be adversely affected.
We have a collaboration with Viatris for the development and commercialization of a nebulized formulation of revefenacin, which is a LAMA compound (including YUPELRI). Additional collaborations, if any, may be needed to progress additional programs and to commercialize the product candidates in our programs if approved by the necessary regulatory authorities.
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Collaborations with third parties regarding our programs may require us to relinquish material rights, including revenue from commercialization of our medicines, or to assume material ongoing development obligations that we would have to fund. Furthermore, once we enter into a collaboration, our collaboration partners are frequently important for the success of the product or product candidate. For example, Viatris’ role in the commercialization of YUPELRI is important to the overall success of the product. In addition, since we do not currently intend to progress our skin-selective pan-JAK inhibitor program internally, Pfizer was important to such program’s development. However, for any collaboration, we may not be able to control the amount of time and resources that our partners devote to our products or product candidates and our partners may choose to prioritize alternative programs or otherwise be unsuccessful in their efforts with respect to our products or product candidates. In addition, effective collaboration with a partner requires coordination to achieve complex and detail-intensive goals between entities that potentially have different priorities, capabilities and processes and successful navigation of the challenges such coordination entails. For example, Viatris has a substantial existing product portfolio largely comprising generic products, other considerations and incentives that influence its resource allocation, and background, experiences, priorities, and internal organizational processes that differ from our own. As a result of these differing backgrounds, interests, and processes, Viatris may take actions that it believes are in its best interest, but which might not be in the best interests of either us or our other shareholders. Our inability to successfully collaborate with third parties would increase our development costs and may cause us to choose not to continue development or commercialization of product candidates, would limit the likelihood of successful commercialization of product candidates, may cause us not to continue commercialization of our authorized products and could cause the price of our securities to fall.
If there are any adverse developments or perceived adverse developments with respect to TRELEGY, we may not receive Milestone Payments, which would harm our business and could cause the price of our securities to fall.
Through the milestone payment we may receive from Royalty Pharma if certain TRELEGY global net sales thresholds are met following our sale of our economic interest in TRELEGY (the “Milestone Payments”), we may participate economically in royalty payments from GSK with respect to TRELEGY. However, we cannot assure you as to the amount, if any, we might receive. We have no access to non-public information regarding the development progress of, or plans for TRELEGY, and we have no current authority to enforce rights under the GSK Agreements assigned to TRC. However, if there are any adverse developments or perceived adverse developments with respect to TRELEGY, we may not realize the value we currently anticipate from the Milestone Payments, which would harm our business and may cause the price of our securities to fall. Examples of such adverse developments include, but are not limited to:
| ● | disappointing or lower than expected sales of TRELEGY; |
| ● | the emergence of new closed triple or other alternative therapies or any developments regarding competitive therapies, including comparative price or efficacy of competitive therapies; |
| ● | disputes between any of Royalty Pharma, GSK, Innoviva and us; |
| ● | GSK deciding to modify, delay or halt the TRELEGY program; |
| ● | any safety, efficacy or other concerns regarding the TRELEGY program; or |
| ● | any particular FDA requirements or changes in FDA policy or guidance regarding the TRELEGY program or any particular regulatory requirements in other jurisdictions or changes in the policies or guidance adopted by foreign regulatory authorities. |
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We do not control the commercialization of TRELEGY; accordingly, our receipt of Milestone Payments will depend on, among other factors, GSK’s ability to further commercialize TRELEGY.
The Milestone Payments are ultimately based on the amount of sales of TRELEGY by GSK. Whether we receive Milestone Payments will depend on GSK’s ability to commercialize the product, and the future payments, if any, made by GSK to Royalty Pharma.
Accordingly, our receipt of Milestone Payments involves a number of risks and uncertainties, including:
| ● | GSK’s ability to have an adequate supply of TRELEGY product; |
| ● | ongoing compliance by GSK or its suppliers with the FDA’s current Good Manufacturing Practice; |
| ● | compliance with other applicable FDA and other regulatory requirements in the US or other foreign jurisdictions, including those described elsewhere in this report; |
| ● | competition, whether from current competitors, generics, or new products developed by others in the future; |
| ● | claims relating to intellectual property; |
| ● | any future disruptions in GSK’s business which would affect its ability to commercialize TRELEGY; |
| ● | the ability of TRELEGY to achieve wider acceptance among physicians, patients, third-party payors, or the medical community in general; |
| ● | global economic conditions; and |
| ● | any of the other risks relating to commercialization of TRELEGY. |
These risks and uncertainties could materially impact the amount and timing of future Milestone Payments, which could have a material adverse effect on our future revenues, other financial results and our financial position and cause the price of our securities to fall.
If we lose key management, sales, or other personnel, or if we fail to attract and retain key employees, our ability to develop product candidates, commercialize our products and maximize shareholder value will be impaired.
We are highly dependent on principal members of our management team and other staff, and in particular, our Chief Executive Officer, Rick E Winningham, to operate our business. Mr. Winningham has significant pharmaceutical industry experience. The loss of Mr. Winningham’s services could impair our ability to develop and commercialize medicines and maximize shareholder value.
If we fail to retain our qualified personnel or replace them when they leave, we may be unable to continue our business activities, which may cause the price of our securities to fall. The organizational restructuring announced in March 2026 may make retention of our current personnel both more important and more challenging.
In addition, our US operating subsidiary’s facility and most of its employees are located in northern California, headquarters to many other biotechnology and biopharmaceutical companies and many academic and research institutions. As a result, competition for certain skilled personnel in our market is intense. None of our employees have employment commitments for any fixed period of time and they all may leave our employment at will. If we fail to retain our qualified personnel or replace them when they leave, we may be unable to continue our business activities, and the price of our securities could fall.
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Our business and operations would suffer in the event of significant disruptions of information technology systems or security breaches.
We, our vendors, and third parties that are important to how we operate and monitor our business rely extensively on computer systems to maintain information and manage our finances and business. In the ordinary course of business, we collect, store, and transmit large amounts of confidential information (including but not limited to trade secrets or other intellectual property, proprietary business information and personal information) and it is critical that we maintain the confidentiality and integrity of such confidential information. Although we have security measures in place, our internal information technology systems and those of our CROs, other third parties that are important to how we operate and monitor our business, and other service providers, including cloud-based and hosted applications, data and services, may be vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our employees, service providers and/or business partners, from cyber-attacks by malicious third parties, including but not limited to those involving malware and ransomware, which can disrupt operations significantly, and/or from natural disasters, terrorism, war and telecommunication and electrical failures. Cyber-attacks are increasing in their frequency, sophistication, and intensity, and have become increasingly difficult to detect. Significant disruptions of information technology systems or security breaches could adversely affect our business operations and result in financial, legal, business, and reputational harm to us, including significant liability and/or significant disruption to our business. For example, in February 2024, UnitedHealth's Change Healthcare Unit, a large US insurance claim and co-pay card processing clearinghouse, experienced a ransomware attack that caused significant disruptions to healthcare provider and pharmacy operations. Change Healthcare does not provide services to us, however, disruptions to co-pay card support, insurance billing and Medicaid rebate processing potentially led to lost sales and, in response to disruptions from this breach, we and our partner Viatris took steps to help patients access their medications. Similar disruptions may occur in the future stemming from the interconnectedness of the US healthcare ecosystem and industry reliance on centralized claims processing systems and networks, and such future disruptions may have a material adverse effect on our business or results of operations. In addition, Viatris distributes YUPELRI in the US through durable medical equipment suppliers, specialty pharmacies and pharmaceutical wholesalers, and a security breach that impairs the distribution operations or retail pharmacies could materially and adversely impair our ability to deliver YUPELRI to healthcare providers and patients and therefore result in reduced revenue.
If a disruption of information technology systems or security breach results in a loss of or damage to our data or regulatory applications, unauthorized access, use, or disclosure of, or the prevention of access to, confidential information, or other harm to our business, we could incur liability and reputational harm, we could be required to comply with federal and/or state breach notification laws and foreign law equivalents, we may incur legal expenses to protect our confidential information, the development of any product candidates could be delayed and the price of our securities could fall. For example, the loss of clinical trial data from clinical trials could result in delays in regulatory approval efforts and significantly increase costs to recover or reproduce the data. As another example, we may incur penalties imposed by the competent authorities in the EU Member States in case of breach of the EU rules governing the collection and processing of personal data, including unauthorized access to or disclosure of personal data. In addition, we may suffer damages as a result of civil claims, including potential class action claims, in response to security breaches. Although we have security and fraud prevention measures in place, we have been subject to immaterial payment fraud activity. In 2017, we filed a lawsuit (which has since been resolved) against a former employee for misappropriation of our confidential, proprietary and trade secret information. Moreover, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our information technology systems and sensitive data. These same risks also apply to our partners and vendors, who similarly hold sensitive and critical information related to our business in computer systems as well as any other third parties in our industry whose operations may indirectly affect our business. Such third parties are similarly potentially vulnerable to service interruptions and security breaches.
Global economic, political, and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.
Worldwide economic conditions remain uncertain due to current global economic challenges, war and hostilities in Ukraine and the Middle East, health emergencies, inflation, priorities of the US presidential administration and related changes in laws, regulations and policies, instability in the US banking and private credit sectors and other disruptions to global and regional economies and markets.
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Further, development of any product candidate and/or regulatory approval may be delayed for other political events beyond our control. The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, shifting policy priorities as a result of changes in the US presidential administration and political appointees tasked to oversee the agency, and statutory, regulatory, and policy changes. For example, a US federal government budget cut, shutdown or budget sequestration, such as ones that occurred during 2013, 2018, and 2019, or actions by the current US presidential administration in 2026 to limit federal agency budgets and/or personnel, may result in significant reductions to the FDA’s budget, employees, and operations, which may lead to slower response times and longer review periods, potentially affecting our ability to progress development of any product candidates or obtain regulatory approval for any product candidates. Further, future government shutdowns and/or cuts to federal budgets or personnel, including as a result of the US failing to raise the debt ceiling, could impact the ability of any party with which we might enter into a strategic transaction to access the public markets and obtain necessary capital.
Our operations also depend upon favorable trade relations between the US and those foreign countries, including China, in which our materials suppliers have operations. A protectionist trade environment in either the US or those foreign countries in which we do business, such as a change in the current tariff structures, including any tariffs imposed by the current US administration and any reciprocal tariffs in response thereto, export compliance or other trade policies, may materially and adversely affect our operations. The current US administration’s trade policy, including the use and effects of tariffs or other restrictions, could materially impact the macroeconomic framework in which we operate and could harm our business.
External factors, such as potential terrorist attacks, acts of war, geopolitical and social turmoil, including the ongoing hostilities between Russia and Ukraine and those in the Middle East, similar events in many parts of the world or the worsening of such factors, could also prevent or hinder our ability to do business, increase our costs and negatively affect our stock price. These geopolitical, social, and economic conditions could harm our business.
Our US operating subsidiary’s facility is located near known earthquake fault zones, and the occurrence of an earthquake, extremist attack or other catastrophic disaster could cause damage to our facilities and equipment, which could require us to cease or curtail operations.
Our US operating subsidiary’s facility is located in the San Francisco Bay Area near known earthquake fault zones and therefore will be vulnerable to damage from earthquakes. In October 1989, a major earthquake struck this area and caused significant property damage and a number of fatalities. We are also vulnerable to damage from other types of disasters, including power loss, attacks from extremist organizations, fire, floods, communications failures, and similar events. If any disaster were to occur, our ability to operate our business could be seriously impaired. We may not have adequate insurance to cover our losses resulting from disasters or other similar significant business interruptions and we do not plan to purchase additional insurance to cover such losses due to the cost of obtaining such coverage. Any significant losses that are not recoverable under our insurance policies could seriously impair our business and financial condition, which could cause the price of our securities to fall.
We may be treated as a US corporation for US federal income tax purposes.
For US federal income tax purposes, a corporation generally is considered tax resident in the place of its incorporation. Theravance Biopharma is incorporated under Cayman Islands law and established tax residency in Ireland effective July 1, 2015. Therefore, it should be a non-US corporation under this general rule. However, Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”), contains rules that may result in a foreign corporation being treated as a US corporation for US federal income tax purposes. The application of these rules is complex and there is little guidance regarding certain aspects of their application.
Under Section 7874 of the Code, a corporation created or organized outside the US will be treated as a US corporation for US federal tax purposes if (i) the foreign corporation directly or indirectly acquires substantially all of the properties held directly or indirectly by a US corporation; (ii) the former shareholders of the acquired US corporation hold at least 80% of the vote or value of the shares of the foreign acquiring corporation by reason of holding stock in the US acquired corporation; and (iii) the foreign corporation’s “expanded affiliated group” does not have “substantial business activities” in the foreign corporation’s country of incorporation relative to its expanded affiliated group’s
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worldwide activities. For this purpose, “expanded affiliated group” generally means the foreign corporation and all subsidiaries in which the foreign corporation, directly or indirectly, owns more than 50% of the stock by vote and value, and “substantial business activities” generally means at least 25% of employees (by number and compensation), assets and gross income of our expanded affiliated group are based, located, and derived, respectively, in the country of incorporation.
We do not expect to be treated as a US corporation under Section 7874 of the Code, because we do not believe that the assets contributed to us by Innoviva constituted “substantially all” of the properties of Innoviva (as determined on both a gross and net fair market value basis). However, the Internal Revenue Service may disagree with our conclusion on this point and assert that, in its view, the assets contributed to us by Innoviva did constitute “substantially all” of the properties of Innoviva. In addition, there could be legislative proposals to expand the scope of US corporate tax residence and there could be changes to Section 7874 of the Code or the Treasury Regulations promulgated thereunder that could apply retroactively and could result in Theravance Biopharma being treated as a US corporation.
If it were determined that we should be treated as a US corporation for US federal income tax purposes, we could be liable for substantial additional US federal income tax on our post-Spin-Off taxable income. In addition, though we have no current plans to pay any dividends, payments of any dividends to non-US holders may be subject to US withholding tax.
Future tax reform, including changes in tax rates and imposition of new taxes, could impact our results of operations and financial condition.
We are incorporated in the Cayman Islands, maintain subsidiaries in the Cayman Islands (until December 2020), the US, and Ireland, and effective July 1, 2015, we migrated our tax residency from the Cayman Islands to Ireland. We are subject to new, evolving, or revised tax laws and regulations in such jurisdictions, and the enactment of or increases in taxes, or other changes in the application of existing taxes, in such jurisdictions may have an adverse effect on our business or on our results of operations. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. Our future effective tax rate could be affected by changes in our mix of earnings in countries with differing statutory tax rates, changes in valuation of our deferred tax assets and liabilities, or changes in tax laws or their interpretation, including possible US tax reform and contemplated changes in other countries of long-standing tax principles. These and other similar changes, if finalized and adopted, could have a material impact on our income tax expense and deferred tax balances. For example, the Internal Revenue Code tax capitalization rules enacted in 2022 required research and development expenses to be capitalized and amortized over a 5-year period for tax purposes. However, The One Big Beautiful Bill Act (the “OBBBA”) features several tax reforms, including permitting taxpayers to permanently deduct domestic research and development expenses for amounts paid or incurred in tax years beginning after December 31, 2024. The changes introduced by the OBBBA did not have a material impact on the Company’s annual effective tax rate for 2025, and we do not anticipate any OBBBA provisions with a 2026 implementation date to materially impact our financial statements.
Taxing authorities may challenge our structure and transfer pricing arrangements.
We are incorporated in the Cayman Islands, maintain subsidiaries in the Cayman Islands (until December 2020), the US, and Ireland, and effective July 1, 2015, we migrated our tax residency from the Cayman Islands to Ireland. Due to economic and political conditions, various countries are actively considering changes to existing tax laws. We cannot predict the form or timing of potential legislative changes that could have a material adverse impact on our results of operations. Ireland has implemented further tax law changes through the Finance Act 2021 to comply with the European Union Anti-Tax Avoidance Directives. Changes to date, including reverse-hybrid mismatch and interest limitation rules, are not expected to have a material impact on our tax position.
In addition, significant judgment is required in determining our worldwide provision for income taxes. Various factors may have favorable or unfavorable effects on our income tax rate including, but not limited to the performance of certain functions and ownership of certain assets in tax-efficient jurisdictions such as the Cayman Islands and Ireland, together with intra-group transfer pricing agreements. Taxing authorities may challenge our structure and transfer pricing arrangements through an audit or lawsuit. Responding to or defending such a challenge could be expensive and consume time and other resources, and divert management’s time and focus from operating our business. We cannot predict whether taxing authorities will conduct an audit or file a lawsuit challenging this structure, the cost involved in
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responding to any such audit or lawsuit, or the outcome. We may be required to pay taxes for prior periods, interest, fines or penalties, and may be obligated to pay increased taxes in the future which could result in reduced cash flows and have a material adverse effect on our business, financial condition and growth prospects.
We were a passive foreign investment company, or “PFIC,” for 2014, but we were not a PFIC from 2015 through 2025, and we do not expect to be a PFIC for the foreseeable future.
For US federal income tax purposes, we generally would be classified as a PFIC for any taxable year if either (i) 75% or more of our gross income (including gross income of certain 25% or more owned corporate subsidiaries) is “passive income” (as defined for such purposes) or (ii) the average percentage of our assets (including the assets of certain 25% or more owned corporate subsidiaries) that produce passive income or that are held for the production of passive income is at least 50%. In addition, whether our Company will be a PFIC for any taxable year depends on our assets and income over the course of each such taxable year and, as a result, cannot be predicted with certainty until after the end of the year.
Based upon our assets and income during the course of 2014, we believe that our Company and one of our Company’s wholly-owned subsidiaries, Theravance Biopharma R&D, Inc. was a PFIC for 2014. Based upon our assets and income from 2015 through 2025, we do not believe that our Company is a PFIC since 2015. Based on existing tax law, we do not expect to be a PFIC for the foreseeable future based on our current business plans and current business model. For any taxable year (or portion thereof) in which our Company is a PFIC that is included in the holding period of a US holder, the US holder is generally subject to additional US federal income taxes plus an interest charge with respect to certain distributions from Theravance Biopharma or gain recognized on a sale of Theravance Biopharma shares. Similar rules would apply with respect to distributions from or gain recognized on an indirect sale of Theravance Biopharma Ireland Limited. US holders of our ordinary shares may have filed an election with respect to Company shares held at any time during 2014 to be treated as owning an interest in a “qualified electing fund” (“QEF”) or to “mark to market” their ordinary shares to avoid the otherwise applicable interest charge consequences of PFIC treatment with respect to our ordinary shares. A foreign corporation will not be treated as a QEF for any taxable year in which such foreign corporation is not treated as a PFIC. QEF and mark to market elections generally apply to the taxable year for which the election is made and all subsequent taxable years unless the election is revoked with consent of the Secretary of Treasury. US holders of our ordinary shares should consult their tax advisers regarding the tax reporting implications with respect to any QEF and mark to market elections made with respect to our Company and with respect to their indirect interests in Theravance Biopharma R&D, Inc.
If we are unable to maintain effective internal controls, our business, financial position, and results of operations could be adversely affected.
If we are unable to maintain effective internal controls, our business, financial position, and results of operations could be adversely affected. We are subject to the reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which require annual management assessments of the effectiveness of our internal control over financial reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the US. Any failure to achieve and maintain effective internal controls could have an adverse effect on our business, financial position, and results of operations. These reporting and other obligations place significant demands on our management and administrative and operational resources, including accounting resources.
If sufficient capital is not available, we may have to further curtail operations or we could be forced to sell or license assets on terms that may not be favorable to us.
Based on our current operating plans and financial forecasts, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated operating needs for at least the next twelve months. However, our current operating plans or financial forecasts occasionally change. If our current operating plans or financial forecasts change, we may require or seek additional funding in the form of public or private equity or
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equity-linked offerings, debt financings or additional collaborations and licensing arrangements. In addition, as of June 30, 2026, we had cash, cash equivalents and marketable securities of approximately $387.7 million.
Our future capital needs depend on many factors, including:
| ● | support and investments in YUPELRI, including funding our commercialization strategies and post marketing clinical studies; |
| ● | the occurrence of events triggering Royalty Pharma’s obligations to make Milestone Payments to us; |
| ● | the outcome of any licensing or partnering transactions; |
| ● | responding to competitive pressures and competing technological developments; |
| ● | the extent of our proprietary patent position in any approved products and product candidates; |
| ● | our facilities expenses, which will vary depending on the time and terms of any facility lease or sublease we may enter into, and other operating expenses; |
| ● | the scope and extent of the sales and marketing efforts, including our independent sales and marketing organization and medical affairs team; |
| ● | litigation, potential litigation and other contingencies; and |
| ● | the regulatory approval process for product candidates. |
If we require additional funding, we may not be able to obtain additional financing on terms favorable to us, if at all. General market conditions may make it difficult for us to seek financing from the capital markets. We may be required to relinquish rights to our technologies, product candidates or territories, or grant licenses on terms that are not favorable to us, in order to raise additional funds through collaborations or licensing arrangements. We may also have to sequence studies as opposed to conducting them concomitantly in order to conserve resources, or, as we announced in September 2021 and in February 2023, we may need to delay, reduce, or eliminate one or more of our programs and reduce overall overhead expenses. In addition, we may have to make additional reductions in our workforce and may be prevented from continuing our development and commercialization efforts and exploiting other corporate opportunities. This would likely harm our business, prospects and financial condition, and cause the price of our securities to fall.
Our drug development efforts might not generate additional approvable drugs.
Compounds in clinical trials are subject to the risks and failures inherent in the development of pharmaceutical products. These risks include, but are not limited to, the inherent difficulty in selecting the right drug and drug target and avoiding unwanted side effects, as well as unanticipated problems relating to product development, testing, enrollment, obtaining regulatory approvals, maintaining regulatory compliance, manufacturing, competition and costs and expenses that may exceed current estimates.
Clinical studies involving a product candidate may reveal that it is ineffective, inferior to existing approved medicines, unacceptably toxic, or that they have other unacceptable side effects. In addition, the results of preclinical studies do not necessarily predict clinical success, and larger and later-stage clinical studies may not produce the same results as earlier-stage clinical studies. Frequently, product candidates that have shown promising results in early preclinical or clinical studies have subsequently suffered significant setbacks or failed in later non-clinical or clinical studies. In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial protocols, differences in size and type of the patient populations, varying levels of adherence to the dosing regimen and other trial protocols and the rate of dropout among clinical trial participants. Clinical and non-clinical studies of product candidates often reveal that it is not possible or practical to continue development efforts for these product candidates. In addition, the design of a clinical trial can determine whether its results will support regulatory approval and flaws in the design of a clinical trial may not
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become apparent until the clinical trial is well underway or completed. We may interrupt or discontinue development of a product candidate if one or more clinical studies fails to demonstrate adequate safety or efficacy, or if undesirable side effects or unexpected safety issues arise. For example, in March 2026 we announced our decision to wind down the ampreloxetine program after our Phase 3 CYPRESS study of ampreloxetine in patients with neurogenic orthostatic hypotension due to multiple system atrophy did not meet its primary endpoint. As we wind down the CYPRESS program, subject to certain restrictions set forth in the Merger Agreement between us and Zymeworks, we are continuing certain targeted regulatory, scientific and intellectual property research and development activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets, including with respect to the CVR pursuant to the Merger Agreement. There can be no assurance as to the outcome of any regulatory engagement or the value of the program and related assets.
Any adverse results from clinical or non-clinical studies or regulatory obstacles any product candidates or product may face would harm our business and the price of our securities could fall.
Product candidates must undergo extensive non-clinical and clinical studies as a condition to regulatory approval. Clinical studies are expensive, take many years to complete and study results may lead to delays in further studies, new requirements for conducting future studies or decisions to terminate programs. Programs may be terminated due to many factors, including, but not limited to:
| ● | lack of efficacy of product candidate during clinical studies; |
| ● | adverse events, safety issues or side effects (or perceived adverse developments or results) relating to the product candidate or its formulation into medicines; |
| ● | unfavorable study data or unfavorable interpretations of data among the FDA and foreign regulatory authorities; |
| ● | insufficient capital to continue our development program; |
| ● | inability to enter into partnering arrangements relating to the development and commercialization of our program and product candidate or partner decisions not to maintain a partnership with us; |
| ● | delays in patient enrollment and variability in the number and types of patients available for clinical studies; |
| ● | competitive clinical trials; |
| ● | our inability or the inability of our collaborators or licensees to manufacture or obtain from third parties materials sufficient for use in non-clinical and clinical studies; |
| ● | governmental or regulatory delays or suspensions of the conduct of the clinical trials and changes in regulatory requirements, policy and guidelines; |
| ● | challenges with recruitment and/or progressing patients through studies; |
| ● | failure of any partners to advance product candidates through clinical development; |
| ● | incomplete data from clinical trials; |
| ● | varying regulatory requirements or interpretations of data among the FDA and foreign regulatory authorities; |
| ● | new clinical trial regulations in the European Union; and |
| ● | a disturbance where we or our collaborative partners are enrolling patients in clinical trials, such as a pandemic, terrorist activities or war, political unrest or a natural disaster. |
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Any adverse developments or results or perceived adverse developments or results with respect to our clinical program including, without limitation, any delays in our development program, any halting of development in our program, any difficulties or delays encountered with regard to the FDA or other third country regulatory authorities with respect to our program, or any indication from clinical or non-clinical studies that the compounds in our program are not safe, efficacious or sufficiently differentiated from those of our competitors, could have a material adverse effect on our business and cause the price of our securities to fall. There can be no assurance that any clinical or non-clinical study will be read out on the timeline we expect or at all, that the study will meet its endpoints, or that a product candidate will ultimately be found to be safe and effective. For example, in March 2026 we announced that our Phase 3 CYPRESS study of ampreloxetine in patients with neurogenic orthostatic hypotension due to multiple system atrophy did not meet its primary endpoint and we are winding down the ampreloxetine program. As we wind down the CYPRESS program, subject to certain restrictions set forth in the Merger Agreement between us and Zymeworks, we are continuing certain targeted regulatory, scientific and intellectual property research and development activities to evaluate potential future regulatory and strategic opportunities and maximize the value of the program and related assets, including with respect to the CVR pursuant to the Merger Agreement. There can be no assurance as to the outcome of any regulatory engagement or the value of the program and related assets.
If any product candidate is not approved by regulatory authorities, including the FDA, we will be unable to commercialize it.
The FDA must approve any new medicine before it can be marketed and sold in the US. We will not obtain this approval for a product candidate unless and until the FDA approves a New Drug Application (“NDA”). We, or our collaborative partners, must provide the FDA and similar foreign regulatory authorities with data from preclinical and clinical studies that demonstrate that a product candidate complies with the regulatory requirements for the quality of medicinal products and is safe and effective for a defined indication before it can be approved for commercial distribution. FDA or foreign regulatory authorities may disagree with our trial design and our interpretation of data from preclinical studies and clinical trials. The processes by which regulatory approvals are obtained from the FDA and foreign regulatory authorities to market and sell a new product are complex, require a number of years, depend upon the type, complexity and novelty of the product candidate and involve the expenditure of substantial resources for research, development and testing. The FDA has substantial discretion in the drug approval process and may require us to conduct additional non-clinical and clinical testing or to perform post-marketing studies. Further, the implementation of new laws and regulations, and revisions to FDA clinical trial design guidance, may lead to increased uncertainty regarding the approvability of new drugs. See the risk factor entitled “Any delay in commencing or completing clinical studies for product candidates or product and any adverse results from clinical or non-clinical studies or regulatory obstacles product candidates or product may face, would harm our business and the price of our securities could fall” above for additional information. In addition, the FDA has additional standards for approval of new drugs, including recommended advisory committee meetings for certain new molecular entities, and formal risk evaluation and mitigation requirements at the FDA’s discretion. Even if we receive regulatory approval of a product, the approval may limit the indicated uses for which the drug may be marketed or impose significant restrictions or limitations on the use and/or distribution of such product.
In addition, in order to market our medicines in foreign jurisdictions, we or our collaborative partners must obtain separate regulatory approvals in each country. The approval procedure varies among countries and can involve additional testing, and the time required to obtain approval may differ from that required to obtain FDA approval. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Conversely, failure to obtain approval in one or more jurisdictions may make approval in other jurisdictions more difficult. These laws, regulations, additional requirements and changes in interpretation could cause non-approval or further delays in the FDA’s or other regulatory authorities’ review and approval of our and our collaborative partners’ product candidates, which would materially harm our business and financial condition and could cause the price of our securities to fall.
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We depend on third parties in the conduct of our non-clinical and clinical studies for product candidates.
We depend on independent clinical investigators, contract research and manufacturing organizations and other third-party service providers in the conduct of our non-clinical and clinical studies for product candidates. We rely heavily on these parties for execution of our non-clinical and clinical studies, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that our clinical studies are conducted in accordance with good clinical, laboratory and manufacturing practices (“GXPs”) and other standards as required by the FDA and foreign regulatory authorities, and the applicable protocol. Failure by these parties to comply with applicable regulations and practices in conducting studies of a product candidate can result in a delay in our development programs or non-approval of a product candidate by regulatory authorities.
The FDA, and equivalent authorities in other countries, enforce GXPs and other regulations through periodic inspections of trial sponsors, clinical research organizations (“CROs”), principal investigators and trial sites. If we or any of the third parties on which we have relied to conduct our clinical studies are determined to have failed to comply with GXPs (or other equivalent regulations outside the US), the study protocol or applicable regulations, the clinical data generated in our studies may be deemed unreliable. This could result in non-approval of a product candidate by the FDA, or equivalent authorities in other countries, or we, the FDA, or equivalent authorities in other countries may decide to conduct additional audits or require additional clinical studies, which would delay our development programs, could result in significant additional costs and cause the price of our securities to fall.
RISKS RELATED TO LEGAL AND REGULATORY UNCERTAINTY
If our efforts to protect the proprietary nature of the intellectual property related to our technologies are not adequate, we may not be able to compete effectively in our current or future markets.
We rely upon a combination of patents, patent applications, trade secret protection and confidentiality agreements to protect the intellectual property related to our technologies. Any involuntary disclosure to or misappropriation by third parties of this proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market. The status of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and is very uncertain. As of June 30, 2026, we owned a total of 108 issued US patents and 638 granted foreign patents, as well as additional pending US and foreign patent applications. Our patent applications may be challenged or fail to result in issued patents and our existing or future patents may be invalidated or be too narrow to prevent third parties from developing or designing around these patents, including the patents that relate to YUPELRI. If the sufficiency of the breadth or strength of protection provided by our patents is threatened, it could dissuade companies from transacting or collaborating with us and threaten our ability to commercialize products. Further, if we encounter delays in our clinical trials or in obtaining regulatory approval of product candidates, the effective patent lives of the related product candidates could be reduced.
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In addition, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, for processes for which patents are difficult to enforce and for any other elements of our drug discovery and development processes that involve proprietary know-how, information and technology that is not covered by patent applications. Although we require our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information and technology to enter into confidentiality agreements, we cannot be certain that this know-how, information and technology will not be misappropriated, disclosed or used for unauthorized purposes or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Further, the laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the US. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the US and abroad. If we are unable to prevent material disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or, if established, maintain a competitive advantage in our market, which could materially adversely affect our business, financial condition, and results of operations, which could cause the price of our securities to fall.
Litigation to protect or defend our intellectual property or third-party claims of intellectual property infringement will require us to divert resources and may prevent or delay our drug development and commercialization efforts.
Our commercial success depends in part on us and our partners not infringing the patents and proprietary rights of third parties. Third parties may assert that we or our partners are using their proprietary rights without authorization. There are third-party patents that may cover materials or methods for treatment related to a product. At present, we are not aware of any patent infringement claims that would adversely and materially affect our ability to develop any current product, but nevertheless the possibility of third-party allegations cannot be ruled out. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. Furthermore, parties making claims against us or our partners may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize a product. Defense against these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.
In the event of a successful claim of infringement against us, we may have to pay substantial damages, obtain one or more licenses from third parties or pay royalties. In addition, even in the absence of litigation, we may need to obtain licenses from third parties to allow commercialization of a product, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize such product, which could harm our business significantly.
In addition, we have initiated, and in the future we could again be required to initiate, litigation to enforce our proprietary rights against infringement by third parties, prevent the unauthorized use or disclosure of our trade secrets and confidential information, or defend the validity of our patents. For example, in 2017, we filed a lawsuit against a former employee for misappropriation of certain of our confidential, proprietary and trade secret information. While this litigation has since been resolved, prosecution of claims to enforce or defend our rights against others involve substantial litigation expenses and divert substantial employee resources from our business but may not result in adequate remedy to us or sufficiently mitigate the harm to our business caused by any intellectual property infringement, unauthorized access, use or disclosure of trade secrets. For example, in February 2023, we filed patent infringement lawsuits against seven companies and certain of their affiliates seeking to market a generic version of YUPELRI, and in December 2023, we amended the lawsuit to include several non-Orange Book listed patents. Additional lawsuits were filed later in 2023 and into 2024 and 2025 based on newly-issued patents. A further lawsuit was filed during 2024 in response to a subsequent company seeking to market a generic version of YUPELRI. While this litigation has since been resolved, prosecution of claims to enforce or defend our rights against others involves substantial litigation expenses and divert substantial employee resources from our business but may not result in adequate remedy to us or sufficiently mitigate the harm to our business caused by any intellectual property infringement. Our collaboration partner, Viatris, is responsible for enforcing our Orange Book patents relating to YUPELRI, in consultation with us, and their views on litigation, process or strategy may differ from ours, and we have a reduced ability to control the outcome of any litigation. For additional discussion of risks related to partnering programs, please see the risk factor entitled “If we are unable to enter into future collaboration arrangements or if any such collaborations are unsuccessful, we may be unable to fully develop and commercialize products and our business will be adversely affected.” If we fail to effectively enforce our proprietary rights against others, our business will be harmed, and the price of our securities could fall.
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If the efforts of our partners or future partners to protect the proprietary nature of the intellectual property related to collaboration assets are not adequate, the future commercialization of any medicines resulting from collaborations could be negatively impacted, which would materially harm our business and could cause the price of our securities to fall.
The risks identified in the two preceding risk factors may also apply to the intellectual property protection efforts of our partners or future partners. To the extent the intellectual property protection of any partnered assets is successfully challenged or encounters problems with the US Patent and Trademark Office or other comparable agencies throughout the world, the future commercialization of these potential medicines could no longer be economically feasible. Any challenge to the intellectual property protection of a late-stage development or commercial-stage asset could harm our business and cause the price of our securities to fall.
Product liability and other lawsuits could divert our resources, result in substantial liabilities and reduce the commercial potential of our medicines.
The risk that we may be sued on product liability claims is inherent in the development and commercialization of pharmaceutical products. Side effects of, or manufacturing defects in, products that we or our partners develop or commercialize could result in the deterioration of a patient’s condition, injury or even death. Once a product is approved for sale and commercialized, the likelihood of product liability lawsuits tends to increase. Claims may be brought by individuals seeking relief for themselves or by individuals or groups seeking to represent a class, asserting injuries based both on potential adverse effects described in the label as well as adverse events not yet observed. We also face an inherent risk of product liability exposure related to the testing of product candidates in human clinical trials. In addition, changes in laws outside the US are expanding our potential liability for injuries that occur during clinical trials. Product liability claims could harm our reputation, regardless of the merit or ultimate success of the claim, which may adversely affect our and our partners’ ability to commercialize our products and cause the price of our securities to fall. These lawsuits may divert our management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any of these lawsuits, we may incur substantial liabilities and may be forced to limit or forgo further commercialization of the applicable products.
Although we maintain general liability and product liability insurance, this insurance may not fully cover potential liabilities, and we cannot be sure that our insurer will not disclaim coverage as to a future claim. In addition, inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercial production and sale of our products, which could adversely affect our business.
We may also be required to prosecute or defend general commercial, intellectual property, securities and other lawsuits. Litigation typically involves substantial expenses and diverts substantial employee resources from our business. The cost of defending any product liability litigation or engaging in any other legal proceeding, even if resolved in our favor, could be substantial and uncertainties resulting from the initiation and continuation of the litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace and achieve our business goals.
If we fail to comply with data protection laws and regulations, we could be subject to government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity, which could negatively affect our operating results and business.
We are subject to data protection laws and regulations (i.e., laws and regulations that address privacy and data security). In the US, numerous federal and state laws, and regulations, including state data breach notification laws, state health information and/or genetic privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act and the Health Breach Notification Rule), govern the collection, use, disclosure, and protection of health related and other personal information. In California, the California Consumer Privacy Act, as amended by the California Privacy Rights Act, (“CCPA”) establishes certain requirements for data use and sharing transparency, and provides California consumers certain rights concerning the use, disclosure, and retention of their personal data. Virginia, Colorado, Utah, Indiana, Iowa, Tennessee, Montana, Texas, and Connecticut have enacted privacy laws similar to the CCPA that impose new obligations or limitations in areas affecting our business. Health-
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specific consumer privacy laws were also passed in multiple states, including Washington and Nevada. These laws and regulations are evolving and subject to interpretation and may impose limitations on our activities or otherwise adversely affect our business. The obligations to comply with the CCPA and evolving legislation involve, among other things, updates to our notices and the development of new processes internally and with our partners. We may be subject to fines, penalties, or private actions in the event of non-compliance with such laws.
In addition, we may obtain health information from third parties (e.g., healthcare providers who prescribe our products) that are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, (collectively, “HIPAA”). HIPAA imposes privacy and security obligations on covered entity health care providers, health plans, and health care clearinghouses, as well as their “business associates”—certain persons or entities that create, receive, maintain, or transmit protected health information in connection with providing a specified service or performing a function on behalf of a covered entity. Although we are not directly subject to HIPAA, we could be subject to criminal penalties if we knowingly receive individually identifiable health information maintained by a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA and subject to other civil and/or criminal penalties if we obtain, use, or disclose information in a manner not permitted by other privacy and data security and consumer protection laws.
Further, at the federal level, the Federal Trade Commission (“FTC”) also sets expectations for failing to take appropriate steps to keep consumers’ personal information secure, or failing to provide a level of security commensurate to promises made to individual about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards. With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how the company handles consumers’ personal information; any failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act. While we do not intend to engage in unfair or deceptive acts or practices, the FTC has the power to enforce promises as it interprets them, and events that we cannot fully control, such as data breaches, may result in FTC enforcement. Enforcement by the FTC under the FTC Act can result in civil penalties or enforcement actions. The FTC also has the power to enforce the Health Breach Notification Rule, which imposes notification obligations on companies for breaches of certain health information contained in personal health records. The FTC has brought enforcement actions under both Section 5 of the FTC Act and the Health Breach Notification Rule.
EU Member States and other jurisdictions where we operate, such as Switzerland and the UK, have adopted data protection laws and regulations, which impose significant compliance obligations. For example, the General Data Protection Regulation including the local implementation legislation in EU member states and the UK (collectively “GDPR”), imposes strict obligations and restrictions on the ability to collect, analyze, use, store, disclose, transfer or otherwise process personal data, including health data from clinical trials subjects and adverse event reporting. Switzerland has adopted laws that impose restrictions and obligations similar to the GDPR. The GDPR and Switzerland’s data protection laws impose a broad range of requirements and obligations relating to the processing and protection of personal data, including obligations to having legal bases for processing personal data (which may result in some instances in obtaining the consent of the individuals to whom the personal data relate), providing detailed information about the processing activities to the individuals, ensuring that personal data is deleted or anonymized after they are no longer needed for the purposes for which they are collected, ensuring that personal data are adequately protected, ensuring that security incidents are detected, handled and reported to individuals and competent authorities where required, and allowing individuals to exercise their privacy rights. Other obligations relate to restrictions on sharing of personal data with third parties and transferring personal data out of the European Economic Area (“EEA”), Switzerland, or the UK to third countries including the US, having contracting arrangements in place where required (such as with clinical trial sites and vendors), appointing data protection officers, conducting data protection impact assessments, responding to privacy rights requests and keeping records of processing activities. Data protection authorities from the different EU Member States and the EEA may interpret the GDPR and applicable related national laws differently which could effectively result in requirements additional to those currently understood to apply under the GDPR. Further, the UK Government may amend/update UK data protection law, which may result in changes being
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required to our business operations and potentially incur commercial cost. In addition, guidance on implementation and compliance practices may be updated or otherwise revised, which adds to the complexity of processing personal data in the EEA and the UK. When processing personal data of subjects in the EU, we have to comply with applicable data protection and electronic communications laws. In particular, as we rely on service providers processing personal data of data subjects in the EU, we have to enter into suitable contract terms with such providers and receive sufficient guarantees that such providers meet the requirements of the applicable data protection laws, particularly the GDPR which imposes specific and relevant obligations. Enforcement by EU and UK regulators is active, and failure to comply with the GDPR or applicable Member State law may result in substantial fines. The GDPR increases substantially the penalties to which we could be subject in the event of any non-compliance, including fines of up to 10,000,000 Euros or up to 2% of our total worldwide annual turnover for certain comparatively minor offenses, or up to 20,000,000 Euros or up to 4% of our total worldwide annual turnover for more serious offenses. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with data protection authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.
With regard to transfer of personal data, the GDPR restricts the ability of companies to transfer personal data from the EU to the US and other countries, which may incur compliance costs for implementing lawful transfer mechanisms, conducting data transfer impact assessments, and implementing additional measures where necessary to ensure that personal data transferred are adequately protected in a manner essentially equivalent to the EU. The GDPR provides different transfer mechanisms we can use to lawfully transfer personal data from the EU to countries outside the EU. An example is relying on the EU Standard Contractual Clauses and the EU - US Data Privacy Framework. The suitability of Standard Contractual Clauses for data transfer in some scenarios has recently been the subject of legal challenge, and while the US and the EU reached agreement on the EU - US Data Privacy Framework, there are legal challenges to that data transfer mechanism as well. Compliance with EU data transfer obligations can be costly and time-consuming. Data importers must also expend resources in analyzing their ability to comply with transfer obligations, including implementing new safeguards and controls to further protect personal data. If we or our vendors fail to comply with applicable data privacy laws concerning, or if the legal mechanisms we or our vendors rely upon to allow, the transfer of personal data from the EEA or Switzerland to the US (or other countries not considered by the European Commission to provide an adequate level of data protection) are not considered adequate, we could be subject to government enforcement actions, including an order to stop transferring the personal data outside of the EEA and significant penalties against us. Moreover, our business could be adversely impacted if our ability to transfer personal data out of the EEA, the UK or Switzerland to the US is restricted, which could adversely impact our operating results.
As a result of the broad-scale release and availability of Artificial Intelligence (“AI”) technologies, such as generative AI, there is a global trend towards more regulation (e.g., the EU AI Act and AI laws passed in US states) to ensure the ethical and lawful use of AI, and the privacy and security of such AI and the data that it processes. Compliance with such laws will likely be an increasing and substantial cost in the future.
Failure to comply with data protection laws and regulations could result in unfavorable outcomes, including increased compliance costs, delays or impediments in the development of new products, increased operating costs, diversion of management time and attention, government enforcement actions and create liability for us (which could include civil, administrative, and/or criminal penalties), private litigation and/or adverse publicity that could negatively affect our operating results and business.
These privacy and data protection laws and regulations increase our responsibility and liability in relation to personal data that we process and compliance has been and is expected to continue to be difficult, constantly evolving, costly and time-consuming. We may be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data protection laws, to protect against security incidents, or to alleviate issues caused by such incidents. Moreover, despite our efforts and the ever-changing threat landscape, the possibility of these events occurring cannot be eliminated entirely and there can be no assurance that any measures we take will prevent cyber-attacks or security breaches that could adversely affect our business. We rely on third party vendors and service providers to support various aspects of our business operations. However, these third parties may pose risks related to data security, compliance, and contractual obligations. A breach or failure by a third party to adequately protect our data could have adverse consequences for our business and reputation.
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Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor and distributor cost-containment initiatives, may negatively impact us, our collaboration partners, or those commercializing products with respect to which we have an economic interest or right to receive royalties.
The efforts of federal and state governments, insurance companies, managed care organizations and other payors of health care costs, and distributors to contain or reduce costs that they or patients are charged may adversely affect us, our collaboration partners, or those commercializing products with respect to which we have an economic interest or right to receive royalties in regard to one or more of the following:
| ● | the ability to set and collect a price believed to be reasonable for products; |
| ● | the ability to generate revenues and achieve profitability; and |
| ● | the availability of capital. |
The pricing and reimbursement environment for products may change in the future and become more challenging due to, among other reasons, policies advanced by federal agencies, new healthcare legislation passed by Congress or fiscal challenges faced by all levels of government. Among policy makers and payors in the US and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality, and expanding access to healthcare. In the US, the pharmaceutical industry has been a particular focus of these efforts and has been and may in the future be significantly affected by major regulatory or legislative initiatives, including those related to pricing of or reimbursement for prescription drugs. We expect we, our collaboration partners, or those commercializing products with respect to which we have an economic interest or right to receive royalties may experience pricing pressures in connection with the sale of drug products, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, distributors and additional legislative enactments and administrative policies.
The ACA contains a number of provisions that impact our business and operations, including those governing enrollment in federal healthcare programs, reimbursement changes, benefits for patients within a coverage gap in the Medicare Part D prescription drug program (commonly known as the “donut hole”; the coverage gap was eliminated effective 2025 under the Inflation Reduction Act of 2022 (the “IRA”) and was replaced with a new manufacturer discount program), rules regarding prescription drug benefits under the health insurance exchanges, changes to the Medicare Drug Rebate program, expansion of the Public Health Service Act’s 340B drug pricing program, fraud and abuse and enforcement. These changes have impacted previously existing government healthcare programs and have resulted in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program. More recently, the OBBBA, signed into law in 2025, is projected to decrease federal health care spending by approximately $1 trillion by reducing Medicaid spending and enrollment and making changes to federal Medicare spending. The law also made changes to ACA marketplace enrollment that are projected to decrease the number of individuals with marketplace coverage.
Future legislative or regulatory efforts at both the federal and state levels could have a material adverse effect on our industry generally and on the ability of us, our collaboration partners, or those commercializing products with respect to which we have an economic interest or right to receive royalties to maintain or increase sales of existing products or to successfully commercialize product candidates, if approved.
The Budget Control Act of 2011, among other things, and in concert with subsequent legislation, has resulted in aggregate reductions to Medicare payments to providers of, on average, 2% per fiscal year through 2033 (sequestration). Sequestration is currently set at 2%. As long as these cuts remain in effect, they could adversely impact payment for any products that are reimbursed under Medicare.
The IRA sunset the coverage gap discount program starting in 2025 that was first enacted as part of the ACA, under which manufacturers agreed to offer point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during the coverage gap period. A new manufacturer discount program replaced the previous program, requiring manufacturers to provide a 10% discount on a covered Part D drug where a beneficiary is in the
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initial phase of Part D coverage and a 20% discount where a beneficiary is in the catastrophic phase of Part D coverage, and establishes Part B and Part D inflation rebates. The IRA also created a Drug Price Negotiation Program under which the prices for Medicare units of certain high Medicare spend drugs and biologics without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price, with negotiated prices set to take effect starting in 2026. Failure to comply with requirements under the drug price negotiation program is subject to an excise tax and/or a civil monetary penalty. Whether any of our marketed products are selected for negotiation for a given year will depend on whether they are at least 7 years post-approval/licensure; whether they meet any of the exclusions from eligibility for selection for negotiation, such as the exclusion of certain orphan drugs; their expenditures under Medicare Part B or Part D during a statutorily specified period; and whether a generic of the product has been determined to have come to market. These or any other legislative change could impact the market conditions for our products. We further expect continued scrutiny on pricing from Congress, agencies, and other bodies with respect to drug pricing.
Individual states in the US have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement limitations, marketing cost disclosure and transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing. For example, California has enacted a prescription drug price transparency law requiring prescription drug manufacturers to provide advance notice and explanation for price increases of certain drugs with prices that exceed a specified threshold, and to report new prescription drugs introduced to the market at a wholesale acquisition cost exceeding the Medicare Part D specialty drug threshold. Additionally, some individual states have begun establishing Prescription Drug Affordability Boards (or similar entities) to review high-cost drugs and, in some cases, set upper payment limits. Some state legislatures have passed laws that regulate how manufacturers make the 340B Drug Pricing Program ceiling price available on the market.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for product or additional pricing pressures for our collaboration partners, or those commercializing products with respect to which we have an economic interest or right to receive royalties, which could impact our revenues.
If we failed to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Prior to the sale of VIBATIV to Cumberland Pharmaceuticals Inc. (“Cumberland”) in November 2018, we had certain price reporting obligations to the Medicaid Drug Rebate program and other governmental pricing programs, and we had obligations to report average sales price under the Medicare program. Following the consummation of the transaction with Cumberland, our price reporting obligations related to VIBATIV have been transitioned to Cumberland, and price reporting obligations for YUPELRI reside with Viatris. We retain certain obligations with respect to record retention for these programs. These programs included the following:
| ● | The Medicaid Drug Rebate program, under which a manufacturer is required to pay a rebate based on reported pricing data to each state Medicaid program for its covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having federal funds made available to the states for the manufacturer’s drugs under Medicaid and Medicare Part B. |
| ● | The 340B Program, in which manufacturers must participate in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B. The 340B program requires participating manufacturers to agree to charge no more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs to certain entities, and that price is calculated based on the information reported under the Medicaid Drug Rebate program. |
| ● | Reporting of average sales price, which manufacturers report for certain categories of drugs that are paid under the Medicare Part B program to CMS on a quarterly basis and which CMS may use in determining |
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| payment rates for drugs under Medicare Part B. |
A manufacturer that becomes aware that its Medicaid reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, is obligated to resubmit the corrected data for up to three years after those data originally were due. Such restatements and recalculations increase the costs for complying with the laws and regulations governing the Medicaid Drug Rebate program and could result in an overage or underage in our rebate liability for past quarters. Price recalculations also may affect the 340B ceiling price and the average sales price. Manufacturers may need to make additional restatements beyond the three-year period.
We may be liable for errors associated with our submission of pricing data for VIBATIV for historic periods, and we may retain some liability for price reporting by Cumberland for VIBATIV sold under our labeler code. In addition to retroactive rebates and the potential for 340B program refunds, if we are found to have knowingly submitted any false price information to the government, we may be liable for significant civil monetary penalties per item of false information. If we are found to have made a misrepresentation in the reporting of our average sales price, the Medicare statute provides for significant civil monetary penalties for each misrepresentation for each day in which the misrepresentation was applied. If we are found to have charged 340B covered entities more than the statutorily mandated ceiling price, we could be subject to significant civil monetary penalties and/or such failure also could be grounds for HRSA to terminate a manufacturer’s agreement to participate in the 340B program, in which case covered outpatient drugs under our labeler code may no longer be eligible for federal payment under the Medicaid or Medicare Part B program. If we are found to have not submitted required price data on a timely basis, that could result in a significant civil monetary penalty per day for each day the information is late beyond the due date.
In order to be eligible to have its products paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by the Department of Veterans Affairs (“VA”), Department of Defense (“DoD”), Public Health Service, and Coast Guard (the “Big Four agencies”) and certain federal grantees, a manufacturer is required to list its innovator products on a VA Federal Supply Schedule (“FSS”) contract and charge a price to the Big Four agencies that is no higher than the Federal Ceiling Price (“FCP”), which is a price calculated pursuant to a statutory formula. In addition, manufacturers must submit to the VA quarterly and annual “non-federal average manufacturer price” (“Non-FAMP”) calculations for each NDC-11 of their innovator drugs. Under Section 703 of the National Defense Authorization Act for FY 2008, the manufacturer is required to pay quarterly rebates to DoD on utilization of its innovator products that are dispensed through DoD’s Tricare network pharmacies to Tricare beneficiaries.
Individual states in the US, as noted, have also passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including establishing Prescription Drug Affordability Boards (or similar entities) to review high-cost drugs and, in some cases, set upper payment limits and implementing marketing cost disclosure and transparency measures. Some states require the submission of reports related to pricing information, including based on the introduction of new prescription drugs, certain increases in wholesale acquisition cost of prescription drugs, marketing of prescription drugs within the state, and sales of prescription drugs in or into the state. Some states may pursue available enforcement measures, including imposition of civil monetary penalties, for a manufacturer’s failure to report such information.
The coverage and reimbursement status of products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for products could limit our ability to market those products and decrease our ability to generate revenue.
Initial and continued market acceptance and sales of products will depend on reimbursement policies and may be affected by future healthcare reform measures in the US. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs they will cover and establish payment levels. We cannot be certain that reimbursement will be available for any commercialized product. Also, we cannot be certain that reimbursement policies will not reduce the demand for, or the price paid for, a product. If reimbursement is not available or is available on a limited basis, we may not be able to successfully commercialize products.
The pricing, coverage and reimbursement of products must be adequate to support our commercial infrastructure. Our per-patient prices must be sufficient to recover our development and manufacturing costs and potentially achieve profitability. However, sales of any pharmaceutical product depend, in part, on the extent to which
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such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product. As a result, we do not have assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
In addition, third-party payors are increasingly reducing reimbursements for pharmaceutical products and services. The US government and state legislatures have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement, and requirements for substitution of generic products. Third-party payors are increasingly challenging the prices charged, examining the medical necessity, and reviewing the cost effectiveness of pharmaceutical products, in addition to questioning their safety and efficacy. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit or delay sales of any of our future products. A decision by a third-party payor not to cover a product could reduce physician ordering and patient demand for a product.
Outside the US, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies. For example, the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. Medicinal products may also face competition from lower-priced products in foreign countries that have placed price controls on medicinal products and may also compete with imported foreign products. Furthermore, there is no assurance that a product will be considered medically reasonable and necessary for a specific indication, will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be established even if coverage is available, or that the third-party payors’ reimbursement policies will not adversely affect the ability of manufacturers to sell products profitably.
Our relationships with customers and third-party payors are subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, exclusion, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians, distributors, and third-party payors play a primary role in the distribution, recommendation, and prescription of any pharmaceutical product for which we obtain marketing approval. Our arrangements with third-party payors and customers expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements through which we market, sell and distribute any products for which we have obtained or may obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following:
| ● | The US federal healthcare Anti-Kickback Statute prohibits any person from, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchasing, leasing, ordering or arranging for or recommending of any good or service for which payment may be made, in whole or in part, under federal and state healthcare programs such as Medicare and Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute is subject to evolving interpretation and has been applied by government enforcement officials to a number of common business arrangements in the pharmaceutical industry. The government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of the statute or specific intent to violate it. There are a number of statutory exemptions and regulatory safe harbors protecting some common activities from prosecution; however, those exceptions and safe harbors are drawn narrowly. Failure to meet all of the requirements of a particular statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute, but the legality of the arrangement will be evaluated on a case-by-case basis based on the totality of the facts and circumstances. |
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| We seek to comply with the available statutory exemptions and safe harbors whenever possible, but our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability. Moreover, there are no safe harbors for many common practices, such as educational and research grants or patient or product assistance programs. |
| ● | The federal civil False Claims Act prohibits, among other things, knowingly presenting, or causing to be presented, claims for payment of government funds that are false or fraudulent, or knowingly making, or using or causing to be made or used, a false record or statement material to a false or fraudulent claim to avoid, decrease, or conceal an obligation to pay money to the federal government. Private individuals, commonly known as “whistleblowers,” can bring civil False Claims Act qui tam actions, on behalf of the government and such individuals and may share in amounts paid by the entity to the government in recovery or settlement. In recent years, several pharmaceutical and other healthcare companies have faced enforcement actions under the federal False Claims Act for, among other things, allegedly submitting false or misleading pricing information to government health care programs and providing free product to customers with the expectation that the customers would bill federal programs for the product. Federal enforcement agencies also have shown increased interest in pharmaceutical companies’ product and patient assistance programs and a number of investigations into these programs have resulted in significant civil and criminal settlements. Other companies have faced enforcement actions for causing false claims to be submitted because of the companies’ marketing the product for unapproved, and thus non-reimbursable, uses. In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. False Claims Act liability is significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per false claim or statement for violations. Because of the potential for large monetary exposure, healthcare and pharmaceutical companies often resolve allegations for significant and material amounts to avoid the uncertainty of treble damages and per claim penalties that may be awarded in litigation proceedings. As part of these resolutions, companies may enter into corporate integrity agreements with the government, which may impose substantial costs on companies to ensure compliance. |
| ● | HIPAA, among other things, imposes criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors, and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. HIPAA also prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation. |
| ● | The federal Physician Payment Sunshine Act, implemented as the Open Payments Program, requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the US Department of Health and Human Services, Centers for Medicare and Medicaid Services, information related to payments and other transfers of value, directly or indirectly, to physicians, certain advanced practice professionals, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. A manufacturer’s failure to submit timely, accurately, and completely the required information for all payments, transfers of value or ownership or investment interests may result in civil monetary penalties. |
| ● | Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payors, including private insurers or patients. Several states also require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products in those states and to report gifts and payments to individual health care providers in those states. Some of these states also |
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| prohibit certain marketing-related activities, including the provision of gifts, meals, or other items to certain health care providers, and restrict the ability of manufacturers to offer co-pay support to patients for certain prescription drugs. Some states require the posting of information relating to clinical studies and their outcomes. Some states and cities require identification or licensing of sales representatives. In addition, several states require pharmaceutical companies to implement compliance programs or marketing codes. |
| ● | Similar restrictions are imposed on the promotion and marketing of medicinal products in the EU Member States and other countries, including restrictions prohibiting the promotion of a medicinal product prior to its approval and any prescription medicine to the general public. Laws (including those governing promotion, marketing and anti-kickback provisions), industry regulations and professional codes of conduct often are strictly enforced. Even in those countries where we may decide not to directly promote or market our products, inappropriate activity by our international distribution partners could have implications for us. |
The shifting commercial compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance or reporting requirements in multiple jurisdictions increase the possibility that we or our partners may fail to comply fully with one or more of these requirements. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with applicable fraud and abuse or other healthcare laws and regulations or guidance. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, exclusion from government funded healthcare programs, such as Medicare and Medicaid in the US and similar programs outside the US, contractual damages, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our financial condition and divert resources and the attention of our management from operating our business.
Our business and operations, including prior use of hazardous and biological materials, may result in liabilities with respect to environmental, health and safety matters.
Our drug development activities involved the controlled use of potentially hazardous substances, including chemical, biological, and radioactive materials. In addition, our operations produced hazardous waste products, including hazardous waste. Federal, state, and local laws and regulations govern the use, manufacture, management, storage, handling and disposal of hazardous materials and wastes. We may incur significant additional costs or liabilities to comply with, or for violations of, these and other applicable laws in the future. Also, even if we are in compliance with applicable laws, we cannot completely eliminate the risk of contamination or injury resulting from hazardous materials and we may incur liability as a result of any such contamination or injury. Further, in the event of a release of or exposure to hazardous materials, including at the sites we currently or formerly operate or at sites such as landfills where we have sent wastes for disposal, we could be held liable for cleanup costs or damages or subject to other costs or penalties and such liability could exceed our resources. We do not have any insurance for liabilities arising from hazardous materials or under environmental laws. Compliance with or liability under applicable environmental laws and regulations or with respect to hazardous materials may be expensive, and current or future environmental regulations may impair our development and production efforts, which could harm our business, which could cause the price of our securities to fall.
RISKS RELATING TO OUR ORDINARY SHARES
The market price for our shares has and may continue to fluctuate widely and may result in substantial losses for purchasers of our ordinary shares.
The market price for our shares has fluctuated and may continue to fluctuate and may result in substantial losses for purchasers of our ordinary shares. For example, in the year ended December 31, 2025, the last reported sales price of our ordinary shares on Nasdaq fluctuated between a low of $8.32 per share and a high of $20.30 per share. To the extent
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that low trading volumes for our ordinary shares continue, our stock price may fluctuate significantly more than the stock market as a whole or the stock prices of similar companies. Without a larger public float of actively traded shares, our ordinary shares are likely to be more sensitive to changes in sales volumes, market fluctuations and events or perceived events with respect to our business, than the shares of common stock of companies with broader public ownership, and as a result, the trading prices for our ordinary shares may be more volatile. Among other things, trading of a relatively small volume of ordinary shares may have a greater effect on the trading price than would be the case if our public float of actively traded shares were larger. In addition, as further described below under the risk factor entitled “—Concentration of ownership will limit your ability to influence corporate matters,” a number of shareholders hold large concentrations of our shares which, if sold to third parties within a relatively short timeframe, could cause the price of our shares to drop significantly.
Market prices for securities of biotechnology and biopharmaceutical companies have been highly volatile, and we expect such volatility to continue for the foreseeable future, so that investment in our ordinary shares involves substantial risk. Additionally, the stock market from time to time has experienced significant price and volume fluctuations unrelated to the operating performance of particular companies.
The following are some of the factors that may have a significant effect on the market price of our ordinary shares:
| ● | any adverse developments or results or perceived adverse developments or results with respect to YUPELRI, including without limitation, lower than expected sales of or revenues from YUPELRI, difficulties or delays encountered with regard to the FDA or other regulatory authorities in this program or any indication from clinical or non-clinical studies that YUPELRI is not safe or efficacious; |
| ● | any adverse developments or results or perceived adverse developments or results with respect to TRELEGY, including the Milestone Payments; |
| ● | any adverse developments or results or perceived adverse developments or results with respect to any clinical development program, including, without limitation, any delays in development, halting of development, difficulties or delays encountered with regard to the FDA or other regulatory authorities, or any indication from clinical or non-clinical studies that the compounds in such programs are not safe or efficacious; |
| ● | any announcements of developments with, or comments by, the FDA or other regulatory authorities with respect to products we or our partners have under development, are manufacturing or have commercialized; |
| ● | any adverse developments or disagreements or perceived adverse developments or disagreements with respect to our relationship with Royalty Pharma, or the relationship of Royalty Pharma and GSK; |
| ● | any adverse developments or perceived adverse developments with respect to our relationship with any of our development or commercialization partners, including, without limitation, disagreements that may arise between us and any of those partners; |
| ● | any adverse developments or perceived adverse developments with respect to the efforts of the Committee; |
| ● | announcements of patent issuances or denials, technological innovations or new commercial products by us or our competitors; |
| ● | publicity regarding actual or potential study results or the outcome of regulatory review relating to products under development by us, our partners, or our competitors; |
| ● | regulatory developments in the US and foreign countries; |
| ● | announcements with respect to governmental or private insurer reimbursement policies; |
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| ● | announcements of equity or debt financings; |
| ● | possible impairment charges on non-marketable equity securities; |
| ● | economic and other external factors beyond our control, such as health emergencies, tax regimes, foreign policy, and fluctuations in interest rates; |
| ● | loss of key personnel; |
| ● | likelihood of our ordinary shares to be more sensitive to changes in sales volume, market fluctuations and events or perceived events with respect to our business due to our small public float; |
| ● | low public market trading volumes for our ordinary shares; |
| ● | the sale of large concentrations of our shares to third parties, which may be more likely to occur due to the concentration of ownership of our shares, such as what we experienced when our then-largest shareholder divested its holdings in 2019; |
| ● | developments or disputes as to patent or other proprietary rights; |
| ● | approval or introduction of competing products and technologies; |
| ● | results of clinical trials; |
| ● | failures or unexpected delays in timelines for products in development, including the obtaining of regulatory approvals; |
| ● | delays in manufacturing adversely affecting operations; |
| ● | fluctuations in our operating results; |
| ● | market reaction to announcements by other biotechnology or pharmaceutical companies; |
| ● | initiation, termination, or modification of agreements with our collaborators or disputes or disagreements with collaborators; |
| ● | litigation or the threat of litigation; |
| ● | public concern as to the safety of product candidates or medicines developed by us; and |
| ● | comments and expectations of results made by securities analysts or investors. |
If any of these factors cause us to fail to meet the expectations of securities analysts or investors, or if adverse conditions prevail or are perceived to prevail with respect to our business, the price of the ordinary shares would likely drop significantly. For example, our stock price dropped significantly when we announced that ampreloxetine did not meet its primary endpoint in our CYPRESS study. In addition, though none has been filed to our knowledge, a significant drop in the price of a company’s securities often leads to the filing of securities class action litigation against the company. This type of litigation against us could result in substantial costs and a diversion of management’s attention and resources.
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Activist shareholders could negatively impact our business and cause disruptions.
We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and performance. While our board of directors and management team welcome their views and opinions with the goal of enhancing value for all shareholders, we may be subject to actions or proposals from activist shareholders that may not align with our business strategies or the best interests of all of our shareholders.
For example, in February 2023, Irenic Capital Management LP (“Irenic”) released a public letter communicating its opinions regarding actions that it believes we should take and made public statements critical of our board of directors and management. In December 2023, we entered into a cooperation agreement with Irenic pursuant to which Irenic designated a member of our board of directors, and we and Irenic extended this Agreement by one year in late 2024. Nevertheless, Irenic may continue to make and/or other activist shareholders may make such public communications in the future.
In the event of such shareholder activism – particularly with respect to matters which our board of directors, in exercising their fiduciary duties, disagree with or have determined not to pursue – our business could be adversely affected because responding to such actions by activist shareholders can be costly and time-consuming, disruptive to our operations and divert the attention of management, our board of directors and our employees, and our ability to execute our strategic plan could also be impaired as a result. Such an activist campaign could require us to incur substantial legal, public relations and other advisory fees and proxy solicitation expenses. Further, we may become subject to, or we may initiate, litigation as a result of proposals by activist shareholders or matters relating thereto, which could be a further distraction to our board of directors and management and could require us to incur significant additional costs. In addition, perceived uncertainties as to our future direction, strategy, or leadership created as a consequence of activist shareholders may result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers, directors, employees, collaborators or other partners, disrupt relationships with us, and the market price of our ordinary shares could also experience periods of increased volatility as a result.
Concentration of ownership will limit your ability to influence corporate matters.
Based solely on our review of publicly available filings, as of June 30, 2026, our three largest shareholders collectively owned 41.4% of our outstanding ordinary shares. These shareholders could control the outcome of actions taken by us that require shareholder approval, including a transaction in which shareholders might receive a premium over the prevailing market price for their shares.
Certain provisions in our constitutional and other documents may discourage our acquisition by a third party, which could limit your opportunity to sell shares at a premium.
Our constitutional documents include provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change-of-control transactions, including, among other things, provisions that:
| ● | require supermajority shareholder voting to effect certain amendments to our amended and restated memorandum and articles of association; |
| ● | restrict our shareholders from calling meetings or acting by written consent in lieu of a meeting; |
| ● | limit the ability of our shareholders to propose actions at duly convened meetings; and |
| ● | authorize our board of directors, without action by our shareholders, to issue preferred shares and additional ordinary shares. |
In addition, in May 2018, our shareholders approved a resolution authorizing our board of directors to adopt a shareholder rights plan in the future intended to deter any person from acquiring more than 19.9% of our outstanding ordinary shares without the approval of our board of directors.
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These provisions could have the effect of depriving you of an opportunity to sell your ordinary shares at a premium over prevailing market prices by discouraging third parties from seeking to acquire control of us in a tender offer or similar transaction.
Our shareholders may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.
Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Act (As Revised) of the Cayman Islands and by the common law of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under the laws of the Cayman Islands are different from those under statutes or judicial precedent in existence in jurisdictions in the US. Therefore, you may have more difficulty in protecting your interests than would shareholders of a corporation incorporated in a jurisdiction in the US, due to the different nature of Cayman Islands law in this area.
Shareholders of Cayman Islands exempted companies such as our company have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders. Our directors have discretion under our amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
Our Cayman Islands counsel, Maples and Calder, is not aware of any reported class action having been brought in a Cayman Islands court. Derivative actions have been brought in the Cayman Islands courts, and the Cayman Islands courts have confirmed the availability for such actions. In most cases, we will be the proper plaintiff in any claim based on a breach of duty owed to it, and a claim against (for example) our officers or directors usually may not be brought by a shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, exceptions to the foregoing principle apply in circumstances in which:
| ● | a company is acting, or proposing to act, illegally or beyond the scope of its authority; |
| ● | the act complained of, although not beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been obtained; or |
| ● | those who control the company are perpetrating a “fraud on the minority.” |
A shareholder may have a direct right of action against the company where the individual rights of that shareholder have been infringed or are about to be infringed.
There is uncertainty as to shareholders’ ability to enforce certain foreign civil liabilities in the Cayman Islands.
We are incorporated as an exempted company limited by shares with limited liability under the laws of the Cayman Islands. A material portion of our assets are located outside of the US. As a result, it may be difficult for our shareholders to enforce judgments against us or judgments obtained in US courts predicated upon the civil liability provisions of the federal securities laws of the US or any state of the US.
We understand that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against Theravance Biopharma judgments of courts of the US predicated upon the civil liability provisions of the securities laws of the US or any State and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Theravance Biopharma predicated upon the civil liability provisions of the securities laws of the US or any State, on the grounds that such provisions are penal in nature. However, in the case of laws that are not penal in nature, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the US, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of
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taxes or a fine or penalty, inconsistent with a Cayman Islands’ judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court, including the Grand Court of the Cayman Islands, may stay proceedings if concurrent proceedings are being brought elsewhere, which would delay proceedings and make it more difficult for our shareholders to bring action against us.
If securities or industry analysts cease coverage of us or do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our ordinary shares and trading volume could decline.
The trading market for our ordinary shares depends in part on the research and reports that securities or industry analysts publish about us or our business. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our ordinary shares could be negatively affected. If one or more of the analysts who cover us downgrade our ordinary shares or publish inaccurate or unfavorable research about our business or if our results fail to meet the expectations of these analysts, the price of our ordinary shares would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our ordinary shares could decrease, which might cause our share price and trading volume to decline.
Capital appreciation, if any, of our ordinary shares may be your sole source of gain for the foreseeable future.
We have never declared or paid cash dividends on our capital shares. Starting in September 2022, we undertook a capital return program of $325.3 million which was completed in January 2024. There is no guarantee that we will implement another capital return program in the future. As a result, capital appreciation, if any, of our ordinary shares may be your sole source of gain for the foreseeable future.
We remain eligible to use the reduced reporting and disclosure requirements applicable to smaller reporting companies through our Annual Report on Form 10-K for the year ending December 31, 2026, and our use of such requirements could make our ordinary shares less attractive to investors.
As of June 30, 2026, we determined that we will no longer qualify as a “smaller reporting company,” as defined in the Exchange Act beginning in 2027. However, we remain eligible to use the reduced reporting and disclosure requirements applicable to smaller reporting companies through our Annual Report on Form 10-K for the year ending December 31, 2026, and will cease to be eligible to use such requirements beginning with our Quarterly Report on Form 10-Q for the first quarter of 2027. Until then, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies that are not smaller reporting companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and only being required to provide two years of audited financial statements in annual reports.
If we continue to take advantage of some or all of the reduced disclosure requirements available to smaller reporting companies through the period during which we remain eligible to use such requirements, investors may find our ordinary shares less attractive, which may result in a less active trading market for our ordinary shares and greater stock price volatility.
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ITEM 6. EXHIBITS
Incorporated by Reference | ||||||||
Exhibit | | Exhibit Description | | Filed Herewith | | Form | | Filing |
2.1 | 8-K | June 29, 2026 | ||||||
10.1+# | X | |||||||
10.2+# | Special Employer Pension Contribution Letter to Áine Miller, dated June 18, 2026 | X | ||||||
31.1 | X | |||||||
31.2 | X | |||||||
32(1) | X | |||||||
101 | Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2026, formatted in iXBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements | X | ||||||
104 | Cover Page Interactive Data File (Formatted in iXBRL and contained in Exhibit 101) | X | ||||||
* The schedules and exhibits to the Merger Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the SEC upon request.
+ | Management contract or compensatory plan or arrangement. |
# | Certain personally identifiable information has been omitted from this exhibit pursuant to Item 601(a)(6) of Regulation S-K. The omitted information is indicated by “[***].” |
| (1) | The certifications provided as Exhibit 32 are being furnished to accompany the Report pursuant to 18 U.S.C. Section 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
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SIGNATURES
Pursuant to 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: August 11, 2026 | /s/ Rick E Winningham |
Rick E Winningham | |
Chief Executive Officer | |
(Principal Executive Officer) | |
Date: August 11, 2026 | /s/ Aziz Sawaf |
Aziz Sawaf Senior Vice President and Chief Financial Officer | |
(Principal Financial Officer) | |
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