Theravance Biopharma, Inc.

1. Organization and Summary of Significant Accounting Policies

Theravance Biopharma, Inc. (“Theravance Biopharma” or the “Company”) is a biopharmaceutical company primarily focused on the development and commercialization of medicines. The Company’s focus is to delivermedicines that make a difference® in people's lives.

Basis of Presentation

The Company’s condensed consolidated financial statements as of March 31,2026 and for the three months ended March 31, 2026 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which are considered necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for the period, and have been prepared in accordance with United States (“US”) generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2025 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on March 23, 2026.

The results for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or for any other interim period or for any future period. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Due to the inherent uncertainty in making estimates, actual results could differ materially from those estimates.

Liquidity and Capital Resources

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

Significant Accounting Policies

Other than an update to the*“Future Royalty Payment Contingency”* accounting policy below, there have been no material revisions in the Company’s significant accounting policies described in Note 1 to the consolidated financial statements included in its Annual Report on Form 10-K as of and for the year ended December 31, 2025.

Future Royalty Payment Contingency

The Company treats contingent liabilities related to sale of future royalties as debt financings, amortized under the effective interest method over the estimated life of the related expected royalty stream. The contingent liabilities related to sale of future royalties and the debt amortization are based on current estimates of the amount and timing of future royalty payments. The Company periodically reassesses the amount and timing of probability-adjusted estimated royalty payments based on internal sales projections and external information from market data sources, which are considered Level 3 inputs. To the extent the Company’s estimates of the amount and timing of future royalty payments are materially greater or less than previous estimates, the Company will prospectively adjust the amortization of the contingent liability and effective interest rate.

In periods in which updated estimates of the amount or timing of future royalty payments results in the undiscounted cash flows payable to be less than the current net carrying amount of the debt, the Company ceases the recognition of interest expense on the royalty liability. Consistent with the accounting guidance applicable to debt financings, the Company does not reduce the net carrying amount of the royalty liability below its initial carrying amount, which represents the original proceeds received.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03,Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)(“ASU 2024-03”). ASU 2024-03 modifies the rules on income statement disclosures to enhance the transparency of and include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. ASU 2024-03 will be effective for annual periods beginning after December 15, 2026. The Company isevaluating the impact of adopting ASU 2024-03 on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270): Narrow-Scope Improvements(“ASU 2025-11”). ASU 2025-11 clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. ASU 2025-11 will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is evaluating the impact of adopting ASU 2025-11 on its consolidated financial statements and related disclosures.

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

2. Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding during the period. Diluted net loss per share is computed by increasing the weighted-average number of shares outstanding for the dilutive effect of potential ordinary shares. The Company’s potential ordinary shares include outstanding options to purchase ordinary shares and restricted share units (“RSUs”), including market-based and performance-contingent awards. See*“Note 8. Share-Based Compensation”* for information related to outstanding options and RSUs as of March 31, 2026 and 2025.

In accordance with Accounting Standards Codification (“ASC”) Topic 260,Earnings Per Share, if a company incurred a net loss, then potential ordinary shares are considered anti-dilutive for the periods in which the net loss was recognized. For the three months ended March 31, 2026 and 2025, the Company recognized net losses. As a result, the potential ordinary shares as described above were not included in the computation of diluted net loss per share, as presented below, due to their anti-dilutive effects.

3. Revenue

Revenue from Collaborative Arrangements

Viatris

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

In the US, Viatris is leading the commercialization of YUPELRI, and the Company co-promotes the product under a profit and loss sharing arrangement (65% to Viatris;35% to the Company). Outside the US (excluding China and adjacent territories), Viatris is responsible for development and commercialization and will pay the Company a tiered royalty on net sales at percentage royalty rates ranging from low double-digits to mid-teens. Viatris also holds exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories, which include the Hong Kong SAR, the Macau SAR, and Taiwan (collectively, the “China Region”), and the Company is eligible to receive tiered royalties ranging from 14% to 20% on net sales of nebulized revefenacin in the China Region. Viatris is responsible for all aspects of development and commercialization in the China Region, including pre- and post-launch activities and product registration and all associated costs. Viatris is the principal in the YUPELRI sales transactions, and as a result, the Company does not reflect the product sales in its consolidated financial statements.

As of March 31, 2026, the Company is eligible to receive from Viatris potential global sales and regulatory milestone payments (excluding the China Region) up to $180.0 million in the aggregate, with $135.0 million associated with YUPELRI monotherapy and $45.0 million associated with future potential combination products. Of the $135.0 million associated with monotherapy, $125.0 million relates to sales milestones based on achieving certain levels of US net sales and $10.0 million relates to regulatory actions in the European Union (“EU”). The Company is also eligible to receive additional potential sales and regulatory milestones up to $45.0 million related to Viatris’ development and commercialization of nebulized revefenacin in the China Region with $37.5 million associated with YUPELRI monotherapy and $7.5 million associated with future potential combination products. The $37.5 million relates to sales milestones based on achieving certain levels of net sales in the China Region, and the $7.5 million relates to achieving regulatory milestones.

The Viatris Agreement is considered to be within the scope of ASC 808, Collaborative Arrangements, as the parties are active participants and exposed to the risks and rewards of the collaborative activity with a unit of account provided to Viatris as a customer. Under the terms of the Viatris Agreement, which included the delivery by the Company of a license to Viatris to develop and commercialize revefenacin, Viatris was responsible for reimbursement of the Company’s costs related to the registrational program up until the approval of the first new drug application in November 2018; thereafter, R&D expenses are shared by both parties according to the profit and loss sharing percentages noted above. Performing R&D services for reimbursement is considered a collaborative activity under the scope of ASC 808. Reimbursable program costs, if any, are recognized proportionately with the performance of the underlying services and accounted for as reductions to R&D expense.

The future potential milestone amounts for the Viatris Agreement were not included in the original transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. As part of the Company’s evaluation of the constraint on development and regulatory milestones, the Company determined that the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals which are not within its control and uncertain at this stage. In June 2025, YUPELRI received regulatory approval by China’s National Medical Products Administration (“NMPA”) which triggered a $7.5 million milestone payment from Viatris to the Company.

Sales-based milestone payments and royalty arrangements will be recognized when the sales occur or the milestone is achieved. In December 2025, the Company recognized a $25.0 million milestone related to the achievement of $250.0 million in US net sales in 2025.

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

accordance with the applicable accounting guidance, amounts receivable from Viatris in connection with the commercialization of YUPELRI are recorded within the condensed consolidated statements of operations as revenue from “Viatris collaboration agreement” irrespective of whether the overall collaboration is profitable.

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

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

4. Segment Information

The Company operates in a single segment, which is the development and commercialization of human therapeutics. The Company has determined that its chief executive officer is the Chief Operating Decision Maker (“CODM”). When evaluating the Company’s financial performance, the CODM reviews total revenues and total expenses and makes financial decisions using this information on a consolidated net loss basis. The measure of segment assets is the Company’s total assets which are reported on the condensed consolidated balance sheets. The Company’s segment revenue and long-lived assets are primarily generated and maintained in the US.

The following table summarizes significant segment expenses:

1 Excludes share-based compensation

5. Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the current period and comparable prior year period condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.

The Company maintains restricted cash for certain lease agreements and letters of credit by which the Company has pledged cash and cash equivalents as collateral. The cash-related amounts reported in the table above exclude the Company’s investments in short-term marketable securities that are reported separately on the condensed consolidated balance sheets.

The Company periodically engages in foreign exchange transactions as a part of its operations. The Company recognized net realized and unrealized foreign currency losses were immaterial for the three months ended March 31, 2026 and 2025, respectively. These amounts are included in the Company’s condensed consolidated statements of operations within “Interest income and other income, net”.

6. Investments and Fair Value Measurements

Available-for-Sale Securities

The estimated fair value of marketable securities is based on quoted market prices for these or similar investments obtained from a commercial pricing service. The fair market value of marketable securities classified within Level 1 is based on quoted prices for identical instruments in active markets. The fair value of marketable securities classified within Level 2 is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-driven valuations whose inputs are observable or whose significant value drivers are observable. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.

Available-for-sale securities are summarized below:

As of March 31, 2026, all of the Company’s available-for-sale securities had contractual maturities withinone year, and the weighted-average maturity of marketable securities was approximatelyone month. There wereno transfers between Level 1 and Level 2 during the periods presented, and there have been no material changes to the Company’s valuation techniques during the three months ended March 31, 2026.

Available-for-sale securities with unrealized losses as of March 31, 2026 are summarized below:

Available-for-sale securities with unrealized losses as of December 31, 2025 are summarized below:

The Company invests primarily in high credit quality and short-term maturity debt securities with the intent to hold such securities until maturity at par value. The Company does not intend to sell the investments that are currently in an unrealized loss position, and it is unlikely that it will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity. The Company reviewed its available-for-sale debt securities and determined that there wereno credit-related losses to be recognized as of March 31, 2026, and there wereno individual securities that were in a significant unrealized loss position as of March 31, 2026.

For the three months ended March 31, 2026 and 2025, the Company didnot sell any marketable securities.

Ampreloxetine Funding

The Company recognizes a contingent liability related to funding received from Royalty Pharma Investments (“Royalty Pharma”) in exchange for certain future royalty rights to ampreloxetine. The contingent liability consists of an upfront $25.0 million received in July 2022 and management’s estimate of (i) a risk-adjusted future contingent $15.0 million milestone; and (ii) the amount and timing of royalties to be paid to Royalty Pharma and then discounted over the life of the arrangement using an imputed rate of interest. The excess of future estimated royalty payments over the amount of cash funding received is recognized as interest expense using the effective interest method. The balance associated with the contingent liability was initially recorded as $25.0 million, net of allocated transaction costs, in July 2022 and is reported on the condensed consolidated balance sheets as “Future royalty payment contingency”.

There are a number of factors that could materially affect the amount and timing of the contingent $15.0 million milestone and royalty payments, some of which are not within the Company’s control. Such factors include, but are not limited to, changes in the projected market size, the introduction of competing products, patent protection matters, and regulatory product approval for ampreloxetine. The contingent liability was recognized using significant unobservable inputs. These inputs were derived using internal management estimates and reflect management’s judgements and forecasts. The significant unobservable inputs include the forecasted revenues, the probability and timing of the

regulatory milestone, and the expected term of the royalty stream, as well as the overall probability of ampreloxetine’s success. These estimates are considered Level 3 fair value inputs. A significant change in certain unobservable inputs, such as the probability of ampreloxetine’s success, could result in a material increase or decrease to the effective interest rate of the contingent liability. If ampreloxetine regulatory approval is not achieved or if ampreloxetine sales are never recognized, the Company would not be obligated to repay any of the funding amounts received from Royalty Pharma.

On March 3, 2026, the Company announced that its ampreloxetine Phase 3 clinical study top-line results did not meet its primary endpoint. As a result of this outcome, the Company decided to wind down the ampreloxetine program, and in accordance with accounting guidance underASC 470, Debt, the Company ceased recognizing interest expense on the contingent liability balance beginning in the first quarter of 2026.

Contract Derivative

On December 27, 2024, the Company purchased a contract derivative to manage its exposure to financial risk and to mitigate potential tax liability. The Company determined that the contract derivative met the definition of a derivative under ASC Topic 815,Derivatives and Hedging.

The contract derivative is measured at fair value using the discounted cash flow method and includes unobservable inputs derived from management’s estimates and assumptions. Management’s estimates and assumptions are based in part on external data and internal data and involve a significant degree of judgment. The primary unobservable inputs, classified as Level 3 under the fair value hierarchy, include the remote possibility of a future payout of taxes. Thediscount rate utilized in the fair value model was 4.8%, as of December 31, 2025 and 5.1% as of March 31, 2026.

The contract derivative was recognized within non-current “Other assets” on the condensed consolidated balance sheets and changes to the contract derivative fair value were as follows for the three months ended March 31, 2026:

For the three months ended March 31, 2026, the decrease in the contract derivative’s fair value was driven by an increase in the estimated discount rate, and the unrealized loss was recognized within “Interest and other income, net” on the condensed consolidated statements of operations.

7. Subleases

Sublease Income

As of March 31, 2026, the Company has subleased approximately 130,000 square feet of a total 162,000 square feet of its South San Francisco office and laboratory space under four separate subleases. The Company’s sublease income is recognized as a reduction to rent expense within selling, general and administrative expenses on the condensed consolidated statements of operations. The Company’s sublease income from its subleases is summarized below:

8. Share-Based Compensation

Share-Based Compensation Expense

Share-based compensation expense included in the condensed consolidated statements of operations was recognized as follows:

Share-Based Compensation Modification Due to Organizational Restructuring

As a result of the Company’s organizational restructuring announcement on March 3, 2026 (see* “Note 10. Organizational Restructuring*” for information), the Board of Directors’ Compensation Committee approved the acceleration of certain equity awards for employees affected by the restructuring. The Company accounted for this acceleration as a Type III modification (improbable to probable) which resulted in an incremental fair value of $1.0 million, as of the modification date, and was recorded in “Restructuring expenses” within the condensed consolidated statements of operations.

Share-Based Compensation Option and Award Activity

The following tables summarize option and RSU activity (including market-based and performance-contingent RSUs) for the three months ended March 31, 2026 and 2025:

9. Income Taxes

For the three months ended March 31, 2026, the Company recognized an income tax benefit of $1.5 million, primarily due to the Company’s pre-tax loss for the year-to-date period.

No provision for income taxes has been recognized on undistributed earnings of the Company's foreign subsidiaries because it considers such earnings to be indefinitely reinvested.

The Company follows the accounting guidance related to accounting for income taxes which requires that a company reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. In 2022, the Company released its valuation allowance for US federal tax purposes stemming from the effects of the Company’s sale of its equity interests in Theravance Respiratory Company, LLC in July 2022. As of March 31, 2026, the Company does not believe a

valuation allowance against its deferred tax assets should be re-established to offset its deferred tax assets for US federal tax purposes. As of March 31, 2026, the Company continues to maintain a full valuation allowance in certain states, including California, and other jurisdictions.

The Company records liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. The Company includes any applicable interest and penalties related to income tax matters in income tax expense.

The Company’s future income tax expense may be affected by such factors as changes in tax laws, regulations, its business, tax rates, interpretation of existing laws or regulations, the impact of accounting for share-based compensation, the impact of accounting for business combinations and other transactions, its international organization, shifts in the amount of income before tax earned in the US as compared with other regions in the world, and changes in overall levels of income before tax.

10. Organizational Restructuring

On March 3, 2026, the Company announced that its ampreloxetine Phase 3 clinical study (CYPRESS) in development for the treatment of symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy did not meet its primary endpoint in the Orthostatic Hypotension Symptom Assessment composite score. As a result of this outcome, the Company has decided to wind down its ampreloxetine program.

As the Company’s Board of Directors evaluates alternatives to maximize shareholder value, the Company is implementing an organizational restructuring (the “Restructuring”) to streamline costs and align its resources with its commercial focus on YUPELRI. As part of the Restructuring, the Company is reducing its headcount of 90 employees by approximately 50% through a reduction in its workforce. This reduction includes the wind-down of the R&D function and a decrease of approximately 50% in G&A employees. The Company estimates that it will incur approximately $5.0 million to $7.0 million in one-time total cash severance costs and approximately $3.5 million to $4.5 million in one-time total non-cash costs primarily related to the modification of equity-based awards for employees affected by the Restructuring.

Certain employees departed the Company on March 31, 2026, and the remainder of the impacted employees are expected to depart the Company over the next two quarters. For the three months ended March 31, 2026, the Company incurred a total of$3.6 million in Restructuring expenses, consisting of$1.7 million in R&D expenses and $1.9 million in G&A expenses, which is included on the condensed consolidated statements of operations within “Restructuring expenses”. Cash-related and non-cash related Restructuring expenses were$2.6 million and $1.0 million, respectively, for the three months ended March 31, 2026.

Selected information related to accrued cash-related Restructuring expenses (excludes share-based compensation expenses) was as follows:

As of March 31, 2026, the Company did not recognize any Restructuring-related impairment charges associated with its long-lived assets.

11. Commitments and Contingencies

Legal Proceedings

In the ordinary course of business, the Company may be subject to legal claims and regulatory actions that could have a material adverse effect on its business or financial position. The Company assesses its potential liability in such situations by analyzing the possible outcomes of various litigation, regulatory, and settlement strategies. If the Company determines that a material loss is probable and its amount can be reasonably estimated, it will accrue an amount equal to the estimated loss. As of March 31, 2026, the Company didnot accrue any estimated losses related to its ongoing legal proceedings.

Litigation – Patent Infringement

During January 2023, the Company received notice from Accord Healthcare, Inc.; Cipla USA, Inc. and Cipla Limited; Eugia Pharma Specialties Ltd.; Lupin Inc.; Mankind Pharma Ltd.; Orbicular Pharmaceutical Technologies Private Limited; and Teva Pharmaceuticals, Inc. (collectively, the “generic companies”), that they have each filed with the FDA an abbreviated new drug application (“ANDA”), for a generic version of YUPELRI. The notices from the generic companies each included a paragraph IV certification with respect tofive of the Company’s patents listed in the FDA’s Orange Book for YUPELRI on the date of the Company’s receipt of the notice. The asserted patents relate generally to polymorphic forms of and a method of treatment using YUPELRI. In February 2023, the Company filed patent infringement suits against the generic companies in federal district courts, including the US District Court for the District of New Jersey, the US District Court for the District of Delaware, and the US District Court for the Middle District of North Carolina. The suits in Delaware and North Carolina have been dismissed, as all generic companies have agreed to venue in New Jersey. The complaint alleges that by filing the ANDAs, the generic companies have infringed five of the Company’s Orange Book listed patents. Additional patents covering YUPELRI, granted on July 4, 2023, January 2, 2024, July 30, 2024 and April 29, 2025, were listed in the Orange Book. The Company filed additional patent infringement suits in the US District Court for the District of New Jersey against generic companies who had not settled at those times, and these suits were consolidated with the above action.

In May 2024, the Company received notice from Qilu Pharmaceuticals Co., Ltd. (“subsequent ANDA filer”), that it had filed with the FDA an ANDA for a generic version of YUPELRI. The notice from the subsequent ANDA filer included a paragraph IV certification with respect to certain of the Company’s patents listed in FDA’s Orange Book for YUPELRI. The asserted patents relate generally to polymorphic forms of and a method of treatment using YUPELRI. In June 2024, the Company filed a patent infringement suit against the subsequent ANDA filer in the US District Court for the Eastern District of Pennsylvania. The complaint alleges that by filing the ANDA, the subsequent ANDA filer has infringed certain of the Company’s Orange Book listed patents.

As of March 31, 2026, the Company has settled all litigation with all of the parties listed above pursuant to individual agreements in which the Company granted these companies a royalty-free, non-exclusive, non-sublicensable, non-transferable license to manufacture and market their respective generic versions of YUPELRI inhalation solution in the US on or after the licensed launch date of April 23, 2039, subject to certain exceptions and other provisions customary for agreements of this type. As required by law, the settlements are subject to review by the US Department of Justice and the Federal Trade Commission.