Theravance Reports Fourth Quarter And Full Year 2004 Financial Results

Announced Telavancin Phase 2 Study Results

Initiated Telavancin Phase 3 Clinical Studies in Hospital Acquired Pneumonia

South San Francisco, CA - February 16, 2005: Theravance, Inc. (Nasdaq: THRX), reported today its financial results for the fourth quarter and year ended December 31, 2004.

The net loss for the fourth quarter of 2004 increased to $29.2 million from $21.5 million for the fourth quarter of 2003 due primarily to higher research and development expenses, specifically external research and development costs for preclinical and clinical services provided by contract research organizations and contract manufacturing organizations. These external expenses increased to $13.2 million in the fourth quarter of 2004 from $6.7 million in the fourth quarter of 2003 due primarily to fourth quarter 2004 expenses related to Phase 3 clinical studies for telavancin and Phase 1 clinical studies for the overactive bladder and gastrointestinal prokinetic (GI motility) programs. Revenue recognized from the amortization of upfront and milestone payments from GlaxoSmithKline (GSK) increased to $2.7 million in the fourth quarter of 2004 from $1.3 million in the fourth quarter of 2003. The revenue increase was a result of additional milestone payments received in 2004 under the Company's long-acting beta2 agonist collaboration with GSK (the "Beyond Advair" collaboration) and fees received under the Company's Strategic Alliance with GSK.

For the full year 2004, the net loss increased to $102.7 million from $70.6 million for 2003 primarily due to higher research and development expenses. External research and development expenses for contract research and manufacturing activities increased to $34.9 million in 2004 from $15.7 million in 2003, reflecting expenses related to clinical studies for telavancin and the overactive bladder program, as well as development expenses for the GI motility program. Revenue recognized from the amortization of upfront and milestone payments from GSK increased to $8.9 million in 2004 from $3.6 million in 2003, as a result of additional milestone payments received in 2004 related to the "Beyond Advair" collaboration and fees received in 2004 under the Strategic Alliance.

Theravance ended the year with $257.1 million in cash, cash equivalents and short-term investments, which includes approximately $110 million from the net proceeds received in its initial public offering and concurrent sale of equity to GSK.

Recent Highlights

For telavancin, a rapidly bactericidal injectable antibiotic with a unique multiple mechanism of action for treatment of patients with Staphylococcus aureus (including methicillin-resistant strains known as MRSA) and other Gram-positive infections, the Company:

On December 7, 2004, announced results of the Phase 2 FAST 2 clinical study, a randomized, double-blind, multinational study of intravenous telavancin dosed once a day compared to standard therapy for the treatment of complicated Gram-positive skin and skin structure infections (cSSSI). The clinical cure rates in the clinically evaluable population were 96.1% and 93.5% for patients treated with telavancin and standard therapy, respectively. In the group of microbiologically evaluable patients with MRSA infection, eradication was achieved in 92.3% of the telavancin-treated group versus 68.4% in the group receiving vancomycin; and

On January 26, 2005, announced the initiation of Phase 3 clinical studies in hospital-acquired pneumonia (HAP).

On January 3, 2005, the Company announced the initiation of a Phase 1 clinical study designed to assess the safety, tolerability and pharmacokinetics for TD-2749, its investigational gastrointestinal (GI) prokinetic. This compound is designed to treat GI motility disorders such as chronic constipation, constipation-predominant irritable bowel syndrome (C-IBS), functional dyspepsia and diabetic gastroparesis.

Rick E Winningham, the Company's Chief Executive Officer, noted, "The fourth quarter ended a year of significant achievements for Theravance. In addition to our Strategic Alliance with GSK that was completed earlier in the year and our initial public offering, we continued to make progress in moving our pipeline ahead. In 2005, we look forward to building on our accomplishments and continuing Theravance's discovery and development of medicines to improve patients' lives."