Theravance, Inc. to Offer $250 Million Convertible Subordinated

Theravance, Inc. to Offer $250 Million Convertible Subordinated Notes
Due 2023 
Company Intends to Use a Portion of the Net Proceeds of the Offering
to Pay for the Cost of Entering Into Capped Call Transactions 
SOUTH SAN FRANCISCO, CA -- (Marketwire) -- 01/16/13 --   Theravance,
Inc. (NASDAQ: THRX) (the "Company"), a biopharmaceutical company with
a pipeline of internally discovered product candidates and strategic
collaborations with pharmaceutical companies, announced today its
intention to offer, subject to market conditions and other factors,
$250 million aggregate principal amount of convertible subordinated
notes due 2023 (the "notes") in an underwritten public offering. The
notes will be convertible at the option of the holders into shares of
the Company's common stock at any time on or prior to the second
business day preceding the maturity date. The Company also expects to
grant the underwriters an option to purchase up to $37.5 million
aggregate principal amount of additional notes. The interest rate,
conversion price and other terms of the notes will be determined by
the Company and the underwriters. BofA Merrill Lynch is acting as the
sole book-running manager for the offering. 
The Company intends to use the net proceeds of the offering for
potential milestone payments to GlaxoSmithKline plc if there is any
approval or launch of products under the parties' long-acting beta2
agonist (LABA) collaboration, including RELVAR(TM) or BREO(TM)
(fluticasone furoate/vilanterol), ANORO(TM) (umeclidinium
bromide/vilanterol), or vilanterol, for the potential repayment of
debt, and for other general corporate purposes. The Company also
intends to use a portion of the net proceeds of the offering to pay
for the cost of entering into capped call transactions with one or
more of the underwriters or their affiliates (the "hedge
counterparties") covering the aggregate number of shares of common
stock underlying the notes. If the underwriters exercise their option
to purchase additional notes, the Company may enter into additional
capped call transactions with the hedge counterparties. The capped
call transactions are expected generally to reduce the potential
dilution upon conversion of the notes in the event that the market
price of the Company's common stock, as measured under the terms of
the capped call transactions, is greater than the strike price of the
capped call transactions, which initially corresponds to the
conversion price of the notes, and is expected to be subject to
customary anti-dilution adjustments. However, if the market price of
the Company's common stock, as measured under the terms of the capped
call transactions, exceeds the cap price of the capped call
transactions, the anti-dilutive effect of the capped call
transactions will be limited. 
For any conversions of notes prior to the close of business of the
95th scheduled trading day immediately preceding the maturity date,
including without limitation upon an acquisition of the Company or
similar business combination, a corresponding portion of the capped
call transactions will be terminated. Upon such termination, the
portion of the capped call transactions being terminated will be
settled at fair value (subject to certain limitations), which the
Company expects to receive from the hedge counterparties, and no
payments will be due to the hedge counterparties. 
The Company has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the hedge
counterparties (or their affiliates) expect to enter into various
derivative transactions with respect to the Company's common stock
concurrently with, and/or purchase the Company's common stock shortly
after, the pricing of the notes. These activities could have the
effect of increasing, or reducing the size of any decrease in, the
price of the notes and/or the Company's common stock concurrently
with, or shortly after, the pricing of the notes. In addition, the
hedge counterparties (or their affiliates) are likely to modify their
hedge positions by entering into or unwinding various derivative
transactions with respect to the Company's common stock and/or by
purchasing or selling the Company's common stock or other of its
securities in secondary market transactions following the pricing of
the notes and prior to the maturity date of the notes (and are likely
to do so during a specified averaging period under the capped call
transactions preceding the maturity date, and on or around any
earlier conversion date related to a conversion of the notes). The
effect, if any, of any of these transactions and activities on the
market price of the Company's common stock or the notes will depend
in part on market conditions and cannot be ascertained at this time,
but any of these activities could adversely affect the value of the
Company's common stock, which could affect the value of the notes and
the value of any of the Company's common stock holders of the notes
receive upon any conversion of the notes. 
This press release is neither an offer to sell nor a solicitation of
an offer to buy any securities and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer,
solicitation or sale is unlawful. 
The offering is being made pursuant to a registration statement
(including a prospectus for the offering) filed with the U.S.
Securities and Exchange Commission (the "SEC") on January 16, 2013.
Before you invest, you should read the prospectus in that
registration statement and the other documents the issuer has filed
with the SEC for more complete information about the issuer and the
offering. You may get these documents for free by visiting EDGAR on
the SEC's website at www.sec.gov. Alternatively, the issuer, any
underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request them by calling BofA
Merrill Lynch at 866-500-5408. In addition, copies of the preliminary
prospectus may be obtained from BofA Merrill Lynch, 222 Broadway, New
York, NY 10038, Attn: Prospectus Department, or email
dg.prospectus_requests@baml.com.  
THERAVANCE(R), the Theravance logo, and MEDICINES THAT MAKE A
DIFFERENCE(R) are registered trademarks of Theravance, Inc. 
RELVAR(TM) or BREO(TM) (FF/VI) and ANORO(TM) are investigational
medicines and are not currently approved anywhere in the world.
RELVAR(TM), BREO(TM) and ANORO(TM) are trademarks of the
GlaxoSmithKline group of companies. The use of these brand names has
not yet been approved by any regulatory authority. 
This press release contains certain "forward-looking" statements as
that term is defined in the Private Securities Litigation Reform Act
of 1995 regarding, among other things, statements relating to goals,
plans, objectives and future events. Theravance intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 21E of
the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. These statements are based on the
current estimates and assumptions of the management of Theravance as
of the date of this press release and are subject to risks,
uncertainties, changes in circumstances, assumptions and other
factors that may cause the actual results of Theravance to be
materially different from those reflected in its forward-looking
statements. Factors that could cause such differences are described
under the heading "Risk Factors" contained in Theravance's
registration statement filed with the SEC on January 16, 2013 related
to the offering and the risks discussed in the Company's periodic
filings with SEC. Given these uncertainties, you should not place
undue reliance on these forward-looking statements. Theravance
assumes no obligation to update its forward-looking statements. 
Any disclaimer or other notice that may appear below is not
applicable to this communication and should be disregarded. Such
disclaimer or notice was automatically generated as a result of this
communication being sent by Bloomberg or another email system.  
Contact Information: 
Theravance, Inc.
Michael W. Aguiar
Senior Vice President and Chief Financial Officer
650-808-4100
investor.relations@theravance.com