"Theravance continued to make progress across our key clinical programs this quarter," said Rick E Winningham, Chief Executive Officer. "Recently, we announced positive news from our bifunctional muscarinic antagonist-beta2 agonist program with GSK, which successfully completed a proof-of-concept Phase 2 study in COPD patients. Our Horizon program, in collaboration with GSK, completed enrollment in the mild and the severe asthma Phase 2b studies of inhaled corticosteroid '698. We expect to complete enrollment in the third quarter of 2008 in the asthma study with the long-acting beta agonist '444. We expect results from a study of '698 in moderate asthmatic patients in early 2009. Earlier this week, we announced that the FDA has not yet made a decision regarding the NDA for telavancin for the treatment of complicated skin and skin structure infections. We are working diligently with the FDA to complete its review of the skin application and are planning to submit the telavancin HAP NDA in the fourth quarter of 2008."

Program Highlights

Respiratory Programs

Horizon

We expect completion of enrollment in the Phase 2b asthma dose-ranging study with GW642444 ('444) in the third quarter 2008. The Phase 2b dose-ranging studies with the lead inhaled corticosteroid (ICS) GW685698 ('698) for patients with mild asthma and for patients with severe asthma have recently completed enrollment. The Phase 2b study with '698 for patients with moderate asthma continues to enroll patients with results now expected in early 2009.

Enrollment remains on track for the large Phase 2b chronic obstructive pulmonary disease (COPD) dose-ranging study with the lead long-acting beta agonist (LABA), '444. We expect to report top-line data from this study in the first half of 2009.

Inhaled Bifunctional Muscarinic Antagonist-Beta2 Agonist (MABA) Program

We recently reported positive clinical results from our Phase 2 study in the MABA program with our lead investigational compound, GSK961081 ('081), for the treatment of COPD. '081 administered once daily to COPD patients demonstrated 24-hour bronchodilation on day 14 that was statistically greater than placebo, and comparable to a combination therapy active control of salmeterol dosed twice daily plus tiotropium dosed once daily. '081 was generally well tolerated throughout the 14-day study. In conjunction with the successful achievement of proof-of-concept in this Phase 2 clinical study, we earned a milestone payment of $10 million from GlaxoSmithKline (GSK).

Inhaled Long-Acting Muscarinic Antagonist (LAMA) Program

We recently reported clinical results from our Phase 1 study in the LAMA program with our lead investigational compound, GSK1160724 (TD-4208), for the treatment of COPD. TD-4208 administered as a single dose to healthy volunteers was generally well tolerated, with a similar incidence of adverse events to placebo. In addition, TD-4208 demonstrated evidence of bronchodilation in volunteers sensitive to muscarinic antagonists. We also announced GSK's intent to return the LAMA program to the company because the current formulation of the compound is incompatible with GSK's proprietary inhaler device. Both parties are currently discussing the transfer of information and materials back to the company.

Bacterial Infections Programs

Telavancin

We plan on submitting to the U.S. Food and Drug Administration (FDA) a New Drug Application (NDA) for telavancin in the treatment of hospital-acquired pneumonia (HAP) caused by Gram-positive bacteria including resistant pathogens such as methicillin-resistant Staphylococcus aureus (MRSA) in the fourth quarter 2008.

Earlier this week, we announced that the FDA has not yet made a decision regarding the NDA for telavancin for the treatment of complicated skin and skin structure infections (cSSSI). The Prescription Drug User Fee Act (PDUFA) date for action by FDA was July 21, 2008, and as of July 23, 2008, the company had not received an action letter from the FDA.

As previously announced, the FDA had indicated that it did not expect to take final action on the telavancin NDA prior to completing its further evaluation of study site monitoring and study conduct in the ATLAS Phase 3 program, nor prior to resolution of the manufacturing issues not specifically related to telavancin that were cited in the approvable letter received in October 2007.

Telavancin is also under review for its safety and efficacy by regulatory authorities in Europe for the treatment of complicated skin and soft tissue infections and in Canada for the treatment of cSSSI.

Gastrointestinal (GI) Motility Dysfunction Program

We continue to evaluate the data and the study site audit from a previously conducted thorough QTc study of TD-5108, our lead compound, which evaluated the potential for QT prolongation. We currently intend to initiate a drug-drug interaction (DDI) study later in 2008. We intend to meet with the FDA later in 2008 to discuss the thorough QTc study and appropriate next steps, including conducting another thorough QTc study if necessary. We continue to evaluate the potential of this compound in chronic constipation, constipation-predominant irritable bowel syndrome and other indications.

Financial Results

Revenue

Revenue was $5.5 million for the second quarter of 2008 compared with $5.3 million for the same period of 2007. This increase was due to higher amortization of milestone payments received from the company's partnerships with GSK and Astellas.