<SUBMISSION>
<ACCESSION-NUMBER>0001047469-08-002326
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20080422
<FILING-DATE>20080307
<DATE-OF-FILING-DATE-CHANGE>20080307
<EFFECTIVENESS-DATE>20080307
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>THERAVANCE INC
<CIK>0001080014
<ASSIGNED-SIC>2834
<IRS-NUMBER>943265960
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-30319
<FILM-NUMBER>08672553
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>901 GATEWAY BLVD
<CITY>SOUTH SAN FRANCISCO
<STATE>CA
<ZIP>94080
<PHONE>6508086000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>901 GATEWAY BLVD
<CITY>S. SAN FRANCISCO
<STATE>CA
<ZIP>94080
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ADVANCED MEDICINE INC
<DATE-CHANGED>20000302
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>a2183412zdef14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
<HTML>
<HEAD>
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<FONT SIZE=3 ><A HREF="#08ZAG77202_1">QuickLinks</A></FONT>
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 </FONT> <FONT SIZE=2><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B> SCHEDULE 14A</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Proxy
Statement Pursuant to Section&nbsp;14(a) of<BR>
the Securities Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;) </FONT></P>

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<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Filed by the Registrant <FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2>Filed by a Party other than the Registrant <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check the appropriate box:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Preliminary Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><BR><FONT SIZE=2><B>Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Definitive Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Definitive Additional Materials</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Soliciting Material Pursuant to &sect;240.14a-12<BR></FONT>
</TD>
</TR>
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<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=5><B>THERAVANCE,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2> (Name of Registrant as Specified In Its Charter)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2> (Name of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=2>Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
No fee required.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Title of each class of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Aggregate number of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Proposed maximum aggregate value of transaction:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Total fee paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2><BR>
(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2><BR>
Amount Previously Paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Form, Schedule or Registration Statement No.:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Filing Party:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Date Filed:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
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<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=1,EFW="2183412",CP="THERAVANCE, INC.",DN="1",CHK=836453,FOLIO='blank',FILE='DISK124:[08ZAG2.08ZAG77202]BA77202A.;4',USER='MOBRIEN',CD=';6-MAR-2008;13:56' -->
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<P style="font-family:times;"><FONT SIZE=2>


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 </FONT> <FONT SIZE=2><B>
<IMG SRC="g817752.jpg" ALT="GRAPHIC" WIDTH="205" HEIGHT="75">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>March&nbsp;7,
2008 </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Dear
Stockholder: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I
am pleased to invite you to attend Theravance,&nbsp;Inc.'s 2008 Annual Meeting of Stockholders, to be held on Tuesday, April&nbsp;22, 2008 at the Presidio Room, Embassy Suites
Hotel, 250 Gateway Boulevard, South San Francisco, California 94080. The meeting will begin promptly at 1:00&nbsp;p.m., local time. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Enclosed
are the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>our
Notice of Annual Meeting of Stockholders and Proxy Statement for 2008;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>our
Annual Report on Form&nbsp;10-K for 2007; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>a
proxy card with a return envelope to record your vote. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Details
regarding the business to be conducted at the Annual Meeting are more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your
vote is important. Whether or not you expect to attend, please date, sign, and return your proxy card in the enclosed envelope, or vote via telephone or the Internet according to
the instructions in the Proxy Statement, as soon as possible to assure that your shares will be represented and voted at the Annual Meeting. If you attend the Annual Meeting, you may vote your shares
in person even though you have previously voted by proxy if you follow the instructions in the Proxy Statement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
behalf of your Board of Directors, thank you for your continued support and interest. </FONT></P>

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<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>Sincerely,<BR>
&nbsp;&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g979546.jpg" ALT="GRAPHIC" WIDTH="169" HEIGHT="39">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>Rick E Winningham<BR></FONT> <FONT SIZE=2><I>Chief Executive Officer<BR> </I></FONT></TD>
</TR>
</TABLE>
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<P style="font-family:times;"><FONT SIZE=2>901
Gateway Boulevard<BR>
South San Francisco, CA 94080 </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>T 650.808.6000&nbsp;F&nbsp;650.827.8690<BR>
www.theravance.com  </I></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=2,EFW="2183412",CP="THERAVANCE, INC.",DN="1",CHK=25186,FOLIO='blank',FILE='DISK124:[08ZAG2.08ZAG77202]BC77202A.;7',USER='MOBRIEN',CD=';6-MAR-2008;13:56' -->
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>


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 </FONT> <FONT SIZE=2><B>Theravance,&nbsp;Inc.<BR>  </B></FONT><FONT SIZE=2>901 Gateway Boulevard<BR>
South San Francisco, California 94080 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> To Be Held On April&nbsp;22, 2008  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Dear
Stockholder: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
are cordially invited to attend the Annual Meeting of Stockholders of Theravance,&nbsp;Inc., a Delaware corporation (the "Company"). The meeting will be held on Tuesday,
April&nbsp;22, 2008, at 1:00&nbsp;p.m. local time at the Presidio Room, Embassy Suites Hotel, 250 Gateway Boulevard, South San Francisco, California 94080 for the following purposes: </FONT></P>

<UL>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>1.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To elect directors to serve for the ensuing year and until their successors are elected.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>2.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To approve an amendment to the Theravance,&nbsp;Inc. Employee Stock Purchase Plan ("ESPP") increasing the aggregate number of shares
of common stock authorized for issuance under the ESPP by 300,000 shares.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>3.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To ratify the selection by the Audit Committee of the Board of Directors of Ernst&nbsp;&amp; Young&nbsp;LLP as the independent
registered public accounting firm of the Company for its fiscal year ending December&nbsp;31, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>4.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To conduct any other business properly brought before the meeting. </FONT></DD></DL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These
items of business are more fully described in the Proxy Statement accompanying this Notice. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
record date for the Annual Meeting is February&nbsp;27, 2008. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof. </FONT></P>

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<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>By Order of the Board of Directors</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g352051.jpg" ALT="GRAPHIC" WIDTH="241" HEIGHT="81">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>Bradford J. Shafer<BR></FONT> <FONT SIZE=2><I>Senior&nbsp;Vice&nbsp;President,&nbsp;General&nbsp;Counsel&nbsp;and&nbsp;Secretary</I></FONT></TD>
</TR>
</TABLE>
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<P style="font-family:times;"><FONT SIZE=2>South
San Francisco, California<BR>
March&nbsp;7, 2008 </FONT></P>

<HR NOSHADE>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed
proxy card, or vote via telephone or the Internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage
prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must provide a valid proxy issued in your name from that record holder.</B></FONT></P>

<HR NOSHADE>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Important Notice Regarding the Availability of Proxy Materials for the Annual<BR>
Meeting of Shareholders to be held on April&nbsp;22, 2008:  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> The proxy statement is available at http://ir.theravance.com/proxy.cfm.  </B></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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 </FONT> <FONT SIZE=2><B>Theravance,&nbsp;Inc.<BR>  </B></FONT><FONT SIZE=2>901 Gateway Boulevard<BR>
South San Francisco, California 94080 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>PROXY STATEMENT<BR>
FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>April&nbsp;22, 2008 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Why am I receiving these materials?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors of Theravance,&nbsp;Inc. (sometimes referred to as the "Company" or
"Theravance") is soliciting your proxy to vote at the 2008 Annual Meeting of Stockholders (the "Annual Meeting"). You are invited to attend the Annual Meeting to vote on the proposals described in
this Proxy Statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions on the
enclosed proxy card to submit your proxy via telephone or on the Internet. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company intends to mail this Proxy Statement and accompanying proxy card on or about March&nbsp;11, 2008 to all stockholders of record entitled to vote at the Annual Meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Who can vote at the Annual Meeting?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only stockholders of record at the close of business on February&nbsp;27, 2008 will be entitled to vote at the Annual Meeting. On this record date, there were
51,701,257 shares of Company common stock ("Common Stock") outstanding and 9,401,499 shares of Company Class&nbsp;A Common Stock ("Class&nbsp;A Common Stock") outstanding. All of these outstanding
shares are entitled to vote at the Annual Meeting as the Class&nbsp;A Common Stock is entitled to vote with the Common Stock in connection with the matters set forth in this Proxy Statement.
Entities affiliated with GlaxoSmithKline&nbsp;plc own all outstanding shares of Class&nbsp;A Common Stock. The holders of Common Stock and the holders of Class&nbsp;A Common Stock each have the
right to one vote for each share they held as of the record date. </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Stockholder of Record: Shares Registered in Your Name  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If on February&nbsp;27, 2008 your shares were registered directly in your name with our transfer agent, The Bank of New York Mellon, then you are a stockholder
of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card
or vote by proxy via telephone or the Internet as instructed on your proxy card to ensure your vote is counted. </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Beneficial Owner: Shares Registered in the Name of a Broker or Bank  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If on February&nbsp;27, 2008 your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial
owner of shares held in "street name" and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for
purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. A number of brokers and banks enable
beneficial holders to give voting instructions&nbsp;via telephone or the Internet. Please refer to the voting instructions provided by your bank or broker. You are also invited to attend the Annual
Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you provide a valid proxy from your broker, bank or other custodian. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>What am I voting on?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are three matters scheduled for a vote: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Election
of nine directors;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Approval
of an amendment to our ESPP increasing the aggregate number of shares of Common Stock authorized for issuance under the ESPP by 300,000 shares; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Ratification
of Ernst&nbsp;&amp; Young&nbsp;LLP as our independent registered public accounting firm for the fiscal year ending December&nbsp;31, 2008. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B>How do I vote?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may either vote "For" all the nominees to the Board of Directors or you may withhold your vote from any nominee you specify. You may not vote your proxy
"For" the election of any persons in addition to the nine named nominees. For the other matters to be voted on, you may vote "For" or "Against" or abstain from voting. The procedures for voting are
explained below. </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Stockholder of Record: Shares Registered in Your Name  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a stockholder of record, you may vote by proxy using the enclosed proxy card, vote by proxy on the Internet or by telephone, or vote in person at the
Annual Meeting. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already
voted by proxy. </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#150;&gt;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed
proxy card to us before the Annual Meeting, we will vote your shares as you direct.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#150;&gt;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
vote on the Internet, please follow the instructions provided on your proxy card.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#150;&gt;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
vote by telephone, please follow the instructions provided on your proxy card.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#150;&gt;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
vote in person, come to the Annual Meeting and we will give you a ballot when you arrive. </FONT></DD></DL>
</UL>
<BR>
<HR NOSHADE>

<P style="font-family:times;"><FONT SIZE=2><B>We provide Internet proxy voting to allow you to vote your shares on-line, with procedures designed to ensure the authenticity and correctness of your proxy vote
instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers.</B></FONT></P>

<HR NOSHADE>
<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Beneficial Owner: Shares Registered in the Name of Broker or Bank  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received instructions for granting proxies
with these proxy materials from that organization rather than from the Company. A number of brokers and banks enable beneficial holders to give voting instructions&nbsp;via telephone or the
Internet. Please refer to the voting instructions provided by your bank or broker. To vote in person at the Annual Meeting, you must provide a valid proxy from your broker, bank, or other custodian.
Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>How many votes do I have?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On each matter to be voted upon, you have one vote for each share of Common Stock you owned as of February&nbsp;27, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>What if I return a proxy card but do not make specific choices?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you return a signed and dated proxy card without marking any voting selections, your shares will be voted
"</FONT><FONT SIZE=2><B>For</B></FONT><FONT SIZE=2>" the election of all nine nominees for director, "</FONT><FONT SIZE=2><B>For</B></FONT><FONT SIZE=2>" the proposed increase in the number of
shares authorized for issuance under our ESPP, and "</FONT><FONT SIZE=2><B>For</B></FONT><FONT SIZE=2>" ratification of Ernst&nbsp;&amp; Young&nbsp;LLP as our independent registered public accounting
firm. If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his best judgment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Who is paying for this proxy solicitation?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in
person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms, banks and other
agents for the cost of forwarding proxy materials to beneficial owners. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>What does it mean if I receive more than one proxy card?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and
return </FONT><FONT SIZE=2><B>each</B></FONT><FONT SIZE=2> proxy card to ensure that all of your shares are voted. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Can I change my vote after submitting my proxy?  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes. You can revoke your proxy at any time before the final vote at the meeting. You may revoke your proxy in any one of three ways: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You
may submit another properly completed proxy card with a later date.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You
may send a written notice that you are revoking your proxy to the Secretary of the Company at 901 Gateway Boulevard, South San Francisco, California 94080.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You
may attend the Annual Meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B>How are votes counted?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Votes will be counted by the inspector of election appointed for the meeting, who will separately count "For" and (with respect to proposals other than the
election of directors) "Against" votes, abstentions and broker non-votes. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as "Against"
votes. Broker non-votes, as described in the next paragraph, have no effect and will not be counted towards the vote total for any proposal. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
your shares are held by your broker as your nominee (that is, in "street name"), you will need to obtain a proxy form from the institution that holds your shares and follow the
instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to
"discretionary" items, but not with respect to "non-discretionary" items. Discretionary items are proposals considered routine under the rules of the New York Stock Exchange ("NYSE") on
which your broker may vote shares held in street name in the absence of your voting instructions. On non-discretionary items for which you do not give your broker instructions, the shares
will be treated as broker non-votes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>How many votes are needed to approve each proposal?  </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>For
the election of directors, the nine nominees receiving the most "For" votes (among votes properly cast in person or by proxy) will be elected. Broker
non-votes will have no effect.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
be approved, Proposal 2 to increase the number of shares authorized for issuance under our ESPP must receive a "For" vote from the holders of a majority of issued and
outstanding shares, present in person or represented by proxy at the meeting and entitled to vote thereon. If you "Abstain" from voting, it will have the same effect as an "Against" vote. Broker
non-votes will have no effect.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
be approved, Proposal 3 to ratify the selection by the Audit Committee of the Board of Directors of Ernst&nbsp;&amp; Young&nbsp;LLP as the independent registered public
accounting firm of the Company for its fiscal year ending December&nbsp;31, 2008 must receive a "For" vote from the majority of all outstanding shares, present in person or represented by proxy at
the Annual Meeting and entitled to vote thereon either in person or by proxy. If you "Abstain" from voting, it will have the same effect as an "Against" vote. Broker non-votes will have no
effect. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B>What is the quorum requirement?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of all shares outstanding on February&nbsp;27, 2008, the
record date, are represented at the meeting by stockholders present in person or by proxy. On the record date, there were 61,102,756 shares of Common Stock and Class&nbsp;A Common Stock outstanding
and entitled to vote. Thus 30,551,379 shares must be represented by stockholders present at the meeting or by proxy to have a quorum. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your
shares will be counted towards the quorum only if you submit a valid proxy vote or vote at the meeting. Abstentions and broker non-votes will be counted towards the
quorum requirement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>How can I find out the results of the voting at the Annual Meeting?  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in our quarterly report on
Form&nbsp;10-Q for the second quarter of 2008. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>When are stockholder proposals due for next year's Annual Meeting?  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you wish to submit a proposal to be considered for inclusion in next year's proxy materials or nominate a director, your proposal must be in proper form
according to SEC Regulation&nbsp;14A, Rule&nbsp;14a-8 and received by the Secretary of the Company on or before November&nbsp;6, 2008. If you wish to submit a proposal to be
presented at the 2009 Annual Meeting of Stockholders but which will not be included in the Company's proxy materials, your proposal must be submitted in writing and in conformance with our Bylaws to
Theravance,&nbsp;Inc., 901 Gateway Boulevard, South San Francisco, CA 94080 Attn: Secretary no earlier than December&nbsp;26, 2008 and no later than January&nbsp;25, 2009. You are advised to
review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. Theravance's current bylaws may be found on our website at </FONT> <FONT SIZE=2><I>www.theravance.com</I></FONT><FONT
SIZE=2>. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

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<BR></FONT><FONT SIZE=2><B>PROPOSAL 1    <BR>    <BR>    ELECTION OF DIRECTORS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors consists of nine directors. The nine directors who are nominated for election to the Board of Directors this year, their ages as of
February&nbsp;15, 2008, their positions and offices held with the Company and certain biographical information are set forth below. Each director to be elected will hold office until the next Annual
Meeting of Stockholders and until his successor is elected, or until the director's death, resignation or removal. Each of the nominees listed below is currently a director of the Company. Each of the
nominees was previously elected by the stockholders, except for Burton G. Malkiel who was appointed to be a director by the Board of Directors since the last annual meeting. It is our policy to
encourage nominees for director to attend the Annual Meeting. Four of the nominees for election as a director at the 2007 Annual Meeting attended the meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors
are elected by a plurality of the votes properly cast in person or by proxy. The nine nominees receiving the highest number of affirmative votes will be elected. Shares
represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nine nominees named below. If any nominee becomes unavailable for election as a result of
an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by our current Board of Directors, if any. Each person nominated for election has agreed to serve
if elected. We have no reason to believe that any nominee will be unable to serve. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>NOMINEES</B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="71%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="48%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="41%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Positions and Offices<BR>
Held With the Company</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>P. Roy Vagelos, M.D.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>78</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Chairman of the Board of Directors</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>Rick E Winningham</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>48</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Chief Executive Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>Jeffrey M. Drazan</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>49</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>Robert V. Gunderson, Jr.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>56</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>Arnold J. Levine, Ph.D.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>Burton G. Malkiel, Ph.D.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>75</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>William H. Waltrip</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>70</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>George M. Whitesides, Ph.D.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>William D. Young</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>63</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>P. Roy Vagelos,</I></FONT><FONT SIZE=2> M.D., co-founded Theravance in 1996 and has served as Chairman of our Board of Directors since inception.
Dr.&nbsp;Vagelos served as Chief Executive Officer of Merck&nbsp;&amp;&nbsp;Co.,&nbsp;Inc., from 1985 to 1994, and Chairman of the board of directors of Merck from 1986 until 1994.
Dr.&nbsp;Vagelos is Chairman of the board of directors of Regeneron Pharmaceuticals,&nbsp;Inc. Dr.&nbsp;Vagelos holds an M.D. from Columbia University College of Physicians and Surgeons and an
A.B. degree from the University of Pennsylvania. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Rick E Winningham</I></FONT><FONT SIZE=2> joined Theravance as Chief Executive Officer and a member of our Board of Directors in October 2001. From 1997 to 2001
he served as President, Bristol-Myers Squibb
Oncology/Immunology/ Oncology Therapeutics Network (OTN) and also as President of Global Marketing from 2000 to 2001. In addition to operating responsibility for U.S. Oncology/Immunology/OTN at
Bristol-Myers Squibb, Mr.&nbsp;Winningham also had full responsibility for Global Marketing in the Cardiovascular, Infectious Disease, Immunology, Oncology/ Metabolics and GU/GI/Neuroscience
therapeutic areas. Mr.&nbsp;Winningham held various management positions with Bristol-Myers Squibb and its predecessor, Bristol-Myers, since 1986. Mr.&nbsp;Winningham holds an M.B.A. from Texas
Christian University and a B.S. degree from Southern Illinois University. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Jeffrey M. Drazan</I></FONT><FONT SIZE=2> has served as a director of Theravance since December 1999. Mr.&nbsp;Drazan has been a General Partner with Sierra
Ventures, a private venture capital firm, since 1984. Mr.&nbsp;Drazan has also been a Managing Director of Bertram Capital, a private equity firm since September 2006. He also serves as a director
of several private companies. Mr.&nbsp;Drazan holds an M.B.A. degree from New York University's Graduate School of Business Administration and a B.S.E. degree in Engineering from Princeton
University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert V. Gunderson, Jr.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;has served as a director of Theravance since September 1999. He is a founding partner
of the law
firm of Gunderson Dettmer Stough Villeneuve Franklin&nbsp;&amp; Hachigian,&nbsp;LLP, where he has practiced since 1995. Mr.&nbsp;Gunderson currently serves as a director of a number of private
companies. Mr.&nbsp;Gunderson holds a J.D. from the University of Chicago where he was Executive Editor of The University of Chicago Law Review. Mr.&nbsp;Gunderson also received an M.B.A. in
Finance from The Wharton School, University of Pennsylvania and an M.A. from Stanford University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Arnold J. Levine,</I></FONT><FONT SIZE=2> Ph.D., served as a director of Theravance from inception until February 2002. He rejoined our Board of Directors in
June 2003. Dr.&nbsp;Levine is currently a professor at The Cancer Institute of New Jersey, Robert Wood Johnson School of Medicine, New Brunswick, NJ, and a professor at the Institute for Advanced
Study, Princeton, NJ, positions he has held since January 2003. He was President of The Rockefeller University from 1998 until his retirement in February 2002. He was the Harry C. Wiess Professor in
Life Sciences and former Chairman of the Department of Molecular Biology at Princeton University from 1984 until 1996. Dr.&nbsp;Levine is a member of the board of directors of Applera Corporation
and Infinity Pharmaceuticals,&nbsp;Inc. He is a member of the National Academy of Sciences. Dr.&nbsp;Levine was Editor-in-Chief of the Journal of Virology from 1984 to 1994
and is a member of scientific advisory boards of several cancer centers. Dr.&nbsp;Levine holds a Ph.D. in Microbiology from the University of Pennsylvania and a B.A. from Harpur College, State
University of New York at Binghamton. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Burton G. Malkiel</I></FONT><FONT SIZE=2>, Ph.D., joined the Board of Directors of Theravance in July 2007. Dr.&nbsp;Malkiel is the Chemical Bank Chairman's
Professor of Economics at Princeton University. He is widely published in finance, the valuation of stocks and bonds and the operation of financial markets in the United States. He has also served as
a member of the Council of Economic Advisors under the administration of U.S. President Gerald R. Ford and was Dean at the School of Management and the William S. Beinecke
Professor of Management at Yale University. Dr.&nbsp;Malkiel served as an officer in the United States Army Finance Corps and as an investment banker at Smith, Barney&nbsp;&amp;&nbsp;Co. before
earning his doctoral degree. Dr.&nbsp;Malkiel is an investment committee member of the American Philosophical Society and the Corvina Foundation and serves on the boards of several companies
including Vanguard Group&nbsp;Ltd and Genmab A/S. He is also the Chief Investment Officer of Alpha Shares. He received his B.A. degree in Economics from Harvard University, a M.B.A. from Harvard
Graduate School of Business Administration and a Ph.D. in Economics and Finance from Princeton University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>William H. Waltrip</I></FONT><FONT SIZE=2> has served as a director of Theravance since April 2000. Mr.&nbsp;Waltrip served from 1993 until 2003 as Chairman of
the board of directors of Technology Solutions Company, a systems integration company, and from 1993 until 1995 he was Chief Executive Officer of that company. From 1995 to 1998 he also served as
Chairman of Bausch&nbsp;&amp; Lomb&nbsp;Inc., and during 1996 and 2002 was the company's Chief Executive Officer. From 1991 to 1993 he was Chairman and Chief Executive Officer of Biggers
Brothers,&nbsp;Inc., a food service distribution company, and was a consultant to private industry from 1988 to 1991. From 1985 to 1988 he served as President and Chief Operating Officer of IU
International Corporation, a transportation, environmental and distribution company. Earlier, he had been President, Chief Executive Officer and a director of Purolator Courier Corporation. He is a
member of the board of directors of Bausch&nbsp;&amp; Lomb&nbsp;Inc., Charles River Laboratories Corporation and Thomas&nbsp;&amp; Betts Corporation. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>George M. Whitesides,</I></FONT><FONT SIZE=2> Ph.D., co-founded Theravance in 1996 and has served as a member of our Board of Directors since
inception. He has been Woodford L. and Ann A. Flowers University Professor at Harvard University since 2004. From 1986 until 2004, Dr.&nbsp;Whitesides was Mallinckrodt Professor of Chemistry at
Harvard University. From 1982 until 1991 he was a member of the Department of Chemistry at Harvard University, and Chairman of the Department of Chemistry from 1986 until 1989. He was a faculty member
of the Massachusetts Institute of Technology from 1964 until 1982. Dr.&nbsp;Whitesides was a 1998 recipient of the National Medal of Science. He is a member of the editorial boards of 14 scientific
journals. He is also a member of the board of directors of Surface Logix,&nbsp;Inc., Nano-Terra&nbsp;Inc., WMR Biomedical,&nbsp;Inc., Rohm and Haas Company, and Hughes Research
Laboratories, L.L.C. Dr.&nbsp;Whitesides holds a Ph.D. in Chemistry from the California Institute of Technology and a B.A. from Harvard University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>William D. Young</I></FONT><FONT SIZE=2> has served as a director of Theravance since April 2001. Mr.&nbsp;Young has been Chairman of the board of directors
and Chief Executive Officer of Monogram Biosciences,&nbsp;Inc. since 1999. From 1980 to 1999 Mr.&nbsp;Young was employed at Genentech,&nbsp;Inc., most recently as Chief Operating Officer. Prior
to joining Genentech, Mr.&nbsp;Young worked at Eli Lilly and Company for 14&nbsp;years and held various positions in production and process engineering, antibiotic process development and
production management. He is a member of the board of directors of Biogen Idec,&nbsp;Inc. Mr.&nbsp;Young received his M.B.A. from Indiana University and his B.S. in Chemical Engineering from
Purdue University, and an honorary Doctorate of Engineering from Purdue University. Mr.&nbsp;Young is a member of The National Academy of Engineering. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg77202_the_board_of_directors_recomme__the02782"> </A>
<A NAME="toc_dg77202_2"> </A>
<BR></FONT><FONT SIZE=2><B>THE BOARD OF DIRECTORS RECOMMENDS</B></FONT><BR><FONT SIZE=2><B>A VOTE IN FAVOR OF EACH NAMED NOMINEE.</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>INDEPENDENCE OF THE BOARD OF DIRECTORS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required under the listing standards of the Nasdaq Global Market ("Nasdaq"), a majority of the members of a Nasdaq-listed company's board of directors must
qualify as "independent," as affirmatively determined by its board of directors. Our Board of Directors consults with our outside counsel to ensure that the Board of Directors' determinations are
consistent with all relevant laws and regulations regarding the definition of "independent," including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
has reviewed the directors' responses to a questionnaire asking about their transactions, relationships and arrangements with the Company (and those of their immediate family
members) and other potential conflicts of interest. Other than as set forth in this Proxy Statement, these questionnaires did not disclose any transactions, relationships, or arrangements that
question the independence of our directors. After reviewing this information, our Board of Directors affirmatively has determined that all of our directors are independent directors within the meaning
of the applicable Nasdaq listing standards except for Rick E Winningham and P. Roy Vagelos. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required under Nasdaq listing standards, our independent directors meet in regularly scheduled executive sessions at which only independent directors are
present. William H. Waltrip presides over these executive sessions. The Board has an Audit Committee, a Compensation Committee, a Nominating/Corporate Governance Committee and a Science and Technology
Advisory </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:times;"><FONT SIZE=2>Committee.
The following table provides membership and meeting information for each of the Board committees during 2007: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="90%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Audit</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Nominating/Corporate Governance</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Science and Technology Advisory Committee</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>P. Roy Vagelos, M.D.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Rick E Winningham</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Jeffrey M. Drazan</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Robert V. Gunderson, Jr.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Arnold J. Levine, Ph.D.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Burton G. Malkiel, Ph.D.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Eve E. Slater, M.D., F.A.C.C.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>William H. Waltrip</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>George M. Whitesides, Ph.D.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>William D. Young</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>X</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Total meetings in fiscal year 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Committee
Chairperson.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Resigned
from Board of Directors in July 2007. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Below
is a description of each committee of the Board of Directors. The Board of Directors has determined that each member of the Audit, Compensation and Nominating/Corporate Governance
Committees meets the applicable rules and regulations regarding "independence" and that each such member is free of any relationship that would interfere with his or her individual exercise of
independent judgment with regard to the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>AUDIT COMMITTEE</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of the Board of Directors oversees our accounting practices, systems of internal controls and financial reporting processes. For this
purpose, the Audit Committee performs several functions. The Audit Committee determines and approves the engagement of the independent auditors; determines whether to retain or terminate the existing
independent auditors or to appoint and engage new independent auditors; reviews and approves audit and permissible non-audit services provided by the independent auditors to the Company;
confers with management and the independent auditors regarding the effectiveness of internal controls, financial reporting processes and disclosure controls; consults with management and the
independent auditors regarding Company policies governing financial risk management; reviews and discusses reports from the independent auditors on critical accounting policies used by the Company;
establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing
matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; reviews and approves related-person transactions in accordance
with the Company's Policies and Procedures with respect to Related-Person Transactions and applicable Nasdaq rules; reviews the financial statements to be included in our Annual Report on
Form&nbsp;10-K; and discusses with management and the independent auditors the results of the annual audit and the results of quarterly reviews and any significant changes in our
accounting principles. Our Audit Committee charter can be found on the corporate governance section of our corporate website at </FONT><FONT SIZE=2><I>www.theravance.com</I></FONT><FONT SIZE=2>.
During 2007, three directors comprised the Audit Committee: Messrs.&nbsp;Drazan, Levine and Waltrip. The Audit Committee met eight times during 2007. On January&nbsp;29, 2008, Dr.&nbsp;Malkiel
was appointed to the Audit Committee and Dr.&nbsp;Levine resigned from the Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors annually reviews the Nasdaq listing standards definition of independence for Audit Committee members and has determined that all members of our Audit Committee
are independent (as independence is currently defined in the Nasdaq listing standards). The Board of Directors has determined that William H. Waltrip, Chairman of the Audit Committee, is an audit
committee financial expert as defined by Item&nbsp;407(d) of Regulation&nbsp;S-K. The Board made a qualitative assessment of Mr.&nbsp;Waltrip's level of knowledge and experience
based on a number of factors, including his experience as a chief executive officer for public reporting companies and service on the audit committees of the board of directors of several public
companies. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>COMPENSATION COMMITTEE</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee of the Board of Directors reviews and approves the overall compensation strategy and policies for the Company. Specifically, the
Committee reviews and approves corporate performance goals and objectives relevant to the compensation of our executive officers and other senior management; reviews and approves the compensation and
other terms of employment of our principal executive officer and other executive officers; approves the individual bonus programs in effect for the principal executive officer, other executive
officers and key employees for each fiscal year; recommends to the Board of Directors the compensation of the directors; recommends to the Board of Directors the adoption or amendment of equity and
cash incentive plans; approves amendments to these plans; grants stock options and other equity awards; and administers our 2004 Equity Incentive Plan ("Incentive Plan"), our ESPP and similar
programs. A more detailed description of the Committee's functions can be found in our Compensation Committee Charter. The charter is published in the corporate governance section of our website at </FONT> <FONT
SIZE=2><I>www.theravance.com</I></FONT><FONT SIZE=2>. Three directors comprise the Compensation Committee of the Board of Directors: Messrs.&nbsp;Drazan, Whitesides and Young. All
members of the Committee are independent (as independence is currently defined in the Nasdaq listing standards). </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee met six times during 2007. Mr.&nbsp;Winningham, our principal executive officer, does not participate in the determination of his own compensation or the
compensation of directors. However, he makes recommendations to the Committee regarding the amount and form of the compensation of the other executive officers and key employees, and he often
participates in the Committee's deliberations about their compensation. Mr.&nbsp;Shafer, our General Counsel, also assists the Committee in its executive officer, director and employee compensation
deliberations. No other executive officers participate in the determination of the amount or form of the compensation of executive officers or directors. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee has retained Frederic W. Cook&nbsp;&amp;&nbsp;Co. ("FW Cook") as its independent compensation consultant. FW Cook serves at the pleasure of the Committee
rather than the Company and its fees are approved by the Committee. FW Cook provides the Committee with data about the compensation paid by our peer group and other employers who compete with the
Company for executives, updates the Committee on new developments in areas that fall within the Committee's jurisdiction and is available to advise the Committee regarding all of its responsibilities.
FW Cook also provides data and recommendations concerning the compensation of directors. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company also has a Stock Option Committee, of which Mr.&nbsp;Winningham is the sole member. The Stock Option Committee may grant equity awards to employees who are not executive
officers. The Compensation Committee may delegate any other authority to the Stock Option Committee or to any other committee or individual to the extent permitted by law or the applicable rules of
Nasdaq. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee, in consultation with FW Cook, reviews and approves the overall strategy for compensating members of the Board of Directors. Specifically, the Committee
reviews the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:times;"><FONT SIZE=2>compensation
of the directors and recommends to the Board any changes to the compensation of the directors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of Jeffrey M. Drazan, Dr.&nbsp;Eve E. Slater, George M. Whitesides, Ph.D. and William D. Young served on the Compensation Committee of the Board of
Directors during 2007. Dr.&nbsp;Slater resigned from the Board of Directors and its Compensation Committee in July 2007. None of the members of the Compensation Committee was at any time during the
2007 fiscal year (or at any other time) an officer or employee of the Company. No executive officer of the Company serves as a member of the board of directors or Compensation Committee of any entity
that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>NOMINATING/CORPORATE GOVERNANCE COMMITTEE</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating/Corporate Governance Committee of the Board of Directors is responsible for identifying, reviewing and evaluating candidates to serve as directors
of the Company (consistent with criteria approved by the Board), reviewing and evaluating incumbent directors, recommending to the Board for selection candidates for election to the Board, making
recommendations to the Board regarding the membership of the committees of the Board, assessing the performance of the Board and advising the Board on corporate governance principles for the Company.
Our Nominating/Corporate Governance Committee charter can be found on the corporate governance section of our corporate website at </FONT><FONT SIZE=2><I>www.theravance.com</I></FONT><FONT SIZE=2>.
Three directors comprise the Nominating/Corporate Governance Committee: Messrs.&nbsp;Gunderson, Waltrip and Young. All members of the Nominating/Corporate Governance Committee are independent (as
independence is currently defined in the Nasdaq listing standards). The Nominating/Corporate Governance Committee met one time during 2007. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating/Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including being able to read and understand basic
financial statements and having the highest personal integrity and ethics. The Committee also considers such factors as having relevant expertise upon which to be able to offer advice and guidance to
management, sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, the ability to exercise sound business judgment and the commitment to rigorously
represent the long-term interests of our stockholders. However, the Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are
reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the
Committee considers diversity, age, skills, and such other factors as it deems appropriate given the then current needs of the Board and the Company, to maintain a balance of knowledge, experience and
capability. In the case of incumbent directors whose terms of office are set to expire, the Nominating/Corporate Governance Committee reviews such directors' overall service to the Company during
their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such directors' independence. In
the case of new director candidates, the committee also determines whether the nominee must be independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards,
applicable SEC rules and regulations and the advice of counsel, if necessary. The Committee uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems
appropriate, a professional search firm. The Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function
and needs of the Board. The Committee meets to discuss and consider such candidates' qualifications and then selects a nominee for recommendation to the Board by majority vote. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>10</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating/Corporate Governance Committee will consider director candidates recommended by stockholders and evaluate them using the same criteria as candidates identified by the
Board or the Nominating/Corporate Governance Committee for consideration. If a stockholder of the Company wishes to recommend a director candidate for consideration by the Nominating/Corporate
Governance Committee, pursuant to the Stockholder-Director Communications Policy adopted by the Nominating/Corporate Governance Committee in January of 2007, the stockholder recommendation should be
delivered to the Secretary of the Company at the principal executive offices of the Company, and must include the candidate's name and qualifications for board membership, the candidate's age,
business address, residence address, principal occupation or employment, the number of Company shares beneficially owned by the candidate and information that would be required to solicit a proxy
under federal securities law. In addition, the recommendation must include the stockholder's name, address and the number of Company shares beneficially owned by the stockholder. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SCIENCE AND TECHNOLOGY ADVISORY COMMITTEE</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Science and Technology Advisory Committee of the Board of Directors reviews and discusses scientific and technological matters affecting the Company. The
Science and Technology Advisory Committee also identifies scientific and technological matters that may affect the Company in the future, and develops strategies to address these issues in our
research plans. The Science and Technology Advisory Committee reports to the Board periodically. Four directors comprise the Science and Technology Advisory Committee: Drs. Levine, Vagelos, Whitesides
and Mr.&nbsp;Winningham. A fifth director, Dr.&nbsp;Slater, also served on the committee during 2007 until she resigned from the Board in July 2007. The Science and Technology Advisory Committee
met three times during 2007. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>MEETINGS OF THE BOARD OF DIRECTORS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors met nine times during 2007. Each Board member attended 75% or more of the aggregate of the meetings of the Board and of the committees on
which he or she served, held during the period for which he or she was a director or committee member. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders interested in communicating with the Board or a particular director should send correspondence to Theravance,&nbsp;Inc. at 901 Gateway Boulevard,
South San Francisco, CA 94080, Attn:&nbsp;Secretary. Each communication should set forth (i)&nbsp;the name and address of the stockholder as it appears on the Company's books and, if the stock is
held by a nominee, the name and address of the beneficial owner of the stock, and (ii)&nbsp;the number of shares of the Company's stock that are owned of record by the record holder and beneficially
by the beneficial owner. Pursuant to our Stockholder-Director Communications Policy adopted by the Board in February 2007, the Secretary has been instructed, in his discretion, to screen out
communications from stockholders that are not related to the duties and responsibilities of the Board. If deemed an appropriate communication, the Secretary will forward it, depending on the subject
matter, to the chairperson of a committee of the Board or a particular director, as appropriate. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>CODE OF BUSINESS CONDUCT</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has adopted the Theravance,&nbsp;Inc. Code of Business Conduct that applies to all directors, officers and employees. The Code of Business Conduct,
as amended and restated on December&nbsp;11, 2007, is available on our website at </FONT><FONT SIZE=2><I>www.theravance.com</I></FONT><FONT SIZE=2>. If the Company makes any substantive
amendments to the Code of Business Conduct or grants any waiver from a provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or
waiver on its website. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><B>2007 DIRECTOR COMPENSATION</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-employee directors of the Company receive compensation for services provided as a director. Each member of our Board who is not an employee
receives a $30,000 annual retainer as well as $1,000 for each board and committee meeting attended in person ($500 for meetings attended by video or telephone conference). The chairpersons of the
Compensation Committee, the Nominating/Corporate Governance Committee and the Science and Technology Advisory Committee receive $2,000 for each committee meeting attended in person ($1,000 for
meetings attended by video or telephone conference), and the chairperson of the Audit Committee receives $3,000 for each audit committee meeting attended in person ($1,500 for meetings attended by
video or telephone conference). Dr.&nbsp;Vagelos receives a flat rate of $87,500 per year for his service as Chairman of the Board. The members of our Board are eligible for reimbursement for their
expenses incurred in attending Board meetings in accordance with Company policy. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
independent director of the Company receives periodic automatic stock option grants under a program implemented under our Incentive Plan. Only non-employee directors of
the Company or affiliates of such directors are eligible to receive automatic option grants under the Incentive Plan. Automatic options granted under the Incentive Plan are intended by the Company not
to qualify as incentive stock options under the Internal Revenue Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Automatic
option grants under the Incentive Plan are non-discretionary. Each individual who first becomes a non-employee director after January&nbsp;1, 2007 is
automatically granted an option to purchase 30,000 shares of our Common Stock on the date such individual joins the Board, provided such individual was not previously employed by the Company. This
initial option grant vests monthly over the director's first two years of service. In addition, each non-employee director who was not previously employed by the Company is automatically
granted an option to purchase 15,000 shares annually on the date of each Annual Meeting of Stockholders. These annual options vest monthly over the 12&nbsp;month period following the date of grant.
In addition, initial automatic grants vest in full if the Company is subject to a change in control. Automatic option grants have a term of up to ten years and will remain exercisable for
3&nbsp;years following termination of a director's service. The exercise price of automatic options granted under the Incentive Plan is the fair market value of the Common Stock subject to the
option on the date of the option grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors
are eligible to receive additional options and be issued shares of Common Stock directly under the Incentive Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
option to purchase 86,694 shares of our Common Stock was granted to Dr.&nbsp;Vagelos on April&nbsp;25, 2007. The Compensation Committee determined that the grant to
Dr.&nbsp;Vagelos was warranted in light of his significant contributions to Theravance. The option vests in 48 equal monthly installments so that it will become fully vested over a
four-year period measured from the date of grant. In the event of the death or disability of Dr.&nbsp;Vagelos, the option will vest and become exercisable in full. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>12</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth all of the compensation awarded to, earned by, or paid to each person who served as a director during 2007, other than a director who also served as a
named executive officer. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="43%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Fees&nbsp;Earned&nbsp;or<BR>
Paid&nbsp;in&nbsp;Cash<BR>
($)(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Awards<BR>
($)(6)(7)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All&nbsp;Other<BR>
Compensation<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="43%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(d)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(g)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(h)<BR> </B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>P. Roy Vagelos</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>88,500</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,419,622</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,508,122</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Julian C. Baker</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,083</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,083</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Jeffrey M. Drazan</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>43,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>153,954</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>196,954</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Robert V. Gunderson, Jr.&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>36,500</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>153,954</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>190,454</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Arnold J. Levine</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>42,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>153,954</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>195,954</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Ronn C. Loewenthal</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,583</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,583</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Burton G. Malkiel</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,500</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>115,858</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>134,358</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Eve E. Slater</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>26,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>162,931</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>188,931</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>William H. Waltrip</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>50,500</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>153,954</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>204,454</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>George M. Whitesides</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>41,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>153,954</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>121,638</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(8)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>316,592</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>William D. Young</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>47,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>153,954</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>200,954</FONT></TD>
</TR>
</TABLE>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
the annual retainer each director receives as well as fees for attendance at Board of Directors and committee meetings. If a director serves on our Board of Directors for
only part of a year, the annual retainer is prorated based on the number of days the director served on the Board of Directors.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Baker
did not run for re-election to the Board in 2007 and therefore his last day as a Board member was April&nbsp;25, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Loewenthal
did not run for re-election to the Board in 2007 and therefore his last day as a Board member was April&nbsp;25, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Dr.&nbsp;Malkiel
joined the Board effective July&nbsp;3, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Dr.&nbsp;Slater
resigned from the Board effective July&nbsp;31, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amounts in this column represent the dollar amount recognized for financial statement reporting purposes with respect to options held by each director during the fiscal year in
accordance with FAS123R, excluding forfeiture estimates. This amount consisted of: (a)&nbsp;$153,954 per director (with the exception of Dr.&nbsp;Slater) with respect to the option granted to each
independent director on the date of our Annual Meeting of Stockholders in 2007 (the aggregate grant date fair value of each such option was $243,707); (b)&nbsp;$166,402 with respect to the option
granted to Dr.&nbsp;Slater on the date of our Annual Meeting of Stockholders in 2007 (the aggregate grant date fair value of which was $243,707); (c)&nbsp;($3,471) with respect to the option
granted to Dr.&nbsp;Slater on December&nbsp;8, 2005 (the aggregate grant date fair value of such option was $188,668); (d)&nbsp;$115,858 with respect to the option granted to Burton Malkiel on
July&nbsp;3, 2007 (the aggregate grant date fair value of such option was $498,258); (e)&nbsp;$961 with respect to the option granted to Dr.&nbsp;Vagelos on January&nbsp;24, 2003 (the
aggregate grant date fair value of such option was $234,062), $860,968 with respect to the option granted to Dr.&nbsp;Vagelos on March&nbsp;29, 2004 (the aggregate grant date fair value of such
option was $3,986,100), $321,077 with respect to the option granted to Dr.&nbsp;Vagelos on April&nbsp;26, 2006 (the aggregate grant date fair value of such option was $1,318,182) and $236,616 with
respect to the option granted to Dr.&nbsp;Vagelos on April&nbsp;25, 2007 (the aggregate grant date fair value of such option was $1,498,228). The actual 2007 FAS123R expense for Dr.&nbsp;Slater
was $9,923. Due to Dr.&nbsp;Slater's resignation, options to purchase a total of 24,153 unvested shares were cancelled. We recorded a $208,092 forfeiture </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>adjustment
in 2007 in connection with the cancellation of these options, $55,085 of which is reflected in the table above. See Note&nbsp;9 of the notes to our consolidated financial statements in
our Annual Report on Form&nbsp;10-K filed on February&nbsp;26, 2008 for a discussion of all assumptions made by the Company in determining the grant date fair value of its equity
awards. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>As
of December&nbsp;31, 2007, the above-listed directors held outstanding options to purchase the following number of shares of our Common Stock: Dr.&nbsp;Vagelos (944,355);
Messrs.&nbsp;Waltrip and Young (98,870 each); Messrs.&nbsp;Drazan and Gunderson and Drs. Levine and Whitesides (66,612 each); Dr.&nbsp;Malkiel (30,000); Mr.&nbsp;Baker (34,086);
Mr.&nbsp;Loewenthal (31,806); and Dr.&nbsp;Slater (29,556).
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
$26,950 of loan principal that was forgiven by the Company pursuant to the terms of two promissory notes dated December&nbsp;14, 1998 plus $481 imputed interest. Also
includes $94,207, which is the dollar amount recognized with respect to the 2007 fiscal year in accordance with FAS&nbsp;123R for financial statement reporting purposes associated with the 35,483
shares of Common Stock purchased by Dr.&nbsp;Whitesides in 1998 which were subject to the Company's right of repurchase through May&nbsp;20, 2007. We also recorded a $625,401 forfeiture adjustment
in 2007 in connection with the repurchase of 51,612 unvested shares of Common Stock from Dr.&nbsp;Whitesides which is not reflected in the dollar amount reflected in the table. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>14</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>PROPOSAL 2    <BR>    <BR>    </B></FONT><FONT SIZE=2><B>APPROVAL OF AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is asking stockholders to approve an amendment to the Theravance,&nbsp;Inc. Employee Stock Purchase Plan (the "ESPP") to increase the number of
authorized shares of our Common Stock issuable thereunder from 625,000 shares to 925,000 shares. Theravance established the ESPP in connection with its initial public offering to provide employees of
Theravance and designated parent or subsidiary corporations (collectively, the "participating companies") an opportunity to participate in the ownership of Theravance by purchasing its Common Stock
through payroll deductions. The ESPP, and the right of participants to make purchases thereunder, is intended to meet the requirements of an employee stock purchase plan as defined in
Section&nbsp;423 of the Internal Revenue Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
approved by our stockholders, the amendment to the ESPP will become effective for the purchase period beginning May&nbsp;16, 2008. If the stockholders do not approve the amendment
to the ESPP, the amendment will be rescinded and the ESPP will continue in effect in accordance with its existing terms. The ESPP is intended to benefit Theravance as well as its stockholders and
employees. The ESPP gives employees an opportunity to purchase shares of Common Stock at a favorable price. Theravance believes that the stockholders will correspondingly benefit from the increased
interest on the part of participating employees in the performance of Theravance. Theravance will also benefit from the periodic investments of equity capital provided by participants in the ESPP. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
principal terms and provisions of the ESPP are summarized below. The summary, however, is not intended to be a complete description of all the terms of the ESPP. This summary is
qualified in its entirety by reference to the complete text of the ESPP, which is attached hereto as </FONT><FONT SIZE=2><I>Appendix&nbsp;A</I></FONT><FONT SIZE=2>. To the extent there is a
conflict between this summary and the ESPP, the terms of the ESPP will govern. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee of the Board of Directors, which is comprised of two or more members
of our Board
of Directors, administers the ESPP. All costs and expenses incurred in administration of the ESPP are paid by Theravance without charge to participants. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Generally, any individual who is customarily employed by a participating company more than
20&nbsp;hours per
week and for more than five months per calendar year is eligible to participate in the ESPP. Although officers are currently excluded from participation in the ESPP, the Board of Directors may elect
to permit participation by officers in the future. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of February&nbsp;15, 2008, approximately 291 employees and no officers were eligible to participate in the ESPP. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities Subject to ESPP.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The securities available for purchase under the ESPP are shares of our Common Stock.
625,000
shares of our Common Stock have been authorized for issuance under the ESPP, without giving effect to the 300,000-share increase that is the subject of this Proposal No.&nbsp;2. As of
December&nbsp;31, 2007, 180,929 shares remained available for purchase under the ESPP, without giving effect to the 300,000-share increase that is the subject of this Proposal
No.&nbsp;2. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Offering Periods.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The ESPP is implemented by offering periods that generally have a duration of 24&nbsp;months;
each
offering period is comprised of a series of one or more successive purchase periods, which generally have a duration of six months. Offering periods are concurrent and successive and, accordingly, a
new offering period commences every six months and runs concurrently with each prior offering period. The Compensation Committee in its discretion may vary the beginning date and ending date of the
offering periods and may vary the duration of an offering period or purchase period, provided no offering period shall exceed 27&nbsp;months in length. Currently, a new offering period commences on
May&nbsp;16 and November&nbsp;16 of each calendar year or on such other date selected by the Board of Directors or the Compensation Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>15</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
participant will have a separate purchase right for each offering period in which he or she participates. The purchase right will be granted on the first day of the offering period
and will be automatically exercised in successive installments on the last day of each purchase period within the offering period. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Price.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purchase price per share under the ESPP is 85% of the lower of (i)&nbsp;the fair market
value of a
share of Common Stock on the last day before commencement of the applicable offering period, or (ii)&nbsp;the fair market value of a share of Common Stock on the last day of the purchase period.
Generally, the fair market value of the Common Stock on a given date is the closing sale price of the Common Stock, as reported on the Nasdaq Global Market. To the extent required by applicable law,
participants must make arrangements for the satisfaction of any withholding tax obligations that arise in connection with the ESPP. Theravance is not required to issue any shares of Common Stock under
the ESPP until such tax obligations are satisfied. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limitations.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The plan imposes certain limitations upon a participant's rights to acquire Common Stock, including
the
following: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
participant may not purchase more than 2,500 shares on any one purchase date. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
participant may not purchase Common Stock under the ESPP that exceeds $25,000 (determined as of the time a purchase right is granted) in any calendar year. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
employee is not eligible to participate in the ESPP if he or she owns stock or outstanding options or rights to purchase stock (including a right granted under the ESPP) possessing
five percent or more of the total combined voting power or value of all classes of stock of Theravance or any of its parent or subsidiary corporations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
no event may a participant's payroll deductions for a semi-annual purchase period be less than 1% nor more than 15% of the participant's cash compensation paid during a
purchase period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase
rights under the ESPP are not transferable other than by beneficiary designation or by the laws of descent and distribution. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Purchase Price; Payroll Deductions.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Shares are purchased under the ESPP through after-tax payroll
deductions. All cash proceeds received by Theravance from payroll deductions under the ESPP are credited to a non-interest bearing book account. A participant's payroll deductions may not
exceed 15% of the participant's cash compensation paid during a purchase period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
the last day of each purchase period, each participant will be deemed to have elected to purchase up to a number of shares of our Common Stock determined by dividing such
participant's payroll deductions accumulated prior to the purchase date by the applicable purchase price (subject to the limitations described above). Unless the Compensation Committee determines
otherwise, no fractional shares will be purchased. Any payroll deductions accumulated in a participant's account that are not sufficient to purchase a full share will be retained in the participant's
account for use in the subsequent purchase period. No interest shall accrue on the payroll deductions of a participant in the ESPP except to the extent required by applicable law. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proration of Purchase Rights.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If the total number of shares of Common Stock for which purchase rights are to be
granted on
any date exceeds the number of shares then remaining available under the ESPP, a pro rata allocation of the shares remaining shall be made as provided in the ESPP. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination and Change to Payroll Deductions.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Participants may increase or decrease the level of their payroll
deductions
during a purchase period as permitted by the Compensation Committee. Once enrolled in the ESPP, a participant shall continue to participate in the ESPP until the earlier of (i)&nbsp;the termination
of the participant's employment or status as an eligible employee or (ii)&nbsp;the participant discontinues further payroll contributions. Contributions may also be suspended if a </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>16</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>participant
reaches the $25,000 limit described above. Upon termination of participation in the ESPP, any payroll deductions that the participant may have made with respect to a terminated purchase
right will be refunded. If a participant's contributions are suspended as a result of the $25,000 limit described above, then payroll deductions will automatically resume at the beginning of the
earliest purchase period in the next calendar year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If any change in our Common Stock occurs (through re-capitalization, stock dividend, stock split,
combination of shares, exchange of shares, or other change affecting the outstanding Common Stock as a class without Theravance' receipt of consideration), appropriate adjustments shall be made to the
class and maximum number of shares subject to the ESPP, to the class and maximum number of shares purchasable by each participant on any one purchase date, and the class and number of shares and
purchase price per share subject to outstanding purchase rights in order to prevent the dilution or enlargement of benefits thereunder. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Termination.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors may amend, suspend or terminate the ESPP at any time. Unless
sooner
terminated by the Board of Directors, the ESPP shall continue in effect until the earlier of (i)&nbsp;May&nbsp;27, 2024, (ii)&nbsp;the date on which all shares available for issuance under the
ESPP shall have been issued or (iii)&nbsp;the occurrence of a corporate transaction (as described below), unless the ESPP is assumed or continued by the surviving corporation. Stockholder approval
of any amendments to the ESPP will be obtained to the extent required by applicable law. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate Transaction.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of (i)&nbsp;a merger or consolidation of Theravance with or into another
entity or any
other corporate reorganization or (ii)&nbsp;the sale, transfer or other disposition of all or substantially all of the assets of Theravance or the complete liquidation or dissolution of Theravance,
the offering periods and purchase periods then in progress will terminate unless the ESPP is continued or assumed by the surviving corporation. In the event of the termination of the ESPP, each
outstanding purchase right will automatically be exercised immediately before consummation of the corporate transaction as if such date were the last purchase date of the offering period. The purchase
price per share shall be equal to eighty-five percent of the lower of the fair market value per share of our Common Stock on the start date of the offering period or the fair market value
per share of our Common Stock immediately prior to the effective date of such corporate transaction. Any payroll deductions not applied to such purchase shall be promptly refunded to the participant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
grant of purchase rights under the ESPP will in no way affect the right of Theravance to adjust, reclassify, reorganize, or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of Federal Income Tax Consequences.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The following is only a summary of the principal United States
Federal income
tax consequences to the participant and Theravance with respect to the ESPP, based on advice received from counsel to Theravance regarding current United States Federal income tax laws. This summary
is not intended to be exhaustive and among other things, does not discuss the tax consequences of a participant's death or the income tax laws of any city, state or foreign country in which the
participant may reside. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
ESPP is intended to qualify as an employee stock purchase plan under Section&nbsp;423 of the Code. Under a plan that so qualifies, no taxable income will be reportable by a
participant, and no deductions will be allowable to Theravance, by reason of the grant or exercise of the purchase rights issued thereunder. A participant will, however, recognize taxable income in
the year in which the purchased shares are sold or otherwise made the subject of disposition. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
sale or other disposition of the purchased shares, a participant will recognize ordinary income. If the shares were held at least two years from the start of the offering period in
which the shares were acquired and one year from the date the shares were purchased, then the amount of ordinary income recognized will be equal to the lesser of the difference between the fair market
value </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>17</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>of
the shares on the date of disposition and the purchase price paid for the shares or 15% of the fair market value of the shares on the last trading day before the offering period in which the shares
were purchased began. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a sale or other disposition of the purchased shares is made before the later of two years after the start of the offering period in which such shares were acquired or one year after
the shares are purchased, then a participant will recognize ordinary income equal to the excess of the fair market value of the shares on the purchase date over the purchase price paid for the shares.
Theravance will be entitled to an income tax deduction equal to the amount of income recognized. In no other instance will Theravance be allowed a deduction with respect to the participant's
disposition of the purchased shares. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
additional gain or loss recognized upon the disposition of the shares will be a capital gain, which will be long-term if the shares have been held for more than one year
following the date of purchase under the ESPP. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>New ESPP Benefits  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since purchase rights are subject to discretion, including an employee's decision not to participate in the ESPP, awards under the ESPP for the current fiscal
year are not determinable. The Company's officers, including its executive officers, and directors are not currently permitted to participate in the ESPP. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>THE BOARD OF DIRECTORS RECOMMENDS<BR>
A VOTE IN FAVOR OF PROPOSAL 2.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk77202_proposal_3_ratification_of_sel__pro03397"> </A>
<A NAME="toc_dk77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL&nbsp;3    <BR>    <BR>    RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of the Board of Directors has selected Ernst&nbsp;&amp; Young&nbsp;LLP, independent registered public accounting firm, as our independent
auditors for the fiscal year ending December&nbsp;31, 2008 and has further directed that management submit the selection of independent auditors for ratification by the stockholders at the Annual
Meeting. Ernst&nbsp;&amp; Young&nbsp;LLP has audited our financial statements since 1996. Representatives of Ernst&nbsp;&amp; Young&nbsp;LLP are expected to be present at the Annual Meeting. They will
have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
our Bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst&nbsp;&amp; Young&nbsp;LLP as our independent registered public
accounting firm. However, the Board is submitting the selection of Ernst&nbsp;&amp; Young&nbsp;LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail
to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may
direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the
selection of Ernst&nbsp;&amp; Young&nbsp;LLP. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this matter has been approved. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S FEES</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table represents aggregate fees billed to the Company for fiscal years ended December&nbsp;31, 2007 and December&nbsp;31, 2006 by
Ernst&nbsp;&amp; Young&nbsp;LLP, our principal accountant. </FONT></P>

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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Fiscal&nbsp;Year<BR>
Ended<BR>
December&nbsp;31,</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>2007</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>2006</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(in&nbsp;thousands)</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Audit Fees(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>758</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>669</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Audit-related Fees(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>44</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>Tax Fees</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>All Other Fees</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="72%" style="font-family:times;"><FONT SIZE=2>Total Fees</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>791</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>713</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>For
professional services rendered for the integrated audits of annual financial statements, including the audit of annual financial statements for the years ended December&nbsp;31,
2007 and 2006 and the audit of internal control over financial reporting as of December&nbsp;31, 2007 and 2006. For years ended 2007 and 2006, the audit fees also include the review of quarterly
financial statements included in our quarterly reports on Form&nbsp;10-Q and fees for services associated with our Registration Statement filings on Form&nbsp;S-3 and
Form&nbsp;S-8.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>For
the years ended 2007 and 2006, audit related services including accounting consultations. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
fees described above were approved by the Audit Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>19</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>PRE-APPROVAL POLICIES AND PROCEDURES</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee's policy is to pre-approve all audit and permissible non-audit services rendered by Ernst&nbsp;&amp; Young&nbsp;LLP,
our independent registered public accounting firm. The Audit Committee can pre-approve specified services in defined categories of audit services, audit-related services and tax services
up to specified amounts, as part of the Audit Committee's approval of the scope of the engagement of Ernst&nbsp;&amp; Young&nbsp;LLP or on an individual case-by-case basis
before Ernst&nbsp;&amp; Young&nbsp;LLP is engaged to provide a service. The Audit Committee has determined that the rendering of the services other than audit services by Ernst&nbsp;&amp;
Young&nbsp;LLP is compatible with maintaining the principal accountant's independence. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>THE BOARD OF DIRECTORS RECOMMENDS<BR>
A VOTE IN FAVOR OF PROPOSAL&nbsp;3.</B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>REPORT OF THE AUDIT COMMITTEE(1)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of the Board of Directors consists of the three non-employee directors named below. The Board annually reviews the Nasdaq listing
standards' definition of independence for audit committee members and has determined that each member of the Audit Committee meets that standard. The Board of Directors has also determined that
William H. Waltrip is an audit committee financial expert as described in applicable rules and regulations of the Securities and Exchange Commission. </FONT></P>

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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
material in this report is not "soliciting material," is not deemed "filed" with the SEC and is not to be incorporated by reference in any filing of Theravance under the
Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
principal purpose of the Audit Committee is to assist the Board of Directors in its general oversight of our accounting and financial reporting processes and audits of our financial
statements. The Audit Committee is responsible for selecting and engaging our independent auditor and approving the audit and non-audit services to be provided by the independent auditor.
The Audit Committee's function is more fully described in its Charter, which the Board has adopted and which the Audit Committee reviews on an annual basis. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
management is responsible for preparing our financial statements and our financial reporting process. Ernst&nbsp;&amp; Young&nbsp;LLP, our independent registered public accounting
firm, is responsible for performing an independent audit of our consolidated financial statements and expressing an opinion on the conformity of those financial statements with U.S. generally accepted
accounting principles as well as performing an audit of our internal control over financial reporting as of the end of the fiscal year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has reviewed and discussed with our management the audited financial statements of the Company included in our Annual Report on Form&nbsp;10-K for the
fiscal year ended December&nbsp;31, 2007 ("10-K"). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has also reviewed and discussed with Ernst&nbsp;&amp; Young&nbsp;LLP the audited financial statements in the 10-K. In addition, the Audit Committee
discussed with Ernst&nbsp;&amp; Young&nbsp;LLP those matters required to be discussed by Statement on Auditing Standards No.&nbsp;61, as amended. Additionally, Ernst&nbsp;&amp; Young&nbsp;LLP
provided to the Audit Committee the written disclosures and the letter required by Independence Standards Board Standard No.&nbsp;1, as adopted by the Public Company Accounting Oversight Board. The
Audit Committee also discussed with Ernst&nbsp;&amp; Young&nbsp;LLP its independence from the Company. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>20</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's
10-K for filing with the United States Securities and Exchange Commission. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Submitted
by the following members of the Audit Committee: </FONT></P>

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<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>Jeffrey M. Drazan<BR>
Burton G. Malkiel, Ph.D.<BR>
William H. Waltrip, Chairman</FONT></TD>
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<P style="font-family:times;"><FONT SIZE=2><B>EXECUTIVE OFFICERS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The names of the executive officers of Theravance who are not also directors of Theravance and certain information about each of them as of February&nbsp;15,
2008 are set forth below: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Michael W. Aguiar,</I></FONT><FONT SIZE=2> age 41, joined Theravance as Senior Vice President and Chief Financial Officer in March 2005. Prior to joining
Theravance, Mr.&nbsp;Aguiar served as Vice President of Finance at Gilead Sciences,&nbsp;Inc., a biopharmaceutical company, since 2002. Prior to Gilead Sciences,&nbsp;Inc., Mr.&nbsp;Aguiar
served as Vice President of Finance at Immunex Corporation, a biopharmaceutical company, from 2001 to 2002. From 1995 to 2001, he was with Honeywell International in a variety of positions, including,
most recently CFO and Vice President Finance for Honeywell Electronic Materials Strategic Business Unit. Mr.&nbsp;Aguiar earned a B.S. in Biology from UC Irvine and an M.B.A. in Finance from the
University of Michigan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Leonard M. Blum</I></FONT><FONT SIZE=2>, age 47, joined Theravance as Senior Vice President and Chief Commercial Officer in July 2007. Prior to joining
Theravance, Mr.&nbsp;Blum served as Senior Vice President of Sales and Marketing at ICOS Corporation. From 1987-2000, Mr.&nbsp;Blum held positions of increasing responsibility in
marketing and sales management at Merck&nbsp;&amp;&nbsp;Co. in both U.S. and international markets. Mr.&nbsp;Blum earned an M.B.A. from Stanford University, studied Finance as a Fulbright Fellow at
the University of Zurich, and received an A.B. in Economics, magna cum laude, from Princeton University. Mr.&nbsp;Blum served as an officer in the U.S. Army Special Forces. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Arthur L. Campbell,</I></FONT><FONT SIZE=2> Ph.D., age 57, joined Theravance as Senior Vice President, Technical Operations in June 2003. During 2003, he was
Vice President, BioPharma at Pfizer&nbsp;Inc. Prior to joining Pfizer, he was Vice President, BioPharma at Pharmacia Corporation from 2000 until 2003, with global responsibility for Protein API and
Drug Product Development and API manufacturing. From 1980 to 2000 Dr.&nbsp;Campbell was employed with Monsanto/Searle, most recently as Vice President, Product Development, R&amp;D. Dr.&nbsp;Campbell
holds a Ph.D. in Medicinal Chemistry from the University of Kansas and a B.S. in Chemistry from St.&nbsp;Benedict's College, where he graduated cum laude. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Michael M. Kitt,</I></FONT><FONT SIZE=2> M.D., age 57, joined Theravance as Senior Vice President, Development in April 2002. From 1993 to 2002, Dr.&nbsp;Kitt
was employed by COR Therapeutics,&nbsp;Inc. (now Millennium Pharmaceuticals,&nbsp;Inc.), most recently as Vice President, Clinical Research. Dr.&nbsp;Kitt holds an M.D. from the New York
University School of Medicine and a B.S. in Chemistry from Polytechnic University, New York. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Mathai Mammen,</I></FONT><FONT SIZE=2> M.D., Ph.D., age 40, co-founded Theravance in 1996. He was promoted to Senior Vice President, Research, in
January 2008. He has served in various positions in both the Medicinal Chemistry Department and the Molecular and Cellular Biology Department, most recently as Vice President, Molecular and Cellular
Biology, responsible for all molecular pharmacology, molecular biology, cell biology, microbiology and enzymology activities in support of projects in both Research and Development. Dr.&nbsp;Mammen
obtained his M.D. from Harvard Medical School/Massachusetts Institute of Technology, and his Ph.D. in Physical Organic Chemistry from Harvard University. Dr.&nbsp;Mammen obtained his B.S. in
Chemistry from Dalhousie University in Halifax, Nova Scotia. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Bradford J. Shafer,</I></FONT><FONT SIZE=2> age 47, joined Theravance as Senior Vice President, General Counsel and Secretary in August 1999. From 1996 to 1999
he served as General Counsel of Heartport,&nbsp;Inc., a cardiovascular medical device company. From 1993 to 1996 Mr.&nbsp;Shafer was a partner in the Business and Technology Group at the law firm
of Brobeck, Phleger&nbsp;&amp; Harrison&nbsp;LLP. Mr.&nbsp;Shafer holds a J.D. from the University of California, Hastings College of the Law, where he was Editor-in-Chief of
The Hastings Constitutional Law Quarterly, and a B.A. from the University of the Pacific, where he graduated magna cum laude. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information known to us regarding beneficial ownership of our voting securities as of February&nbsp;15, 2008 by:
</FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>each
person known by us to be the beneficial owner of more than 5% of any class of our voting securities;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>our
named executive officers;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>each
of our directors; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>all
executive officers and directors as a group. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission (the "SEC") and generally includes voting or investment power with respect to
securities. Except as noted by footnote, and subject to community property laws where applicable, the persons named in the table below have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them. The table below is based upon information supplied by officers, directors and principal stockholders and Schedules&nbsp;13G filed with the SEC. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
table lists applicable percentage ownership based on 61,098,106 shares of Common Stock (including 9,401,499 shares of Class&nbsp;A Common Stock beneficially owned by affiliates
of GlaxoSmithKline&nbsp;plc) outstanding as of February&nbsp;15, 2008. Options to purchase shares of our Common Stock that are exercisable within 60&nbsp;days of February&nbsp;15, 2008 and
notes that are convertible into our Common Stock are deemed to be beneficially owned by the persons holding these options and convertible notes for the purpose of computing percentage ownership of
that person, but are not treated as outstanding for the purpose of computing any other person's ownership percentage. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>22</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="57%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Beneficial&nbsp;Ownership</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="57%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name and Address of Beneficial Owner(1)<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number&nbsp;of&nbsp;Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="22%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Percent&nbsp;of&nbsp;Total<BR>
Outstanding&nbsp;Common<BR>
Stock&nbsp;and&nbsp;Class&nbsp;A<BR>
Common&nbsp;Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><B>5% Stockholders</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
GlaxoSmithKline&nbsp;plc(2)<BR>
980 Great West Road<BR>
Brentford<BR>
Middlesex<BR>
TW8&nbsp;9GS<BR>
United Kingdom</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
9,401,499</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
15.4</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
FMR&nbsp;LLC.<BR>
82 Devonshire Street<BR>
Boston, MA 02109</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
7,402,763</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
12.1</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%(3)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
OppenheimerFunds,&nbsp;Inc.<BR>
Two World Financial Center<BR>
225 Liberty Street<BR>
New York, NY 10281</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
5,446,277</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
8.9</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%(4)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
T. Rowe Price Associates,&nbsp;Inc.<BR>
100 East Pratt Street<BR>
Baltimore, MD 21202</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
4,589,300</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
7.5</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%(5)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Sierra Ventures VI, L.P.(6)<BR>
2884 Sand Hill Road, Suite&nbsp;100<BR>
Menlo Park, CA 94025</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
2,812,178</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
4.6</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%(7)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Chesapeake Partners Management&nbsp;Co.,&nbsp;Inc.<BR>
1829 Reisterstown Road, Suite&nbsp;220<BR>
Baltimore, MD 21208</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
4,208,842</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
6.9</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%(8)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2><B>Named Executive Officers and Directors</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Rick E Winningham(9)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
1,299,252</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
2.1</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Michael W. Aguiar(10)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
222,136</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Arthur L. Campbell, Ph.D.(11)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
216,907</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Patrick P.A. Humphrey, Ph.D., D.Sc.(12)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
627,387</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
1.0</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Michael Kitt, M.D.(13)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
354,346</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
P. Roy Vagelos, M.D.(14)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
2,074,143</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
3.4</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Jeffrey M. Drazan(15)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
2,967,148</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
4.8</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Robert V. Gunderson, Jr.(16)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
118,467</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Arnold J. Levine, Ph.D.(17)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
129,329</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
Burton G. Malkiel, Ph.D.(18)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
11,250</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
William H. Waltrip(19)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
97,620</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
George M. Whitesides, Ph.D.(20)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
773,099</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
1.3</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
William D. Young(21)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
97,620</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
*</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
All executive officers and directors as a group (17 persons)(22)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
9,582,022</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
14.7</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Less
than one percent.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Unless
otherwise indicated, the address for each beneficial owner is c/o Theravance,&nbsp;Inc., 901 Gateway Boulevard, South San Francisco, California 94080. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>23</FONT></P>

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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Based
on a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on February&nbsp;12, 2008. Includes 2,580,645 shares of Class&nbsp;A Common Stock held of record
by Glaxo Group Limited. Also includes 6,820,854 shares of Class&nbsp;A Common Stock held of record by SmithKline Beecham Corporation. Glaxo Group Limited and SmithKline Beecham Corporation each are
wholly-owned subsidiaries of GlaxoSmithKline&nbsp;plc. The percentage of shares beneficially owned by GlaxoSmithKline&nbsp;plc is based on its beneficial ownership of 9,401,499 shares of
Class&nbsp;A Common Stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
various individuals, funds and entities that are deemed to be the beneficial owners of these shares, and the individuals, funds and entities having sole and shared voting power
over these shares, are set forth in the Schedule&nbsp;13G/A filed on February&nbsp;14, 2008 and on which the information reported herein is based. Constitutes 14.3% of our outstanding Common Stock
as a class.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Based
on a Schedule&nbsp;13G filed with the Securities and Exchange Commission on February&nbsp;8, 2008. Constitutes 10.5% of our outstanding Common Stock as a class.
OppenheimerFunds,&nbsp;Inc. ("Oppenheimer") has shared voting and dispositive power over all 5,446,277 shares. For purposes of the Securities Exchange Act of 1934, Oppenheimer is deemed to be a
beneficial owner of such securities; however, Oppenheimer expressly disclaims that it is, in fact, the beneficial owner of such securities.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Based
on a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on February&nbsp;12, 2008. Constitutes 8.9% of our outstanding Common Stock as a class. These
securities are owned by various individual and institutional investors for which T. Rowe Price Associates,&nbsp;Inc. ("Price Associates") serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For purposes of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
2,688,754 shares held of record by Sierra Ventures VI,&nbsp;L.P. SV Associates VI,&nbsp;L.P. is the general partner of Sierra Ventures VI,&nbsp;L.P. Management of the
business affairs of SV Associates VI,&nbsp;L.P., including the decisions respecting disposition and voting of investments held by Sierra Ventures VI,&nbsp;L.P., is by majority decision of the
general partners of SV Associates VI,&nbsp;L.P., Jeffrey M. Drazan, David C. Schwab and Peter C. Wendell. Also includes 123,424 shares issuable upon conversion of convertible notes in the aggregate
principal amount of $3,193,000.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Constitutes
5.4% of our outstanding Common Stock as a class.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Based
on a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on February&nbsp;14, 2008. Constitutes 8.1% of our outstanding Common Stock as a class. Each of
Chesapeake Partners Management&nbsp;Co.,&nbsp;Inc., Mark D. Lerner and Traci Lerner may be deemed to have voting and investment power over the shares held by Chesapeake Partners
Management&nbsp;Co.,&nbsp;Inc.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
1,299,252 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
181,073 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
216,907 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15, 2008, 16,354 of which are held for the benefit of Dr.&nbsp;Campbell's
ex-wife pursuant to a domestic relations order issued in 2005.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
54,310 shares held by Dr.&nbsp;Humphrey and his spouse as joint tenants with rights of survivorship, 11,000 shares held by Dr.&nbsp;Humphrey's spouse and 562,077 shares
subject to options exercisable within 60&nbsp;days of February&nbsp;15, 2008. Dr.&nbsp;Humphrey retired as an executive officer of the Company on January&nbsp;4, 2008, but is included here as
he was one of the Company's named executive officers for fiscal 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
2,000 shares held by Dr.&nbsp;Kitt's spouse as UTMA custodian for children and 326,984 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15,
2008. Dr.&nbsp;Kitt disclaims beneficial ownership of the shares held by his spouse as UTMA custodian for his children.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(14)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
96,774 shares held of record by the Marianthi Foundation, of which Dr.&nbsp;Vagelos is a founder and current director. Dr.&nbsp;Vagelos disclaims any pecuniary interest
in the shares held by the Marianthi Foundation. Also includes 441,507 shares held of record by the P. Roy Vagelos 2007 Theravance Annuity Trust, 573,571 shares held of record by the Vagelos 2006
Grantor Retained Annuity Trust, 38,709 shares held of record by the Cara Diana Roberts Trust, 38,709 shares held of record by the Olivia Sophia Vagelos Trust, 38,709 shares held of record by the Lydia
Joan Roberts Trust, 38,709 shares held of record by the Alexa E. Masseur Irrevocable Trust, 38,709 shares held of record by the 2004 Vagelos Grandchild Irrevocable Trust and 38,709 shares held of
record by the Emma B. Vagelos Irrevocable Trust, each of which Dr.&nbsp;Vagelos is the trustee. Includes 707,538 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15,
2008. </FONT></DD></DL>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(15)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
2,688,754 shares held of record by Sierra Ventures&nbsp;VI,&nbsp;L.P. and 59,040 shares held of record by SV Associates&nbsp;VI,&nbsp;L.P. as nominee for
Mr.&nbsp;Drazan. SV Associates&nbsp;VI,&nbsp;L.P. is the general partner of Sierra Ventures&nbsp;VI,&nbsp;L.P. Mr.&nbsp;Drazan is one of the general partners, in addition to
David&nbsp;C. Schwab and Peter&nbsp;C. Wendell, of SV Associates&nbsp;VI,&nbsp;L.P. and exercises shared voting and investment power over the shares held by Sierra
Ventures&nbsp;VI,&nbsp;L.P. Mr.&nbsp;Drazan disclaims beneficial ownership of the shares held by Sierra Ventures&nbsp;VI,&nbsp;L.P. Also includes 65,362 shares subject to options exercisable
within 60&nbsp;days of February&nbsp;15, 2008, 123,424 shares issuable upon conversion of convertible notes in the principal amount of $3,193,000 held by Sierra Ventures&nbsp;VI,&nbsp;L.P. and
2,702 shares issuable upon conversion of convertible notes in the principal amount of $69,906 held by SV Associates&nbsp;VI,&nbsp;L.P. as nominee for Mr.&nbsp;Drazan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(16)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
6,451 shares held by Marshall&nbsp;&amp; Ilsley for the benefit of Mr.&nbsp;Gunderson and 5,709 shares held by Gunderson Dettmer Stough Villeneuve Franklin&nbsp;&amp;
Hachigian,&nbsp;LLP ("GD"). Mr.&nbsp;Gunderson disclaims beneficial ownership of the shares held by GD except to the extent of his pecuniary interest therein. Includes 65,362 shares subject to
options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(17)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
65,362 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(18)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
11,250 shares subject to stock options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(19)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
97,620 shares subject to stock options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(20)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
170,318 shares held of record by the Deborah L. Anderson, Trustee, Whitesides Family 1998 Irrevocable Trust. Includes 65,362 shares subject to stock options exercisable
within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(21)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
97,620 shares subject to stock options exercisable within 60&nbsp;days of February&nbsp;15, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(22)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
an aggregate of 4,009,749 shares subject to options exercisable within 60&nbsp;days of February&nbsp;15, 2008 and 126,126 shares issuable upon conversion of convertible
notes in the aggregate principal amount of $3,262,906. Includes shares and options held by Dr.&nbsp;Humphrey, who resigned as an executive officer of the Company on January&nbsp;4, 2008, but who
is a named executive officer for fiscal 2007. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Exchange Act requires our directors, executive officers, and holders of more than 10% of our Common Stock to file reports regarding
their ownership and changes in ownership of our securities with the SEC, and to furnish us with copies of all Section&nbsp;16(a) reports that they file. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that during the fiscal year ended December&nbsp;31, 2007, our directors, executive officers, and greater than 10% stockholders complied with all applicable
Section&nbsp;16(a) filing requirements, except that one Form&nbsp;5 was filed in May of 2007 to reflect a gift of shares of Common Stock by Dr.&nbsp;Whitesides in 2005 and one Form&nbsp;5 was
filed in February 2008 to report the acquisition of one share of Common Stock by GSK in September 2007. In making these statements, we have relied upon a review of the copies of Section&nbsp;16(a)
reports furnished to us and the written representations of our directors, executive officers, and greater than 10% stockholders. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>25</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>COMPENSATION OF EXECUTIVE OFFICERS</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm77202_compensation_discussion_and_analysis"> </A>
<A NAME="toc_dm77202_1"> </A></FONT> <FONT SIZE=2><B>COMPENSATION DISCUSSION AND ANALYSIS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section discusses our executive compensation polices and decisions and the most important factors relevant to an analysis of these policies and decisions.
It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our executive officers and offers perspective on the data presented in the tables
and narrative that follow. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>Compensation Philosophy and Objectives  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a biopharmaceutical company, we operate in an extremely competitive, rapidly changing and heavily regulated industry. We believe that the skill, talent,
judgment and dedication of the executive officers and our other key employees are critical factors affecting our long-term stockholder value. Therefore, our goal is to maintain a
compensation program that will fairly compensate employees, attract and retain highly qualified employees, motivate the performance of employees towards, and reward the achievement of, clearly defined
corporate goals, and align employees' long-term interests with those of our stockholders. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
executive officer compensation philosophy is to (1)&nbsp;provide overall compensation, when targeted levels of performance are achieved, which is at the
75<SUP>th</SUP>&nbsp;percentile of pay practices of a peer group selected, among other criteria, for similarities in size, business model and stage of development, and (2)&nbsp;emphasize
at-risk equity compensation over annual cash compensation to attract and retain officers and align the majority of their compensation with long-term stockholders' interests.
Our annual cash incentives and our longer term incentives, such as our long-term performance-contingent restricted stock unit awards, are tied to our achievement of corporate operating
goals. We believe that successful execution against goals is the best way to enhance long-term stockholder value. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
difficulty of achieving our goals in the time frames specified is a significant reason for our compensation philosophy. Our annual and longer-term operating goals, which
generally relate to the successful discovery and development of our compounds, are aggressive. The business of discovering novel compounds and developing them as potential medicines is extremely
risky. In addition, the time frames within which our operating goals must be achieved in order to earn annual or long-term incentive compensation are very tight. Furthermore, while we have
less control over the progress and timing of development programs that we have licensed to our collaborative partners, our officers spend a great deal of time and energy on those programs, and to the
extent possible we hold those programs to goal expectations as rigorous as those for our own development programs that we are progressing internally. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
do not have stock ownership guidelines for our officers because officer compensation is set within a typical market range and is primarily performance-based and high risk. In
addition, we believe that stock ownership guidelines are rare in development-stage biopharmaceutical companies, so ownership requirements would put Theravance at a competitive disadvantage. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I>Compensation Committee  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee of our board of directors is comprised of three non-employee members of the board of directors. The Compensation
Committee's basic responsibility is to review the performance of our management in achieving corporate objectives and to assure that the named executive officers as well as other members of senior
management are compensated effectively in a manner consistent with our compensation philosophy and competitive practice. In fulfilling this responsibility, the Compensation Committee reviews the
performance of each executive officer twice each year. The CEO, as the manager of the executive team, assesses the executives' contributions to the corporate goals and makes a recommendation to the
Compensation Committee with respect to any </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>merit
increase in salary, cash bonus and annual replenishment equity award for each member of the executive team, other than himself. The Compensation Committee meets with the CEO to evaluate, discuss
and modify or approve these recommendations. The Compensation Committee also conducts a similar evaluation of the CEO's contributions when the CEO is not present, and determines any increase in
salary, cash bonus and annual replenishment equity award. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with reviewing the compensation recommendations, since 2006 we have provided the Compensation Committee with a compensation "tally sheet" for each executive officer toward
the end of each year. The information in these tally sheets is used by the Compensation Committee to assist it in analyzing existing compensation and any proposed changes in compensation for each
executive officer. The tally sheet presents the total value of all elements of compensation, broken down by components, based on our best estimate of the number of annual goals that will be achieved
by the end
of the current year. The tally sheets also present compensation information for the previous two years, and estimated compensation for the following year, assuming Company performance is at target.
Each tally sheet also presents: (i)&nbsp;the executive officer's equity grant history; (ii)&nbsp;vested and unvested potential gain on equity awards at a series of stock prices and points in time;
and (iii)&nbsp;the stock option exercise history for the executive officer over the past three years, including the difference between the aggregate stock option exercise price and fair market value
of the Common Stock on the date of exercise. Further, the tally sheets present an estimate of the compensation that would be delivered should the executive's employment be terminated in connection
with a change-in-control assuming a termination date of the last day of the current year. We believe that the tally sheets provide the Compensation Committee with appropriately
detailed information about all the elements of each executive officer's compensation to ensure that the Compensation Committee is aware of the totality of the compensation of all executive officers.
In addition to the information and analyses supplied to the Compensation Committee as described above and in the peer group segment below, members of management support the Compensation Committee in
its work from time to time at the Committee's request. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>Compensation Consultant  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Compensation
Committee. In accordance with this authority, the Compensation Committee consults from time to time with its independent executive compensation consultant, Frederic W. Cook&nbsp;&amp;&nbsp;Co. ("FW
Cook") for advice on matters related to compensation for executive officers, other key employees and non-employee directors. FW Cook is retained by and reports directly to the Compensation
Committee. In 2006, FW Cook was engaged to re-evaluate the peer group and assist the Compensation Committee with consideration and analysis of potential employee and executive incentives
including the Company's long-term performance-contingent restricted stock unit awards that are described in the Long-Term Incentive Compensation section below. FW Cook does not
work on projects for management except as an agent of the Compensation Committee and with the advance knowledge and approval of the Chairman of the Compensation Committee. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B><I>Peer Group  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In late 2006, the Compensation Committee revised the peer group to better align target compensation with competitive data. Our peer group, which is listed below,
was selected by the Compensation Committee, taking into account the advice of FW Cook, based on a review of biopharmaceutical companies that were similar to Theravance in market capitalization,
development stage, and business model. At the time the peer group was chosen, all of the companies had a market capitalization of generally within one-third to three times that of
Theravance, and Theravance's market capitalization was in the mid-range of the group. The Compensation Committee intends to continue </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>reviewing
and revising the peer group periodically to ensure that it continues to reflect companies of a similar size and development stage as Theravance. </FONT></P>

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<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Alkermes,&nbsp;Inc.<BR>
Biomarin Pharmaceutical&nbsp;Inc.<BR>
Cubist Pharmaceuticals,&nbsp;Inc.<BR>
Human Genome Sciences,&nbsp;Inc.<BR>
ICOS Corporation*<BR>
Medarex,&nbsp;Inc.<BR>
Myogen,&nbsp;Inc.*<BR>
Myriad Genetics,&nbsp;Inc.<BR>
Nuvelo,&nbsp;Inc.<BR>
Onyx Pharmaceuticals,&nbsp;Inc.<BR>
OSI Pharmaceuticals,&nbsp;Inc.<BR>
PDL BioPharma,&nbsp;Inc.<BR>
Telik,&nbsp;Inc.<BR>
Zymogenetics,&nbsp;Inc.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Acquired
following inclusion in the peer group and no longer publicly traded. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><B><I>Principal Elements of Compensation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base Salaries.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Base salaries are set to reflect compensation commensurate with the individual's current position
and work
experience. Our goal in this regard is to attract and retain high caliber talent for the position and to provide a base wage that is not subject to performance risk. Salary for the CEO and the other
executive officers is established based on the underlying scope of their respective responsibilities, taking into account competitive market compensation. The base salary for each executive officer is
targeted at the 75<SUP>th</SUP>&nbsp;percentile compared to similar positions in the peer companies. In practice, the Company's base salary levels may exceed the
75<SUP>th</SUP>&nbsp;percentile target for certain executive officers due to the intensely competitive environment for highly qualified employees in this industry. We review base salaries for the
executive officers annually near the end of each year, and the CEO proposes salary adjustments to the Compensation Committee based on any changes in our competitive market salaries, individual
performance and/or changes in job duties and responsibilities. The Compensation Committee then determines any salary adjustment percentage applicable to the executive officers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual Incentive Compensation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Annual cash incentives for the executive officers are designed to reward the
achievement of
key corporate goals for the year, which we believe in turn should increase stockholder value. The annual incentive awards for executive officers are determined on the basis of our achievement of
specific performance goals that are established at the beginning of the fiscal year and are clearly communicated, measurable and consistently applied. A target bonus is set for each executive officer
based on targets for comparable positions and is stated in terms of a percentage of the officer's annualized base salary for the year. In February of 2007, based on an independent review by FW Cook
completed in late 2006, the Compensation Committee approved an increase in the target bonus for senior vice presidents from 30% to 40% of their annualized base salary. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Early
each year, the board of directors approves the performance objectives and goals for the upcoming year. Senior management then proposes percentage weights to be allocated to the
goals, with higher weights given to those goals that we believe will have a greater impact on the Company's value and/or are more challenging to achieve within the time frame specified. The
Compensation Committee evaluates and approves the final goal weightings. Given the number of Theravance-discovered potential </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>28</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>medicines
in development, our emphasis on research and discovery, and the efforts required to manage our collaborations with other companies, each year we establish more goals than we believe can
reasonably be achieved. For this reason, the cumulative weighting of all goals generally adds up to 150% and the likelihood of achieving all of the goals and a payout based on 150% of target is
extremely low. In the unlikely event that all goals are achieved, the cash bonus awards could be up to 150% of target, depending on the Compensation Committee's discretion. In 2006, the bonus payout
for our officers was 92.5% based on achievement of goals set for that year and in 2005, the bonus payout for our officers was 90% based on achievement of goals set for that year. At the end of each
year, the Compensation Committee assesses the Company's performance against the goals and establishes the cash bonus awards based on achievement of those goals. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
cash bonus program for 2007 was designed to motivate management to achieve specific goals related to: (i)&nbsp;telavancin, our product candidate furthest along in development;
(ii)&nbsp;our Horizon program (formerly referred to as Beyond Advair) with GlaxoSmithKline&nbsp;plc and its affiliates ("GSK"); (iii)&nbsp;clinical progress with many of our earlier-stage
programs; (iv)&nbsp;increasing our pipeline of potential medicines; and (v)&nbsp;compliance. Primary among these goals were: reporting positive Phase&nbsp;2b asthma study results for two
long-acting beta2 agonist (LABA) product candidates in the Horizon program with GSK; reporting positive proof-of-concept Phase&nbsp;2 results for (i)&nbsp;the
lead compound in the Gastrointestinal Motility Dysfunction program, TD-5108, in a chronic constipation study, (ii)&nbsp;investigational antibiotic TD-1792 in a complicated
skin and skin structure infection (cSSSI) study, and (iii)&nbsp;the lead compound in the muscarinic antagonist-beta2 agonist (MABA) program in a chronic obstructive pulmonary disease (COPD) study;
obtaining Food and Drug Administration (FDA) approval of and launching telavancin for the treatment of cSSSI; initiating a Phase&nbsp;1 study in COPD with the lead compound in the
long-acting muscarinic antagonist (LAMA) program; reporting positive telavancin hospital-acquired pneumonia (HAP) Phase&nbsp;3 results and filing a telavancin New Drug Application with
the FDA for the treatment of HAP; nominating a number of product candidates meeting strict target product profiles to move forward in development; and successfully accomplishing
non-program goals relating to safety and compliance. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
achieved performance goals equaling 75% of the executive officers' target for 2007, and the cash bonus awards for executive officers were reduced from target accordingly. The
Non-Equity Incentive Compensation column of the "Summary Compensation Table" on page&nbsp;35 sets forth bonuses earned by the named executive officers for performance in 2007 (though
paid in February of 2008). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-Term Incentive Compensation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The types of equity compensation comprising the mix of officer compensation
consist of: (i)&nbsp;stock options with time-based vesting, which
require increases in the market value of our Common Stock to be valuable; (ii)&nbsp;long-term performance contingent restricted stock unit awards, the right to which is entirely
dependent upon successful completion of corporate operating milestones; (iii)&nbsp;restricted shares with time-based vesting for recruiting new officers; and (iv)&nbsp;beginning in
2008, restricted stock unit awards with time-based vesting for annual replenishment and promotion awards. We do not use a targeted cash/equity split to set officer compensation. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally,
in order to align his interests with those of our stockholders, a significant stock option grant is made to an executive officer at the first regularly scheduled meeting of
the Compensation Committee after the officer commences employment. Annual replenishment stock option grants to all employees generally have been made at the first regularly scheduled meeting of the
Compensation Committee following annual employee performance reviews. This meeting is typically held in late January to early February of each year. In 2007, non-officer employees' annual
replenishment stock option grants were made in February, but the officers' annual replenishment stock options, though approved by the Compensation Committee in February, were contingent upon
stockholder approval of an amendment to the equity incentive plan increasing the number of shares reserved for issuance, among other changes to the plan. Therefore, the officers' option grants were
made on April&nbsp;25, 2007, the date that stockholder approval of the amendment was obtained. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>29</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Early
each calendar year, the Compensation Committee considers annual replenishment equity awards for executive officers based on recommendations from the CEO. The Company believes that
the resulting overlapping vesting schedule from awards made in prior years, together with the number of shares subject to each award, helps ensure a meaningful incentive to remain in the Company's
employ and to enhance stockholder value over time. Through 2007, these awards were made through stock option grants. In January 2008 the Company decided to satisfy its annual replenishment equity
awards and promotion equity awards with a reduced number of time-based restricted stock unit awards (RSUs) rather than time-based stock option grants. The Company's decision to
use RSUs to satisfy its annual replenishment equity awards in 2008 was based on a desire to reduce short-term dilution and stock plan share usage, while simultaneously maintaining
competitive rewards to retain employee talent. RSUs give an employee the right to receive a specified number of shares of Company Common Stock at no cost to the employee if the employee remains
employed at the Company until the RSUs vest. These RSUs generally vest quarterly over a four-year period with an initial one-year cliff. The compensation value of RSUs does not
depend solely on future stock price increases. Although its value may increase or decrease with changes in the stock price during the period before vesting, an RSU will have value in the long term,
thus encouraging retention, while the entire compensation value of a stock option depends on future stock price appreciation. Accordingly, RSUs can deliver significantly greater
share-for-share compensation value at grant than stock options and the Company can offer comparable compensation value with fewer shares and less dilution for our stockholders.
Notwithstanding the Company's decision to utilize RSUs for annual replenishment equity awards and promotion equity awards, new-hire equity awards continue to be made with stock option
grants. The reason for this is the Company wants each new executive to be motivated to run the business in a fashion that increases stockholder value over the long term. Since options provide a return
only if the executive remains in the Company's service and then only if the market price of the
Company's Common Stock appreciates over the option term, the Company believes options are uniquely capable of rewarding long-term performance of that kind. New-hire stock
option grants generally vest monthly over a four-year period with an initial one-year cliff. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2004, in connection with the Company's strategic alliance with GSK and then our initial public offering, the Compensation Committee consulted with FW Cook to develop recommendations
for structuring our compensation programs to retain our highly experienced executive management team, to keep management focused during the period following the initial public offering, and to
motivate management to maximize stockholder value in light of the strategic relationship with GSK. The Compensation Committee approved a program (the 2004 Program), providing for significant officer
option grants in 2004, which vest over a five-year period, and reduced officer annual replenishment equity awards in 2005 through 2008. The vesting schedule of the option grants made under
the 2004 Program are described in the "Outstanding Equity Awards at 2007 Fiscal Year-End" section on page&nbsp;37. The 2004 Program was designed to provide approximately a median number
of options when averaged over the 2004 to 2008 time frame. The annual replenishment option grants authorized by the Compensation Committee in early 2007 and the annual replenishment RSUs authorized by
the Compensation Committee in early 2008 for those officers who participated in the 2004 Program were consistent with the 2004 Program. However, the number of RSUs awarded were reduced from the
guideline number of shares under the 2004 Program based on one RSU share for every three option shares. The 2004 Program applies only to employees who were officers of Theravance at the time of its
adoption. In 2007, based on market data provided by FW Cook, the Compensation Committee increased the target annual replenishment equity award for those individuals who became officers of the Company
after adoption of the 2004 Program, to provide these officers with approximately a median annual replenishment equity award compared to the peer group. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
date, the Company has used time-based restricted stock awards only to recruit new officers. In 2005 the Compensation Committee authorized a restricted stock grant in
connection with recruiting Michael Aguiar, our CFO, to replace an award that would lapse upon his departure from his prior </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>30</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>employment.
Restricted stock was used for this purpose, rather than an option, because restricted stock is a more targeted method of delivering a specified value. </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> Performance-Contingent Restricted Stock Unit Awards  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006 the Compensation Committee engaged FW Cook in connection with its consideration and analysis of a new form of long-term incentive award. In
the Spring of 2007, the Compensation Committee granted long-term performance-contingent restricted stock unit awards (Performance RSUs) to all of its executive officers other than to
Patrick P.A. Humphrey and David L. Brinkley, who had existing plans to terminate their employment with the Company near
the end of the year. The Performance RSUs are intended to motivate these officers to manage the business toward the accomplishment of four specific corporate operating milestones that we believe are
meaningful value drivers for our business. These four milestones have deadlines spread across 2008 and 2009. The successful completion of each milestone within the time frame allotted leads to the
right to receive 25% of the Performance RSU, which is settled on April&nbsp;26, 2010 in the form of fully vested shares of our Common Stock, provided that the officer remains in continuous
employment through the settlement date. The Performance RSU is forfeited if the officer's employment is terminated prior to April&nbsp;26, 2010 for any reason other than death, disability or a
change-in-control of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
maximum number of shares that may be issued to an executive officer pursuant to the Performance RSUs was determined on the grant date by multiplying the officer's base 2007 salary
by 10, and then dividing that sum by the closing sales price of the Company's Common Stock on Nasdaq on the date of grant. Based on data provided by FW Cook, the Compensation Committee determined that
when combined with the executives' option grants, the Performance RSUs provided annualized long-term incentive compensation in the 75<SUP>th</SUP>&nbsp;percentile of our peer group if
two of the four Performance RSU milestones are achieved during the three-year performance period. These milestones are tied to the successful achievement of four mid- and
late-stage clinical development objectives for various programs currently underway at Theravance: achieving successful proof-of-concept in two Phase&nbsp;2
clinical studies, initiating a Phase&nbsp;3 clinical study, and filing a New Drug Application with the FDA. Payouts are determined by the number of milestones that are timely achieved, with each of
the four milestones weighted at 25% of the total potential award. For example, if an officer holds a Performance RSU that could, at its maximum, result in the issuance of 100,000 shares, and two of
the four milestones are successfully accomplished on time and the officer remains employed through April&nbsp;26, 2010, then on that date 50,000 shares of fully vested shares of Company Common Stock
would be issued to the officer. Based on the Company's historical operating performance, the nature of these clinical development milestones and the uncertainties inherent in developing these
potential medicines, we believe that the likelihood of achieving all four milestones on time is extremely remote. To achieve these milestones, the multiple and integral contributions of each of our
departments, as well as third parties' delivery on their service and supply obligations, must be completed successfully and on an aggressive time frame. If our performance is superior beyond
expectations and we timely achieve all four of the Performance RSU milestones, then the Performance RSUs, when combined with the officers' options, are intended to provide annualized
long-term incentive compensation in the 90<SUP>th</SUP>&nbsp;percentile of our peer group as superior pay for superior performance. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2008 the Compensation Committee undertook a review of the Performance RSUs in light of recent corporate developments: in particular the Company's retained ownership of both
its Gastrointestinal Motility Dysfunction program and its investigational antibiotic, TD-1792, as well as the need to focus a substantial portion of its resources on its pending new drug
application for telavancin in complicated skin and skin structure infections and preparation of the new drug application for telavancin in the hospital-acquired pneumonia indication. Following this
review, the Compensation Committee amended each Performance RSU to eliminate one of the milestones that, in management's view, had become unachievable, and requested that each of the executive
officers agree to a </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>31</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>corresponding
reduction in the number of shares subject to the Performance RSU. Therefore, the maximum number of shares that may be issued to an executive officer pursuant to each Performance RSU was
reduced by 25% to a number of shares equal to his 2007 salary multiplied by 7.5, divided by the closing sales price of the Company's Common Stock on Nasdaq on the original date of grant. The number of
restricted stock units shown in the "Outstanding Equity Awards at 2007 Fiscal Year-End" table on page&nbsp;37 reflects the original number of shares subject to the Performance RSU award
and not the reduced number of shares subject to the Performance RSU award after the 2008 amendment. In addition, the Compensation Committee added two new milestones relating to telavancin revenue and
initiation of a Phase&nbsp;3 clinical study as replacements to two of the original milestones. The Compensation Committee believes these new milestones are comparable in difficulty to the existing
milestones they replace. Accordingly, following this amendment, there are three milestones that could trigger a share payout, and the maximum number of shares issuable to executive officers has been
reduced by 25%. The Compensation Committee viewed this amendment as striking the appropriate balance of maintaining the unique incentive structure of the Performance RSUs in a changing business
environment while not rewarding a failure to perform. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>Post-Termination Protection  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors adopted a change in control severance plan for our officers in 2004, after consulting with FW Cook, in connection with the Company's
strategic alliance with GSK and then its initial public offering. A description of our change in control severance plan is in the "Potential Payments Upon Termination or
Change-in-Control" section on page&nbsp;40. Theravance provides gross-ups for excise taxes potentially due upon a change in control in order to mitigate unfair
differences between participants that may stem from their individual decisions to exercise or hold vested options. The gross-ups are also provided to recognize that the value of stock
option vesting acceleration may be higher at Theravance as a result of the special vesting structure implemented in connection with the 2004 Program, which provides for a five-year vesting
period ending in March of 2009. Due to this special vesting, a significant portion of the option grants made under the 2004 Program remain unvested and are therefore subject to potential
transaction-related acceleration and inclusion in the excise tax calculation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe the change in control severance plan is important to protect our officers from any involuntary termination associated with a change in control. With this change in control
severance plan, we sought uniformity of results among the officers based on their positions at the Company. We believe
that the change in control severance plan protects the stockholders interests by encouraging our officers to continue to devote their attention to their duties and to facilitating the acquisition with
minimized distraction, and reducing any bias the officers might have in evaluating acquisition proposals. In addition, we believe that the events triggering payment, both a change in control and an
involuntary termination, and then only when there is no misconduct by the officer, are fair hurdles for the ensuing income protection. We do not have agreements providing severance in the event of
involuntary terminations that do not occur in connection with a change in control with any of our officers except the CEO. Pursuant to the offer letter we entered into with Mr.&nbsp;Winningham to
become our Chief Executive Officer in 2001, if Mr.&nbsp;Winningham's service is terminated without cause, he will receive a lump-sum severance payment (less taxes) of 24&nbsp;months of
his current salary plus two times his current target bonus. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>CEO Compensation  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Winningham's 2007 compensation consisted of base salary, annual bonus, a long-term performance contingent restricted stock unit award and
stock options. The Compensation Committee determined CEO compensation using methods consistent with those used for other senior executives. In February 2007, as part of the annual officers'
compensation review, Mr.&nbsp;Winningham's annualized </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>32</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>base
salary was increased from $718,692 to $754,627 in recognition of both his performance as CEO and competitive market salary levels. Mr.&nbsp;Winningham's adjusted base salary was determined to
be above 75% of the average of the peer group's CEOs. Mr.&nbsp;Winningham's award under the annual cash bonus program was paid in accordance with the terms of the defined performance goals.
Mr.&nbsp;Winningham was granted a stock option under the long-term incentive program in accordance with the methods used for other senior executives who participated in the 2004 Program.
In April 2007, Mr.&nbsp;Winningham was granted a long-term performance contingent restricted stock unit award as described above in the Performance-Contingent Restricted Stock Unit Award
portion of the Long-Term Incentive Compensation section on pages&nbsp;31 and 32. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
late 2006, the Compensation Committee approved the Company's reimbursement of the cost of a personal assistant to the CEO for both business and personal matters, and agreed to pay an
additional amount to the CEO to cover the income taxes that he incurs associated with this perquisite. We believe this perquisite enhanced the CEO's productivity and allowed him to operate more
effectively. Mr.&nbsp;Winningham engaged a personal assistant for approximately four months during 2007. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
CEO, Mr.&nbsp;Winningham's level of responsibility is much greater than those of the other executives, as he is informed and involved, in a detailed manner, with each department's
progress toward our shared Company goals. In our industry, the CEO must be deeply aware of the Company's strengths and obstacles, and have sharp strategic vision for the Company's future while
maintaining the Company's ability to adapt to changed circumstances and prospects quickly and thoughtfully. We believe Mr.&nbsp;Winningham displays these skills and holds his direct reports to task
in a manner that enables expedited progress of our discovery and development programs. The successful progress of our research
and development programs brings value to the Company and our stockholders, and we believe Mr.&nbsp;Winningham's direction in the decisions and actions that drive this progress merit the compensation
that he receives. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I>Tax Deductibility of Pay  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that Theravance may deduct in any one year with
respect to each of its CEO and three other most highly paid executive officers, other than its CFO. There is an exception to the $1,000,000 limitation for performance-based compensation meeting
certain requirements. The equity incentive plan was designed to qualify for exemption from the $1&nbsp;million limitation and, accordingly, option grants under the equity incentive plan with an
exercise price that is at least equal to the fair market value of the option shares on the grant date and certain performance-based stock awards should qualify as performance-based compensation and
should not be subject to the $1&nbsp;million deduction limitation. Restricted stock or RSU awards with time-based vesting and cash awards under the annual incentive program are subject
to the $1&nbsp;million deduction limitation when aggregated with other non-exempt compensation. To maintain flexibility in compensating executive officers in a manner designed to promote
varying corporate goals, the Compensation Committee has not adopted a policy requiring all compensation to be deductible. Although some amounts recorded as compensation by Theravance to certain
executives may be limited by Section&nbsp;162(m), that limitation does not result in the current payment of increased federal income taxes by Theravance due to its significant net operating loss
carry forwards. The Compensation Committee may approve compensation or changes to plans, programs or awards that may cause the compensation or awards not to comply with Section&nbsp;162(m) if it
determines that such action is appropriate and in our best interests. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>33</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>REPORT OF THE COMPENSATION COMMITTEE(1)</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and
discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. </FONT></P>

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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
material in this report is not "soliciting material," is not deemed "filed" with the SEC and is not to be incorporated by reference in any filing of Theravance under the
Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Submitted
by the following members of the Compensation Committee: </FONT></P>

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<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>Jeffrey M. Drazan<BR>
George M. Whitesides, Ph.D.<BR>
William D. Young, Chairman</FONT></TD>
</TR>
</TABLE>
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 </FONT> <FONT SIZE=2><B>SUMMARY COMPENSATION TABLE</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth all of the compensation awarded to, earned by, or paid to our "principal executive officer," "principal financial officer" and the
three other highest paid executive officers whose total compensation in fiscal year 2007 exceeded $100,000 (our "named executive officers"). </FONT></P>

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<TH WIDTH="23%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name and Principal Position<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Year(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Salary<BR>
($)(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock<BR>
Awards<BR>
($)(3)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Awards<BR>
($)(3)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Non-Equity<BR>
Incentive Plan<BR>
Compensation<BR>
($)(4)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All Other<BR>
Compensation<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="23%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(c)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(e)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(f)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(g)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(i)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(j)</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1>Rick E Winningham<BR>
Chief Executive Officer</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2007<BR>
2006</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>751,632<BR>
716,223</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,380,087<BR>
1,269,852</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>282,986<BR>
332,395</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>36,422<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>(5)<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,451,127<BR>
2,318,470</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1><BR>
Michael W. Aguiar<BR>
Senior Vice President, Chief Financial Officer</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
2007<BR>
2006</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
355,447<BR>
335,924</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
218,725<BR>
293,857</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>(6)<BR>(6)</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
852,874<BR>
695,972</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
107,140<BR>
93,424</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
0<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
1,534,186<BR>
1,419,177</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="23%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
Arthur L. Campbell(7)<BR>
Senior Vice President, Technical Operations</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
2007</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
351,657</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
0</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
370,237</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
105,933</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
0</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
827,827</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1><BR>
Patrick P.A. Humphrey<BR>
Executive Vice President, Research</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
2007<BR>
2006</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
392,416<BR>
373,929</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
0<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
673,781<BR>
625,740</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
118,194<BR>
138,831</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
0<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
1,184,391<BR>
1,138,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1><BR>
Michael M. Kitt<BR>
Senior Vice President, Development</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
2007<BR>
2006</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
366,042<BR>
347,615</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
0<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
384,548<BR>
392,752</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
110,250<BR>
97,125</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
0<BR>
0</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
860,840<BR>
837,492</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>In
accordance with SEC transition rules, information is provided for the two most recently completed fiscal years only.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Includes
amounts deferred pursuant to our 401(k) plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>The
amounts in this column represent the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with FAS&nbsp;123R,
excluding forfeiture estimates. See Note&nbsp;9 of the notes to our consolidated financial statements in our Annual Report on Form&nbsp;10-K filed on February&nbsp;26, 2008 for a
discussion of all assumptions made by the Company in determining the FAS&nbsp;123R values of its equity awards.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>The
amounts in this column reflect cash bonus awards earned by the named individuals under our 2006 and 2007 annual cash bonus plans, which were paid in the first quarter of the
following year. The 2007 annual cash bonus plan is discussed in greater detail in "Compensation Discussion and Analysis" beginning on page&nbsp;26.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Includes
$24,441 for the cost of Mr.&nbsp;Winningham's personal assistant, a $11,741 tax gross-up and a $240 cash wellness benefit paid to all Company employees.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>This
restricted stock was granted in connection with recruiting Michael Aguiar to replace an award that would lapse upon his departure from his prior employment.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Dr.&nbsp;Campbell
was employed by us, but was not one of our named executive officers, in 2006. Accordingly, compensation information is not provided for 2006. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><B>Salary and Non-Equity Incentive Plan Compensation in Proportion to Total Compensation  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of salary and non-equity incentive plan compensation earned in 2007 in proportion to the total compensation reported for each of our named
executive officers was: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="74%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="27%" style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Winningham:</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>42</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="62%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="27%" style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Aguiar:</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="62%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="27%" style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Campbell</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="62%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="27%" style="font-family:times;"><FONT SIZE=2>Dr.&nbsp;Humphrey:</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>43</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="62%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="27%" style="font-family:times;"><FONT SIZE=2>Dr.&nbsp;Kitt:</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="62%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>35</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=38,EFW="2183412",CP="THERAVANCE, INC.",DN="1",CHK=728716,FOLIO='35',FILE='DISK124:[08ZAG2.08ZAG77202]DO77202A.;9',USER='MOBRIEN',CD=';6-MAR-2008;13:29' -->
<A NAME="page_do77202_1_36"> </A>

<P style="font-family:times;"><FONT SIZE=2><B>2007 GRANTS OF PLAN-BASED AWARDS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth each non-equity incentive plan award and equity award granted to our named executive officers during fiscal year 2007. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="16%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Estimated Possible<BR>
Payouts Under Non-Equity Incentive Plan Awards&nbsp;($)(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ROWSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Estimated Future<BR>
Payouts Under<BR>
Equity Incentive<BR>
Plan Awards<BR>
Target<BR>
(#)(3)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ROWSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All Other<BR>
Option Awards:<BR>
Number of<BR>
Securities<BR>
Underlying<BR>
Options<BR>
(#)(4)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="16%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ROWSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Exercise or<BR>
Base Price of<BR>
Option Awards<BR>
($/Sh)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ROWSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Grant Date<BR>
Fair Value<BR>
of Option<BR>
Awards($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Grant<BR>
Date(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Target<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Maximum<BR>
($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(d)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(e)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(g)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(j)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(k)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(i)</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=1>Rick E Winningham</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>N/A<BR>
2/14/2007<BR>
4/25/2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>377,313<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>565,970<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
226,955</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
69,355<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
34.00<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
1,190,160<BR>
7,546,254</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=1><BR>
Michael W. Aguiar</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><BR>
N/A<BR>
2/14/2007<BR>
4/25/2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
142,853<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
214,280<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
107,408</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
70,000<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
34.00<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
1,201,228<BR>
3,571,316</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=1><BR>
Arthur L. Campbell</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><BR>
N/A<BR>
2/14/2007<BR>
4/25/2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
141,244<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
211,867<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
106,198</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
16,129<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
34.00<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
276,780<BR>
3,531,084</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=1><BR>
Patrick P.A. Humphrey</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><BR>
N/A<BR>
2/14/2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
157,592<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
236,387<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
33,870</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
34.00</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
581,223</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="16%" style="font-family:times;"><FONT SIZE=1><BR>
Michael M. Kitt</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><BR>
N/A<BR>
2/14/2007<BR>
4/25/2007</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
147,000<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
220,500<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
110,526</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
16,129<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
34.00<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1><BR>
&#151;<BR>
276,780<BR>
3,674,990</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>The
stock options set forth in this table were approved by the Compensation Committee on February&nbsp;14, 2007, subject to stockholder approval of a share increase to the
Incentive Plan. Stockholder approval of the share increase was obtained on April&nbsp;25, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Each
named executive officer was granted a non-equity incentive plan award pursuant to our 2007 annual cash bonus plan which is discussed in greater detail in
"Compensation Discussion and Analysis" beginning on page&nbsp;26. The amounts shown in the "target" column reflect the target payout under the plan which is equal to 50% of Mr.&nbsp;Winningham's
base salary and 40% the other named executive officers' base salaries. The amounts shown in the "maximum" column reflect the maximum payout under the plan if 150% of the goals set forth in the plan
are achieved. The actual amounts paid to each named executive officer are shown in the Summary Compensation Table above.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>With
the exception of Dr.&nbsp;Humphrey, each of our named executive officers was granted a performance-contingent restricted stock unit award (RSU) under our Incentive Plan. The
vesting of these RSUs is tied to the successful achievement of certain corporate operating milestones during 2008 and 2009, as well as the officers' continued employment through April&nbsp;26, 2010.
In addition, if we are acquired, 25% of the units will vest for each milestone that has been achieved as of the date of the acquisition and an additional 25% of the units will vest. However, a
transaction in which SmithKline Beecham Corporation acquires less than 100% of our stock or assets is not considered an acquisition that would trigger acceleration. The number of shares reflected in
the table above as the "target" payout assumes that all of the milestones will be achieved and that the officer will remain employed by Theravance through April&nbsp;26, 2010.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Each
of our named executive officers was granted an option to purchase shares of our Common Stock under our Incentive Plan. Each option vests in 48 equal monthly installments from
the date of grant. As a result, each option will be fully vested four years after the date of grant. In addition, the options will become fully vested if we are acquired and the optionee is subject to
an involuntary termination as described in greater detail in "Potential Payments Upon Termination or Change in Control" beginning on page&nbsp;40. However, a transaction in which SmithKline Beecham
Corporation acquires less than 100% of our stock or assets is not considered an acquisition that would trigger the foregoing acceleration provision. The options have a term of 10&nbsp;years from the
date of grant, subject to earlier expiration if the optionee's service terminates. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>36</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=39,EFW="2183412",CP="THERAVANCE, INC.",DN="1",CHK=998402,FOLIO='36',FILE='DISK124:[08ZAG2.08ZAG77202]DO77202A.;9',USER='MOBRIEN',CD=';6-MAR-2008;13:29' -->
<A NAME="page_do77202_1_37"> </A>


<P style="font-family:times;"><FONT SIZE=2><B>OUTSTANDING EQUITY AWARDS AT 2007 FISCAL YEAR-END</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding each unexercised option and all unvested stock and restricted stock units held by each of our named
executive officers as of December&nbsp;31, 2007. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock Awards</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Unexercised<BR>
Options<BR>
Exercisable<BR>
(#)(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Unexercised<BR>
Options<BR>
Unexercisable<BR>
(#)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Exercise<BR>
Price<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Expiration<BR>
Date</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number<BR>
of Shares<BR>
or Units<BR>
of Stock<BR>
That Have<BR>
Not<BR>
Vested<BR>
(#)(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Market<BR>
Value of<BR>
Shares or<BR>
Units of<BR>
Stock That<BR>
Have Not<BR>
Vested<BR>
($)(9)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Equity<BR>
Incentive<BR>
Plan<BR>
Awards:<BR>
Number of<BR>
Unearned<BR>
Shares,<BR>
Units or<BR>
Other Rights<BR>
That Have<BR>
Not Vested<BR>
(#)(16)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Equity<BR>
Incentive<BR>
Plan<BR>
Awards:<BR>
Market or<BR>
Payout<BR>
Value of<BR>
Unearned<BR>
Shares,<BR>
Units or<BR>
Other Rights<BR>
That Have<BR>
Not Vested<BR>
($)(17)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(c)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(e)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(f)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(g)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(h)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(i)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(j)</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>Rick E Winningham</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>774,192<BR>
177,419<BR>
166,452<BR>
31,788<BR>
13,005</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>(2)<BR>(3)<BR>(4)<BR>(5)<BR>(6)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
249,676<BR>
37,567<BR>
56,350</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8.525<BR>
3.10<BR>
9.6875<BR>
29.65<BR>
34.00</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>12/7/2011<BR>
1/23/2013<BR>
3/28/2014<BR>
2/7/2016<BR>
2/13/2017</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>226,955<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4,425,623<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>Michael W. Aguiar</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>120,313<BR>
13,865<BR>
9,167<BR>
13,125</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>(7)<BR>(5)<BR>(10)<BR>(6)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>54,687<BR>
16,385<BR>
10,833<BR>
56,875</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>17.91<BR>
29.65<BR>
27.56<BR>
34.00</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3/6/2015<BR>
2/7/2016<BR>
4/25/2016<BR>
2/13/017</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>25,000<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>(8)<BR><BR><BR></FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>487,500<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>107,408<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,094,456<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>Arthur L. Campbell</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>123,290<BR>
38,710<BR>
11,425<BR>
7,393<BR>
3,025</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>(11)<BR>(4)<BR>(12)<BR>(5)<BR>(6)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
58,063<BR>
4,704<BR>
8,736<BR>
13,104</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3.10<BR>
9.6875<BR>
18.37<BR>
29.65<BR>
34.00</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4/21/2013<BR>
3/28/2014<BR>
2/9/2015<BR>
2/7/2016<BR>
2/13/017</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>106,198<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,070,861<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>Patrick P.A. Humphrey</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>193,548<BR>
181,818<BR>
27,257<BR>
70,968<BR>
15,524<BR>
6,351</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>(13)<BR>(14)<BR>(3)<BR>(4)<BR>(5)<BR>(6)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
121,934<BR>
18,346<BR>
27,519</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8.525<BR>
8.525<BR>
3.10<BR>
9.6875<BR>
29.65<BR>
34.00</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>6/29/2011<BR>
2/23/2012<BR>
1/23/2013<BR>
3/28/2014<BR>
2/7/2016<BR>
2/13/2017</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>Michael M. Kitt</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>215,805<BR>
9,250<BR>
38,710<BR>
18,862<BR>
7,393<BR>
3,025</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>(15)<BR>(3)<BR>(4)<BR>(12)<BR>(5)<BR>(6)</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
58,063<BR>
7,767<BR>
8,736<BR>
13,104</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8.525<BR>
3.10<BR>
9.6875<BR>
18.37<BR>
29.65<BR>
34.00</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4/12/2012<BR>
1/23/2013<BR>
3/28/2014<BR>
2/9/2015<BR>
2/7/2016<BR>
2/13/2017</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>110,526<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,155,257<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>All
unvested options will become exercisable in full, and all restricted stock will vest, if we are acquired and the optionee or holder of restricted stock is subject to an
involuntary termination as described in greater detail in "Potential Payments Upon Termination or Change in Control" beginning on page&nbsp;40. However, a transaction in which SmithKline Beecham
Corporation acquires less than 100% of our stock or assets is not considered an acquisition that would trigger the foregoing acceleration provision.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Winningham
received grants of options to purchase shares of our Common Stock under our 1997 Stock Plan at the commencement of his employment on December&nbsp;8, 2001.
These options vested over a four-year period from the date of grant and became fully vested on December&nbsp;8, 2005.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Winningham,
Dr.&nbsp;Humphrey and Dr.&nbsp;Kitt received grants of options to purchase shares of our Common Stock under our 1997 Stock Plan on January&nbsp;24, 2003.
25% of the option shares vested on January&nbsp;24, 2004, and an additional 1/48<SUP>th</SUP>&nbsp;of the option shares vested when each additional month of service thereafter was completed. As
a result, each option became fully vested on January&nbsp;24, 2007. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>37</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Winningham,
Dr.&nbsp;Campbell, Dr.&nbsp;Humphrey and Dr.&nbsp;Kitt received grants of options to purchase shares of our Common Stock under our Long-Term
Stock Option Plan on March&nbsp;29, 2004. 40% of the option shares vested on September&nbsp;13, 2007. An additional 30% of the option shares will vest on March&nbsp;29, 2008 and the final 30% of
the option shares will vest on March&nbsp;29, 2009.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Winningham,
Mr.&nbsp;Aguiar, Dr.&nbsp;Campbell, Dr.&nbsp;Humphrey and Dr.&nbsp;Kitt received grants of options to purchase shares of our Common Stock under our
Incentive Plan on February&nbsp;8, 2006. Each option vests in 48 equal monthly installments upon completion of each month of continuous service after the date of grant.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Winningham,
Mr.&nbsp;Aguiar, Dr.&nbsp;Campbell, Dr.&nbsp;Humphrey and Dr.&nbsp;Kitt each received grants of options to purchase shares of our Common Stock under
our Incentive Plan on February&nbsp;14, 2007. Each option vests in 48 equal monthly installments upon completion of each month of continuous service after the date of grant.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Aguiar
received a grant of an option to purchase shares of our Common Stock under our Incentive Plan at the commencement of his employment on March&nbsp;7, 2005. On
September&nbsp;13, 2007, 109,375 option shares became exercisable. Thereafter, 1/48<SUP>th</SUP>&nbsp;of the option shares vest when each additional month of service is completed.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Aguiar
received 50,000 restricted shares of our Common Stock at the commencement of his employment to replace an award that lapsed upon his departure from his prior
employment. The grant was made under our Incentive Plan. One-half of the shares vested on September&nbsp;13, 2007, one-quarter of the shares will vest on September&nbsp;13,
2008, and the remaining one-quarter of the shares will vest on September&nbsp;13, 2009. The shares (whether vested or unvested) carry the same dividend and voting rights as our other
shares of Common Stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(9)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Computed
in accordance with SEC rules as the number of unvested shares multiplied by the closing market price of our Common Stock at the end of the 2007 fiscal year, which was $19.50
on December&nbsp;31, 2007. The actual value (if any) to be realized by the officer depends on whether the shares vest and the future performance of our Common Stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(10)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Mr.&nbsp;Aguiar
received a grant of an option to purchase shares of our Common Stock under our Incentive Plan on April&nbsp;26, 2006. The option vests in 48 equal monthly
installments upon completion of each month of continuous service after February&nbsp;8, 2006.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(11)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Dr.&nbsp;Campbell
received a grant of an option to purchase shares of our Common Stock under our 1997 Stock Plan at the commencement of his employment on April&nbsp;22, 2003. The
option vested over a four-year period from the date of grant and became fully vested on April&nbsp;22, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(12)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Dr.&nbsp;Campbell
and Dr.&nbsp;Kitt received grants of options to purchase shares of our Common Stock under our Incentive Plan on February&nbsp;10, 2005. Each option vests in
48 equal monthly installments upon completion of each month of continuous service after the date of grant.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(13)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Dr.&nbsp;Humphrey
received a grant of an option to purchase shares of our Common Stock under our 1997 Stock Plan at the commencement of his employment on June&nbsp;30, 2001. The
option vested over a four-year period from the date of grant and became fully vested on June&nbsp;30, 2005.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(14)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Dr.&nbsp;Humphrey
received grants of options to purchase shares of our Common Stock under our 1997 Stock Plan on February&nbsp;24, 2002. These options vested over a
four-year period from the date of grant and became fully vested on February&nbsp;24, 2006.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(15)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Dr.&nbsp;Kitt
received grants of options to purchase shares of our Common Stock under our 1997 Stock Plan at the commencement of his employment on April&nbsp;13, 2002. These
options vested over a four-year period from the date of grant and became fully vested on April&nbsp;13, 2006.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(16)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>On
April&nbsp;25, 2007, Messrs.&nbsp;Winningham, Aguiar, Campbell and Kitt received grants of restricted stock unit awards (RSUs). The vesting of these RSUs is tied to the
successful achievement of certain corporate operating milestones during 2008 and 2009, as well as the officers' continued employment through April&nbsp;26, 2010. If we are acquired, 25% of the RSUs
will vest for each milestone that has been achieved as of the date of the acquisition and an additional 25% of the units will vest. However, a transaction in which SmithKline Beecham Corporation
acquires less than 100% of our stock or assets is not considered an acquisition that would trigger acceleration.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(17)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Computed
in accordance with SEC rules as the number of unvested restricted stock units multiplied by the closing market price of our Common Stock at the end of the 2007 fiscal year,
which was $19.50 on December&nbsp;31, 2007. The actual value (if any) realized by the officer depends on the successful achievement of certain corporate operating milestones and the future
performance of our Common Stock. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>38</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><B>2007 OPTION EXERCISES AND STOCK VESTED</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the number of shares acquired upon exercise of options by each named executive officer during fiscal year 2007 and the number of shares
of restricted stock held by each named executive officer that vested during fiscal year 2007. No restricted stock units vested during the 2007 fiscal year. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock Awards</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of Shares<BR>
Acquired on Exercise<BR>
(#)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Value Realized on<BR>
Exercise<BR>
($)(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of Shares<BR>
Acquired on Vesting<BR>
(#)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Value Realized on<BR>
Vesting<BR>
($)(2)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(c)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(d)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(e)</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Rick E Winningham</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Michael W. Aguiar</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>700,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Arthur L. Campbell</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Patrick P.A. Humphrey</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>54,310</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,009,421</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%" style="font-family:times;"><FONT SIZE=2>Michael M. Kitt</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>216,450</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Value
realized is based on the fair market value of our Common Stock on date of exercise minus the exercise price and does not necessarily reflect proceeds actually received by the
officer.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Value
realized is based on the fair market value of our Common Stock on the vesting date multiplied by the number of shares vested and does not necessarily reflect proceeds received
by the officer. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>39</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
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 </FONT> <FONT SIZE=2><B>POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our named executive officers is entitled to severance benefits pursuant to our change in control severance plan. In addition, Mr.&nbsp;Winningham is
entitled to severance benefits pursuant to his offer letter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Change in Control Severance Benefits  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to our change in control severance plan, if a named executive officer is subject to an involuntary termination within 3&nbsp;months prior to or
24&nbsp;months after a change in control of Theravance, he is entitled to the following benefits provided he signs a release of claims: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
the case of our Senior Vice Presidents, a lump sum payment equal to 150% of the officer's annual base salary and target bonus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>In
the case of our Chief Executive Officer and Executive Vice Presidents, a lump sum payment equal to 200% of the officer's annual base salary and target bonus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A
pro-rata portion of the named executive officer's target bonus based on the number of full months of employment completed in the year of termination.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Continuation
of the officer's health and welfare benefits for the shorter of 18&nbsp;months (in the case of our Senior Vice Presidents) or 24&nbsp;months (in the case of
our Chief Executive Officer and Executive Vice Presidents) or the expiration of the officer's continuation coverage under COBRA.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Full
vesting of any unvested stock options and restricted stock held by the officer. The RSUs granted to our named executive officers in 2007 are </FONT> <FONT SIZE=2><I>not</I></FONT><FONT SIZE=2> eligible for acceleration of vesting pursuant to our
change in control severance plan, however a portion of those awards may vest in connection with
a change in control as described below under "Equity Acceleration Upon A Change in Control". </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B>Conditions to Receive Severance Payments Under our Change in Control Severance Plan  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to receive severance benefits under our change in control severance plan, an officer must sign a general release of claims. In addition, severance
benefits may be conditioned upon the officer's compliance with any confidentiality agreement between the officer and the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Definitions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following definitions are used in our change in control severance plan: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
"change in control" includes: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
consummation of a merger or consolidation if persons who were not our stockholders prior to the merger or consolidation own 50% or more of the voting securities of the
surviving company and its parent.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A
sale, transfer or other disposition of all or substantially all of our assets.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A
change in the composition of our Board of Directors as a result of which fewer than 50% of the incumbent directors either were directors on the date 24&nbsp;months prior
to the change in control (the "original directors") or were appointed or nominated for election to the Board of Directors by a majority of the original directors or directors whose appointment or
nomination was approved by at least 50% of the original directors.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A
transaction as a result of which any person becomes the beneficial owner of 50% or more of our outstanding voting securities. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>40</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dq77202_1_41"> </A>
<UL>
<UL>
</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
transaction shall not constitute a change in control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company's securities immediately before such transaction. In addition, except with respect to a GSK Change In Control (defined below),
the following stock purchases by SmithKline Beecham Corporation (GSK) will not constitute a change in control: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
exercise by GSK of any of its rights under the Amended and Restated Governance Agreement, dated as of June&nbsp;4, 2004, as amended, among the Company, GSK,
GlaxoSmithKline&nbsp;plc and Glaxo Group Limited (the "Governance Agreement") to representation on our Board of Directors (and its committees).
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Any
acquisition by GSK of securities of the Company (whether by merger, tender offer, private or market purchases or otherwise) not prohibited by the Governance Agreement. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
"GSK Change In Control" means the acquisition by GSK in compliance with the provisions of the Governance Agreement of 100% of the Company's outstanding voting stock. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
"involuntary termination" means a termination of an officer's employment by the Company for reasons other than misconduct or an officer's resignation following (1)&nbsp;a material
diminuition in the officer's authority, duties or responsibilities, (2)&nbsp;a material reduction in the officers's base salary, (3)&nbsp;a material change in the officer's work location or
(4)&nbsp;a breach of the officer's employment agreement by the Company. In order to qualify as an involuntary termination, the officer must give written notice to the Company within 90&nbsp;days
after the initial existence of one of the conditions described above and the Company must not have cured such condition within 30&nbsp;days thereafter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Misconduct"
means an officer's (1)&nbsp;commission of any act of fraud, embezzlement or dishonesty, (2)&nbsp;material unauthorized use or disclosure of our confidential information
or trade secrets or (3)&nbsp;other material intentional misconduct adversely affecting the business or affairs of the Company. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Equity Acceleration Upon A Change in Control  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The RSUs granted to our named executive officers in 2007 are not eligible for vesting upon an involuntary termination under our change in control severance plan
except in the event of a GSK Change In Control. Instead, some or all of the RSUs will vest on the date of the change in control if the performance milestones applicable to the RSUs have been met. In
addition, assuming that some of the performance goals have not been met, another 25% of the unvested RSUs will vest on the date of the change in control unless the deadline for achieving all of the
performance goals has already passed. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>280G Tax Gross-Up  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a named executive officer meets the conditions to severance payments under our change in control severance plan, and if an independent accounting firm
selected by the Company determines that the named executive officer would be subject to excise taxes under Section&nbsp;4999 of the Internal Revenue Code as a result of payments under the change in
control severance plan, due to acceleration of vesting of options, or otherwise, then the Company will pay the named executive officer an additional amount equal to the excise taxes and any income and
excise taxes due as a result of the Company's payment of the excise taxes, along with any interest or penalties stemming from these taxes. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>CEO Severance  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the severance benefits he is entitled to pursuant to our change in control severance plan, Mr.&nbsp;Winningham's offer letter provides that if
his employment is terminated by Theravance without cause, he will receive a lump-sum severance payment of 24&nbsp;months salary plus two times his current target bonus provided he signs
a general release of claims. "Cause" means </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>41</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dq77202_1_42"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Winningham's
(i)&nbsp;unauthorized use or disclosure of the confidential information or trade secrets, which use causes material harm to the Company, (ii)&nbsp;conviction of a felony
under the laws of the United States or any state thereof, (iii)&nbsp;gross negligence, or (iv)&nbsp;repeated failure to perform lawful assigned duties for thirty days after receiving written
notification from the Board of Directors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below reflects the potential payments and benefits to which the named executive officers would be entitled under the arrangements described above. The amounts shown in the
table below assume that both the change in control and an involuntary termination occurred on December&nbsp;31, 2007 and that all eligibility requirements under the change in control severance plan
were met. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following assumptions were used in calculating the values described in the table below: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Value
of Option Acceleration: The value of vesting acceleration was calculated by multiplying the number of unvested option shares by the difference between the closing
price of our Common Stock on December&nbsp;31, 2007 (which was $19.50 per share) and the exercise price of the unvested option shares.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Value
of Restricted Stock and RSU Acceleration: The value of the vesting acceleration was calculated by multiplying the number of unvested restricted shares or unvested RSUs
by the closing price of our Common Stock on December&nbsp;31, 2007 (which was $19.50 per share).
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>280G
Tax Gross-Up: The calculation of the gross-up payments in the table below is based on an excise tax rate of 20%, a 38.6% federal income tax
rate, a 1.45% Medicare tax rate and a 5.7% state income tax rate. For purposes of this calculation, it is assumed that no amounts will be discounted as attributable to reasonable compensation and no
value will be attributed to an executive executing a non-competition agreement. </FONT></DD></DL>
</UL>
<BR>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Bonus for<BR>
Year of<BR>
Termination<BR>
($)(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Cash<BR>
Severance<BR>
($)(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Vacation<BR>
Payout<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Unexercisable<BR>
Options that<BR>
Vest&nbsp;($)(3)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Restricted<BR>
Stock that<BR>
Vests&nbsp;($)(4)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Restricted<BR>
Stock Units<BR>
That Vest(5)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Health and<BR>
Welfare<BR>
($)(6)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Excise Tax<BR>
Gross-Up<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="16%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(c)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(d)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(e)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(f)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(g)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(h)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(i)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(j)</B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="16%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>Rick E Winningham(7)<BR>
Chief Executive Officer</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>377,313</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>2,263,880</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>53,223</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>2,449,946</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>N/A</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>1,106,406</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>45,386</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>6,296,155</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="16%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
Michael W. Aguiar<BR>
SVP, Chief Financial Officer</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
142,853</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
749,977</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
20,432</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
86,952</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
487,500</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
523,614</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
34,039</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
896,619</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
2,941,987</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="16%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
Arthur L. Campbell<BR>
SVP, Technical Operations</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
141,244</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
741,533</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
33,953</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
575,059</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
N/A</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
517,715</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
9,118</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
850,618</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
2,869,240</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="16%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
Patrick P.A. Humphrey<BR>
EVP, Research</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
157,592</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
1,103,141</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
19,025</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
1,196,477</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
N/A</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
N/A</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
27,525</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
0</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
2,503,759</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="16%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
Michael M. Kitt<BR>
SVP, Development</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
147,000</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
771,750</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
35,337</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
578,520</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
N/A</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
538,814</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
34,039</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
947,530</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
3,052,990</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Reflects
payment of the officer's 2007 target bonus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Reflects
payment of 1.5 or 2&nbsp;times the officer's base salary and target bonus.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Reflects
full vesting of unvested stock options.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Reflects
full vesting of all unvested restricted stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Reflects
vesting of 25% of each officer's RSUs. As of December&nbsp;31, 2007, none of the performance goals applicable to the RSUs had been met and thus no additional RSUs would
vest.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>Reflects
the cost of each officer's COBRA premiums for 18 or 24&nbsp;months, as applicable.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=1>If
Mr.&nbsp;Winningham's employment had been terminated by Theravance without cause on December&nbsp;31, 2007 other than in connection with a change in control, he would have
been entitled to receive the cash severance payments indicated in column&nbsp;(c) and the vacation payout in column&nbsp;(d) but no other benefits. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>42</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><B>SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Equity Compensation Plans  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides certain information with respect to all of our equity compensation plans in effect as of December&nbsp;31, 2007: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="32%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Plan Category<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of securities to be<BR>
issued upon exercise of<BR>
outstanding options,<BR>
warrants and rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Weighted-average<BR>
exercise price of<BR>
outstanding options,<BR>
warrants and rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of securities<BR>
remaining available<BR>
for future issuance under<BR>
equity compensation plans<BR>
(excluding securities<BR>
reflected in column&nbsp;(a))</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="32%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(a)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(b)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(c)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Equity compensation plans approved by security holders</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13,480,669</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16.63</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,074,079</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Equity compensation plans not approved by security holders</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13,480,669</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16.63</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,074,079</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
11,435,786 shares issuable upon exercise of outstanding options and 2,044,883 shares issuable upon vesting of outstanding restricted stock units.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Does
not take into account outstanding restricted stock units as these awards have no exercise price.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
480,929 shares of Common Stock available for issuance under our Employee Stock Purchase Plan, including the 300,000 shares described in Proposal&nbsp;2. </FONT></DD></DL>


<P style="font-family:times;"><FONT SIZE=2><B>RELATED PERSON TRANSACTIONS  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transactions, arrangements or relationships in which we were, are or will be a participant and the amount involved exceeds $120,000, and in which any related
person had, has or will have a direct or indirect material interest are subject to review, approval or ratification by our Board or a committee of our Board. Our Audit Committee, which has the
principal responsibility for reviewing related person transactions, has adopted written policies and procedures with respect to related person transactions. In conformance with SEC regulations, these
policies and procedures define related persons to include our
executive officers, our directors and nominees to become a director of our company, any person who is known to us to be the beneficial owner of more than 5% of any class of our voting securities, any
immediate family member of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or in which such person has a
5% or greater beneficial ownership interest. As set forth in our policies and procedures, it is our general policy to approve or ratify related person transactions only when our Board or a committee
of our Board determines that the transaction is in, or is not inconsistent with, our and our stockholders' best interests, including situations where we may obtain products or services of a nature,
quantity or quality, or on other terms, that are not readily available from alternative sources or when the transaction is on terms comparable to those that could be obtained in arm's length dealings
with an unrelated third party. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Legal Services  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has engaged Gunderson Dettmer Stough Villeneuve Franklin&nbsp;&amp; Hachigian,&nbsp;LLP, of which Mr.&nbsp;Gunderson is a founding partner, as its
primary legal counsel. Fees are incurred in the ordinary course of business, and during fiscal year ended December&nbsp;31, 2007, we incurred fees of approximately $586,000. Mr.&nbsp;Gunderson's
interest in these fees is not readily calculable. We believe the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>43</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:times;"><FONT SIZE=2>services
rendered to us by Gunderson Dettmer were on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party. We expect to continue to retain the
services of Gunderson Dettmer in the future. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Agreements with GSK  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002 and 2004 we entered into significant agreements with GSK, which resulted in transactions with GSK during the fiscal year ended December&nbsp;31, 2007
and contemplate transactions that may occur during the current fiscal year. </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> 2002 Horizon Collaboration  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2002, we entered into our Horizon collaboration with GSK to develop and commercialize a long-acting beta2 agonist (LABA) product
candidate for the treatment of asthma and chronic obstructive pulmonary disease (COPD). This product candidate is intended to be administered via inhalation once daily both as a single new medicine
and as part of a new combination medicine
with an inhaled corticosteroid (ICS). Each company contributed four LABA product candidates to the collaboration. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the Horizon program, in 2002 we received from GSK an upfront payment of $10&nbsp;million and sold to an affiliate of GSK shares of our Series&nbsp;E preferred
stock for an aggregate purchase price of $40&nbsp;million. In addition, we were eligible to receive up to $495&nbsp;million in development, approval, launch, and sales milestones and royalties on
the sales of any product resulting from this program. As of December&nbsp;31, 2007, we had received a total of $60&nbsp;million in upfront and development milestone payments. GSK has determined to
focus the collaboration's resources on the development of the lead LABA, GW642444, a GSK-discovered compound, together with the lead ICS. Accordingly, we do not expect to receive any
further milestone payments from the Horizon program. In the event that a LABA product candidate discovered by GSK is successfully developed and commercially launched in multiple regions in the world,
we will be obligated to make milestone payments to GSK of up to $220&nbsp;million. Based on available information, we do not estimate that a significant portion of these potential milestone payments
to GSK are likely to be made in the next three years. In addition, we are entitled to receive the same royalties on product sales of medicines from the Horizon program, regardless of whether the
product candidate originated with Theravance or with GSK. The royalty structure is downward-tiering and would result in an average percentage royalty rate in the low- to
mid-teens at annual net sales of up to approximately $4&nbsp;billion and the average royalty rate would decline to single digits at annual net sales of more than $6&nbsp;billion. Sales
of single agent LABA medicines and combination LABA/ICS medicines would be combined for the purposes of this royalty calculation. </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> 2004 Strategic Alliance  </I></FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2004, we entered into our strategic alliance with GSK. Under this alliance, GSK received an option to license exclusive development and
commercialization rights to product candidates from all of our full drug discovery programs initiated prior to September&nbsp;1, 2007, on pre-determined terms and on an exclusive,
worldwide basis. We are obligated to use diligent efforts to discover and deliver compounds for the alliance and, pursuant to our obligations, we initiated three new full discovery programs between
May&nbsp;2004 and August&nbsp;2007. These three programs are (i)&nbsp;our peripheral Opioid-Induced Bowel Dysfunction (PUMA) program, (ii)&nbsp;our AT1 Receptor&#151;Neprilysin
Inhibitor hypertension (ARNI) program and (iii)&nbsp;our MonoAmine Reuptake Inhibitor chronic pain (MARIN) program. GSK has the right to license product candidates from these three programs, and
must exercise this right no later than sixty days subsequent to the "proof-of-concept" stage, as defined in the strategic alliance agreement. Under the terms of the strategic
alliance, GSK has only one opportunity to license each of our programs. Upon its decision to license a program, GSK is responsible for </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>44</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2>funding
all future development, manufacturing and commercialization activities for product candidates in that program. In addition, GSK is obligated to use diligent efforts to develop and
commercialize product candidates from any program that it licenses. Consistent with our strategy, we are obligated at our sole cost to discover two structurally different product candidates for any
programs that are licensed by GSK under the alliance. If these programs are successfully advanced through development by GSK, we are entitled to receive clinical, regulatory and commercial milestone
payments and royalties on any sales of medicines developed from these programs. For product candidates licensed to date under this agreement, the royalty structure for a product containing one of our
compounds as a single active ingredient would result in an average percentage royalty rate in the low double digits. If a product is successfully commercialized, in addition to any royalty revenue
that we receive, the total upfront and milestone payments that we could receive in any given program that GSK licenses range from $130&nbsp;million to $162&nbsp;million for programs with
single-agent medicines and up to $252&nbsp;million for programs with both a single-agent and a combination medicine. If GSK chooses not to license a program, we retain all rights to the program and
may continue the program alone or with a third party. To date, GSK has licensed our two COPD programs: long-acting muscarinic antagonist (LAMA) and bifunctional muscarinic antagonist-beta2
agonist (MABA). We received a $5&nbsp;million payment from GSK in connection with its license of each of our LAMA and MABA programs in August&nbsp;2004 and March&nbsp;2005, respectively. GSK has
chosen not to license our bacterial infections program, our anesthesia program and our Gastrointestinal Motility Dysfunction program. There can be no assurance that GSK will license any other programs
under the terms of the alliance agreement or at all, which could have an adverse effect on our business and financial condition. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the strategic alliance with GSK, we received from GSK a payment of $20&nbsp;million. In May&nbsp;2004, GSK purchased through an affiliate 6,387,096 shares of our
Class&nbsp;A common stock for an aggregate purchase price of $108.9&nbsp;million. Through December&nbsp;31, 2007, we had received $36&nbsp;million in upfront and milestone payments from GSK
relating to the strategic alliance agreement. In addition, pursuant to a partial exercise of its rights under the governance agreement, upon the closing of our initial public offering on
October&nbsp;8, 2004, GSK purchased through an affiliate an additional 433,757
shares of Class&nbsp;A common stock. GSK's ownership position of our outstanding stock was approximately 15.4% as of February&nbsp;15, 2008. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the alliance, GSK had the right between June&nbsp;1 and July&nbsp;1, 2007, to elect to acquire (call) half of our outstanding shares of common stock at $54.25 per share. On
June&nbsp;29, 2007, GSK elected not to exercise the call, which triggered the right of our stockholders to require us to redeem (put) up to 50% of their common stock at $19.375 per share between
August&nbsp;1 and September&nbsp;12, 2007 with funds provided by GSK. One stockholder exercised his put right for one share of common stock. In exchange for GSK providing the funds to pay the
redemption price for the one share of common stock, and pursuant to our certificate of incorporation, we issued to GSK one share of our Class&nbsp;A common stock. The common share that we redeemed
pursuant to the stockholder's exercise of the put right was retired and cancelled. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Delivery of Documents to Stockholders Sharing an Address  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of brokers with account holders who are Theravance,&nbsp;Inc. stockholders may be "householding" our proxy materials. A single proxy statement will be
delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be
"householding" communications to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in
"householding" and would prefer to receive a separate proxy statement and annual report, please notify your broker and direct your written request to Theravance,&nbsp;Inc., 901&nbsp;Gateway
Boulevard, South San Francisco, California 94080 Attn: Secretary or contact Bradford&nbsp;J. Shafer, Secretary at (650)&nbsp;808-6000. Stockholders who currently receive multiple
copies of the proxy statement at their address and would like to request "householding" of their communications should contact their broker. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>45</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ds77202_other_matters"> </A>
<A NAME="toc_ds77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>OTHER MATTERS</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before
the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment. </FONT></P>

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<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>By Order of the Board of Directors</FONT></TD>
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<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g352051.jpg" ALT="SIGNATURE" WIDTH="241" HEIGHT="81">
 </B></FONT></TD>
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<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>Bradford J. Shafer<BR></FONT> <FONT SIZE=2><I>Senior&nbsp;Vice&nbsp;President,&nbsp;General&nbsp;Counsel&nbsp;and&nbsp;Secretary</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="48%" style="font-family:times;"><FONT SIZE=2>March&nbsp;7, 2008</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>46</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ea77202_appendix_a_employee_stock_purchase_plan"> </A>
<A NAME="toc_ea77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>Appendix&nbsp;A    <BR>    <BR>    Employee Stock Purchase Plan    <BR>    </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="eb77202_theravance,_inc._2004_employee__the03340"> </A>
<A NAME="toc_eb77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>Theravance,&nbsp;Inc.    <BR>    <BR>    2004 Employee Stock Purchase Plan    <BR>    <BR>    (As Adopted May&nbsp;27, 2004 and Amended on April&nbsp;19, 2005 and December&nbsp;11, 2007)    <BR>    </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec77202_table_of_contents"> </A>
<A NAME="toc_ec77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>TABLE OF CONTENTS    <BR>    </B></FONT></P>

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<TH WIDTH="6%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="4%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="80%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>SECTION&nbsp;1. PURPOSE OF THE PLAN<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;2. ADMINISTRATION OF THE PLAN<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Committee Composition</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Committee Responsibilities</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;3. STOCK OFFERED UNDER THE PLAN<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Authorized Shares</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Anti-Dilution Adjustments</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(c)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Reorganizations</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;4. ENROLLMENT AND PARTICIPATION<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Offering Periods</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Accumulation Periods</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(c)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Enrollment at IPO</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(d)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Enrollment After IPO</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(e)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Duration of Participation</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(f)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Applicable Offering Period</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;5. EMPLOYEE CONTRIBUTIONS<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
3</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Commencement of Payroll Deductions</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Amount of Payroll Deductions</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(c)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Changing Withholding Rate</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(d)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Discontinuing Payroll Deductions</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(e)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Limit on Number of Elections</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;6. WITHDRAWAL FROM THE PLAN<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Withdrawal</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Re-Enrollment After Withdrawal</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;7. CHANGE IN EMPLOYMENT STATUS<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Termination of Employment</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Leave of Absence</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(c)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Death</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;8. PLAN ACCOUNTS AND PURCHASE OF SHARES<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Plan Accounts</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Purchase Price</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(c)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Number of Shares Purchased</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(d)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Available Shares Insufficient</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(e)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Issuance of Stock</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(f)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Tax Withholding</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(g)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Unused Cash Balances</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(h)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Stockholder Approval</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;9. LIMITATIONS ON STOCK OWNERSHIP<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Five Percent Limit</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Dollar Limit</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;10. RIGHTS NOT TRANSFERABLE<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
6</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;11. NO RIGHTS AS AN EMPLOYEE<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
6</FONT></TD>
</TR>
</TABLE>
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<BR>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-i</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=52,EFW="2183412",CP="THERAVANCE, INC.",DN="1",CHK=221704,FOLIO='A-i',FILE='DISK124:[08ZAG2.08ZAG77202]EC77202A.;9',USER='MOBRIEN',CD=';6-MAR-2008;13:57' -->
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;12. NO RIGHTS AS A STOCKHOLDER<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;13. SECURITIES LAW REQUIREMENTS<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;14. AMENDMENT OR DISCONTINUANCE<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>General Rule</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Impact on Purchase Price</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
SECTION&nbsp;15. DEFINITIONS<BR></FONT>
</TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(a)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Accumulation Period</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(b)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Board</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(c)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Code</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(d)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Committee</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(e)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Company</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(f)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Compensation</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(g)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Corporate Reorganization</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(h)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Eligible Employee</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(i)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Exchange Act</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(j)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Fair Market Value</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(k)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>IPO</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(l)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Offering Period</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(m)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Participant</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(n)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Participating Company</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(o)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Plan</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(p)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Plan Account</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(q)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Purchase Price</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(r)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Stock</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="6%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(s)</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Subsidiary</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-ii</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
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<A NAME="toc_ee77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>THERAVANCE,&nbsp;INC.</B></FONT><FONT SIZE=2><B>    <BR>    <BR>    </B></FONT><FONT SIZE=2><B>2004 EMPLOYEE STOCK PURCHASE PLAN</B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;PURPOSE OF THE PLAN.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board adopted the Plan effective as of the date of the IPO. The Plan shall be implemented on such date following its effectiveness as shall be determined by
the Board in its discretion. The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Company by purchasing Stock from
the Company on favorable terms and to pay for such purchases through payroll deductions. The Plan is intended to qualify for favorable tax treatment under section&nbsp;423 of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;ADMINISTRATION OF THE PLAN.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Committee Composition.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall administer the Plan. The Committee shall consist exclusively of
one or more directors of the Company, who shall be appointed by the Board. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Committee Responsibilities.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall interpret the Plan and make all other policy decisions
relating to the operation of the Plan. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;STOCK OFFERED UNDER THE PLAN.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Authorized Shares.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The number of shares of Stock available for purchase under the Plan shall be 925,000(1)
(subject to adjustment pursuant to Subsection&nbsp;(b) below). </FONT></P>

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>All
share numbers reflect the reverse stock split approved in connection with the IPO. Reflects 300,000 shares increase approved by the stockholders on June&nbsp;30, 2005. Reflects
300,000 shares increase approved by the Compensation Committee of the Board on December&nbsp;11, 2007, subject to approval by stockholders at the Annual Stockholders Meeting on April&nbsp;22,
2008. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Anti-Dilution Adjustments.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of shares of Stock offered under the Plan, the
2,500-share limitation described in Section&nbsp;8(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately for any increase or decrease
in the number of outstanding shares of Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without
receipt or payment of consideration by the Company, the distribution of the shares of a Subsidiary to the Company's stockholders, or a similar event. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Reorganizations.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Any other provision of the Plan notwithstanding, immediately prior to the effective time
of a Corporate Reorganization, the Offering Period and Accumulation Period then in progress shall terminate and shares shall be purchased pursuant to Section&nbsp;8, unless the Plan is continued or
assumed by the surviving corporation or its parent corporation. The Plan shall in no event be construed to restrict in any way the Company's right to undertake a dissolution, liquidation, merger,
consolidation or other reorganization. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;ENROLLMENT AND PARTICIPATION.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Offering Periods.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;While the Plan is in effect, four overlapping Offering Periods shall commence in each
calendar year. The Offering Periods shall consist of the 27-month periods commencing on each February&nbsp;1, May&nbsp;1, August&nbsp;1, and November&nbsp;1, except that: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;The
first Offering Period under the Plan shall commence on the date designated by the Board and shall end on the date 27&nbsp;months later. </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-1</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;The
Committee may determine that the first Offering Period applicable to the Eligible Employees of a new Participating Company shall commence on any date specified by
the Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;An
Offering Period shall in no event be longer than 27&nbsp;months. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;The
Committee may vary the beginning and ending dates of an Offering Period at any time prior to the commencement of an Offering Period or at any time during an
Offering Period to be effective following the next purchase date. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Accumulation Periods.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;While the Plan is in effect, four Accumulation Periods shall commence in each
calendar year. The Accumulation Periods shall consist of the three-month periods commencing on each February&nbsp;1, May&nbsp;1, August&nbsp;1, and November&nbsp;1, except that: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;The
first Accumulation Period shall commence on the date designated by the Board and end on the earliest of the next January&nbsp;31, April&nbsp;30, July&nbsp;31,
or October&nbsp;31 unless otherwise provided by the Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;The
Committee may determine that the first Accumulation Period applicable to the Eligible Employees of a new Participating Company shall commence on any date specified
by the Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;The
Committee may vary the beginning and ending dates of an Accumulation Period at any time to be effective following the next purchase date. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Enrollment at IPO.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If the Board elects to implement the Plan effective on the date of the IPO, then each
individual who, on the day of the IPO, qualifies as an Eligible Employee shall automatically become a Participant on such day. Each Participant who was automatically enrolled on the day of the IPO
shall file the prescribed enrollment form with the Company. The enrollment form shall be filed at the prescribed location within 10 business days after the Company files&nbsp;a registration
statement on Form&nbsp;S-8 for the shares of Stock offered under the Plan. If a Participant who was automatically enrolled on the day of the IPO fails to file such form in a timely
manner, then such Participant shall be deemed to have withdrawn from the Plan under Section&nbsp;6(a). A former Participant who is deemed to have withdrawn from the Plan shall not be a Participant
until he or she re-enrolls in the Plan under Subsection&nbsp;(d) below. Re-enrollment may be effective only at the commencement of an Offering Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Enrollment After IPO.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If the Plan is implemented subsequent to the date of the IPO, then each Eligible
Employee may elect to become a Participant on the first day of the first Offering Period by filing the prescribed enrollment form with the Company. The enrollment form shall be filed at the prescribed
location not later than the day designated by the Company but in any event prior to the commencement of the Offering Period. In the case of any individual who qualifies as an Eligible Employee on the
first day of any Offering Period other than the first Offering Period, he or she may elect to become a Participant by filing the prescribed enrollment form with the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Duration of Participation.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Once enrolled in the Plan, a Participant shall continue to participate in the
Plan until he or she: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;Reaches
the end of the Accumulation Period in which his or her employee contributions were discontinued under Section&nbsp;5(d) or 9(b); </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;Is
deemed to withdraw from the Plan under Subsection&nbsp;(c) above; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;Withdraws
from the Plan under Section&nbsp;6(a); or </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;Ceases
to be an Eligible Employee. </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-2</FONT></P>

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<UL>
<UL>
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<P style="font-family:times;"><FONT SIZE=2>A
Participant whose employee contributions were discontinued automatically under Section&nbsp;9(b) shall automatically resume participation at the beginning of the earliest Accumulation Period
ending in the next calendar year, if he or she then is an Eligible Employee. In all other cases, a former Participant may again become a Participant, if he or she then is an Eligible Employee, by
following the procedure described in Subsection&nbsp;(d) above. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Applicable Offering Period.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;For purposes of calculating the Purchase Price under Section&nbsp;8(b), the
applicable Offering Period shall be determined as follows: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;Once
a Participant is enrolled in the Plan for an Offering Period, such Offering Period shall continue to apply to him or her until the earliest of (A)&nbsp;the end
of such Offering Period, (B)&nbsp;the end of his or her participation under Subsection&nbsp;(e) above or (C)&nbsp;re-enrollment for a subsequent Offering Period under
Paragraph&nbsp;(ii), (iii)&nbsp;or (iv)&nbsp;below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;In
the event that the Fair Market Value of Stock on the last trading day before the commencement of the Offering Period for which the Participant is enrolled is higher
than on the last trading day before the commencement of any subsequent Offering Period, the Participant shall automatically be re-enrolled for such subsequent Offering Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;If
Section&nbsp;14(b) applies, the Participant shall automatically be re-enrolled for a new Offering Period. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;Any
other provision of the Plan notwithstanding, the Company (at its sole discretion) may determine prior to the commencement of any new Offering Period that all
Participants shall be re-enrolled for such new Offering Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;When
a Participant reaches the end of an Offering Period but his or her participation is to continue, then such Participant shall automatically be
re-enrolled for the Offering Period that commences immediately after the end of the prior Offering Period. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;EMPLOYEE CONTRIBUTIONS.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Commencement of Payroll Deductions.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A Participant may purchase shares of Stock under the Plan solely by
means of payroll deductions. Payroll deductions shall commence as soon as reasonably practicable after the Company has received the prescribed enrollment form. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Amount of Payroll Deductions.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;An Eligible Employee shall designate on the enrollment form the portion of
his or her Compensation that he or she elects to have withheld for the purchase of Stock. Such portion shall be a whole percentage of the Eligible Employee's Compensation, but not less than 1% nor
more than 15%. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Changing Withholding Rate.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If a Participant wishes to change the rate of payroll withholding, he or she may
do so by filing a new enrollment form with the Company at the prescribed location at any time. The new withholding rate shall be effective as soon as reasonably practicable after the Company has
received such form. The new withholding rate shall be a whole percentage of the Eligible Employee's Compensation, but not less than 1% nor more than 15%. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Discontinuing Payroll Deductions.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If a Participant wishes to discontinue employee contributions entirely,
he or she may do so by filing a new enrollment form with the Company at the prescribed location at any time. Payroll withholding shall cease at the date requested by the Participant or thereafter as
soon as reasonably practicable after the Company has received such form. (In addition, employee contributions may be discontinued automatically pursuant to Section&nbsp;9(b).) A Participant who has
discontinued employee contributions may resume such contributions by filing a new enrollment form with the Company at the prescribed location. Payroll withholding shall resume as soon as reasonably
practicable after the Company has received such form. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-3</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Limit on Number of Elections.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No Participant shall make more than 2 elections under Subsection&nbsp;(c)
or (d)&nbsp;above during any Accumulation Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;WITHDRAWAL FROM THE PLAN.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Withdrawal.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A Participant may elect to withdraw from the Plan by filing the prescribed form with the
Company at the prescribed location at any time before the last day of an Accumulation Period. As soon as reasonably practicable thereafter, payroll deductions shall cease and the entire amount
credited
to the Participant's Plan Account shall be refunded to him or her in cash. No partial withdrawals shall be permitted. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Re-Enrollment After Withdrawal.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A former Participant who has withdrawn from the Plan shall not
be a Participant until he or she re-enrolls in the Plan under Section&nbsp;4(d). Re-enrollment may be effective only at the commencement of an Offering Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;CHANGE IN EMPLOYMENT STATUS.  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Termination of employment as an Eligible Employee for any reason, including
death, shall be treated as an automatic withdrawal from the Plan under Section&nbsp;6(a). (A transfer from one Participating Company to another shall not be treated as a termination of employment.) </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Leave of Absence.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the Plan, employment shall not be deemed to terminate when the
Participant goes on a military leave, a sick leave or another </FONT><FONT SIZE=2><I>bona fide</I></FONT><FONT SIZE=2> leave of absence, if the leave was approved by the Company in writing.
Employment, however, shall be deemed to terminate 90&nbsp;days after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work. Employment shall be
deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Death.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of the Participant's death, the amount credited to his or her Plan Account shall be
paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant's estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;PLAN ACCOUNTS AND PURCHASE OF SHARES.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Plan Accounts.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company shall maintain a Plan Account on its books in the name of each Participant.
Whenever an amount is deducted from the Participant's Compensation for purposes of the Plan, such amount shall be credited to the Participant's Plan Account. Amounts credited to Plan Accounts shall
not be trust funds and may be commingled with the Company's general assets and
applied to general corporate purposes. No interest shall be credited to Plan Accounts, except to the extent otherwise provided by the Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Purchase Price.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Price for each share of Stock purchased at the close of an Accumulation Period
shall not be less than the lower of: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;85%
of the Fair Market Value of such share on the last trading day before the commencement of the applicable Offering Period (as determined under Section&nbsp;4(f))
or, in the case of the first Offering Period under the Plan, 85% of the price at which one share of Stock is offered to the public in the IPO; or </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;85%
of the Fair Market Value of such share on the last trading day in such Accumulation Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;The
Committee may determine at any time prior to the start of an Accumulation Period that the Purchase Price will be such percentage of the Fair Market Value as the </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-4</FONT></P>

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<UL>
<UL>
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<P style="font-family:times;"><FONT SIZE=2>Committee
shall determine provided that the price shall not be lower than 85% nor higher than 100% of the Fair Market Value of such share on the last trading day before the commencement of the
applicable Offering Period or on the last trading day of an Accumulation Period (whichever of such days is selected by the Committee). </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Number of Shares Purchased.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As of the last day of each Accumulation Period, each Participant shall be
deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection&nbsp;(c), unless the Participant has previously elected to withdraw from the Plan in
accordance with Section&nbsp;6(a). The amount then in the Participant's Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company
with the funds in the Participant's Plan Account. The foregoing notwithstanding, no Participant shall purchase more than 2,500 shares of Stock with respect to any Accumulation Period nor more than the
amounts of Stock set forth in Sections&nbsp;3(a) and 9(b). The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection&nbsp;(c),
shall be (i)&nbsp;rounded down to the next lower whole share or (ii)&nbsp;credited as a fractional share. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Available Shares Insufficient.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event that the aggregate number of shares that all Participants elect
to purchase during an Accumulation Period exceeds the maximum number of shares remaining available for issuance under Section&nbsp;3, then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance by a fraction. The numerator of such fraction is the number of shares that such Participant has elected to purchase, and
the denominator of such fraction is the number of shares that all Participants have elected to purchase. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Issuance of Stock.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Certificates representing the shares of Stock purchased by a Participant under the Plan
shall be issued to him or her as soon as reasonably practicable after the close of the applicable Accumulation Period, except that the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee (unless the Participant has elected that certificates be issued to him or her). Shares may be registered in the name of the Participant or
jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Tax Withholding.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;To the extent required by applicable federal, state, local or foreign law, a Participant
shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any
shares of Stock under the Plan until such obligations are satisfied. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Unused Cash Balances.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;An amount remaining in the Participant's Plan Account that represents the Purchase
Price for any fractional share shall be carried over in the Participant's Plan Account to the next Accumulation Period. Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares that could not be purchased by reason of Subsection&nbsp;(c) above, Section&nbsp;3 or Section&nbsp;9(b) shall be refunded to the Participant in cash, without
interest. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Stockholder Approval.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Any other provision of the Plan notwithstanding, no shares of Stock shall be
purchased under the Plan unless and until the Company's stockholders have approved the adoption of the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;LIMITATIONS ON STOCK OWNERSHIP.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Five Percent Limit.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Any other provision of the Plan notwithstanding, no Participant shall be granted a
right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing more than 5% of the total combined </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-5</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>voting
power or value of all classes of stock of the Company or any parent or Subsidiary of the Company. For purposes of this Subsection&nbsp;(a), the following rules shall apply: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;Ownership
of stock shall be determined after applying the attribution rules of section&nbsp;424(d) of the Code; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;Each
Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;Each
Participant shall be deemed to have the right to purchase 2,500 shares of Stock under this Plan with respect to each Accumulation Period. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Dollar Limit.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Any other provision of the Plan notwithstanding, no Participant shall purchase Stock with a
Fair Market Value in excess of the following limit: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;In
the case of Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A)&nbsp;$25,000 minus
(B)&nbsp;the Fair Market Value of the Stock that the Participant previously purchased in the current calendar year (under this Plan and all other employee stock purchase plans of the Company or any
parent or Subsidiary of the Company). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;In
the case of Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A)&nbsp;$50,000 minus
(B)&nbsp;the Fair Market Value of the Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the
Company) in the current calendar year and in the immediately preceding calendar year. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;In
the case of Stock purchased during an Offering Period that commenced in the second preceding calendar year, the limit shall be equal to (A)&nbsp;$75,000 minus
(B)&nbsp;the Fair Market Value of the Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the
Company) in the current calendar year and in the two preceding calendar years. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>For
purposes of this Subsection&nbsp;(b), the Fair Market Value of Stock shall be determined in each case as of the beginning of the Offering Period in which such Stock is purchased. Employee stock
purchase plans not described in section&nbsp;423 of the Code shall be disregarded. If a Participant is precluded by this Subsection&nbsp;(b) from purchasing additional Stock under the Plan, then
his or her employee contributions shall automatically be discontinued and shall automatically resume at the beginning of the earliest Accumulation Period ending in the next calendar year (if he or she
then is an Eligible Employee). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;RIGHTS NOT TRANSFERABLE.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights of any Participant under the Plan, or any Participant's interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not
be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution. If a Participant in
any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws of descent and distribution, then such act
shall be treated as an election by the Participant to withdraw from the Plan under Section&nbsp;6(a). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;NO RIGHTS AS AN EMPLOYEE.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for
any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each,
to terminate his or her employment at any time and for any reason, with or without cause. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-6</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;NO RIGHTS AS A STOCKHOLDER.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Participant shall have no rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such
shares have been purchased on the last day of the applicable Accumulation Period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;SECURITIES LAW REQUIREMENTS.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares of Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements
of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock
exchange or other securities market on which the Company's securities may then be traded. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENT OR DISCONTINUANCE.  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;General Rule.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Board shall have the right to amend, suspend or terminate the Plan at any time and
without notice. Except as provided in Section&nbsp;3, any increase in the aggregate number of shares of Stock that may be issued under the Plan shall be subject to the approval of the Company's
stockholders. In addition, any other amendment of the Plan shall be subject to the approval of the Company's stockholders to the extent required by any applicable law or regulation. The Plan shall
terminate automatically 20&nbsp;years after its adoption by the Board, unless (a)&nbsp;the Plan is extended by the Board and (b)&nbsp;the extension is approved within 12&nbsp;months by a vote
of the stockholders of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;Impact on Purchase Price.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Subsection&nbsp;(b) shall apply in the event that (i)&nbsp;the Company's
stockholders during an Accumulation Period approve an increase in the number of shares of Stock that
may be issued under Section&nbsp;3 and (ii)&nbsp;the aggregate number of shares to be purchased at the close of such Accumulation Period exceeds the number of shares that remained available under
Section&nbsp;3 before such increase. In such event, the Purchase Price for each share of Stock purchased at the close of such Accumulation Period shall be the lower of: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;The
higher of (A)&nbsp;85% of the Fair Market Value of such share on the last trading day before the commencement of the applicable Offering Period or, in the case of
the first Offering Period under the Plan, 85% of the price at which one share of Stock is offered to the public in the IPO (if applicable) or (B)&nbsp;85% of the Fair Market Value of such share on
the last trading day before the date the Company's stockholders approve such increase; or </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;85%
of the Fair Market Value of such share on the last trading day in such Accumulation Period. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>Immediately
after the close of such Accumulation Period, a new Offering Period shall commence for all Participants. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>SECTION&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS.  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Accumulation Period</B></FONT><FONT SIZE=2>" means a period during which contributions may be made toward the purchase of Stock under the Plan,
as determined pursuant to Section&nbsp;4(b). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Board</B></FONT><FONT SIZE=2>" means the Board of Directors of the Company, as constituted from time to time. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Code</B></FONT><FONT SIZE=2>" means the Internal Revenue Code of 1986, as amended. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Committee</B></FONT><FONT SIZE=2>" means a committee of the Board, as described in Section&nbsp;2. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Company</B></FONT><FONT SIZE=2>" means Theravance,&nbsp;Inc., a Delaware corporation. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-7</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Compensation</B></FONT><FONT SIZE=2>" means (i)&nbsp;the total compensation paid in cash to a Participant by a Participating Company,
including salaries, wages, bonuses, incentive compensation, commissions, overtime pay and shift premiums, plus (ii)&nbsp;any pre-tax contributions made by the Participant under
section&nbsp;401(k) or 125 of the Code. "Compensation" shall exclude all non-cash items, moving or relocation allowances, cost-of-living equalization payments,
car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income
attributable to the exercise of stock options, and similar items. The Committee shall determine whether a particular item is included in Compensation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Corporate Reorganization</B></FONT><FONT SIZE=2>" means: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;The
consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization; or </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;The
sale, transfer or other disposition of all or substantially all of the Company's assets or the complete liquidation or dissolution of the Company. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Eligible Employee</B></FONT><FONT SIZE=2>" means any employee of a Participating Company who meets both of the following requirements: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;His
or her customary employment is for more than five months per calendar year and for more than 20&nbsp;hours per week; and </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;He
or she has been an employee of a Participating Company for such period (if any) as the Committee may determine before the beginning of the applicable Offering
Period. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>Officers
of the Company shall not participate in the initial Offering Period or in any subsequent Offering Period unless the Committee announces prior to commencement of an Offering Period that
officers shall be eligible to participate. The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of
any country that has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Exchange Act</B></FONT><FONT SIZE=2>" means the Securities Exchange Act of 1934, as amended. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Fair Market Value</B></FONT><FONT SIZE=2>" means the market price of Stock, determined by the Committee as follows: </FONT></P>

<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;If
the Stock was traded on The Nasdaq National Market or The Nasdaq SmallCap Market on the date in question, then the Fair Market Value shall be equal to the
last-transaction price quoted for such date by such Market; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;If
the Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite
transactions report for such date; or </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;If
none of the foregoing provisions is applicable, then the Committee shall determine the Fair Market Value in good faith on such basis as it deems appropriate. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>Whenever
possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in </FONT><FONT SIZE=2><I>The Wall Street Journal</I></FONT><FONT SIZE=2> or as
reported directly to the Company by Nasdaq or a stock exchange. Such determination shall be conclusive and binding on all persons. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>IPO</B></FONT><FONT SIZE=2>" means the effective date of the registration statement filed by the Company with the Securities and Exchange
Commission for its initial offering of Stock to the public. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-8</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Offering Period</B></FONT><FONT SIZE=2>" means a period with respect to which the right to purchase Stock may be granted under the Plan, as
determined pursuant to Section&nbsp;4(a). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Participant</B></FONT><FONT SIZE=2>" means an Eligible Employee who participates in the Plan, as provided in Section&nbsp;4. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Participating Company</B></FONT><FONT SIZE=2>" means (i)&nbsp;the Company and (ii)&nbsp;each present or future Subsidiary designated by the
Committee as a Participating Company. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Plan</B></FONT><FONT SIZE=2>" means this Theravance,&nbsp;Inc. 2004 Employee Stock Purchase Plan, as it may be amended from time to time. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Plan Account</B></FONT><FONT SIZE=2>" means the account established for each Participant pursuant to Section&nbsp;8(a). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Purchase Price</B></FONT><FONT SIZE=2>" means the price at which Participants may purchase Stock under the Plan, as determined pursuant to
Section&nbsp;8(b). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Stock</B></FONT><FONT SIZE=2>" means the Common Stock of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><B>Subsidiary</B></FONT><FONT SIZE=2>" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-9</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="eg77202_addendum_for_international_participants"> </A>
<A NAME="toc_eg77202_1"> </A>
<BR></FONT><FONT SIZE=2><B>Addendum for International Participants    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may allow Participants who are employed by a Participating Company designated by the Committee, who are not employed by the Company and who work or
reside outside of the United States an opportunity to acquire Common Stock pursuant to the Plan in accordance with such special terms and conditions as the Committee may designate with respect to each
such Participating Company. Without limiting the authority of the Committee, the special terms and conditions which may be established with respect to each such Participating Company, and which need
not be the same for all Participating Companies, include but are not limited to the right to participate, procedures for elections to participate, the payment of any interest with respect to amounts
received from or credited to accounts held for the benefit of Participants, the purchase price of any shares to be acquired, the length of any purchase period, the maximum amount of contributions,
credits or Stock which may be acquired by any Participant, and a Participant's rights in the event of his or her death, disability, withdrawal from the Plan, termination of employment on behalf of the
Company and all matters
related thereto. This Addendum is not subject to Section&nbsp;423 of the Code or any other provision of the Plan that refers to or is based upon such Section. For purposes of United States tax laws,
this Addendum shall be treated as separate and apart from the balance of the Plan. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-10</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>


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<!-- COMMAND=ADD_DEFAULTFONT,"font-family:times;" -->


 </FONT> <FONT SIZE=2><B>THERAVANCE,&nbsp;INC.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> PROXY/VOTING INSTRUCTIONS CARD  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 22, 2008  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby appoints Rick&nbsp;E Winningham and Michael&nbsp;W. Aguiar as proxies, each with full power of substitution, to represent and vote as
designated on the reverse side, all the shares of Common Stock of Theravance,&nbsp;Inc. held of record by the undersigned on February&nbsp;27, 2008, at the Annual Meeting of Stockholders to be
held at the Presidio Room, Embassy Suites Hotel, 250&nbsp;Gateway Boulevard, South San&nbsp;Francisco, California 94080, at 1:00&nbsp;p.m. local time on April&nbsp;22, 2008, or any adjournment
or postponement thereof. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>(Continued and to be marked, dated and signed, on the other side)  </B></FONT></P>

<HR NOSHADE>
<P ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=1>Address Change/Comments (Mark the corresponding box on the reverse side) </FONT></P>

<HR NOSHADE>
<P ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=1><B>^ FOLD AND DETACH HERE ^  </B></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=1><B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR" PROPOSALS&nbsp;2 AND&nbsp;3 BELOW.</B></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" style="font-family:times;"><FONT SIZE=1>Please<BR>
Mark Here<BR>
for Address<BR>
Change or<BR>
Comments</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="77%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1><B>SEE REVERSE SIDE<BR> </B></FONT></TD>
</TR>
</TABLE>
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<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>FOR<BR>
ALL</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>WITHHELD<BR>
FOR ALL</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><BR>
EXCEPTIONS*</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="60%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>ITEM 1 - Election of Directors<BR>
Nominees:</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1><BR>
01 - P. Roy Vagelos, M.D.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="12%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1>02 - Rick E Winningham</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>07 - William H. Waltrip</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1>03 - Jeffrey M. Drazan</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>08 - George M. Whitesides, Ph.D.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1>04 - Robert V. Gunderson, Jr.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>09 - William D. Young</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1>05 - Arnold J. Levine, Ph.D.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="12%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="17%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%" style="font-family:times;"><FONT SIZE=1>06 - Burton G. Malkiel, Ph.D.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="12%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="17%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=5 VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
*Withheld for the nominees you list below: (Write such nominee name or names in the space provided below.)<BR></FONT>
</TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
</TR>
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<TD WIDTH="68%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>FOR</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>AGAINST</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>ABSTAIN</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="68%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>ITEM 2&#151;Approve an amendment to the Theravance, Inc. Employee Stock Purchase Plan (the "ESPP") increasing the aggregate number of shares of common stock authorized for issuance under the ESPP by 300,000
shares, as described in the Proxy Statement.</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="68%" VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
FOR</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
AGAINST</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1><BR>
ABSTAIN</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="68%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>ITEM 3&#151;Ratify the selection by the Audit Committee of the Board of Directors of Ernst &amp; Young&nbsp;LLP as the independent registered public accounting firm of the Company for its fiscal year ending
December&nbsp;31, 2008.</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER" VALIGN="TOP" style="font-family:times;"><FONT SIZE=5><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
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<TD WIDTH="9%" style="font-family:times;"><FONT SIZE=1><B>Signature</B></FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=1><B>Signature</B></FONT></TD>
<TD WIDTH="20%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=1><B>Date</B></FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="49%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="20%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><HR NOSHADE></TD>
</TR>
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<P style="font-family:times;"><FONT SIZE=1><B>NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.  </B></FONT></P>

<HR NOSHADE>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B> <BR>
^ FOLD AND DETACH HERE ^  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONIC VOTING,<BR>
AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Internet and telephone voting is available through 11:59 PM Eastern Time<BR>
on April&nbsp;21, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Your Internet or telephonic vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="45%" ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2><B> INTERNET<BR>
http://www.eproxy.com/thrx</B></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%" ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2><B> TELEPHONE<BR>
1-866-580-9477</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><BR><FONT SIZE=2>Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2><B>OR</B></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2><BR>
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%" style="font-family:times;"><HR NOSHADE></TD>
</TR>
</TABLE></DIV>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>If
you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope. </FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<BR>
<P><br><A NAME="08ZAG77202_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg77202_1">PROPOSAL 1 ELECTION OF DIRECTORS</A></FONT><BR>
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dg77202_2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_di77202_1">PROPOSAL 2 APPROVAL OF AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dk77202_1">PROPOSAL 3 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_dm77202_1">COMPENSATION DISCUSSION AND ANALYSIS</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_ds77202_1">OTHER MATTERS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_ea77202_1">Appendix A Employee Stock Purchase Plan</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_eb77202_1">Theravance, Inc. 2004 Employee Stock Purchase Plan (As Adopted May 27, 2004 and Amended on April 19, 2005 and December 11, 2007)</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_ec77202_1">TABLE OF CONTENTS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_ee77202_1">THERAVANCE, INC. 2004 EMPLOYEE STOCK PURCHASE PLAN</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2 style="font-family:times;"><A HREF="#toc_eg77202_1">Addendum for International Participants</A></FONT><BR>
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