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What changed in Theravance Biopharma, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Theravance Biopharma, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+351 added−369 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-01)

Top changes in Theravance Biopharma, Inc.'s 2023 10-K

351 paragraphs added · 369 removed · 256 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

78 edited+28 added−32 removed79 unchanged
Biggest changeAs of February 27, 2023, we have repurchased $155.3 million of shares, including $27.1 million in 2023, and we have approximately $170.0 million remaining in the capital return program which is expected to be completed by the end of 2023. ​ ● Discontinuing investments in research – We plan to prioritize resource allocation toward the ampreloxetine Phase 3 study and completion of the YUPELRI Peak Inspiratory Flow Rate (PIFR) Phase 4 study and discontinue our research activities including the inhaled Janus kinase (JAK) inhibitor program.
Biggest changeSince the inception of the capital return program in September 2022 through its completion in early January 2024, we repurchased a total of 31.41 million shares at a weighted average cost of $10.354 per share for an approximate aggregate cost of $325.3 million which reduced our shares by 37% since the inception of the capital return program. ​ Discontinued Investment in Research In February 2023, we announced that we discontinued our research activities, including the inhaled Janus kinase (JAK) inhibitor program, and prioritized our R&D resources toward the ampreloxetine Phase 3 study and the completion of the YUPELRI Peak Inspiratory Flow Rate (PIFR-2) Phase 4 study.
Serious adverse events occurred in two patients on placebo and four on ampreloxetine and none of which were considered related to the study drug.
Serious adverse events occurred in two patients on placebo and four on ampreloxetine, none of which were considered related to the study drug.
For more information, see the risk factor under the heading “Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor 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” of this Annual Report on Form 10-K. ​ Pharmaceutical Pricing and Reimbursement We participated in and had certain price reporting obligations under the Medicaid Drug Rebate and other programs and we remain responsible for data reported under those programs in past quarters, as described in greater detail under the risk factor “ 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” of this Annual Report on Form 10-K. ​ 13 Table of Contents Our ability, and the ability of our collaboration partners, licensees, or those commercializing products with respect to which we have an economic interest or right to receive royalties to commercialize our products successfully, and our ability to attract commercialization partners for our products, depends in significant part on the availability of adequate financial coverage and reimbursement from third-party payors, including, in the US, governmental payors such as the Medicare and Medicaid programs, managed care organizations, and private health insurers.
For more information, see the risk factor under the heading “Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor 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” of this Annual Report on Form 10-K. ​ Pharmaceutical Pricing We participated in and had certain price reporting obligations under the Medicaid Drug Rebate and other programs and we remain responsible for data reported under those programs in past quarters, as described in greater detail under the risk factor “ 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” of this Annual Report on Form 10-K. ​ Our ability, and the ability of our collaboration partners, licensees, or those commercializing products with respect to which we have an economic interest or right to receive royalties to commercialize our products successfully, and our ability to attract commercialization partners for our products, depends in significant part on the availability of adequate financial coverage and reimbursement from third-party payors, including, in the US, governmental payors such as the Medicare and Medicaid programs, managed care organizations, and private health insurers.
For more information, see the risk factor under the heading “ There is a single source of supply for a number of our product candidates and for YUPELRI, and our business will be harmed if any of these single-source manufacturers are not able to satisfy demand and alternative sources are not available ” of this Annual Report on Form 10-K. ​ Government Regulation The development and commercialization of pharmaceutical products and our product candidates by us, our collaboration partners and licensees, and those commercializing products in which we have an economic interest, such as GSK, and our ongoing research are subject to extensive regulation by governmental authorities in the US and other countries.
For more information, see the risk factor under the heading “ There is a single source of supply for a number of our product candidates and for YUPELRI, and our business will be harmed if any of these single-source manufacturers are not able to satisfy demand and alternative sources are not available ” of this Annual Report on Form 10-K. ​ Government Regulation The development and commercialization of pharmaceutical products and our product candidates by us, our collaboration partners and licensees, and those commercializing products in which we have an economic interest, such as GSK, are subject to extensive regulation by governmental authorities in the US and other countries.
However, if we are unable to obtain contract manufacturing or obtain such manufacturing on commercially reasonable terms, or if manufacturing is interrupted at one of our suppliers, whether due to regulatory or other reasons, we may not be able to develop our products or commercialize product as planned. ​ Any inability to acquire sufficient quantities of API or drug product in a timely manner from current or future sources could disrupt our research and development programs, the conduct of future clinical trials or our commercialization efforts.
However, if we are unable to obtain contract manufacturing or obtain such manufacturing on commercially reasonable terms, or if manufacturing is interrupted at one of our suppliers, whether due to regulatory or other reasons, we may not be able to develop or commercialize our products as planned. ​ Any inability to acquire sufficient quantities of API or drug product in a timely manner from current or future sources could disrupt our development programs, the conduct of future clinical trials or our commercialization efforts.
Our patent position, similar to other companies in our industry, is generally uncertain and involves complex legal and factual questions. To maintain our proprietary position, we will need to obtain effective claims and enforce these claims once granted.
Our patent position, similar to other companies in our industry, is generally uncertain and involves complex legal and factual questions. To maintain our proprietary position, we will need to obtain effective claims and potentially enforce these claims once granted.
In particular, our wholly-owned subsidiary Theravance Biopharma R&D IP, LLC owns the following US patents that are listed in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) for YUPELRI (revefenacin) inhalation solution: US Patent No. 7,288,657, expiring on December 23, 2025; US Patent No. 7,491,736, expiring March 10, 2025; US Patent No. 7,521,041, expiring March 10, 2025; US Patent No. 7,550,595, expiring March 10, 2025; US Patent No. 7,585,879, expiring March 10, 2025; US Patent No. 7,910,608, expiring March 10, 2025; US Patent No. 8,034,946, expiring March 10, 2025; US Patent No. 8,053,448, expiring March 10, 2025; US Patent No. 8,273,894, expiring March 10, 2025; US Patent No. 8,541,451, expiring August 25, 2031; US Patent No. 9,765,028, expiring July 14, 2030; US Patent No. 10,106,503, expiring March 10, 2025; US Patent No. 10,343,995, expiring March 10, 2025; US Patent No. 10,550,081, expiring July 14, 2030; US Patent No. 11,008,289, expiring July 14, 2030; US Patent No. 11,247,969, expiring March 10, 2025; and US Patent 11,484,531, expiring October 23, 2039 (each of the aforementioned expiration dates not including any patent term extensions that may be available under the Drug Price Competition and Patent Term Restoration Act of 1984).
In particular, our wholly-owned subsidiary Theravance Biopharma R&D IP, LLC owns the following US patents that are listed in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) for YUPELRI (revefenacin) inhalation solution: US Patent No. 7,288,657, expiring on December 23, 2025; US Patent No. 7,491,736, expiring March 10, 2025; US Patent No. 7,521,041, expiring March 10, 2025; US Patent No. 7,550,595, expiring March 10, 2025; US Patent No. 7,585,879, expiring March 10, 2025; US Patent No. 7,910,608, expiring March 10, 2025; US Patent No. 8,034,946, expiring March 10, 2025; US Patent No. 8,053,448, expiring March 10, 2025; US Patent No. 8,273,894, expiring March 10, 2025; US Patent No. 8,541,451, expiring August 25, 2031; US Patent No. 9,765,028, expiring July 14, 2030; US Patent No. 10,106,503, expiring March 10, 2025; US Patent No. 10,343,995, expiring March 10, 2025; US Patent No. 10,550,081, expiring July 14, 2030; US Patent No. 11,008,289, expiring July 14, 2030; US Patent No. 11,247,969, expiring March 10, 2025; US Patent 11,484,531, expiring October 23, 2039; US Patent 11,691,948, expiring July 14, 2030; and US Patent 11,858,898, expiring July 14, 2030 (each of the aforementioned expiration dates not including any patent term extensions that may be available under the Drug Price Competition and Patent Term Restoration Act of 1984).
ITEM 1. BUSINESS Overview Theravance Biopharma, Inc. (“we,” “our,” “Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the discovery, development, and commercialization of medicines.
ITEM 1. BUSINESS Overview Theravance Biopharma, Inc. (“we,” “our,” “Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the development and commercialization of medicines.
Our ability to compete successfully will depend largely on our ability to leverage our experience in drug discovery, development and commercialization to: ​ • discover and develop medicines that are superior to other products in the market; • attract and retain qualified scientific, clinical development and commercial personnel; • obtain patent and/or other proprietary protection for our medicines and technologies; • obtain required regulatory approvals; • commercialize approved products; and • successfully collaborate with pharmaceutical companies in the discovery, development and commercialization of new medicines.
Our ability to compete successfully will depend largely on our ability to leverage our experience in drug development and commercialization to: ​ ● develop medicines that are superior to other products in the market; ● attract and retain qualified scientific, clinical development and commercial personnel; ● obtain patent and/or other proprietary protection for our medicines and technologies; ● obtain required regulatory approvals; ● commercialize approved products; and ● successfully collaborate with pharmaceutical companies in the development and commercialization of new medicines.
Discovery of previously unknown problems with a medicine, manufacturer or facility may result in restrictions on the medicine or manufacturer, including fines, issuance of warning letters, civil penalties, injunctions, suspension of manufacturing operations, operating restrictions, costly recalls, withdrawal of FDA approval, and criminal prosecution. 12 Table of Contents ​ Additionally, the FDA and other federal regulatory agencies closely regulate the marketing and promotion of drugs through, among other things, standards and regulations for direct-to-consumer advertising, advertising and promotion to healthcare professionals, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional activities involving the Internet.
Discovery of previously unknown problems with a medicine, manufacturer or facility may result in restrictions on the medicine or manufacturer, including fines, issuance of warning letters, civil penalties, injunctions, suspension of manufacturing operations, operating restrictions, costly recalls, withdrawal of FDA approval, and criminal prosecution. ​ Additionally, the FDA and other federal regulatory agencies closely regulate the marketing and promotion of drugs through, among other things, standards and regulations for direct-to-consumer advertising, advertising and promotion to healthcare professionals, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional activities involving the Internet.
The compounds in this program are designed to target validated pro-inflammatory pathways and are specifically designed to possess skin-selective activity with minimal systemic exposure. ​ Under the Pfizer Agreement, Pfizer has an exclusive license to develop, manufacture and commercialize certain compounds for all uses other than gastrointestinal, ophthalmic, and respiratory applications.
The compounds in this program are designed to target validated pro-inflammatory pathways and are specifically designed to possess skin-selective activity with minimal systemic exposure. Under the Pfizer Agreement, Pfizer had an exclusive license to develop, manufacture and commercialize certain compounds for all uses other than gastrointestinal, ophthalmic, and respiratory applications.
Also, we do not know whether any of our patent applications will result in any issued patents or, if issued, whether the scope of the issued claims will be sufficient to protect our proprietary position. ​ Patent Term Restoration, Regulatory Exclusivities, and Hatch-Waxman Litigation Depending upon the timing, duration, and specifics of FDA approval of our product candidates, some of our United States patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act.
Also, we do not know whether any of our patent applications will result in any issued patents or, if issued, whether the scope of the issued claims will be sufficient to protect our proprietary position. ​ Patent Term Restoration, Regulatory Exclusivities, and Hatch-Waxman Litigation Depending upon the timing, duration, and specifics of FDA approval of our product candidates, some of our US patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act.
The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application, except that the period is reduced by any time during which the applicant failed to 15 Table of Contents exercise due diligence.
The patent term restoration period is generally one-half the time between the effective date of 14 Table of Contents an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application, except that the period is reduced by any time during which the applicant failed to exercise due diligence.
We make available free of charge on our investor relations website under “SEC Filings” 19 Table of Contents our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our directors’ and officers’ Section 16 Reports and any amendments to those reports as soon as reasonably practicable after filing or furnishing such materials to the US Securities and Exchange Commission (“SEC”).
We make available free of charge on our investor relations website under “SEC Filings” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our directors’ and officers’ Section 16 Reports and any amendments to those reports as soon as reasonably practicable after filing or furnishing such materials to the US Securities and Exchange Commission (“SEC”).
FDA’s PDUFA performance goal is to review and act on 90 percent of priority new molecular entity (“NME”) NDA submissions within 6 months of the 60-day filing date, and to review and act on 90 percent of standard NME NDA submissions within 10 months of the 60-day filing date.
FDA’s PDUFA performance goal is to review and act on 90 percent of priority new molecular entity (“NME”) NDA submissions within 6 months of the 60-day filing date, and to review and act on 90 percent of standard NME NDA submissions within 10 months of the 60-day filing 10 Table of Contents date.
Theravance has a strong value proposition anchored in our Core Values— We Think it Through, We Find a Way, We Get it Done, and We Win Together. We strive to live these values across the Company every day, integrating them into everything from our interview, hiring, and onboarding processes to our PULSE performance process, total rewards, and recognition programs.
We have a strong value proposition anchored in our Core Values— We Think it Through, We Find a Way, We Get it Done, and We Win Together. We strive to live these values across the Company every day, integrating them into everything from our interview, hiring, and onboarding processes to our PULSE performance process, total rewards, and recognition programs.
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 groups response to ampreloxetine.
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 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.
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 7 Table of Contents and OHSA #1. Throughout the study, there was no indication of worsening of supine hypertension among any of the patient sub-groups.
For proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our drug discovery process that involve proprietary know-how and technology that is not covered by patent applications, we rely on trade secret protection and confidentiality agreements to protect our interests.
For proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements 13 Table of Contents of our drug discovery process that involve proprietary know-how and technology that is not covered by patent applications, we rely on trade secret protection and confidentiality agreements to protect our interests.
Our commercial infrastructure is focused primarily on the acute care setting. We expect that any medicines that we commercialize with our collaborative partners or on our own will compete with existing and future market-leading medicines. ​ 16 Table of Contents Many of our competitors have substantially greater financial, technical and personnel resources than we have.
Our commercial infrastructure is focused primarily on the acute care setting. We expect that any medicines that we commercialize with our collaborative partners or on our own will compete with existing and future market-leading medicines. ​ Many of our competitors have substantially greater financial, technical and personnel resources than we have.
We invest in employee learning and development by identifying and providing training and development programs, speakers, tuition reimbursement, and cross-training in areas of interest beyond hired role. ​ 18 Table of Contents We work diligently to attract the best talent from a diverse range of sources to meet the current and future demands of our business.
We invest in employee learning and development by identifying and providing training and development programs, speakers, tuition reimbursement, and cross-training in areas of interest beyond hired role. ​ We work diligently to attract the best talent from a diverse range of sources to meet the current and future demands of our business.
Theravance Biopharma and the Theravance Biopharma logo are registered trademarks of the Theravance Biopharma group of companies. Trademarks, tradenames or service marks of other companies appearing in this report are the property of their respective owners. ​ ​ ​ 20 Table of Contents
Theravance Biopharma and the Theravance Biopharma logo are registered trademarks of the Theravance Biopharma group of companies. Trademarks, tradenames, or service marks of other companies appearing in this report are the property of their respective owners. ​ ​ 19 Table of Contents
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.
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. ​ 5 Table of Contents We co-developed YUPELRI with our collaboration partner, Viatris Inc.
In addition, we have an easily accessible hotline available to employees wishing to report complaints anonymously. ​ Diversity, Equity, and Inclusion As an equal-opportunity employer, we strive to build and maintain a culture of diversity, equity, and inclusion through both our business and human resources practices and policies.
In addition, we have an easily accessible hotline available to employees wishing to report complaints anonymously. 17 Table of Contents ​ Diversity, Equity, and Inclusion As an equal-opportunity employer, we strive to build and maintain a culture of diversity, equity, and inclusion through both our business and human resources practices and policies.
In addition to valuing professional qualifications, we emphasize the importance of character and integrity, fostering a culture of empowerment where employees have ownership in business outcomes. ​ 17 Table of Contents Reflected in our Core Values are behaviors that keep our people engaged and working collaboratively.
In addition to valuing professional qualifications, we emphasize the importance of character and integrity, fostering a culture of empowerment where employees have ownership in business outcomes. ​ Reflected in our Core Values are behaviors that keep our people engaged and working collaboratively.
Our core purpose is to create 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”).
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”).
Data suggest that ampreloxetine was well-tolerated and no new safety signals were identified among any of the patient sub-groups. 8 Table of Contents ​ In June 2022, we held a Type C meeting with the FDA.
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.
This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes a drug. ​ We, our collaboration partners and licensees are also subject to various laws and regulations regarding laboratory practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances in connection with our research.
This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes a drug. 11 Table of Contents ​ We, our collaboration partners and licensees are also subject to various laws and regulations regarding laboratory practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances in connection with our drug development.
An ANDA or 505(b)(2) application may be submitted after four years, however, if the sponsor of the application makes a “Paragraph IV” certification stating that the relevant patents are invalid or will not be infringed by the applicant’s product. ​ A product, if not an NCE, or a new product use may instead qualify for a three-year period of exclusivity if the NDA contains new clinical data (other than bioavailability studies), derived from studies conducted by or for the sponsor, that were necessary for approval.
An ANDA or 505(b)(2) application may be submitted after four years, however, if the sponsor of the application makes a “Paragraph IV” certification stating that one or more of the Orange Book listed patents are invalid or will not be infringed by the applicant’s product. ​ A product, if not an NCE, or a new product use may instead qualify for a three-year period of exclusivity if the NDA contains new clinical data (other than bioavailability studies), derived from studies conducted by or for the sponsor, that were necessary for approval.
The United States Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. ​ The Hatch-Waxman Act also provides periods of regulatory exclusivity for products that would serve as a reference listed drug, or RLD, for an abbreviated new drug application, or ANDA, or application submitted under section 505(b)(2) of the FDCA, or 505(b)(2) application.
The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. ​ The Hatch-Waxman Act also provides periods of regulatory exclusivity for products that would serve as a reference listed drug, or RLD, for an abbreviated new drug application, or ANDA, or application submitted under section 505(b)(2) of the FDCA, or 505(b)(2) application.
Alternatively, we may monetize or divest an asset that we designate as outside our core business, where we believe the program is optimized by leveraging partner capabilities and removing or limiting our research and development costs. ​ Manufacturing We rely primarily on a network of third-party manufacturers, including contract manufacturing organizations, to produce the active pharmaceutical ingredients (“API”) and drug products required for our clinical trials and drug product.
Alternatively, we may monetize or divest an asset that we designate as outside our core business, where we believe the program is optimized by leveraging partner capabilities and removing or limiting our research and development costs. ​ 9 Table of Contents Manufacturing We rely on a network of third-party contract manufacturing organizations to produce the active pharmaceutical ingredients (“API”) and drug products required for our clinical trials.
The patent portfolios for these development products include additional pending patent applications and granted patents in a number of jurisdictions. Nevertheless, issued patents can be challenged, narrowed, invalidated, or circumvented, which could limit our ability to stop competitors from marketing similar products and threaten our ability to commercialize our product candidates.
The patent portfolio for this development product includes additional pending patent applications and granted patents in a number of jurisdictions. Nevertheless, issued patents can be challenged, narrowed, invalidated, or circumvented, which could limit our ability to stop competitors from marketing similar products and threaten our ability to commercialize our product candidates.
An example of such use includes a LABA/ICS combination such as AstraZeneca’s Symbicort and a LAMA such as Boehringer Ingelheim’s Spiriva. ​ Human Capital As of December 31, 2022, we had 111 employees.
An example of such use includes a LABA/ICS combination, such as AstraZeneca’s Symbicort ® and a LAMA such as Boehringer Ingelheim’s Spiriva ® . ​ Human Capital As of December 31, 2023, we had 99 employees.
Where it is necessary to share our proprietary information or data with outside parties, our policy is to make available only that 14 Table of Contents information and data required to accomplish the desired purpose and only pursuant to a duty of confidentiality on the part of those parties. ​ As of December 31, 2022, we owned a total of 235 issued US patents and 1,491 granted foreign patents, as well as additional pending US patent applications and foreign patent applications.
Where it is necessary to share our proprietary information or data with outside parties, our policy is to make available only that information and data required to accomplish the desired purpose and only pursuant to a duty of confidentiality on the part of those parties. ​ As of December 31, 2023, we owned a total of 176 issued US patents and 1,002 granted foreign patents, as well as additional pending US patent applications and foreign patent applications.
Our corporate address in the Cayman Islands and principal executive office is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands and the address of our wholly-owned US operating subsidiary Theravance Biopharma US, Inc. is 901 Gateway Boulevard, South San Francisco, California 94080.
Our corporate address in the Cayman Islands is P.O. Box 309, Ugland House, 18 Table of Contents Grand Cayman, KY1-1104, Cayman Islands, and the address of our wholly-owned US operating subsidiary is Theravance Biopharma US, Inc., 901 Gateway Boulevard, South San Francisco, California 94080, which also serves as our principal executive office.
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 would require us to divert resources and may prevent or delay our drug discovery and development efforts” of this Annual Report on Form 10-K. ​ Competition Our late-stage development programs, and the marketed products to which we are entitled to profit share revenue, royalty or similar payments are primarily focused on respiratory and neurological therapeutics.
The patent litigation against the three remaining generic companies, along with certain affiliates, remains pending. ​ 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 would require us to divert resources and may prevent or delay our drug discovery and development efforts” of this Annual Report on Form 10-K. ​ Competition Our late-stage development programs, and the marketed products to which we are entitled to profit share revenue, royalty or similar payments are primarily focused on respiratory and neurological therapeutics.
District Court for the Middle District of North Carolina. The complaint alleges that by filing the ANDAs, the generic companies have infringed five of our Orange Book listed patents. We are seeking a permanent injunction to prevent the generic companies from introducing a generic version of YUPELRI that would infringe our patents.
That complaint alleges that by filing the ANDAs, the generic companies have infringed five of our Orange Book listed patents. We are seeking a permanent injunction to prevent the generic companies from introducing a generic version of YUPELRI that would infringe our patents.
On February 27, 2023, we announced the decision to discontinue research activities including our inhaled JAK program. This includes nezulcitinib, a nebulized, lung-selective JAK inhibitor positioned for the treatment of acute and chronic lung diseases. ​ Our Strategy Our focus is to deliver medicines that make a difference ® in people's lives.
In February 2023, as part of our 2023 Strategic Actions, we announced the decision to discontinue research activities including our inhaled JAK program, including nezulcitinib, a nebulized, lung-selective JAK inhibitor positioned for the treatment of acute and chronic lung diseases. ​ Our Strategy Our focus is to deliver medicines that make a difference ® in people's lives.
The product candidate is introduced into patients or healthy human volunteers and is tested for safety, dose tolerance and pharmacokinetics. ​ 11 Table of Contents Phase 2.
The product candidate is introduced into patients or healthy human volunteers and is tested for safety, dose tolerance and pharmacokinetics. ​ Phase 2.
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 United States District Court for the District of New Jersey, the U.S. District Court for the District of Delaware, and the U.S.
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 court, which continue in the United States District Court for the District of New Jersey.
From this meeting, we aligned on a path to an NDA filing with one additional Phase 3 clinical study in MSA patients with symptomatic nOH, using the OHSA composite score as the primary endpoint.
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.
Viatris is responsible for all aspects of development and commercialization in the China ad adjacent territories, including pre- and post-launch activities and product registration and all associated costs. ​ Under the terms of the Viatris Agreement, as amended, as of December 31, 2022, we are eligible to receive from Viatris potential global development, regulatory and sales milestone payments (excluding China and adjacent territories) totaling up to $205.0 million in the aggregate with $160.0 million associated with YUPELRI monotherapy and $45.0 million associated with future potential combination products.
As noted above, Viatris is responsible for all aspects of development and commercialization of nebulized revefenacin in the China Region, including pre- and post-launch activities and product registration and all associated costs. ​ Under the terms of the Viatris Agreement, as amended, as of December 31, 2023, we were eligible to receive from Viatris potential global development, regulatory and sales milestone payments (excluding the China Region) of up to $205.0 million in the aggregate with $160.0 million associated with YUPELRI monotherapy and $45.0 million associated with future potential combination products.
Our approach may involve retaining product rights and marketing a product independently in the US or we may partner a product to extend our commercial reach, to expand our geographic reach, and/or to manage the financial risk associated with the program.
We employ multiple strategies for commercialization of our products. Our approach may involve retaining product rights and marketing a product independently in the US or we may partner a product to extend our commercial reach, to expand our geographic reach, and/or to manage the financial risk associated with the program.
We are committed to creating/driving shareholder value. ​ We follow these core guiding principles in our mission to drive value creation: 10 Table of Contents ​ • Focus on insight and innovation; • Outsource non-core activities; • Create and foster an integrated environment; and • Aggressively manage uncertainty.
We are committed to creating/driving shareholder value. ​ We follow these core guiding principles in our mission to drive value creation: ​ ● Focus on insight and innovation; ● Outsource non-core activities; ● Create and foster an integrated environment; and ● Aggressively manage uncertainty. We manage our pipeline with the goal of optimizing program value and allocation of resources.
We received an upfront cash payment of $10.0 million in 2019, and in March 2022, we received a $2.5 million development milestone payment from Pfizer for the first patient dosed in a Phase 1 clinical trial of the skin-selective pan-JAK inhibitor program. ​ As of December 31, 2022, we are eligible to receive up to an additional $237.5 million in development and sales milestone payments from Pfizer.
We received an upfront cash payment of $10.0 million in 2019, and in March 2022, we received a $2.5 million development milestone payment from Pfizer for the first patient dosed in a Phase 1 clinical trial of the skin-selective pan-JAK inhibitor program.
TRELEGY is currently expected to generate global peak sales of $3.5 billion annually according to consensus estimates.
TRELEGY is currently expected to generate global peak sales of $3.7 billion in 2027 according to consensus estimates.
Of these employees, 103 were in the US, and 8 were non-US. ​ Culture and Employee Engagement We consider our employee relations first-rate and strive to provide a culture of purpose, engagement, and learning.
Of these employees, 88 were based in the US, and 11 were based in Dublin, Ireland. ​ Culture and Employee Engagement We consider our employee relations first-rate and strive to provide a culture of purpose, engagement, and learning.
These expectations are outlined and reinforced in various documents and forms of communication within and across our Company. The Company encourages employees to speak up and raise questions and concerns promptly about any situation that may violate our Code of Business Conduct, our Core Values, or our policies.
The Company encourages employees to speak up and raise questions and concerns promptly about any situation that may violate our Code of Business Conduct, our Core Values, or our policies.
PULSE is designed to increase clarity and accountability for roles and responsibilities, strengthen communication, and build trust, all while championing personal and professional growth, learning, and success. ​ Great teamwork is a critical foundation for Theravance Biopharma.
PULSE is designed to increase clarity and accountability for roles and responsibilities, strengthen communication, and build trust, all while championing personal and professional growth, learning, and success. ​ Workplace Safety Workplace safety is always a priority for us.
Our employees are encouraged to ask questions, make suggestions, and provide input through many forms of corporate communication, such as an open-door policy, all-employee meetings, an anonymous online suggestion box, and an employee PULSE survey.
Our employees are encouraged to ask questions, make suggestions, and provide input through many forms of corporate communication, such as an open-door policy, all-employee meetings, an anonymous online suggestion box, and an employee PULSE survey. Our employee PULSE survey is designed to assist us in measuring overall employee engagement, and we consistently achieve participation rates between 85% to 100%.
The third, non-pivotal study (OAK), was designed to allow patients who completed REDWOOD to have continued access to ampreloxetine for up to three and half years. ​ 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.
The third, non-pivotal study (OAK), was a three and 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.
The reimbursement environment is described in greater detail under the risk factor “Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor 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” of this Annual Report on Form 10-K. ​ Fraud and Abuse Laws Our interactions and arrangements with customers and third-party payors are subject to applicable US federal and state fraud and abuse laws and equivalent third country laws.
The reimbursement environment is described in greater detail under the risk factor “Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor 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” of this Annual Report on Form 10-K. ​ Coverage and Reimbursement Market acceptance and sales of any one or more of our product candidates will depend on reimbursement policies and may be affected by future healthcare reform measures in the US.
We retain worldwide rights to revefenacin delivered through other dosage forms, such as a MDI/DPI. ​ In June 2019, we announced the expansion of the Viatris Agreement to grant Viatris exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories, which include Hong Kong SAR, the Macau SAR, and Taiwan.
We retain worldwide rights to revefenacin delivered through other dosage forms, such as a MDI/DPI. ​ 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”) and we are eligible to receive low double-digit tiered royalties on net sales of nebulized revefenacin, if approved.
The patent rights relating to YUPELRI (revefenacin) inhalation solution currently consist of issued US patents, pending US patent applications and counterpart patents and patent applications in a number of jurisdictions, including Europe. ​ Additionally, some of our patents and patent applications directed to products in development.
These PTE applications are currently pending and, if granted, we will be permitted to extend the term of one of these patents for the period determined by the USPTO. ​ The patent rights relating to YUPELRI (revefenacin) inhalation solution currently consist of issued US patents, pending US patent applications and certain counterpart patents and patent applications in a number of jurisdictions, including Europe and China. ​ Additionally, some of our patents and patent applications are directed to products in development.
Over the past three years, TRELEGY has shown substantial growth, with global net sales increasing annually from $661.4 million in 2019 to $2.1 billion in 2022. ​ See “Risk Factors—We do not control the commercialization of TRELEGY; accordingly, our receipt of Milestone Payments and receipt of the value we currently anticipate from the Outer Years Royalty will depend on, among other factors, GSK’s ability to further commercialize TRELEGY” for additional information. ​ Velusetrag (TD-5108) Velusetrag is an oral, investigational medicine developed for gastrointestinal motility disorders.
Over the past three years, TRELEGY has shown substantial growth, with global net sales increasing annually from $661.4 million in 2019 to $2.7 billion in 2023. ​ See “Risk Factors—We do not control the commercialization of TRELEGY; accordingly, our receipt of Milestone Payments and receipt of the value we currently anticipate from the Outer Years Royalty will depend on, among other factors, GSK’s ability to further commercialize TRELEGY” for additional information. ​ Development Projects Our focus remains on near-term value opportunities which consists of executing our ampreloxetine registration Phase 3 study (CYPRESS) and preparing for the NDA filing process.
Of the $160.0 million associated with monotherapy, $150.0 million relates to sales milestones based on achieving certain levels of net sales and $10.0 million relates to regulatory actions in the EU. ​ In August 2021, we announced that in collaboration with our partner Viatris, we were initiating a Phase 4 study comparing improvements in lung function in adults with severe to very severe COPD and suboptimal inspiratory flow rate following once-daily treatment with either YUPELRI delivered via standard jet nebulizer or tiotropium delivered via a dry powder inhaler (Spiriva ® HandiHaler ® ).
Viatris plans to move forward with a registrational filing for YUPELRI in China in mid-2024. ​ In August 2021, we announced that in collaboration with our partner Viatris, we were initiating a Phase 4 study comparing improvements in lung function in adults with severe to very severe COPD and suboptimal inspiratory flow rate following once-daily treatment with either revefenacin (YUPELRI) delivered via standard jet nebulizer or tiotropium delivered via a dry powder inhaler (Spiriva ® HandiHaler ® ).
US TRELEGY royalties payable to us by GSK are expected to end in late 2032 and ex-US royalties are expected to end in mid-2030s and are country specific. ​ TRELEGY (the combination of fluticasone furoate/umeclidinium bromide/vilanterol) The following information regarding the TRELEGY program is based solely upon publicly available information and may not reflect the most recent developments under the programs. ​ 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.
Royalty rates are upward tiering from 6.5% to 10% and based on total annual net sales. ​ The following information regarding the TRELEGY program is based solely upon publicly available information and may not reflect the most recent developments under the programs. ​ 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.
Royalty Pharma’s $40.0 million investment in ampreloxetine includes a $25.0 million upfront payment and an additional $15.0 million payment upon the first regulatory approval of ampreloxetine. We anticipate that the $25.0 million upfront investment in ampreloxetine will fund the majority of the Phase 3 study costs.
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 will receive future unsecured royalties of 2.5% on annual 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.
In exchange, Royalty Pharma will 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.
As a result of this lawsuit, a stay of approval through May 2026 will be imposed by FDA on the generic companies’ ANDAs pending any adverse court decision.
As a result of this lawsuit, a stay of approval through May 2026 will be imposed by FDA on the generic companies’ ANDAs pending any adverse court decision. ​ We have subsequently filed further complaints and amended complaints regarding newly-granted Orange Book listed patents, as well as certain non-Orange Book listed patents.
As a result of halting further research investment, our headcount is being reduced by approximately 17% with the reductions planned for completion by the end of March 2023.
As a result of halting further investment in research activities, our headcount was reduced by approximately 17% in March 2023.
The first Milestone Payment of $50.0 million will be triggered if Royalty Pharma receives $240.0 million or more in royalty payments from GSK with respect to 2023 TRELEGY global net sales, which we 9 Table of Contents would expect to occur in the event TRELEGY global net sales reach approximately $2.863 billion.
For the next potential Milestone Payment, we are eligible to receive either (i) $25.0 million if Royalty Pharma receives $240.0 million or more in royalty payments from GSK with respect to 2024 TRELEGY global net sales, which we would expect to occur in the event TRELEGY global net sales are approximately $2.86 billion; or (ii) $50.0 million if Royalty Pharma receives $275.0 million or more in royalty payments from GSK with respect to 2024 TRELEGY global net sales, which we would expect to occur in the event TRELEGY global net sales exceed approximately $3.21 billion.
We and Viatris continue to supply YUPELRI to our patients and currently do not anticipate any material interruptions in supply. ​ Ampreloxetine (TD-9855) ​ Ampreloxetine is an investigational, once-daily norepinephrine reuptake inhibitor (“NRI”) that we are developing for the treatment of patients with Multiple System Atrophy (“MSA”) and symptomatic neurogenic orthostatic hypotension (“nOH”). nOH is caused by primary autonomic failure conditions and the majority of patients with MSA experience symptoms of nOH.
Our implied 35% share of total YUPELRI net sales is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % YUPELRI net sales (100% recorded by Viatris) ​ $ 220,962 ​ $ 201,866 ​ $ 19,096 ​ 9 % YUPELRI net sales (Theravance Biopharma implied 35%) ​ ​ 77,337 ​ ​ 70,653 ​ ​ 6,684 ​ 9 ​ ​ Ampreloxetine (TD-9855) ​ Ampreloxetine is an investigational, once-daily norepinephrine reuptake inhibitor (“NRI”) that we are developing 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.
This study is aimed at helping to better inform decisions when physicians are designing a personalized COPD treatment plan with patients.
This study was aimed at helping to better inform decisions when physicians are designing a personalized COPD treatment plan with patients. We agreed to pay 35% of the Phase 4 study costs, and Viatris agreed to pay 65% of the Phase 4 study costs. The first patient for the Phase 4 study was enrolled in January 2022.
The Phase 2 study did not meet its endpoints, and we mutually agreed with Takeda to discontinue further development of this program and the Collaboration Agreement in February 2023. ​ Economic Interests and Other Assets ​ Mid- and Long-Term Economic Interest in GSK-Partnered Respiratory Programs On July 20, 2022, we completed the sale of all of our equity interests in TRC representing our 85% economic interest in the sales-based royalty rights on worldwide net sales of GSK's TRELEGY to Royalty Pharma. ​ From and after January 1, 2023, for any calendar year starting with the year ending December 31, 2023 and ending with the year 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”), which may total $250.0 million in the aggregate.
In June 2023, we received notice from Pfizer terminating the Pfizer Agreement, effective as of October 7, 2023, at which time the skin-selective pan-JAK inhibitor program was returned to us. ​ Economic Interests and Other Assets ​ Mid- and Long-Term Economic Interest in 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 $1.1 billion in upfront cash while retaining future value through the right to receive contingent milestone payments and certain outer year-royalties (the “TRELEGY Royalty Transaction”). ​ From and after January 1, 2023, for any calendar year starting with the year ended December 31, 2023 and ending with the year 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 Payment(s)”).
We expect to continue to implement measures as may be required or recommended by government authorities or as we determine are in the best interests of our employees, clinical trial sites and participants, the patients we serve, and other stakeholders in light of COVID-19. ​ ​ ​ ​ 5 Table of Contents Our Programs The chart below summarizes the status of our approved product, product candidates in development, and economic interest. ​ ​ ​ ​ ​ Glossary of Defined Terms used in Table Above: COPD: Chronic Obstructive Pulmonary Disease; FF: Fluticasone Furoate; JAKi : Janus Kinase Inhibitor; LAMA: Long-Acting Muscarinic Antagonist; PIFR: Peak Inspiratory Flow Rate; UMEC: Umeclidinium; and VI: Vilanterol ​ 6 Table of Contents 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.
In addition, we put forth a proposal to declassify the board of the directors over time which was approved at our May 2023 Annual General Meeting of Shareholders. 4 Table of Contents Our Programs The chart below summarizes the status of our approved product, product candidate in development, and economic interest. ​ ​ ​ ​ Glossary of Defined Terms used in Table Above: COPD: Chronic Obstructive Pulmonary Disease; FF: Fluticasone Furoate; LAMA: Long-Acting Muscarinic Antagonist; MSA: Multiple System Atrophy; nOH: Neurogenic Orthostatic Hypotension; NRI: Norepinephrine Reuptake Inhibitor; UMEC: Umeclidinium; and VI: Vilanterol ​ 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.
Our development candidate, ampreloxetine, could receive an orphan drug designation, which could shield it from being selected for negotiation. Our understanding of whether and when our products are likely to be subject to selection for negotiation could evolve as the Drug Price Negotiation Program is implemented.
However, our understanding of whether and when our products are likely to be subject to selection for negotiation could evolve as the Drug Price Negotiation Program is implemented. We further expect continued scrutiny on pricing from Congress, agencies, and 12 Table of Contents other bodies with respect to drug pricing.
We expect this additional Phase 3 study to begin enrolling in first quarter of 2023. ​ On July 13, 2022, in conjunction with the TRELEGY Royalty Transaction, 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.
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 2019 ICAV (“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.
To a lesser extent, midodrine and fludrocortisone are considered to be competitors and are also currently available as generic medications. ​ Trelegy (the combination of fluticasone furoate/umeclidinium bromide/vilanterol) For treatment of COPD, Trelegy competes in all major markets with AstraZeneca’s Breztri ® Aerosphere ® (budesonide/glycopyrronium/formoterol fumarate, dosed twice per day).
Pending confirmation of its clinical profile in the CYPRESS study, it is anticipated that ampreloxetine will represent a differentiated treatment option for MSA patients with symptomatic nOH. ​ Trelegy (the combination of fluticasone furoate/umeclidinium bromide/vilanterol) For treatment of COPD, Trelegy competes in all major markets with AstraZeneca’s Breztri ® Aerosphere ® (budesonide/glycopyrronium/formoterol fumarate, dosed twice per day).
In January 2022, we announced the enrollment of the first patient in the Phase 4 study. ​ 7 Table of Contents While Viatris records total YUPELRI net sales, we are entitled to a 35% share of the net profit (loss).
While the primary endpoint in the Phase 4 study was not met, YUPELRI demonstrated an efficacy and safety profile consistent with its performance in other clinical studies. ​ While Viatris records total YUPELRI net sales, we are entitled to a 35% share of the net profit (loss).
Royalties payable from GSK to Royalty Pharma are upward-tiering from 6.5% to 10%. ​ Additionally, we will receive from Royalty Pharma 85% of the royalty payments on the Assigned Collaboration Products payable (a) for sales or other activities occurring on and after January 1, 2031 related to the Assigned Collaboration Products in the US, and (b) for sales or other activities occurring on and after July 1, 2029 related to the Assigned Collaboration Products outside of the US.
Fourth quarter of 2023 global net sales were $737.0 million which represented an increase of 35% year-over-year, and total 2023 global net sales were $2.7 billion which represented an increase of 28% year-over-year. ​ In addition to potential Milestone Payments, we will receive from Royalty Pharma 85% of the royalty payments on TRELEGY payable (a) for sales or other activities occurring on and after January 1, 2031 related to TRELEGY in the 8 Table of Contents US, and (b) for sales or other activities occurring on and after July 1, 2029 related to TRELEGY outside of the US.
On July 20, 2022, the TRELEGY Royalty Transaction was completed, and we received $25.0 million in cash from Royalty Pharma related to ampreloxetine royalty rights. ​ Out-Licensed Programs ​ Skin-selective Pan-JAK inhibitor Program ​ In December 2019, we entered into a global license agreement with Pfizer Inc. (“Pfizer”) for our preclinical skin-selective, locally acting pan-JAK inhibitor program (the “Pfizer Agreement”).
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. ​ Skin-selective Pan-JAK inhibitor Program ​ In December 2019, we entered into a global license agreement with Pfizer Inc. (“Pfizer”) for our preclinical skin-selective, locally acting pan-JAK inhibitor program (the “Pfizer Agreement”).
YUPELRI (revefenacin) inhalation solution YUPELRI competes predominately with the nebulized LAMA Lonhala ® Magnair ® (glycopyrrolate) dosed two times per day and with short acting nebulized bronchodilators that are dosed three to four times per day . ​ Ampreloxetine norepinephrine reuptake inhibitor (“NRI”) If successfully developed and approved for MSA patients with symptomatic nOH, ampreloxetine would be expected to compete predominantly with droxidopa.
YUPELRI (revefenacin) inhalation solution YUPELRI competes predominately with short acting nebulized bronchodilators that are dosed three to four times per day.
These initiatives include all employee Hub events, meeting free days, employee spotlights, and virtual social events, in addition to executing Company communication strategies. ​ Our employee PULSE survey is designed to assist us in measuring overall employee engagement, and we consistently achieve participation rates between 85% to 100%. 2022 survey scores averaged an overall score of 4.1 on a scale of 1 (Strongly Disagree) through 5 (Strongly Agree), and we received 100% participation from employees.
Our 2023 survey scores averaged an overall score of 4.5 on a scale of 1 (Strongly Disagree) through 5 (Strongly Agree), and we received 100% participation from employees.
To maintain a safe and healthy workplace, we have implemented initiatives, procedures, and policies designed to address risk and stay compliant with relevant national and international health and safety standards. ​ In response to COVID-19, our COVID Task Force continues to lead the Company through the evolution of a pandemic with a continued focus on employee wellness and safety, policy updates based on Centers for Disease Control and Prevention (“CDC”), county, federal and state guidelines, and ongoing employee communication.
To maintain a safe and healthy workplace, we have implemented initiatives, procedures, and policies designed to address risk and stay compliant with relevant national and international health and safety standards.
Northera ® , marketed by Lundbeck NA Ltd., is the branded version of droxidopa and became generic in 2021.
Droxidopa has never demonstrated 16 Table of Contents a durable effect on nOH symptoms including failure of a confirmatory study known as RESTORE which was required by the FDA as a condition of an accelerated approval. Northera ® , marketed by Lundbeck NA Ltd., is the branded version of droxidopa and became generic in 2021 .
As part of this evolution, we have moved to a strategically flexible workforce, encouraging a hybrid-remote model, allowing us to reimagine how we work, and propelling us to emerge as a stronger, more nimble company. ​ Financial Information About Geographic Areas Information on our total revenues attributed to geographic areas and customers who represented at least 10% of our total revenues is included in “Item 8, Note 3.
We continue to focus on employee wellness and safety, policy updates based on Centers for Disease Control and Prevention (“CDC”), county, federal, and state guidelines, and ongoing employee communication. ​ Financial Information About Geographic Areas Information on our total revenues attributed to geographic areas and customers who represented at least 10% of our total revenues is included in “Item 8, Note 3.
These PTE applications are currently pending and, if granted, we will be permitted to extend the term of one of these patents for the period determined by the USPTO. ​ Issued US and foreign patents generally expire 20 years after their filing date.
Issued US and foreign patents generally expire 20 years after their filing date.
Removed
Our pipeline of internally discovered programs is targeted to address significant unmet patient needs. ​ 2022 Highlights ​ YUPELRI Sales Growth In 2022, YUPELRI continued it sales growth trajectory and reached all-time high net sales and profitability on an annual basis. Through the combined commercialization efforts with our partner Viatris Inc.
Added
Ampreloxetine, our late-stage investigational once-daily norepinephrine reuptake inhibitor in development for the treatment of symptomatic neurogenic orthostatic hypotension (“nOH”) in patients with Multiple System Atrophy (“MSA”) has the potential to be a first in class therapy effective in treating a constellation of cardinal symptoms in MSA patients. ​ 2023 Significant Developments ​ YUPELRI Sales Growth In 2023, YUPELRI experienced sales growth and reached all-time high yearly net sales and profitability.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially adversely affect our business, financial condition and/or operating results. ​ Summary of Principal Risks Associated with Theravance Biopharma’s Business ​ ● We may never achieve or sustain profitability from our operations over the long term; ​ ● If YUPELRI does not continue to be accepted by physicians, patients, third-party payors, or the medical community in general, we may not receive significant additional revenues from sales of this product; ​ ● We face risks related to health epidemics, including the recent COVID-19 pandemic, which could have a material adverse effect on our business and results of operations; ​ ● Any delay in commencing or completing clinical studies for product candidates and any adverse results from clinical or non-clinical studies or regulatory obstacles product candidates may face, would harm our business and the price of our securities could fall; ​ ● If our product candidates are not approved by regulatory authorities, including the FDA, we will be unable to commercialize them; ​ ● If our partners do not satisfy their obligations under our agreements with them, or if they terminate our partnerships with them, we may not be able to develop or commercialize our partnered product candidates as planned; ​ ● Our ongoing drug development efforts might not generate additional successful product candidates or approvable drugs; ​ ● Our capital return program and our restructuring activities may not provide the benefits we anticipate; ​ ● We do not control the commercialization of TRELEGY; accordingly our receipt of milestone payments and receipt of the value we currently anticipate from the outer years royalty will depend on, among other factors, GSK’s ability to further commercialize TRELEGY; and ​ ● If there are any adverse developments or perceived adverse developments with respect to TRELEGY, we may not receive milestone payments or the revenue we expect from the outer years royalty, which would harm our business and could cause the price of our securities to fall. ​ RISKS RELATING TO THE COMPANY ​ We may never achieve or sustain profitability.
Biggest changeAdditional 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 Associated with Theravance Biopharma’s Business ​ ● We may never achieve or sustain profitability from our operations; ​ ● 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; ​ ● 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; ​ ● If our product candidates are not approved by regulatory authorities, including the FDA, we will be unable to commercialize them; ​ ● If our partners do not satisfy their obligations under our agreements with them, or if they terminate our partnerships with them, we may not be able to develop or commercialize our partnered product candidates as planned; ​ ● Our ongoing drug development efforts might not generate additional approvable drugs; ​ ● 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 before or more successfully than we do; ​ ● 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; and ​ ● 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. ​ RISKS RELATING TO THE COMPANY ​ We may never achieve or sustain profitability from our operations.
Failure to become and remain profitable would adversely affect the price of our securities and our ability to continue operations as planned. ​ 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.
Failure to become and remain profitable from operations would adversely affect the price of our securities and our ability to continue operations as planned. ​ 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.
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 candidates or is otherwise unsuccessful in its efforts with respect to our products or product candidates, the development and commercialization of 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.
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.
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.
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.
In particular, as we rely on service providers processing personal data of 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.
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.
Through the milestone payments 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”) and our right to receive from Royalty Pharma 85% of the royalty payments on the Assigned Collaboration Products (as defined in the Purchase Agreement) payable (a) for sales or other activities occurring on and after January 1, 2031 related to the Assigned Collaboration Products in the US, and (b) for sales or other activities occurring on and after July 1, 2029 related to the Assigned Collaboration Products outside of the US (the “Outer Years Royalty” and, together with the Milestone Payments, the “Ongoing Economic Interest”), we may participate in the mid- and long-term economically in royalty payments from GSK with respect to the TRELEGY.
Through the milestone payments 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”) and pursuant to our right to receive from Royalty Pharma 85% of the royalty payments on the Assigned Collaboration Products (as defined in the Purchase Agreement) payable (a) for sales or other activities occurring on and after January 1, 2031 related to the Assigned Collaboration Products in the US, and (b) for sales or other activities occurring on and after July 1, 2029 related to the Assigned Collaboration Products outside of the US (the “Outer Years Royalty” and, together with the Milestone Payments, the “Ongoing Economic Interest”), we may participate in the mid- and long-term economically in royalty payments from GSK with respect to the TRELEGY.
If we are unable to obtain any needed additional funding, we may be required to reduce the scope of, delay, or eliminate some or all of, our planned research, development, and commercialization activities or to license to third parties the rights to develop and/or commercialize products or technologies that we would otherwise seek to develop and/or commercialize ourselves or on terms that are less attractive than they might otherwise be, any of which could materially harm our business.
If we are unable to obtain any needed additional funding, we may be required to reduce the scope of, delay, or eliminate some or all of, our planned development and commercialization activities or to license to third parties the rights to develop and/or commercialize products or technologies that we would otherwise seek to develop and/or commercialize ourselves or on terms that are less attractive than they might otherwise be, any of which could materially harm our business.
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 product candidates under the collaboration could be materially and adversely affected.
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.
The Restructuring was completed during the third quarter of 2022, and we and announced additional headcount reductions in February 2023. 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 equity-linked offerings, debt financings or additional collaborations and licensing arrangements.
The 2021 Restructuring was completed during the third quarter of 2022, and we announced additional headcount reductions in February 2023. 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 equity-linked offerings, debt financings or additional collaborations and licensing arrangements.
Brexit has created significant uncertainty about the future relationship between the UK and the EU, including with respect to the laws and regulations that will apply as the UK determines which EU laws to replace or replicate after withdrawal. From a regulatory perspective, the UK’s withdrawal bears significant complexity and risks.
Brexit created significant uncertainty about the future relationship between the UK and the EU, including with respect to the laws and regulations that will apply as the UK determines which EU laws to replace or replicate after withdrawal. From a regulatory perspective, the UK’s withdrawal bears significant complexity and risks.
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 TRELEGY, and we have no current authority to enforce rights under the GSK Agreements assigned to TRC.
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.
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.
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 21 Table of Contents 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.
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, harm or impair our ability to accrue patients to clinical trials because of concerns the study may be disrupted, disrupt relationships with the Company, 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.
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, harm or impair our ability to accrue patients to clinical trials because of concerns the study may be disrupted, 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.
While we are generating revenues and income from sales of YUPELRI, our economic and royalty interests, and payments under collaboration agreements, we may not generate significant profit in the near future. We could fail to meet our revenue expectations.
While we are generating revenues and income from sales of YUPELRI, our economic and royalty interests, and payments under collaboration agreements, we may not generate significant profit from our operations in the near future. We could fail to meet our revenue expectations.
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 research, development and production efforts, which could harm our business, which could cause the price of our securities to fall.
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.
There is a single source of supply for a number of our product candidates and for YUPELRI, and our business will be harmed if any of these single-source manufacturers are not able to satisfy demand and alternative sources are not available.
There is a single source of supply for our product candidates and for YUPELRI, and our business will be harmed if any of these single-source manufacturers are not able to satisfy demand and alternative sources are not available.
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. 27 Table of Contents The manufacturing, labeling, packaging, adverse event reporting, advertising, promotion and recordkeeping for an approved product remain subject to extensive and ongoing regulatory requirements.
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. 26 Table of Contents The manufacturing, labeling, packaging, adverse event reporting, advertising, promotion, and recordkeeping for an approved product remain subject to extensive and ongoing regulatory requirements.
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 with third parties are unsuccessful, we may be unable to fully develop and commercialize certain product candidates 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. ​ 38 Table of Contents 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.
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 with third parties are unsuccessful, we may be unable to fully develop and commercialize certain product candidates 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. ​ 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.
Moreover, our business could be adversely impacted if our ability to transfer personal data out of the EEA or Switzerland to the US is restricted, which could adversely impact our operating results.
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.
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.
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; ​ 49 Table of Contents ● 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.
Our ability to compete successfully will depend largely on our ability to leverage our experience in drug discovery, development and commercialization to: ● discover and develop medicines that are superior to other products in the market; ​ ● attract and retain qualified personnel; ​ ● obtain and enforce patent and/or other proprietary protection for our medicines and technologies; ​ ● conduct effective clinical trials and obtain required regulatory approvals; ​ ● develop and effectively implement commercialization strategies, with or without collaborative partners; and ​ ● successfully collaborate with pharmaceutical companies in the discovery, 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 candidates obsolete.
Our ability to compete successfully will depend largely on our ability to leverage our experience in drug development and commercialization to: ● develop medicines that are superior to other products in the market; ​ ● attract and retain qualified personnel; ​ ● obtain and enforce patent and/or other proprietary protection for our medicines and technologies; ​ ● conduct effective clinical trials and obtain required regulatory approvals; ​ ● 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 or product candidate obsolete.
If we or our collaborators or licensees are not able to successfully develop additional products, obtain required regulatory approvals, manufacture products at an acceptable cost or with appropriate quality, or successfully market and sell such products with desired margins, our expenses will continue to exceed any revenues we may receive in the future.
If we or our collaborators or licensees are not able to successfully develop additional products, obtain required regulatory approvals, 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 will continue to exceed any revenues we may receive in the future.
If we fail to retain our qualified personnel or replace them when they leave, we may be unable to continue our development and commercialization activities and the price of our securities could fall. 31 Table of Contents ​ Our business and operations would suffer in the event of significant disruptions of information technology systems or security breaches.
If we fail to retain our qualified personnel or replace them when they leave, we may be unable to continue our development and commercialization activities and the price of our securities could fall. 30 Table of Contents ​ Our business and operations would suffer in the event of significant disruptions of information technology systems or security breaches.
In addition, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, 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 addition, even in the absence of litigation, we may need to obtain licenses from third parties to allow commercialization of our product candidates, 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.
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 2022, we do not believe that our Company is a PFIC since 2015.
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 2023, we do not believe that our Company is a PFIC since 2015.
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 uses in determining payment rates for drugs under 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 payment rates for drugs under Medicare Part B.
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 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; ​ ● any adverse developments or results or perceived adverse developments or results with respect to our clinical development programs, including, without limitation, any delays in development in these programs, any halting of development in these programs, any difficulties or delays encountered with regard to the FDA or other regulatory authorities in these programs (including any class-based risks that emerge as a FDA or other regulatory agency focus), 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 research, 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 in our programs with respect to partnering efforts or otherwise; ​ ● 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; ​ ● announcements of equity or debt financings; ​ 47 Table of Contents ● possible impairment charges on non-marketable equity securities; ​ ● economic and other external factors beyond our control, such as the COVID-19 pandemic 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 largest shareholder, Woodford Investment Management Limited, 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 our potential products in development, including the obtaining of regulatory approvals; ​ ● delays in manufacturing adversely affecting clinical or commercial 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 causes 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.
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 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; ​ ● any adverse developments or results or perceived adverse developments or results with respect to our clinical development programs, including, without limitation, any delays in development in these programs, any halting of development in these programs, any difficulties or delays encountered with regard 46 Table of Contents to the FDA or other regulatory authorities in these programs, 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 research, 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 in our programs with respect to partnering efforts or otherwise; ​ ● 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; ​ ● announcements of equity or debt financings; ​ ● possible impairment charges on non-marketable equity securities; ​ ● economic and other external factors beyond our control, such as the COVID-19 pandemic 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 our potential products in development, including the obtaining of regulatory approvals; ​ 47 Table of Contents ● delays in manufacturing adversely affecting clinical or commercial 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 causes 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.
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. 49 Table of Contents Our shareholders may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.
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.
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 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 50 Table of Contents public policy).
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 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).
Our operating expenses also will increase if, among other things: ● our earlier stage potential products move into and through later-stage clinical development, which is generally more expensive than early stage development; ​ ● we pursue clinical development of our potential or current products in new indications; ​ ● our clinical trials become more complicated or need to be extended due to the COVID-19 pandemic or other external factors; ​ ● 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.
Our operating expenses also will increase if, among other things: ● any earlier stage potential products move into and through later-stage clinical development, which is generally more expensive than early stage development; ● we pursue clinical development of our potential or current products in new indications; ​ ● our clinical trials become more complicated or need to be extended due to other external factors; ​ ● 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.
If these companies are found not to infringe one or more of our patents or the litigation results in one or more of our patents being invalidated, the generic companies may be able to launch their products prior to the expiration of the patents, which range from 2030 to 2039.
If these companies are found not to infringe one or more of our patents or the litigation results in one or more of our patents being invalidated, the generic companies may be able to launch their products prior to the expiration of the patents, which range from 2028 to 2039.
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; ​ ● establish a classified board of directors; ​ ● 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.
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; ​ ● maintain a classified board of directors until our annual general meeting in 2026; ​ ● 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.
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 42 Table of Contents 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.
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.
ITEM 1A. RISK FACTORS The risks described below and elsewhere in this Annual Report on Form 10-K and in our other public filings with the SEC are not the only risks facing the Company.
ITEM 1A. RISK FACTORS The risks described below and elsewhere in this Annual Report on Form 10-K and in our other public filings with the SEC are not the only risks facing us.
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.
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 44 Table of Contents any materially false fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services.
Certain provisions of the Healthcare Reform Act have been subject to judicial challenges as well as efforts to modify them or to alter their interpretation or implementation and additional legislative changes to and regulatory changes under the Healthcare Reform Act remain possible, but the nature and extent of such potential additional changes are uncertain at this time.
Certain provisions of the Healthcare Reform Act have been subject to judicial challenges as well as efforts to modify them or to alter their interpretation or implementation and additional legislative changes to and regulatory 40 Table of Contents changes under the Healthcare Reform Act remain possible, but the nature and extent of such potential additional changes are uncertain at this time.
Any challenge to the intellectual property protection of a late-stage development or commercial-stage asset, particularly those of TRELEGY, 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.
Any challenge to the intellectual property protection of a late-stage development or commercial-stage asset, particularly those of TRELEGY, could harm our business and cause the price of our securities to fall. 37 Table of Contents Product liability and other lawsuits could divert our resources, result in substantial liabilities and reduce the commercial potential of our medicines.
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.
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’ 23 Table of Contents product candidates, which would materially harm our business and financial condition and could cause the price of our securities to fall.
We were a passive foreign investment company, or “PFIC,” for 2014, but we were not a PFIC from 2015 through 2021, and we do not expect to be a PFIC for the foreseeable future.
We were a passive foreign investment company, or “PFIC,” for 2014, but we were not a PFIC from 2015 through 2023, and we do not expect to be a PFIC for the foreseeable future.
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. 35 Table of Contents Future tax reform, including changes in tax rates and imposition of new taxes, could impact our results of operations and financial condition.
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.
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 adverse effects resulting from the COVID-19 pandemic; ​ ● 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. ​ 30 Table of Contents We do not control the commercialization of TRELEGY; accordingly, our receipt of Milestone Payments and receipt of the value we currently anticipate from the Outer Years Royalty will depend on, among other factors, GSK’s ability to further commercialize TRELEGY.
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. ​ 29 Table of Contents ​ We do not control the commercialization of TRELEGY; accordingly, our receipt of Milestone Payments and receipt of the value we currently anticipate from the Outer Years Royalty will depend on, among other factors, GSK’s ability to further commercialize TRELEGY.
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.
Our future effective tax rate could be affected by changes in our mix 34 Table of Contents 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.
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 37 Table of Contents 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.
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.
Our inability to successfully collaborate with third parties would increase our development costs and may cause us to choose not to continue development of certain product candidates, would limit the likelihood of successful commercialization of some of our product candidates, may cause us not to continue commercialization of our authorized products and could cause the price of our securities to fall.
Our inability to successfully collaborate with third parties would increase our development costs and may cause us to choose not to continue development of certain product candidates, would limit the likelihood of successful commercialization of 28 Table of Contents some of our product candidates, may cause us not to continue commercialization of our authorized products and could cause the price of our securities to fall.
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 United States (“US”), including the maintenance of an independent sales and marketing organization with appropriate technical expertise, a medical affairs presence and consultant support, and post-marketing studies.
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, a medical affairs presence and consultant support, and post-marketing studies.
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.
Under Section 703 of the National Defense 42 Table of Contents 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.
Accordingly, our ability to receive any revenue from the product candidates covered by these agreements is dependent on the efforts of our partners.
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.
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 44 Table of Contents 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.
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.
We may not have adequate insurance to cover our losses resulting from disasters or other 33 Table of Contents 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.
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.
Our new strategic business plan is subject to significant uncertainties and risks as a result of, among other factors, the COVID-19 pandemic, the sales levels of our approved products, unplanned expenses, cash receipts being lower than anticipated, clinical program outcomes, expenses being higher than anticipated, whether, when and on what terms we are able to enter into new collaboration arrangements, and the need to satisfy contingent liabilities.
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, clinical program outcomes, expenses being higher than anticipated, cash receipts being lower than anticipated, whether, when and on what terms we are able to enter into new collaboration arrangements, and the need to satisfy contingent liabilities.
Our operations also depend upon favorable trade relations between the US and those foreign countries in which our materials suppliers have operations.
Our operations also depend upon favorable trade relations between the US and those foreign countries, including China, in which our materials suppliers have operations.
In addition, if we raise funds through the issuance of additional equity, whether through private placements or public offerings, such an issuance would dilute ownership of our current shareholders that do not participate in the issuance.
In addition, if we raise funds through the 33 Table of Contents issuance of additional equity, whether through private placements or public offerings, such an issuance would dilute ownership of our current shareholders that do not participate in the issuance.
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.
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 43 Table of Contents and distribute any products for which we have obtained or may obtain marketing approval.
Among other things, trading 46 Table of Contents 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.
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.
Even if 24 Table of Contents 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.
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 either event, 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.
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.
Any inability to acquire sufficient quantities of API and drug product in a timely manner from these third parties could delay preclinical and clinical studies, prevent us from developing our product candidates in a cost-effective manner or on a timely basis or adversely impact the commercialization of YUPELRI.
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 our product candidates in a cost-effective manner or on a timely basis or adversely impact YUPELRI sales.
If any 28 Table of Contents 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 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.
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. 48 Table of Contents ​ For example, on February 27, 2023, Irenic Capital Management LP 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.
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 addition, the unique nature of our research activities and of much of our equipment could make it difficult and costly for us to recover from this type of disaster.
In addition, the unique nature of our drug development activities and of much of our equipment could make it difficult and costly for us to recover from this type of disaster.
Civil monetary penalties can be applied if a manufacturer fails to provide these discounts in the amount of 125 percent of the discount that was due (the coverage gap has been eliminated effective 2025 under the IRA).
Civil monetary penalties can be applied if a manufacturer fails to provide these discounts in the amount of 125 percent of the discount that was due (the coverage gap has been eliminated effective 2025 under the Inflation Reduction Act).
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.
Although we are not directly subject to HIPAA, we could be 38 Table of Contents 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.
The commencement and completion of clinical studies for our product candidates, including ampreloxetine, and product may be delayed and programs may be terminated due to many factors, including, but not limited to: ● lack of effectiveness of product candidates during clinical studies; ​ ● adverse events, safety issues or side effects (or perceived adverse developments or results) relating to the product candidates or their formulation into medicines; ​ ● unfavorable study data or unfavorable interpretations of data among the FDA and foreign regulatory authorities; ​ ● insufficient capital to continue our development programs; ​ ● inability to enter into partnering arrangements relating to the development and commercialization of our programs and product candidates 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; ​ ● the need to sequence clinical studies as opposed to conducting them concomitantly in order to conserve resources; ​ 23 Table of Contents ● 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 related to the COVID-19 pandemic, including with recruitment and/or progressing patients through studies; ​ ● failure of our partners to advance our product candidates through clinical development; ​ ● difficulty in maintaining contact with patients after treatment, resulting in incomplete data; ​ ● varying regulatory requirements or interpretations of data among the FDA and foreign regulatory authorities; 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. ​ Any adverse developments or results or perceived adverse developments or results with respect to our clinical programs including, without limitation, any delays in development in our programs, any halting of development in our programs, any difficulties or delays encountered with regard to the FDA or other third country regulatory authorities with respect to our programs, or any indication from clinical or non-clinical studies that the compounds in our programs 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.
The completion of clinical studies for our product candidate may be delayed and 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 related to the COVID-19 pandemic, including with recruitment and/or progressing patients through studies; ​ ● failure of any partners to advance product candidates through clinical development; 22 Table of Contents ​ ● difficulty in maintaining contact with patients after treatment, resulting in incomplete data; ​ ● 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. ​ Any adverse developments or results or perceived adverse developments or results with respect to our clinical program including, without limitation, any delays in development in our 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.
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 discovery, development and commercialization of medicines. Our objective is to discover, develop and commercialize new small molecule medicines with superior efficacy, convenience, tolerability and/or safety using our proprietary insights, where applicable.
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 discovery, development and commercialization of medicines. Our objective is to develop and commercialize new small molecule medicines with superior efficacy, convenience, tolerability and/or safety.
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 36 Table of Contents model.
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.
In addition, following unfavorable results from our late-stage development programs, in September 2021, we announced a strategic update and corporate restructuring (the “Restructuring”), including a reduction in headcount by approximately 75% through a reduction in our workforce of regular and contingent workers.
In addition, following 32 Table of Contents unfavorable results from our late-stage development programs, in September 2021, we announced a strategic update and corporate restructuring (the “2021 Restructuring”), including a reduction in headcount by approximately 75% through a reduction in our workforce of regular and contingent workers.
The status of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and is very uncertain. As of December 31, 2022, we owned a total of 235 issued US patents and 1,491 granted foreign patents, as well as additional pending US and foreign patent applications.
The status of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and is very uncertain. As of December 31, 2023, we owned a total of 176 issued US patents and 1,002 granted foreign patents, as well as additional pending US and foreign patent applications.
First as part of Innoviva, Inc., and since June 2, 2014 as Theravance Biopharma, we have been engaged in discovery and development of compounds and product candidates since mid-1997. We are currently approaching non-GAAP profitability; however, we may never generate sufficient cash or revenue to achieve sustainable cash flow or profitability from our operations.
First as part of Innoviva, Inc., and since June 2, 2014 as Theravance Biopharma, we have been engaged in discovery and development of compounds and product candidates since 1997. We may never generate sufficient cash or revenue to achieve sustainable cash flow or profitability from our operations.
Our ability to reach, and the time required to reach, and then to sustain, profitability are uncertain. As a result, we may incur substantial losses in the future.
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.
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 agreement, we and Viatris will co-develop nebulized revefenacin, including YUPELRI, for COPD and other respiratory diseases. In December 2019, we entered into a License Agreement with Pfizer Inc. (“Pfizer”).
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 agreement, we and Viatris will co-develop nebulized revefenacin, including YUPELRI, for COPD and other respiratory diseases.
Worldwide economic conditions remain uncertain due to current global economic challenges, hostilities in Ukraine, the COVID-19 pandemic and other health emergencies, the United Kingdom’s (“UK”) withdrawal from the EU (often referred to as “Brexit”), and other disruptions to global and regional economies and markets.
Worldwide economic conditions remain uncertain due to current global economic challenges, hostilities in Ukraine and the Middle East, the COVID-19 pandemic and other health emergencies, the United Kingdom’s (“UK”) withdrawal from the EU (often referred to as “Brexit”), inflation, instability in the US banking sector and other disruptions to global and regional economies and markets.
Challenges may continue to arise from site closures, site staffing 32 Table of Contents shortages, potential interruptions to the supply chain for investigational products, or other considerations if site personnel or trial participants become infected with COVID-19. These challenges may lead to difficulties in meeting protocol-specified procedures.
Challenges to the conduct of clinical trials may continue to arise due to the COVID-19 pandemic from site closures, site staffing shortages, potential interruptions to the supply chain for investigational products, or other considerations if site personnel or trial participants become infected with COVID-19. These challenges may lead to difficulties in meeting protocol-specified procedures.
Even after the COVID-19 pandemic subsides, we may continue to experience an adverse impact to our business as a result of its global economic impact. Global economic, political, and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.
Even now that the COVID-19 pandemic has largely subsided, we may continue to experience an adverse impact to our business as a result of its global economic impacts. Global economic, political, and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.
Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA or equivalent regulatory approval outside the US 26 Table of Contents or discovering, developing and commercializing medicines before we do. Other companies are engaged in the discovery of medicines that would compete with the product candidates that we are developing or our existing product.
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 before we do. Other companies are engaged in the discovery of medicines that would compete with the product candidate that we are developing or our existing product.
Virginia, Colorado, Utah, and Connecticut have enacted privacy laws similar to the CCPA that impose new obligations or limitations in areas affecting our business. These laws and regulations are evolving and subject to interpretation and 39 Table of Contents may impose limitations on our activities or otherwise adversely affect our business.
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. These laws and regulations are evolving and subject to interpretation and may impose limitations on our activities or otherwise adversely affect our business.
In addition, several states require pharmaceutical companies to implement compliance programs or marketing codes. ​ 45 Table of Contents ● 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 compound prior to its approval.
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 compound prior to its approval.
However, our current operating plans or financial forecasts occasionally change. For example, in August 2017, we announced an increase in our anticipated operating loss for 2017, primarily driven by our decision to accelerate funding associated with the next phase of development of izencitinib in our JAK inhibitor program.
For example, in August 2017, we announced an increase in our anticipated operating loss for 2017, primarily driven by our decision to accelerate funding associated with the next phase of development of izencitinib in our JAK inhibitor program.
Accordingly, our Ongoing Economic Interest 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 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, including, disruptions due to the COVID-19 pandemic; ​ ● 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.
Accordingly, our Ongoing Economic Interest 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 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, including, disruptions due to the COVID-19 pandemic; ​ ● 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 and Outer Years Royalty, 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.
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.
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. Product candidates must undergo extensive non-clinical and clinical studies as a condition to regulatory approval.
For example, in the year ended December 31, 2022, the last reported sales price of our ordinary shares on Nasdaq fluctuated between a low of $8.33 per share and a high of $12.96 per share.
For example, in the year ended December 31, 2023, the last reported sales price of our ordinary shares on Nasdaq fluctuated between a low of $8.38 per share and a high of $11.92 per share.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe South San Francisco lease expires in May 2030 and our subleases expire in September 2028 and May 2030. Our Irish subsidiary operates from approximately 700 square feet of leased office space in Dublin, Ireland, that expires in May 2024. 51 Table of Contents
Biggest changeThe South San Francisco lease expires in May 2030, and our subleases expire in September 2028 and May 2030. Our Irish subsidiary operates from approximately 700 square feet of leased office space in Dublin, Ireland, that expires in May 2024.
ITEM 2. PROPERTIES Our principal physical properties in the US consist of approximately 162,000 square feet of office and laboratory space leased in two buildings in South San Francisco, California. Of this office and laboratory space, 99,000 square feet was subleased as of December 31, 2022.
ITEM 2. PROPERTIES Our principal physical properties in the US consist of approximately 162,000 square feet of office and laboratory space leased in two buildings in South San Francisco, California. Of this office and laboratory space, approximately 99,000 square feet was subleased as of December 31, 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe complaint alleges that by filing the ANDAs, the generic companies have infringed five of our Orange Book listed patents. We are seeking a permanent injunction to prevent the generic companies from introducing a generic version of YUPELRI that would infringe our patents.
Biggest changeWe are seeking a permanent injunction to prevent the generic companies from introducing a generic version of YUPELRI that would infringe its patents. As a result of this lawsuit, a stay of approval through May 2026 has been imposed by the FDA on the generic companies’ ANDAs pending any adverse court decision.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ ​ ​ 52 Table of Contents PART II ​
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ ​ ​ 53 Table of Contents PART II ​
In February 2023, we filed patent infringement suits against the generic companies in federal district courts, including the United States District Court for the District of New Jersey, the U.S. District Court for the District of Delaware, and the U.S. District Court for the Middle District of North Carolina.
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 United States District Court for the District of New Jersey, the U.S. District Court for the District of Delaware, and the U.S.
The notices from the generic companies each included a paragraph IV certification with respect to five of our patents listed in 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.
(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.
Removed
(collectively, the “generic companies”), that they have each filed with FDA an abbreviated new drug application (“ANDA”), for a generic version of YUPELRI (revefenacin) inhalation solution.
Added
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.
Removed
As a result of this lawsuit, a stay of approval through May 2026 will be imposed by FDA on the generic companies’ ANDAs pending any adverse court decision. Please also see “Business – Patents and Proprietary Rights -- Patent Term Restoration, Regulatory Exclusivities, and Hatch-Waxman Litigation” for additional information.
Added
Additional patents 52 Table of Contents covering YUPELRI, granted on July 4, 2023 and January 2, 2024, were subsequently listed in FDA’s Orange Book. We filed additional patent infringement suits in the U.S. District Court for the District of New Jersey during August 2023 and January 2024. These suits have been consolidated with the above action.
Added
Further, the original complaint was amended during December 2023 to include certain patents not listed in the Orange Book. ​ As of February 28, 2024, we have settled all litigation with Accord Healthcare, Inc.; Lupin Pharmaceuticals, Inc.; Orbicular Pharmaceutical Technologies Private Limited; and Teva Pharmaceuticals, Inc. 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 as is customary in these type of agreements.
Added
As required by law, the settlements are subject to review by the U.S. Department of Justice and the Federal Trade Commission. The patent litigation against the three remaining generic companies, along with certain affiliates, remains pending. ​ Please also see “Item 1, Business – Patents and Proprietary Rights -- Patent Term Restoration, Regulatory Exclusivities, and Hatch-Waxman Litigation” for additional information.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnless an employee’s termination of service is due to disability or death, upon termination of service, any unexercised vested options will generally be forfeited at the end of three months or the expiration of the option, whichever is earlier. ​ Under the 2013 ESPP, our officers and employees may purchase ordinary shares through payroll deductions at a price equal to 85% of the lower of the fair market value of the ordinary share at the beginning of the offering period or at the end of each applicable purchase period.
Biggest changeUnless an employee’s termination of service is due to disability or death, upon termination of service, any unexercised vested options will generally be forfeited at the end of three months or the expiration of the option, whichever is earlier. ​ At the our Annual General Meeting of Shareholders on May 2, 2023, shareholders approved an amendment and restatement of the 2013 EIP to effect the following material changes to the existing plan (i) extend the term of the 2013 EIP by an additional ten years to February 14, 2033; (ii) eliminate the provision that provided for automatic annual increases in the number of shares available for issuance under the 2013 EIP; (iii) reduce the number of shares reserved for issuance by 3,808,287 shares; (iv) eliminate our ability to reprice options and share appreciation rights without first obtaining shareholder approval; and (v) remove certain provisions no longer necessary since the repeal of the exemption from the annual deduction limitation imposed by Section 162(m) of the Internal Revenue Code for performance-based compensation. ​ Under the 2013 ESPP, our officers and employees may purchase ordinary shares through payroll deductions at a price equal to 85% of the lower of the fair market value of the ordinary share at the beginning of the offering period or at the end of each applicable purchase period.
Options may be granted with an exercise price not less than the fair market value of the ordinary shares on the grant date.
Options may be granted with an exercise price not less than the fair market value of the ordinary shares on the grant date.
Our 2013 ESPP also includes a feature that provides for the existing offering period to terminate and for participants in that offering period to automatically be enrolled in a new offering period when the fair market value of an ordinary share at the beginning of a subsequent offering period falls below the fair market value of an ordinary share on the first day of such offering period. ​ 54 Table of Contents The 2014 NEEIP provides for the issuance of share-based awards, including restricted shares, restricted share units, non-qualified options and SARs, to our employees.
Our 2013 ESPP also includes a feature that provides for the existing offering period to terminate 55 Table of Contents and for participants in that offering period to automatically be enrolled in a new offering period when the fair market value of an ordinary share at the beginning of a subsequent offering period falls below the fair market value of an ordinary share on the first day of such offering period. ​ The 2014 NEEIP provides for the issuance of share-based awards, including restricted shares, restricted share units, non-qualified options and SARs, to our employees.
As many of our ordinary shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of underlying shareholders represented by these shareholders of record. ​ Dividend Policy We currently intend to retain any future earnings to finance our research and development efforts.
As many of our ordinary shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of underlying shareholders represented by these shareholders of record. ​ Dividend Policy We currently intend to retain any future earnings to finance our pharmaceutical development efforts.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares have traded on The Nasdaq Global Market under the symbol “TBPH” since June 3, 2014. As of February 21, 2023, there were 46 shareholders of record of our ordinary shares.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares have traded on The Nasdaq Global Market under the symbol “TBPH” since June 3, 2014. As of February 23, 2024, there were 43 shareholders of record of our ordinary shares.
Organization and Summary of Significant Accounting Policies,” and “Item 8, Note 12. Share-Based Compensation,” to the consolidated financial statements appearing in this Annual Report on Form 10- K.
Organization and Summary of Significant Accounting Policies,” and “Item 8, Note 12. Share-Based Compensation,” to the consolidated financial statements appearing in this Annual Report on Form 10- K. ​ ITEM 6. [RESERVED ] ​ ​ ​ 56 Table of Contents
We have never declared or paid cash dividends on our ordinary shares and do not intend to declare or pay cash dividends on our ordinary shares in the foreseeable future. Issuer Purchases of Equity Securities On September 19, 2022, we announced that our board of directors had approved a $250.0 million share repurchase program.
We have never declared or paid cash dividends on our ordinary shares and do not intend to declare or pay cash dividends on our ordinary shares in the foreseeable future. ​ Issuer Purchases of Equity Securities On September 19, 2022, we announced that our board of directors had approved a $250.0 million share repurchase program, and on February 27, 2023, we announced that our board of directors had authorized a $75.0 million increase to the capital return program, bringing the total capital return program to $325.0 million.
(2) The Modified Dutch Tender Offer expired on November 17, 2022 and was settled on November 22, 2022. ​ ​ 53 Table of Contents Equity Compensation Plans The following table provides certain information with respect to all of our equity compensation plans in effect as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ ​ ​ ​ ​ ​ Remaining Available ​ ​ Number of Securities ​ ​ ​ ​ for Future Issuance ​ ​ to be Issued Upon ​ Weighted-Average ​ Under Equity ​ ​ Exercise of ​ Exercise Price of ​ Compensation Plans ​ ​ Outstanding Options, ​ Outstanding Options, ​ (excluding securities Plan Category Warrants and Rights (a) Warrants and Rights reflected in column (a)) Options 2,337,733 ​ $ 19.65 7,079,233 Restricted shares 4,109,847 ​ n/a n/a Employee share purchase plan n/a ​ n/a 2,540,151 Equity compensation plans approved by security holders 6,447,580 ​ $ 19.65 9,619,384 ​ ​ ​ ​ ​ ​ ​ ​ Options 74,160 ​ $ 15.62 345,861 Equity compensation plans not approved by security holders 74,160 ​ $ 15.62 345,861 Total 6,521,740 ​ $ 19.53 9,965,245 ​ We have three equity compensation plans — our 2013 Equity Incentive Plan (the “2013 EIP”), our 2013 Employee Share Purchase Plan (the “2013 ESPP”), and our 2014 New Employee Equity Incentive Plan (the “2014 NEEIP”).
(2) Gives effect to the $75.0 million increase in the size of our capital return program announced on February 27, 2023. ​ 54 Table of Contents Equity Compensation Plans The following table provides certain information with respect to all of our equity compensation plans in effect as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ ​ ​ ​ ​ ​ Remaining Available ​ ​ Number of Securities ​ ​ ​ ​ for Future Issuance ​ ​ to be Issued Upon ​ Weighted-Average ​ Under Equity ​ ​ Exercise of ​ Exercise Price of ​ Compensation Plans ​ ​ Outstanding Options, ​ Outstanding Options, ​ (excluding securities Plan Category Warrants and Rights (a) Warrants and Rights reflected in column (a)) Options 2,232,136 ​ $ 18.75 5,339,942 Restricted shares 3,995,750 ​ n/a n/a Employee share purchase plan n/a ​ n/a 2,453,502 Equity compensation plans approved by security holders 6,227,886 ​ $ 18.75 7,793,444 ​ ​ ​ ​ ​ ​ ​ ​ Options 73,740 ​ $ 15.64 346,281 Equity compensation plans not approved by security holders 73,740 ​ $ 15.64 346,281 Total 6,301,626 ​ $ 18.65 8,139,725 ​ We have three equity compensation plans — our 2013 Equity Incentive Plan (the “2013 EIP”), as amended, our 2013 Employee Share Purchase Plan (the “2013 ESPP”), and our 2014 New Employee Equity Incentive Plan (the “2014 NEEIP”).
The table below summarizes information about the Company’s purchases of its equity securities registered pursuant to Section 12 of the Exchange Act during the year ended December 31, 2022 and through February 27, 2023.
As of December 31, 2023, we had repurchased $324.8 million of shares, and, as of December 31, 2023, we had approximately $0.4 million remaining in the capital return program which was completed in early January 2024. ​ The table below summarizes information about the Company’s purchases of its equity securities registered pursuant to Section 12 of the Exchange Act during the three months ended December 31, 2023.
As of February 27, 2023, we have repurchased $155.3 million of shares, and we have approximately $170.0 million remaining in the capital return program which is expected to be completed by the end of 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Value of Shares ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ that May Yet Be ​ ​ Total Number ​ Average ​ as Part of Publicly ​ ​ Purchased Under the ​ ​ of Shares ​ Price Per ​ Announced Plans ​ ​ Plans or Programs Period Purchased Share (1) or Programs ​ ​ (in thousands) September 22, 2022 - Privately negotiated purchase with GSK 9,644,807 ​ $ 9.75 — ​ $ — November 22, 2022 - Modified Dutch Tender Offer (2) 115,967 ​ 10.50 115,967 ​ ​ — December 13, 2022 to December 31, 2022 - Open market share purchases 2,978,341 ​ 11.06 2,978,341 ​ ​ — 2023 - Open market share purchases 2,461,000 ​ ​ 10.99 ​ 2,461,000 ​ ​ 169,746 Total ​ 15,200,115 ​ $ 10.21 5,555,308 ​ $ 169,746 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) The weighted average price paid per ordinary share does not include the cost of commissions.
All shares purchased under the repurchase program were cancelled and ceased to be outstanding. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Value of Shares ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ that May Yet Be ​ ​ Total Number ​ Weighted ​ as Part of Publicly ​ ​ Purchased Under the ​ ​ of Shares ​ Average Price ​ Announced Plans ​ ​ Plans or Programs Period Purchased Per Share (1) or Programs ​ ​ (in thousands) October 1, 2023 to October 31, 2023 ​ 1,021,290 ​ $ 9.089 ​ 1,021,290 ​ $ 21,098 (2) ​ November 1, 2023 to November 30, 2023 ​ 1,006,792 ​ ​ 10.099 ​ 1,006,792 ​ ​ 10,931 (2) ​ December 1, 2023 to December 31, 2023 ​ 987,070 ​ ​ 10.880 ​ 987,070 ​ ​ 444 (2) ​ Total ​ 3,015,152 ​ $ 10.013 ​ 3,015,152 ​ ​ ​ ​ ​ (1) The weighted average price paid per ordinary share does not include the cost of commissions.
Removed
All shares purchased to date under the repurchase program were cancelled and ceased to be outstanding. ​ On February 27, 2023, we announced that our board of directors had authorized a $75.0 million increase to the existing $250.0 million capital return program initiated in September 2022, bringing the total capital return program to $325.0 million.
Removed
As of January 1 of each year, commencing on January 1, 2015 and ending on (and including) January 1, 2023, subject to extension by shareholder approval, the aggregate number of ordinary shares that may be issued under the 2013 EIP shall automatically increase by a number equal to the least of (i) 5% of the total number of ordinary shares outstanding on December 31 of the prior year; (ii) 3,428,571 ordinary shares; or (iii) a number of ordinary shares determined by our board of directors.
Removed
Share Performance Graph The graph set forth below compares the cumulative total shareholder return on our ordinary shares from December 31, 2017 through December 31, 2022, with the cumulative total return of (i) the NASDAQ Composite Index, (ii) the NYSE Arca Pharmaceutical Index and (iii) the NASDAQ Biotechnology Index over the same period.
Removed
This graph assumes the investment of $100 on December 31, 2017 in each of (1) our ordinary shares, (2) the Nasdaq Composite Index, (3) the NYSE Arca Pharmaceutical Index and (4) the Nasdaq Biotechnology Index, and assumes the reinvestment of dividends, if any, although dividends have never been declared on our ordinary shares. ​ The comparisons shown in the graph below are based upon historical data.
Removed
We caution that the price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our ordinary shares. ​ Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act or the Exchange Act that might incorporate this Annual Report on Form 10-K or future filings made by us under those statutes, this Performance Graph section shall not be deemed filed with the SEC and shall not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes. ​ ​ 55 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $100 Investment in TBPH Shares or Index TBPH NASDAQ Composite Index NYSE Arca Pharmaceutical Index ​ NASDAQ Biotechnology Index December 31, 2017 ​ $ 100.00 ​ $ 100.00 ​ $ 100.00 ​ $ 100.00 December 31, 2018 ​ ​ 91.74 ​ ​ 97.16 ​ ​ 107.49 ​ ​ 91.14 December 31, 2019 ​ 92.80 ​ ​ 132.81 ​ ​ 127.25 ​ ​ 114.02 December 31, 2020 ​ ​ 63.69 ​ ​ 192.47 ​ ​ 138.37 ​ ​ 144.15 December 31, 2021 ​ ​ 39.60 ​ ​ 235.15 ​ ​ 170.72 ​ ​ 144.18 December 31, 2022 ​ ​ 40.20 ​ ​ 158.65 ​ ​ 183.92 ​ ​ 129.59 ​ ​ ​ ITEM 6. [RESERVED ] ​ ​ ​ 56 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

29 edited+23 added−39 removed8 unchanged
Biggest changeAs of February 27, 2023, we have repurchased $155.3 million of shares, including $27.1 million in 2023, and we have approximately $170.0 million remaining in the capital return program which is expected to be completed by the end of 2023. ​ Our strategic business plan is subject to significant uncertainties and risks as a result of, among other factors, the COVID-19 pandemic, clinical program outcomes, whether, when and on what terms we are able to enter into new collaboration arrangements, expenses being higher than anticipated, the sales levels of our approved product, unplanned expenses, cash receipts being lower than anticipated, and the need to satisfy contingent liabilities, including litigation matters and indemnification obligations. 64 Table of Contents ​ Adequacy of cash resources to meet future needs We expect our cash, cash equivalents and marketable securities will be sufficient to fund our capital return program and our operations for at least the next twelve months from the issuance date of these consolidated financial statements based on current operating plans and financial forecasts. ​ Cash Flows Cash flows, as compared to the prior years, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change (In thousands) 2022 2021 2020 2022 ​ 2021 Net cash used in operating activities ​ $ (186,991) ​ $ (207,858) ​ $ (250,403) ​ $ 20,867 ​ $ 42,545 Net cash provided by investing activities ​ 1,154,009 ​ 124,494 ​ ​ 10,721 ​ 1,029,515 ​ ​ 113,773 Net cash (used in) provided by financing activities ​ (758,806) ​ 91,860 ​ ​ 263,085 ​ (850,666) ​ ​ (171,225) ​ Net cash flows used in operating activities Net cash used in operating activities was $187.0 million in 2022, of which $2.4 million was used in continuing operations and $184.6 million was used in discontinued operations, consisting of net income of $872.1 million, adjustments for non-cash expenses and other reconciling items of ($1,098.8) million, primarily related to the net gain from the sale of our equity interests in TRC, and a net increase in cash resulting from changes in operating assets and liabilities of $39.7 million. ​ Net cash used in operating activities was $207.9 million in 2021, of which $235.8 million was used in continuing operations and $27.9 million was provided by discontinued operations, consisting of a net loss of $199.4 million, a net increase in cash resulting from adjustments for non-cash and other reconciling items of $31.2 million and a net decrease in cash resulting from changes in operating assets and liabilities of $39.6 million. ​ Net cash flows provided by investing activities Net cash provided by investing activities was $1,154.0 million in 2022, of which $58.9 million was from continuing operations and $1,095.1 million was from discontinued operations, consisting primarily of $54.9 million in net cash inflow from the purchase and maturities of marketable securities and $1,095.1 million in net proceeds related to the sale of our equity interests in TRC. ​ Net cash provided by investing activities was $124.5 million in 2021, all of which was provided by continuing operations, and consisting of cash inflows from the net purchase and maturities of marketable securities of $127.9 million and partially offset by $3.4 million used for the purchase of property and equipment. ​ Net cash flows (used in) provided by financing activities Net cash used in financing activities was $758.8 million in 2022, of which $738.6 million was used in continuing operations and $20.2 million was used in discontinued operations, consisting primarily of a $128.8 million cash outflow related to the repurchase of ordinary shares, a $631.6 million cash outflow related to the extinguishment of our debt, and a $20.2 million cash outflow related to the debt redemption premium associated with the Non-Recourse 2035 Notes.
Biggest changeSince the inception of the capital return program in September 2022, we successfully returned $325.3 million to our shareholders. ​ Our strategic business plan is subject to significant uncertainties and risks as a result of, among other factors, clinical program outcomes, expenses being higher than anticipated, the sales levels of YUPERLI, whether, when and on what terms we are able to enter into new collaboration arrangements, and the need to satisfy contingent liabilities, including tax, litigation matters and indemnification obligations. ​ Adequacy of cash resources to meet future needs We expect our cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the issuance date of our consolidated financial statements based on current operating plans and financial forecasts. ​ Cash Flows Cash flows, as compared to the prior year period, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ (In thousands) 2023 2022 Change Net cash used in operating activities ​ $ (26,997) ​ $ (186,991) ​ $ 159,994 Net cash (used in) provided by investing activities ​ (32,697) ​ 1,154,009 ​ (1,186,706) Net cash used in financing activities ​ (198,933) ​ (758,806) ​ 559,873 ​ Net cash flows used in operating activities Net cash used in operating activities was $27.0 million in 2023, consisting of a net loss of $55.2 million, a net increase in cash resulting from adjustments for non-cash and other reconciling items of $36.5 million and a net decrease in cash resulting from changes in operating assets and liabilities of $8.3 million. ​ Net cash used in operating activities was $187.0 million in 2022, of which $2.4 million was used in continuing operations and $184.6 million was used in discontinued operations, and consisted of net income of $872.1 million, adjustments for non-cash expenses and other reconciling items of ($1,098.8) million, primarily related to the net gain from the sale of our equity interests in TRC, and a net increase in cash resulting from changes in operating assets and liabilities of $39.7 million. ​ Net cash flows (used in) provided by investing activities Net cash used in investing activities was $32.7 million in 2023, consisting primarily of cash outflows from the net purchase and maturities of marketable securities of $31.7 million and cash outflows from the net purchase and sale of property and equipment of $1.0 million. ​ Net cash provided by investing activities was $1,154.0 million in 2022, of which $58.9 million was from continuing operations and $1,095.1 million was from discontinued operations, and consisted primarily of $54.9 million 63 Table of Contents in net cash inflow from the purchase and maturities of marketable securities and $1,095.1 million in net proceeds related to the sale of our equity interests in TRC. ​ Net cash flows used in financing activities Net cash used in financing activities was $198.9 million in 2023, consisting primarily of $197.1 million of cash outflows related to the repurchase of ordinary shares as part of our capital return program. ​ Net cash used in financing activities was $758.8 million in 2022, of which $738.6 million was used in continuing operations and $20.2 million was used in discontinued operations, and consisted primarily of a $128.8 million cash outflow related to the repurchase of ordinary shares, a $631.6 million cash outflow related to the extinguishment of our debt, and a $20.2 million cash outflow related to the debt redemption premium associated with our previous non-recourse 2035 Notes.
See the section entitled “Special Note regarding Forward-Looking Statements” on page 3 for more information. ​ Management Overview Theravance Biopharma, Inc. (“we,” “our,” “Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the discovery, development, and commercialization of medicines.
See the section entitled “Special Note regarding Forward-Looking Statements” on page 3 for more information. ​ Management Overview Theravance Biopharma, Inc. (“we,” “our,” “Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the development and commercialization of medicines.
The primary significant unobservable input was the estimate of forecasted TRELEGY net revenues which is considered a Level 3 fair value input. We periodically reassess the carrying value of the Contingent Consideration when indicators of impairment are identified, and we will recognize an impairment loss if the carry value materially exceeds the reassessed fair value.
The primary significant unobservable input was the estimate of forecasted TRELEGY ELLIPTA net revenues which is considered a Level 3 fair value input. We periodically reassess the carrying value of the Contingent Consideration when indicators of impairment are identified, and we will recognize an impairment loss if the carrying value materially exceeds the reassessed fair value.
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 Contingent Milestone and Royalty Assets The fair value of consideration received in connection with TRELEGY Royalty Transaction in July 2022 included an estimated $194.2 million in future contingent milestone and royalties that was recorded as a contingent consideration asset (“Contingent Consideration”) on our consolidated balance sheets on the transaction date.
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 Contingent Milestone and Royalty Assets The fair value of consideration received in connection with the sale of Theravance Respiratory Company, LLC (“TRC”) in July 2022 included an estimated $194.2 million in future contingent milestones and royalties that were recorded as a contingent consideration asset (“Contingent Consideration”) on our consolidated balance sheets on the transaction date.
In accordance with the applicable accounting guidance, amounts receivable from Viatris in connection with the commercialization of YUPELRI are recorded within the consolidated statements of operations as revenue from “Viatris collaboration agreement” irrespective of whether the overall collaboration is profitable.
In accordance with the applicable accounting guidance, amounts receivable from Viatris in connection with the commercialization of YUPELRI are recorded within the consolidated statements of operations as revenue from “Viatris collaboration agreement” .
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.
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 do not anticipate having any cash interest expense in the foreseeable future. ​ 62 Table of Contents Loss on Extinguishment of Debt ​ Loss on extinguishment of debt, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ Loss on extinguishment of debt ​ $ (3,034) ​ $ — ​ $ — ​ $ (3,034) ​ NM % $ — ​ — % NM: Not Meaningful In 2022, we incurred a $3.0 million loss on the extinguishment of our 3.25% convertible senior notes due 2023, at par, that was completed in August 2022.
We do not anticipate having any cash interest expense in the foreseeable future. ​ ​ ​ 61 Table of Contents Loss on Extinguishment of Debt ​ Loss on extinguishment of debt, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Loss on extinguishment of debt ​ $ — ​ $ (3,034) ​ $ 3,034 ​ NM % NM: Not Meaningful In 2022, we incurred a $3.0 million loss on the extinguishment of our 3.25% convertible senior notes.
Our core purpose is to create 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 FDA approved YUPELRI ® (revefenacin) inhalation solution indicated for the maintenance treatment of patients with chronic obstructive pulmonary disease (“COPD”).
Our focus is to create 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”).
Any reimbursement from Viatris attributed to the 65% cost-sharing of our R&D expenses is characterized as a reduction of R&D expense, as we do not consider performing R&D services for reimbursement to be a part of our ordinary operations. ​ In 2022 and 2021, we recognized $48.6 million and $43.8 million, respectively, in revenue from the Viatris collaboration agreement, which represented the receivables due from Viatris related to YUPELRI.
Any reimbursement from Viatris attributed to the 65% cost-sharing of our R&D expenses is characterized as a reduction of R&D expense, as we do not consider performing R&D services for reimbursement to be a part of our ordinary operations. ​ In 2023 and 2022, we recognized $57.2 million and $48.6 million, respectively, in revenue from the Viatris collaboration agreement, which represented an increase of 18%.
Some of the amounts that we include in this table are based on management’s estimate and assumptions about these obligations, including their duration.
Some of the amounts that are included in this table are based on management’s estimates and assumptions regarding these obligations, including their duration.
The $2.2 million decrease in interest expense was due to the retirement of our 3.25% convertible senior notes in August 2022 which was partially offset by the implied (non-cash) interest expense associated with the $25.0 million funding for ampreloxetine received from Royalty Pharma in July 2022.
The $4.0 million decrease in interest expense was due to the retirement of our 3.25% convertible senior notes in 2022. The interest expense in 2023 was non-cash interest expense associated with $25.0 million received from Royalty Pharma in July 2022 to fund the ampreloxetine Phase 3 clinical study (CYPRESS).
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, wages, and benefits; ​ 2) Share-based compensation, which includes expenses associated with our equity plans; ​ 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, which include laboratory and office supplies, depreciation, and other allocated expenses, which include general and administrative support functions, insurance, and general supplies. 60 Table of Contents ​ The following table summarizes our R&D expenses incurred, net of any reimbursements from collaboration partners, as compared to the prior years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % Employee-related ​ $ 17,924 ​ $ 48,612 ​ $ 60,557 ​ $ (30,688) ​ (63) % $ (11,945) ​ (20) % Share-based compensation ​ 12,888 ​ 25,634 ​ ​ 31,294 ​ ​ (12,746) ​ (50) ​ ​ (5,660) ​ (18) ​ External-related ​ 18,200 ​ 90,194 ​ ​ 135,114 ​ ​ (71,994) ​ (80) ​ ​ (44,920) ​ (33) ​ Facilities, depreciation, and other allocated expenses ​ 14,380 ​ 29,217 ​ ​ 33,988 ​ ​ (14,837) ​ (51) ​ ​ (4,771) ​ (14) ​ Total research & development ​ $ 63,392 ​ $ 193,657 ​ $ 260,953 ​ $ (130,265) ​ (67) % $ (67,296) ​ (26) % ​ R&D expenses decreased significantly by $130.3 million in 2022 compared to 2021, and the decrease was across all R&D categories.
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, wages, and benefits; ​ 59 Table of Contents 2) Share-based compensation, which includes expenses associated with our equity plans; ​ 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, which include office supplies, depreciation, and other allocated expenses, such as general and administrative support functions, office rent, and insurance. ​ The following table summarizes our R&D expenses incurred, net of any reimbursements from collaboration partners, as compared to the prior year period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Employee-related ​ $ 12,699 ​ $ 17,924 ​ $ (5,225) ​ (29) % Share-based compensation ​ 8,048 ​ 12,888 ​ ​ (4,840) ​ (38) ​ External-related ​ 14,473 ​ 18,200 ​ ​ (3,727) ​ (20) ​ Facilities, depreciation, and other allocated expenses ​ 5,401 ​ 14,380 ​ ​ (8,979) ​ (62) ​ Total research & development ​ $ 40,621 ​ $ 63,392 ​ $ (22,771) ​ (36) % ​ R&D expenses decreased by $22.8 million in 2023, or 36%, compared to 2022.
Because these estimates and assumptions are necessarily subjective, the amount of the obligations that we will pay in future periods may vary from those reflected in the table. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years (In thousands) Total Within 1 1 to 3 3 to 5 After 5 Facility operating leases ​ $ 82,598 ​ $ 9,947 ​ $ 21,451 ​ $ 22,624 ​ $ 28,576 Purchase obligations (1) ​ 37,167 ​ 31,044 ​ ​ 6,124 ​ ​ — ​ ​ — Total ​ $ 119,765 ​ $ 40,991 ​ $ 27,575 ​ $ 22,624 ​ $ 28,576 ​ (1) Substantially all of this amount was comprised of open purchase orders, as of December 31, 2022, that were issued under existing contracts.
Because these estimates and assumptions are necessarily subjective, the amount of the obligations that we will pay in future periods may vary from those reflected in the table. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years (In thousands) Total Within 1 1 to 3 3 to 5 After 5 Facility operating leases ​ $ 66,090 ​ $ 3,897 ​ $ 22,138 ​ $ 23,218 ​ $ 16,837 Purchase obligations (1) ​ 36,507 ​ 24,347 ​ ​ 12,160 ​ ​ — ​ ​ — Total ​ $ 102,597 ​ $ 28,244 ​ $ 34,298 ​ $ 23,218 ​ $ 16,837 ​ (1) Substantially all of this amount was comprised of open purchase orders, as of December 31, 2023, that were issued under existing contracts.
As a result of halting further research investment, our headcount is being reduced by approximately 17% with the reductions planned for completion by the end of March 2023.
As a result of halting further investment in research activities, our headcount was reduced by approximately 17% in March 2023.
The $33.0 million was comprised of $17.4 million in cash expenses associated with employee termination benefits and related costs and $15.6 million in non-cash expenses primarily relating to share-based compensation expense. ​ Interest Expense Interest expense, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ 3.25% Convertible senior notes due 2023 ​ $ (5,395) ​ $ (8,547) ​ $ (8,547) ​ $ 3,152 ​ (37) % ​ — ​ — ​ Ampreloxetine royalty contingency (non-cash) ​ ​ (974) ​ ​ — ​ ​ — ​ ​ (974) ​ NM ​ ​ — ​ — ​ Total interest expense ​ $ (6,369) ​ $ (8,547) ​ $ (8,547) ​ $ 2,178 ​ (25) % $ — ​ — % NM: Not Meaningful Interest expense, related to continuing operations, was $6.4 million in 2022 compared to $8.5 million in 2021.
We do not expect to recognize any additional restructuring and related expenses related to the 2023 Strategic Actions. ​ In 2022, we incurred higher restructuring and related expenses of $12.8 million as a result of the much broader reduction in workforce related to the 2021 Restructuring compared to the smaller reduction in workforce associated with the 2023 Strategic Actions. ​ Interest Expense Interest expense, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Ampreloxetine royalty contingency (non-cash) ​ ​ $ (2,350) ​ $ (974) ​ $ (1,376) ​ 141 % 3.25% Convertible senior notes due 2023 ​ ​ ​ — ​ ​ (5,395) ​ ​ 5,395 ​ NM ​ Total interest expense ​ ​ $ (2,350) ​ $ (6,369) ​ $ 4,019 ​ (63) % NM: Not Meaningful Interest expense was $2.4 million in 2023 compared to $6.4 million in 2022.
The examination was completed in the third quarter of 2022 with minimal adjustments to the 2018 federal tax return. ​ Net Income from Discontinued Operations (After tax) Net income from discontinued operations, after tax, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ Net income from discontinued operations ​ $ 964,959 ​ $ 65,645 ​ $ 16,806 ​ $ 899,314 ​ 1,370 % $ 48,839 ​ 291 % 63 Table of Contents ​ In 2022, the TRELEGY Royalty Transaction resulted in (i) income from our investment in TRC; (ii) interest expense related to our Non-Recourse 2035 Notes; and (iii) the net gain from the sale of our equity interests in TRC to be reclassified as net income from discontinued operations for all of the periods presented above. ​ The $965.0 million in net income from discontinued operations for 2022 was primarily attributed to the $1,141.1 million net realized gain from the sale of our equity interests in TRC.
In 2023, this resulted in an increased provision for income tax expense as any changes in deferred tax expense or FIN48 positions were no longer sheltered by the valuation allowance. ​ Net Income from Discontinued Operations (After tax) Net income from discontinued operations, after tax, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Net income from discontinued operations ​ $ — ​ $ 964,956 ​ $ (964,956) ​ NM % NM: Not Meaningful In 2022, the sale of TRC resulted in (i) income from our investment in TRC; (ii) interest expense related to our Non-Recourse 2035 Notes; and (iii) the net gain from the sale of our equity interests in TRC to be reclassified as net income from discontinued operations for 2022. 62 Table of Contents ​ The $965.0 million in net income from discontinued operations for 2022 was primarily attributed to the $1,141.1 million net realized gain from the sale of our equity interests in TRC.
Organization and Summary of Significant Accounting Policies,” in our consolidated financial statements included in this Annual Report on Form 10-K.
Organization and Summary of Significant Accounting Policies,” in our consolidated financial statements included in this Annual Report on Form 10-K. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information. ​
These proceeds were partially offset by $10.7 million in principal payments on our formerly outstanding Non-Recourse 2035 Notes and $9.1 million related to the repurchase of shares to satisfy tax withholding obligations. ​ 65 Table of Contents Contractual Obligations In the table below, we set forth our significant contractual obligations, as well as obligations related to contracts that we are likely to continue, regardless of the fact that some were cancelable as of December 31, 2022.
These cash outflows were partially offset by a $24.5 million cash inflow related to the funding of an additional Phase 3 study for the ampreloxetine program. ​ Contractual Obligations In the table below, we set forth our significant contractual obligations, as well as obligations related to contracts that we are likely to continue, regardless of the fact that some were cancelable as of December 31, 2023.
The increase was primarily due to (i) higher interest income related to an increase in investment yields, as well as investment balances resulting from the TRELEGY Royalty Transaction; and (ii) the sale of velusetrag to Alfasigma in June 2022 which resulted in a net gain of approximately $2.7 million. ​ Provision for Income Tax Benefit (Expense) – Continuing Operations The provision for income tax benefit (expense) related to continuing operations, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ Provision for income tax benefit (expense) - Continuing operations ​ $ (9) ​ $ 151 ​ $ 8,520 ​ $ (160) ​ (106) % $ (8,369) ​ (98) % ​ We were recently under Internal Revenue Service (“IRS”) examination for the tax year ended December 31, 2018.
The $0.6 million increase was primarily due to (i) higher interest income related to an increase in investment yields and (ii) higher investment balances resulting from cash proceeds received from the TRELEGY Royalty Transaction in July 2022. ​ Provision for Income Tax Expense – Continuing Operations The provision for income tax expense related to continuing operations, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Provision for income tax expense - Continuing operations ​ $ (5,924) ​ $ (9) ​ $ (5,915) ​ NM % NM: Not Meaningful In 2022, the provision for income tax expense was largely attributable to the sale of TRC, which was reported as part of discontinued operations (see discussion below).
Additionally, there were higher costs incurred by Viatris in 2022, which also reduced our Viatris collaboration agreement revenue. ​ Our recognized revenue, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % Viatris collaboration agreement ​ $ 48,624 ​ $ 43,848 ​ $ 43,893 ​ $ 4,776 ​ 11 % $ (45) ​ (0.1) % Viatris royalties (Non-US) ​ ​ 30 ​ ​ — ​ ​ — ​ ​ 30 ​ NM ​ ​ — ​ — ​ Collaboration revenue ​ ​ 192 ​ ​ 11,463 ​ ​ 26,464 ​ ​ (11,271) ​ (98) ​ ​ (15,001) ​ (57) ​ Licensing revenue ​ ​ 2,500 ​ ​ — ​ ​ 1,500 ​ ​ 2,500 ​ NM ​ ​ (1,500) ​ NM ​ Total revenue ​ $ 51,346 ​ $ 55,311 ​ $ 71,857 ​ $ (3,965) ​ (7) % $ (16,546) ​ (23) % 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 commercialization of YUPELRI.
(“Viatris”) records the total net sales of YUPELRI within its own financial statements, our implied 35% YUPELRI revenue, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % YUPELRI net sales (100% recorded by Viatris) ​ $ 220,962 ​ $ 201,866 ​ $ 19,096 ​ 9 % YUPELRI net sales (Theravance Biopharma implied 35%) ​ ​ 77,337 ​ ​ 70,653 ​ ​ 6,684 ​ 9 ​ ​ Our recognized revenue, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 ​ $ % Viatris collaboration agreement ​ $ 57,201 ​ $ 48,624 ​ $ 8,577 ​ 18 % Viatris royalties (Non-US) ​ ​ 7 ​ ​ 30 ​ ​ (23) ​ (77) ​ Collaboration revenue ​ ​ 216 ​ ​ 192 ​ ​ 24 ​ 13 ​ Licensing revenue ​ ​ — ​ ​ 2,500 ​ ​ (2,500) ​ NM ​ Total revenue ​ $ 57,424 ​ $ 51,346 ​ $ 6,078 ​ 12 % 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.
Accordingly, we have not recognized any liabilities relating to these agreements as of December 31, 2022. However, n o 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. ​ Performance-Contingent Awards We periodically grant performance-contingent awards to our employees.
However, n o assurances can be given regarding the amounts that may ultimately be covered by the insurers, and we may incur substantial liabilities because of these indemnification obligations. ​ Recent Accounting Pronouncements The information required by this item is included in “Item 8, Note 1.
Severance and other costs that were directly attributed to the Restructuring are included in the Restructuring and Related Expenses section below. ​ Under certain of our collaborative arrangements, we receive partial reimbursement of employee-related costs and external costs, which have been reflected as a reduction of R&D expenses of $6.7 million, $7.9 million, and $10.1 million for 2022, 2021, and 2020, respectively. ​ Selling, General and Administrative Selling, general and administrative expenses, as compared to the prior years, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ Selling, general and administrative ​ $ 67,073 ​ $ 99,296 ​ $ 108,531 ​ $ (32,223) ​ (32) % $ (9,235) ​ (9) % ​ Selling, general and administrative expenses also decreased significantly by $32.2 million in 2022 compared to 2021.
The $3.7 million decrease in external-related expenses was partially offset by increases related to the progression of the ampreloxetine Phase 3 clinical study (CYPRESS) for MSA patients with symptomatic nOH, the completion of the YUPELRI Phase 4 study (PIFR-2), and the close out of discontinued programs. ​ R&D expenses directly attributed to the 2023 Strategic Actions and the restructuring announced in 2021 and completed during the third quarter of 2022 (the “2021 Restructuring”) are included in the Restructuring and Related Expenses section below. ​ Under certain of our collaborative arrangements, we receive partial reimbursement of employee-related costs and external costs, which have been reflected as a reduction of R&D expenses of $5.7 million and $6.7 million for 2023 and 2022, respectively. ​ Selling, General and Administrative Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and benefits, facilities and overhead costs, and other costs related to areas such as legal, finance, information technology, sales and marketing, and medical affairs. ​ SG&A expenses, as compared to the prior year period, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Selling, general and administrative ​ $ 70,095 ​ $ 67,073 ​ $ 3,022 ​ 5 % ​ In 2023, SG&A expenses increased by $3.0 million compared to 2022 and was primarily due to increases in external-related expenses of $4.9 million and SG&A allocated overhead expenses of $7.4 million.
The income tax expense was primarily attributed to the net gain from the sale of our equity interests in TRC and was partially offset by the release of the Company’s valuation allowance on its US federal deferred tax assets. ​ Liquidity and Capital Resources As a result of the approximate $1.1 billion in cash proceeds received from the TRELEGY Royalty Transaction completed in July 2022, our cash position increased significantly during the second half of 2022.
The income tax expense was primarily attributed to the net gain from the sale of our equity interests in TRC and was partially offset by the release of our valuation allowance on our US federal deferred tax assets. ​ We did not recognize any net income from discontinued operations in 2023. ​ Liquidity and Capital Resources As of December 31, 2023, we had approximately $102.4 million in cash, cash equivalents, and investments in marketable securities (excluding restricted cash) and no long-term debt.
In addition, in June 2022, we subleased approximately 78,000 square feet of our South San Francisco office and laboratory space to an unaffiliated company.
Following our 2023 Strategic Actions, we placed approximately 42,000 square feet of vacant office and laboratory space in South San Francisco on the market for sublease in March 2023.
Severance and other costs that were directly attributed to the Restructuring are included in the Restructuring and Related Expenses section below. ​ Share-based compensation expense related to selling, general and administrative expenses was $19.8 million, $28.1 million, and $31.7 million in 2022, 2021, and 2020, respectively. ​ As a result of our Restructuring and the related reduction in workforce, in May 2022, we assigned our Dublin, Ireland, office lease to an unaffiliated company and moved into a smaller office in Dublin, which we estimate will result in approximately $1.4 million cumulative cash savings through March 2027, or approximately $0.3 million annually.
Our cost reduction efforts led to decreases in employee-related expenses of $1.2 million, share-based compensation expenses of $2.9 million and facilities/other expenses of $5.1 million which partially offset the increases in external-related and allocated overhead expenses. 60 Table of Contents ​ Share-based compensation expense related to selling, general and administrative expenses was $17.0 million and $19.8 million for 2023 and 2022, respectively. ​ SG&A expenses that were directly attributed to the 2023 Strategic Actions and the 2021 Restructuring are included in the Restructuring and Related Expenses section below.
As a result of the sublease, we expect to realize cumulative cash savings of approximately $52.7 million through May 2030, or approximately $6.7 million annually. ​ Restructuring and Related Expenses Restructuring and related expenses, as compared to the prior years, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ Restructuring and related expenses ​ $ 5,840 ​ $ 11,780 ​ $ — ​ $ (5,940) ​ (50) % $ 11,780 ​ NM % Share-based compensation expense (Non-cash) ​ ​ 6,998 ​ ​ 8,362 ​ ​ — ​ ​ (1,364) ​ (16) ​ ​ 8,362 ​ NM ​ Total restructuring and related expenses ​ $ 12,838 ​ $ 20,142 ​ $ — ​ $ (7,304) ​ (36) % $ 20,142 ​ NM % NM: Not Meaningful The Restructuring and related expenses were primarily comprised of one-time severance payments, employee-related separation costs, retention costs, and other Restructuring-related expenses.
However, as the sublease market continues to evolve, it is possible that we will need to adjust our assumptions and record an impairment charge (non-cash) in a future period. ​ Restructuring and Related Expenses Restructuring and related expenses, as compared to the prior year period, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Restructuring and related expenses ​ $ 2,386 ​ $ 5,840 ​ $ (3,454) ​ (59) % Share-based compensation expense (non-cash) ​ ​ 357 ​ ​ 6,998 ​ ​ (6,641) ​ (95) ​ Total restructuring and related expenses ​ $ 2,743 ​ $ 12,838 ​ $ (10,095) ​ (79) % ​ Restructuring and related expenses of $2.7 million in 2023 were driven by the 2023 Strategic Actions and were primarily comprised of one-time R&D expenses related to one-time severance payments, employee-related separation costs, and the loss on sale of property and equipment .
As of February 27, 2023, we have repurchased $155.3 million of shares, including $27.1 million in 2023, and we have approximately $170.0 million remaining in the capital return program which is expected to be completed by the end of 2023. ​ ● Discontinuing investments in research – We plan to prioritize resource allocation toward the ampreloxetine Phase 3 study and completion of the YUPELRI Peak Inspiratory Flow Rate (PIFR) Phase 4 study and discontinue our research activities including the inhaled Janus kinase (JAK) inhibitor program.
Since the inception of the capital return program in September 2022 through its completion in early January 2024, we repurchased a total of 31.41 57 Table of Contents million shares at a weighted average cost of $10.354 per share for an approximate aggregate cost of $325.3 million which reduced our shares by 37% since the inception of the capital return program. ​ Discontinued Investment in Research In February 2023, we announced that we discontinued our research activities, including the inhaled Janus kinase (JAK) inhibitor program, and prioritized our R&D resources toward the ampreloxetine Phase 3 study and the completion of the YUPELRI Peak Inspiratory Flow Rate (PIFR-2) Phase 4 study.
We also plan to seek a partnership to continue progression of our inhaled JAK inhibitor program. ​ 58 Table of Contents ● Appointed independent director to the board and commit to governance change – We appointed a new independent director as part of our ongoing commitment to board refreshment, and we intend to put forth a proposal to declassify the board of the directors over time at the May 2, 2023, Annual General Meeting of Shareholders. ​ Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with US Generally Accepted Accounting Principles (“GAAP”).
Business ” starting on page 4 for a more complete discussion of our business. ​ Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with US Generally Accepted Accounting Principles (“GAAP”).
The $3.0 million loss was comprised of transaction costs related to the extinguishment and the write-off of the remaining debt issuance cost. ​ Interest and Other Income, net Interest and other income, net, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % ​ Interest income and other income, net ​ $ 8,545 ​ $ 1,109 ​ $ 4,441 ​ $ 7,436 ​ 671 % $ (3,332) ​ (75) % Costs related to GSK offering ​ ​ — ​ ​ — ​ ​ (1,610) ​ ​ — ​ — ​ ​ 1,610 ​ NM ​ Total interest and other income, net ​ $ 8,545 ​ $ 1,109 ​ $ 2,831 ​ $ 7,436 ​ 671 % $ (1,722) ​ (61) % NM: Not Meaningful Interest income and other income, net, increased by $7.4 million in 2022 compared to 2021.
We no longer have any long-term debt. ​ Interest Income and Other Income (Expense), net Interest and other income (expense), net, as compared to the prior year period, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ (In thousands) 2023 2022 $ % Interest income and other income (expense), net ​ $ 9,116 ​ $ 8,545 ​ $ 571 ​ 7 % ​ Interest income and other income (expense), net, increased slightly by $0.6 million in 2023 compared 2022.
Removed
Our pipeline of internally discovered programs is targeted to address significant unmet patient needs. ​ Sale of Theravance Respiratory Company, LLC On July 20, 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's TRELEGY ELLIPTA (“TRELEGY”) to Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) for over $1.5 billion in potential total value (the “TRELEGY Royalty Transaction”).
Added
Ampreloxetine, our late-stage investigational once-daily norepinephrine reuptake inhibitor in development for the treatment of symptomatic neurogenic orthostatic hypotension (“nOH”) in patients with Multiple System Atrophy (“MSA”) has the potential to be a first in class therapy effective in treating a constellation of cardinal symptoms in MSA patients. ​ 2023 Significant Developments ​ YUPELRI Sales Growth In 2023, YUPELRI experienced sales growth and reached all-time high yearly net sales and profitability.
Removed
The TRELEGY Royalty Transaction is intended to provide us near-, mid- and long-term value with (i) an upfront cash payment of approximately $1.1 billion received on July 20, 2022, (ii) up to $250.0 million in additional milestone payments contingent on the achievement of certain TRELEGY net sales thresholds between 2023 and 2026 and (iii) outer year royalties. ​ Debt Paydown and Capital Return Program ​ Immediately after announcing the TRELEGY Royalty Transaction, we initiated a multi-step process to eliminate our outstanding debt and return capital to shareholders.
Added
Through the combined commercialization efforts with our partner Viatris Inc. (“Viatris”), total YUPELRI net sales increased by 9% to $221.0 million in 2023 compared to 2022.
Removed
The first step in this process was the repayment of our 9.5% non-recourse TRELEGY notes due 2035 for approximately $420.0 million, which was completed on July 20, 2022.
Added
Hospital volumes, which we are directly responsible for, grew 46% in 2023 compared to 2022 and was a meaningful contributor to YUPELRI’s overall net sales growth for the year. ​ Initiation of Ampreloxetine New Phase 3 Clinical Study In the first quarter of 2023, we initiated the ampreloxetine new Phase 3 clinical study (CYPRESS) in MSA patients with symptomatic nOH, using the Orthostatic Hypotension Symptom Assessment Scale (“OHSA”) composite score as the primary endpoint.
Removed
The second step of the process was a tender offer to retire $230.0 million in principal amount of our 3.25% convertible senior notes due 2023, at par, which was completed on August 25, 2022.
Added
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.
Removed
Following the completion of our debt paydown, our board of directors authorized $250.0 million capital return program consisting of three elements as summarized below: ​ GSK Share Repurchase ​ On September 20, 2022, we completed a share repurchase transaction of 9,644,807 of our ordinary shares from GSK Finance (No.3) plc (“GSK Finance”), representing all of the shares owned by GSK Finance or its affiliates.
Added
The study is currently enrolling patients with 42 clinical sites open across 11 countries, as of February 26, 2024. ​ Capital Return Program In 2023, we repurchased 18.63 million of our shares on the open market at a weighted average cost of $10.551 per share for an approximate aggregate cost of $196.6 million, excluding fees and expenses.
Removed
The purchase price under the Share Repurchase Agreement was $9.75 per share, resulting in a total consideration of $94.0 million. ​ 57 Table of Contents Modified Dutch Auction Tender Offer ​ On November 22, 2022, we completed our “modified Dutch auction” tender offer (the “Offer”) to purchase up to $95.0 million of our ordinary shares, at a purchase price not greater than $10.50 nor less than $9.75 per share, in cash, less any applicable withholding taxes and without interest.
Added
We plan to seek a partnership to continue progression of our inhaled JAK inhibitor program. ​ Board Governance Changes In 2023, we appointed three new independent directors reflecting our ongoing commitment to bringing new perspectives and complementary skills to the Company.
Removed
A "modified Dutch auction" tender offer allows shareholders to indicate how many shares and at what price or within the range described above they wish to tender their shares.
Added
In addition, we put forth a proposal to declassify the board of the directors over time which was approved at our May 2023 Annual General Meeting of Shareholders. ​ See “ Item 1.
Removed
Based on the number of shares tendered and the prices specified by the tendering shareholders, we determined the lowest per-share price that enabled us to purchase all of the shares that were validly tendered.
Added
We recognize any increases in the carrying value of the Contingent Consideration only when such contingent gains are realized. ​ 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.
Removed
All shares accepted in the Offer were purchased at the same price even if tendered at a lower price. ​ We accepted a total of 115,967 ordinary shares at a price of $10.50 per share, for an aggregate cost of $1.2 million, excluding fees and expenses relating to the Offer.
Added
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, including the potential for any future funding milestones.
Removed
The total of 115,967 ordinary shares that we accepted for purchase represented approximately 0.2% of the total number of ordinary shares outstanding as of November 21, 2022.
Added
We periodically reassess the amount and timing of estimated royalty payments based on internal sales projections and external information from market data sources, which are considered Level 3 inputs.
Removed
We intend to use the unused portion of the Offer to enlarge our previously announced, planned open market share repurchase plan which is described below. ​ Open Market Share Repurchase Plan ​ On December 13, 2022, we initiated our open market repurchase plan.
Added
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. 58 Table of Contents ​ Results of Operations The following tables set forth our results of operations and management’s commentary for the 2023 period compared to the 2022 period. ​ Revenue While Viatris Inc.
Removed
As of February 27, 2023, we repurchased 5,439,341 shares on the open market at an average cost of $11.03 per share for an aggregate cost of $60.0 million, excluding fees and expenses. ​ 2021- 2022 Corporate Restructuring Completion As previously announced in September 2021, our board of directors approved a plan to focus our resources on our most promising programs and reduce the size of the Company in order to maximize shareholder value.
Added
The increase was driven primarily by (i) an increase in net sales as YUPELRI continued to increase its share of the long-acting nebulized COPD market in both the hospital and outpatient settings; and (ii) lower costs incurred by Viatris.
Removed
The corporate restructuring (the “Restructuring”) resulted in us reducing headcount by approximately 75%. A majority of the total reduction in workforce occurred at the end of November 2021, and the remainder was completed at the end of February 2022.
Added
YUPELRI continued to be profitable for us on a brand basis, and total YUPELRI net sales recorded by Viatris reached an all-time high for 2023 and for the most recent fourth quarter of $221.0 million and $60.6 million, respectively. ​ Licensing revenue was $2.5 million in 2022 and was related to a non-recurring development milestone payment from Pfizer Inc.
Removed
Since the Restructuring was announced and through its completion in the third quarter of 2022, we incurred $33.0 million in Restructuring and related expenses, which was consistent with our expectations. ​ As a result of the Restructuring and reduction in workforce, in May 2022, we assigned our Dublin, Ireland, office lease to an unaffiliated company and moved into a smaller office in Dublin, which we estimate will result in approximately $1.4 million cumulative cash savings through March 2027, or approximately $0.3 million annually.
Added
(“Pfizer”) for the first patient dosed in a Phase 1 clinical trial of the skin-selective pan-JAK inhibitor program. In June 2023, we received notice from Pfizer terminating the Pfizer licensing agreement, effective as of October 7, 2023, at which time the skin-selective pan-JAK inhibitor program was returned to us.
Removed
As a result of the sublease, we expect to realize cumulative cash savings of approximately $52.7 million through May 2030, or approximately $6.7 million annually. ​ 2023 Strategic Actions On February 27, 2023, we announced additional strategic actions to sharpen the Company’s focus and deliver on its commitment to create shareholder value: ​ ● Capital Return Program increased to $325.0 million – Our board of directors authorized a $75.0 million increase to the existing $250.0 million capital return program initiated in September 2022, bringing the total capital return program to $325.0 million.
Added
We did not recognize any licensing revenue in 2023. ​ Research and Development Our R&D expenses consist primarily of employee-related costs, external costs, and various allocable expenses.
Removed
The extent to which the COVID-19 pandemic will continue to directly or indirectly impact our business, results of operations and financial condition, including these estimates, will depend on future developments that are uncertain and may be impacted by the emergence of new information concerning the COVID-19 pandemic, new variants or sub-variants of the COVID-19 virus, and the actions taken to manage or treat the disease, including vaccine availability, distribution, acceptance and effectiveness.
Added
The decrease was across all R&D categories and was primarily driven by our 2023 Strategic Actions announced in February 2023 which included the discontinuation of investment in our research activities.
Removed
Actual results may differ from these estimates under different assumptions or conditions.
Added
External-related expenses increased by $5.0 million and was primarily attributed to professional and financial advisory services and intellectual property protection services, such as the Hatch Waxman litigation, and the increase in SG&A allocated overhead expenses was driven by the reduction in our research activities which resulted in a larger absorption of such expenses by SG&A.
Removed
We recognize any increases in the carrying value of the Contingent Consideration only when such contingent gains are realized. ​ Results of Operations The following tables set forth our results of operations for the periods presented.
Added
As of December 31, 2023, we evaluated the carrying value of our operating lease assets and leasehold improvements associated with the sublease space (approximately $10.9 million) and determined that the carrying amount of these assets was fully recoverable. As a result, we did not recognize an impairment charge in 2023.
Removed
Management’s commentary for the 2022 results compared to 2021 results are presented in the paragraphs below, and management’s commentary for the 2021 results compared to the 2020 results are included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022. ​ Revenue Our implied 35% YUPELRI revenue, as compared to the prior years, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Year Ended December 31, ​ 2022 ​ 2021 ​ (In thousands) 2022 2021 2020 $ % $ % YUPELRI net sales (implied 35%) ​ $ 70,653 ​ $ 56,678 ​ $ 49,979 ​ $ 13,975 ​ 25 % $ 6,699 ​ 13 % ​ While Viatris records the total net sales of YUPELRI within its own financial statements, Viatris collaboration agreement revenue in our financial statements includes our implied 35% share of aggregate net sales of YUPELRI of $70.7 million and $56.7 million for 2022 and 2021, respectively, which represented increases of 25% and 13% over the respective prior year periods.
Added
Cash-related expenses and non-cash related expenses associated with the 2023 Strategic Actions were $1.2 million and $1.5 million in 2023, respectively.
Removed
However, under applicable accounting guidance, our Viatris collaboration agreement revenue increased by only 11% in 2022 (see table below). This increase was due to overall lower costs incurred by 59 Table of Contents Theravance Biopharma as a result of the Restructuring, which improved YUPELRI profitability, but lowered our Viatris collaboration agreement revenue.
Added
The $3.0 million loss was comprised of transaction costs related to the extinguishment and the write-off of the remaining debt issuance cost.
Removed
A mounts payable to Viatris in connection with the commercialization of YUPELRI, if any, are recorded within the consolidated statements of operations as a collaboration loss within selling, general and administrative expenses.
Added
This sale was a non-recurring item, and therefore, all of the provision for income tax expense was recorded in continuing operations in 2023. As a result of the TRC sale in 2022, we released our entire valuation allowance against our federal deferred tax assets as of December 31, 2022.
Removed
In addition to a 11% increase in revenue over the period, YUPELRI continued to increase its share of the long-acting nebulized COPD market and continued to be profitable for us on a brand basis.
Added
In January 2024, we repurchased $0.4 million of our shares to complete our capital return program.
Removed
In the fourth quarter of 2022, we recognized our first revenue associated with non-US YUPELRI royalties in the amount of $30,000. ​ Our other collaboration revenue was $0.2 million in 2022, which represented a $11.3 million decrease from 2021.
Added
Accordingly, we have not recognized any liabilities relating to these agreements as of December 31, 2023.
Removed
The decrease was primarily due to the full recognition of the remaining non-cash Janssen collaboration revenue in the fourth quarter of 2021 which resulted from the planned close-out of the izencitinib program in that period. ​ Licensing revenue was $2.5 million in 2022 and was related to a development milestone payment from Pfizer for the first patient dosed in a Phase 1 clinical trial of the skin-selective pan-JAK inhibitor program. ​ Research and Development Our R&D expenses consist primarily of employee-related costs, external costs, and various allocable expenses.
Removed
External-related expenses decreased by $72.0 million in 2022 and was the largest contributor to the total R&D expense decrease. The decrease in external-related expenses was primarily due to the near completion of expenses related to the izencitinib program and the SEQUOIA and REDWOOD ampreloxetine studies.
Removed
The decrease in external-related expenses was partially offset by expenses incurred in the fourth quarter of 2022 associated with the new ampreloxetine Phase 3 clinical study (CYPRESS) for MSA patients with symptomatic nOH. The decreases across the remaining R&D categories were primarily due to the Restructuring originally announced in September 2021 and completed in the third quarter of 2022.
Removed
As anticipated, the Restructuring resulted in significant savings in 2022 R&D expenses, including (i) $30.7 million in employee-related expenses; (ii) $12.7 million in share-based compensation expenses; and (iii) $14.8 million in facilities, depreciation, and other allocated expenses.
Removed
The decrease was attributed to a (i) $17.7 million reduction in employee-related expenses; (ii) $9.4 million reduction in external-related expenses; (iii) $8.2 million reduction in share-based compensation expense; and (iv) $6.2 million reduction in facilities, depreciation, and other expenses.

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