Executive Summary / Key Takeaways

• Strategic Transformation Underway: Theravance Biopharma is actively reshaping its financial and operational profile, moving from a primarily R&D-focused entity to one poised to unlock significant shareholder value through a profitable commercial asset, strategic divestitures, and a high-potential late-stage neurology program.
• Strengthened Financial Position: The company's balance sheet has been significantly bolstered by the $225 million sale of its remaining TRELEGY royalty interest to GSK (GSK) in Q2 2025, contributing to a cash position of approximately $340 million with no long-term debt, and visibility into an additional $150 million in TRELEGY milestones.
• YUPELRI's Durable Growth: YUPELRI continues to demonstrate strong commercial momentum, with Q2 2025 net sales (Viatris-reported) up 22% year-over-year, driven by robust hospital channel performance and favorable pricing, contributing to expanding profit margins and near-term milestone potential.
• Ampreloxetine: A Transformational Catalyst: The wholly-owned ampreloxetine program for symptomatic neurogenic orthostatic hypotension (nOH) in Multiple System Atrophy (MSA) patients is nearing a critical data readout for its Phase 3 CYPRESS study in Q1 2026, representing a potential first-in-class therapy for a high unmet need rare disease.
• Shareholder Value Focus: A newly formed Strategic Review Committee is actively exploring alternatives to maximize shareholder value, reinforcing a commitment to disciplined capital allocation and returning excess capital.

A New Chapter: From Discovery to Value Realization

Theravance Biopharma, Inc. (TBPH) is undergoing a significant strategic evolution, transitioning from its roots in pharmaceutical discovery and development, dating back to 1997, to a more focused, value-driven biopharmaceutical company. Following its spin-off from Innoviva, Inc. (INVA) in 2014, the company has meticulously built a portfolio centered on a commercialized respiratory asset, YUPELRI, and a promising late-stage neurology candidate, ampreloxetine. This strategic pivot is now accelerating, marked by recent financial maneuvers and a clear roadmap to unlock intrinsic value for shareholders.

The company's journey has been characterized by both successful collaborations and adaptive portfolio management. A foundational partnership with Viatris Inc. (VTRS) in 2015 led to the U.S. FDA approval of YUPELRI (revefenacin) for COPD in 2018, establishing TBPH's commercial footprint. This asset has since become a durable cash generator, with operations turning profitable on a brand basis by Q3 2020. Concurrently, TBPH has navigated the complex landscape of drug development, including clinical setbacks with izencitinib and initial ampreloxetine studies, demonstrating resilience and a commitment to refining its development pathways.

Technological Edge: Differentiated Therapies for Unmet Needs

Theravance Biopharma's strategy is built on developing and commercializing medicines with clear technological differentiation, addressing specific patient populations with high unmet needs. This is evident in both its commercial product, YUPELRI, and its lead investigational candidate, ampreloxetine.

YUPELRI: A Nebulized Advantage in COPD

YUPELRI is a once-daily, nebulized long-acting muscarinic antagonist (LAMA) for the maintenance treatment of COPD. Its core technological differentiator lies in its nebulized delivery, which is crucial for an "enduring population of COPD patients in the U.S. that either need or prefer nebulized delivery for maintenance therapy." This delivery method offers a significant advantage over handheld inhalers, particularly for patients who may struggle with the coordination or dexterity required for proper inhaler use, ensuring consistent and effective drug delivery. YUPELRI stands as the only nebulized LAMA approved for COPD maintenance treatment in the U.S., providing a unique value proposition in a competitive market. The stability of revefenacin in various formulations also suggests its potential as a foundation for future novel handheld combination products, indicating further technological versatility.

Ampreloxetine: Precision in Autonomic Neurology

Ampreloxetine (TD-9855) represents a potentially transformative technological leap in treating symptomatic neurogenic orthostatic hypotension (nOH) in patients with Multiple System Atrophy (MSA). This investigational, once-daily norepinephrine reuptake inhibitor (NRI) is designed to increase synaptic norepinephrine concentrations by blocking its reuptake. This mechanism is particularly well-suited for MSA patients, who often have impaired central autonomic pathways but relatively intact peripheral neurons. By leveraging preserved peripheral sympathetic function, ampreloxetine aims to enhance vasoconstriction, improve blood pressure, and alleviate nOH symptoms.

A critical differentiator for ampreloxetine, highlighted by management, is its observed safety profile, specifically that it "was not associated with worsening of supine hypertension," a common and serious side effect with existing nOH therapies like midodrine and droxidopa. This physiological attunement could provide a significant safety advantage. Furthermore, its once-daily oral dosing and small pill size are operational benefits, especially for MSA patients who frequently experience swallowing difficulties. The primary endpoint for the ongoing Phase 3 CYPRESS study, the Orthostatic Hypotension Symptom Assessment Scale (OHSA) composite score, is designed to capture a broad measure of patient well-being and functional improvement, moving beyond mere dizziness to reflect the overall impact on a patient's quality of life. This comprehensive endpoint underscores the potential for ampreloxetine to offer a "meaningful clinical benefit" that has not been previously demonstrated by other treatments.

Competitive Landscape and Strategic Positioning

Theravance Biopharma operates in distinct therapeutic areas, each with its own competitive dynamics, where the company leverages its technological differentiators and strategic partnerships.

In the COPD market, YUPELRI competes primarily with short-acting nebulized bronchodilators, but also faces competition from newer entrants and established therapies. Recent competitive developments include the launch of Verona Pharma (VRNA)'s ensifentrine (a selective inhaled dual PDE3 and PDE4 inhibitor) and the approval of Sanofi (SNY)/Regeneron (REGN)'s Dupixent (an IL-4/IL-13 monoclonal antibody) for severe COPD with Type 2 inflammation. While ensifentrine and Dupixent represent different mechanisms, they add to the competitive pressure. Theravance's strategy, in collaboration with Viatris, focuses on YUPELRI's unique position as the only nebulized LAMA, emphasizing its utility for patients who need or prefer nebulized delivery. The company actively drives adoption through hospital formulary wins and therapeutic interchange protocols, aiming to transition patients from hospital to community care. Anecdotal feedback suggests ensifentrine is sometimes added to YUPELRI, indicating potential for concomitant use rather than direct substitution in all cases. The extended U.S. patent protection for YUPELRI until 2039 provides a significant competitive moat against generic erosion, a risk the company actively manages through ongoing patent litigation and strategic settlements.

For ampreloxetine in nOH/MSA, the competitive landscape is characterized by a high unmet medical need and limited effective treatments. Currently, generic droxidopa is the sole FDA-approved product for nOH, and midodrine is approved for orthostatic hypotension (OH). However, these existing therapies are often limited by short duration of action, frequent dosing requirements, and significant safety concerns, including box warnings for supine hypertension. Ampreloxetine's potential for once-daily oral dosing, durable symptom relief, and a safety profile that avoids worsening supine hypertension positions it as a highly differentiated and potentially first-in-class therapy. The Orphan Drug Designation further supports its market positioning by offering regulatory and commercial advantages in this rare disease space, which affects an estimated 40,000 patients in the U.S.

Overall, Theravance Biopharma's competitive strategy is to identify and exploit niche opportunities where its differentiated technologies can provide superior patient benefits, either through unique delivery mechanisms (YUPELRI) or novel pharmacological profiles (ampreloxetine). The company's partnerships, particularly with Viatris for YUPELRI and Royalty Pharma (RPRX) for ampreloxetine, are critical for commercialization and funding, allowing TBPH to maintain a lean operational structure while leveraging broader market reach.

Financial Performance and Liquidity: A Strengthened Foundation

Theravance Biopharma's recent financial performance reflects a strategic shift towards maximizing asset value and enhancing its balance sheet. The second quarter of 2025 showcased a significant improvement in net income, reaching $54.8 million for the three months ended June 30, 2025, and $41.3 million for the six months ended June 30, 2025. This profitability was largely driven by a one-time net gain of $75.1 million from the sale of the company's remaining TRELEGY royalty interest to GSK.

YUPELRI's Commercial Strength: The Viatris collaboration agreement for YUPELRI continues to be a robust revenue driver. For Q2 2025, collaboration revenue was $18.7 million, a 31% increase year-over-year, and $34.1 million for the six months ended June 30, 2025, up 19% year-over-year. This growth was fueled by a 22% year-over-year increase in YUPELRI net sales (as reported by Viatris) to $66.3 million in Q2 2025, and a 14% increase to $124.7 million year-to-date. Operational highlights include a 31% increase in hospital channel pull-through in Q2 2025, contributing to a nearly 20% market share in the long-acting nebulized hospital market by Q4 2024. Management anticipates continued expansion of YUPELRI's profit margins as net sales grow, underscoring the product's durable profitability. The recent regulatory approval of YUPELRI in China also triggered a $7.5 million licensing revenue milestone in Q2 2025, with Viatris bearing all commercialization costs in the region.

Disciplined Expense Management: Research and development (R&D) expenses for Q2 2025 were $10.5 million, a modest 5% increase year-over-year, primarily due to ampreloxetine NDA and regulatory activities. Selling, General, and Administrative (SG&A) expenses for Q2 2025 were $18.4 million, up 8% year-over-year, with increases mainly attributed to pre-launch commercial and medical affairs activities for ampreloxetine. However, general and administrative expenses, excluding one-time legal costs, were 12% lower year-over-year in Q2 2025 due to ongoing cost-saving initiatives. Share-based compensation also decreased, reflecting continued cost discipline.

Enhanced Liquidity: The company's liquidity position is exceptionally strong. As of June 30, 2025, Theravance Biopharma reported approximately $338.8 million in cash, cash equivalents, and marketable securities, with no long-term debt. This robust cash position was significantly boosted by the $50 million TRELEGY milestone payment received from Royalty Pharma in February 2025 (for 2024 sales) and the $225 million cash proceeds from GSK for the TRELEGY royalty sale in June 2025.

Net cash provided by operating activities for the six months ended June 30, 2025, surged to $251.1 million, largely reflecting these one-time inflows. Excluding these substantial one-time items, cash burn for Q2 2025 was approximately $3 million, demonstrating effective cash management.

Outlook and Guidance: Poised for Catalysts

Theravance Biopharma is entering a period rich with potential catalysts, and its financial guidance for 2025 has been reaffirmed, reflecting confidence in its operational plans and strategic direction.

Ampreloxetine's Pivotal Moment: The most significant near-term catalyst is the Phase 3 CYPRESS study for ampreloxetine. Enrollment in the open-label portion is anticipated to complete by late summer 2025, with top-line data expected approximately six months thereafter, placing the readout in Q1 2026. The company is proactively preparing for an expedited NDA submission, including advanced drafting of modules and a planned request for Priority Review, aiming to bring this potential therapy to patients as quickly as possible. This program targets an addressable U.S. population of approximately 40,000 MSA patients with symptomatic nOH, representing a substantial market opportunity for a differentiated, first-in-class therapy. Management considers a one-point change in the OHSA composite score to be clinically meaningful, setting a clear bar for success.

TRELEGY Milestones: Despite the sale of its outer-year royalty interest, Theravance Biopharma retains the right to receive up to $150 million in additional milestone payments from Royalty Pharma. Management expresses high confidence in achieving these milestones, with up to $50 million expected in 2025 (requiring $3.4 billion in annual TRELEGY sales) and up to $100 million in 2026 (requiring $3.51 billion in annual sales). GSK's strong TRELEGY sales performance, including $1.11 billion in Q2 2025 and $1.96 billion year-to-date, positions the company firmly on track to meet these thresholds. Beyond these near-term milestones, high single-digit royalties on TRELEGY will revert to Theravance in mid-2029 for ex-U.S. sales and January 2031 for U.S. sales, providing a long-term value stream.

Financial Trajectory: For 2025, R&D expenses (excluding share-based compensation) are guided to be between $32 million and $38 million. While clinical trial costs for CYPRESS will decrease in the second half, this will be offset by one-time spending on NDA completion. SG&A expenses (excluding share-based compensation) are projected to be between $50 million and $60 million, reflecting measured investments in ampreloxetine's pre-launch commercial and medical affairs activities. Management anticipates non-GAAP losses and cash burn to be higher in the first half of 2025 but to improve in the second half, driven by YUPELRI's continued growth and ongoing cost discipline. A one-time tax payment of approximately $27 million related to the TRELEGY royalty sale is expected in the second half of 2025, though this was fully accrued in Q2 and will not impact the P&L going forward.

Risks and Challenges

Despite the positive outlook, investors must consider several key risks. The sustainability of profitability remains a challenge, as recent net income was largely driven by one-time gains from asset monetization rather than recurring operational profit. The commercial success of YUPELRI, while strong, depends on continued acceptance by physicians, patients, and payors, and faces competition from both existing and new therapies.

The ampreloxetine program, while promising, carries inherent clinical trial risks; there is no guarantee that the CYPRESS study will meet its primary endpoint or that the drug will ultimately be approved by regulatory authorities. The company's reliance on single-source manufacturers for YUPELRI and its product candidates poses supply chain risks. Additionally, patent litigation against generic versions of YUPELRI, though partially settled, remains ongoing for some filers, and the outcome could impact market exclusivity. The ongoing strategic review process, while aimed at unlocking value, could also be time-consuming and disruptive, potentially affecting business operations and stock price volatility. Finally, broader healthcare law changes, reimbursement policies, and geopolitical factors (such as the manufacturing location of ampreloxetine's API in Taiwan and IP in Ireland) could impact the company's financial performance and operational flexibility.

Conclusion

Theravance Biopharma stands at a critical juncture, having strategically repositioned itself with a significantly strengthened balance sheet and a clear focus on value creation. The company's core investment thesis hinges on the continued profitable growth of YUPELRI, the realization of substantial near-term TRELEGY milestones, and the transformative potential of its wholly-owned ampreloxetine program. The recent TRELEGY royalty sale has provided a robust financial foundation, enabling the company to pursue its late-stage neurology asset without immediate capital market reliance.

With the CYPRESS study data readout for ampreloxetine on the horizon in Q1 2026, Theravance Biopharma is approaching a pivotal inflection point that could redefine the standard of care for MSA patients with nOH. The company's technological differentiators, particularly ampreloxetine's unique mechanism and safety profile, position it favorably against existing, less effective treatments. While competitive pressures and clinical development risks persist, the disciplined execution, strategic capital allocation, and proactive efforts to unlock shareholder value underscore a compelling narrative for investors looking for a biopharmaceutical company with both commercial stability and significant upside potential from a rare disease neurology catalyst.