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THERAVANCE, INC.

901 GATEWAY BOULEVARD

SOUTH SAN FRANCISCO, CALIFORNIA 94080

TELEPHONE: (650) 808-6000 FACSIMILE: (650)
808-6095

April 13, 2006

Via Edgar

Securities and Exchange Commission

Division of Corporate Finance

100 F Street, N.E.

Washington, D.C. 20549

  Re:

  Theravance, Inc.

  Form 10-K for the Fiscal Year Ended December 31, 2005

  File Number: 000-30319

Dear Mr. Rosenberg:

This letter responds to the comments set forth in your letter to
Theravance, Inc. (the “Company” or “we”) dated March 30, 2006. For your
convenience, we have repeated and numbered the comments from the March 30
letter in italicized print, and our responses are provided below each comment.

Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, page 35

Collaboration Arrangements, page 36

2004 Strategic Alliance with GSK, page 37

1.                          In light
of the redemption rights held by GSK, please tell us how classification of the
common stock subject to those rights within permanent equity complies with GAAP
particularly EITF D-98.

The Company has considered the accounting guidance in EITF D-98 and the
FRP Section 211/ASR 268, referenced in EITF D-98, in determining the
appropriate treatment for its common stock. This guidance states that securities
redeemable for cash or other assets “be classified outside permanent equity if
they are redeemable (1) at a fixed or determinable price on a fixed or
determinable date, (2) at the option of the holder, or (3) upon the occurrence
of an event that is not solely within the control of the issuer” (EITF D-98,
paragraph 2). These rules are intended to highlight the future cash obligations
attached to the redeemable securities (1).

(1) FRP211/ASR 268, paragraph
5.

Fifty percent (50%) of the Company’s outstanding shares of common stock
(other than the Class A common stock) are subject to redemption in 2007
pursuant to the call rights or the put rights described in the Company’s Form
10-K for the Fiscal Year Ended December 31, 2005 (the “2005 10-K”) and which
rights are referred to herein as the “Call” and the “Put”. The Call will become
exercisable in June 2007 at the option of GSK. In the event that GSK does not
exercise the Call, the Put will become exercisable in August 2007 at the option
of each of the Company’s stockholders. These facts may imply that the Company’s
common stock should be classified outside permanent equity.

However, the Company has no future cash obligations attached to its
common stock. The Call and the Put are required to be funded 100% by GSK, not by the Company. The Company’s obligations under either
the Call or the Put are specifically conditioned on, and subject to, the
requirement that GSK deposit the requisite amounts to fund the share redemption
under the Call or the Put. Thus, the cost of the redemption is limited to the
cash proceeds received by the Company from GSK.

Additionally, we believe the Staff has acknowledged an exception to the
general rule set forth in EITF D-98 in situations where the issuer has an
unconditional right, coupled with the present intent and ability, to satisfy
the redemption by an exchange of the redeemable security for a permanent
security, or where the cost of the redemption is limited to the cash proceeds
to be received by the issuance of a new security that is classified in
permanent equity. If outstanding shares of the Company’s common stock are
redeemed pursuant to the Call or the Put, then pursuant to the Company’s
certificate of incorporation, the redeemed shares are required to be retired
and promptly cancelled and, on the date of such cancellation, the Company is
required to issue to GSK an equal number of shares of Class A common stock,
which would be classified as permanent equity. The effect of this redemption of
our common stock would result in a change of equity held by GSK but would not result in any change to the Company’s cash position,
total stockholders’ equity, total assets, and working capital. Accordingly, the
Company believes that its common stock is appropriately classified within
permanent equity.

Results of Operations, page 39

Research & Development, page 39

2.                                      We
have the following comments about your current disclosure about your research
and development expenses:

a.                                      It
appears that you no longer disclose that you do not track all of these expenses
on a project basis, as you had on page 29 of Amendment #7 to Form S-1 filed on
October 1, 2004. As such, please provide us, in disclosure-type format,
the cost incurred during each period presented and to date for each of your major
projects, to the extent you are able. To the extent that you are unable, please
provide us, in disclosure-type format,: (i) a statement to that effect;
(ii) an explanation of why management does not maintain and evaluate
research and development

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costs by major project; and, (iii) other
quantitative or qualitative disclosure that indicates the amount of the company’s
resources being used on each major project.

In disclosure-type format, the Company responds as follows to the Staff’s
comment:

“We do not track, and have not tracked, all of the individual
components (specifically the internal cost components) of our research and
development expenses on a program basis. The Company does not have the systems
and processes in place to accurately capture these costs on a program basis in
a manner that would be consistent with U.S. GAAP.”

The Company supplementally informs the Staff as follows:

Although we do not track all of the components of our internal costs,
the external costs of conducting the Phase 3 clinical studies for telavancin,
our most advanced product candidate, constituted nearly half of the Company’s
research and development expenses for fiscal year 2005 (2). Due to the late
stage of development of the Company’s telavancin program and its concomitant
disproportionate cost as compared to the Company’s other programs, the Company
has been tracking and reporting external research and development costs
associated with the telavancin Phase 3 studies (3) as well as providing the
anticipated length of time that the costs associated with these studies will
continue to increase (4).  With respect
to the Company’s long-acting beta2 agonist (LABA), long-acting muscarinic antagonist (LAMA) and
bifunctional muscarinic antagonist beta2-agonist
(MABA) programs, an affiliate of GSK has licensed rights to those programs
pursuant to the terms of the 2002 Beyond Advair agreement and the 2004
Strategic Alliance, and is therefore obligated to fund all development,
manufacturing and commercialization activities for those programs (5).

The Company respectfully submits that, given our size, the time and
expense of implementing processes to capture the early stage program costs, as
well as the inefficiencies that any such systems would entail, do not justify
designing and executing such systems. If the Company did accurately capture these
costs, the amount spent to date on any of the Company’s programs that are in
pre-clinical development, or Phase 1 or Phase 2 clinical studies would not be
useful for investors to extrapolate future costs relating to such programs, as
numerous factors could cause great variability of such costs, including whether
the Company collaborates with a third party that could assume a portion of the
development costs, the potential cessation of a program based on results of

(2) See pages 4 and 35 of the
2005 10-K for the total cost of research and development activities during
fiscal year 2005, and page 31 of the 2005 10-K for the external costs of
telavancin Phase 3 studies from October 4, 2004 through December 31, 2005.

(3) See pages 13 and 35 of the
Form 10-Q for the fiscal quarter ended March 31, 2005, pages 14 and 36 of
the Form 10-Q for the fiscal quarter ended June 30, 2005, pages 15 and 36
of the Form 10-Q for the fiscal quarter ended September 30, 2005 and pages
31 and 36 of the 2005 10-K.

(4) See pages 13 and 16 of the
Form 10-Q for the fiscal quarter ended March 31, 2005, pages 14 and 17 of
the Form 10-Q for the fiscal quarter ended June 30, 2005, pages 15 and 17
of the Form 10-Q for the fiscal quarter ended September 30, 2005 and pages
36 and 40 of the 2005 10-K.

(5) See pages 7, 9, 10, 37 and
61 of the 2005 10-K.

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clinical studies (6) and the unpredictability of the length of clinical
studies and the timing of regulatory approvals.

b.                                      It
appears that you no longer disclose that you are unable to estimate the length
of time or the costs that will be required to complete the development of your
product candidates, as you had on page 27 of Amendment #7 to Form S-1 filed on
October 1, 2004. In addition, on page 16 of this filing, you disclose when you
expect to complete the first of your Phase 3 clinical studies for telavancin,
which would appears to be one of your candidates. As such, please provide us,
in disclosure-type format, the following information for each major project or
point us to the specific locations within your document where each bullet is
addressed:

•                  The nature, timing and estimated costs of the efforts necessary to
complete the project;

•                  The anticipated completion dates; and finally

•                  The period in which material net cash inflows from significant projects
are expected to commence.

In so doing, indicate the amount or range of
estimated costs and timing to complete the phase in process and each future
phase. To the extent that information is not estimable, state those facts and
circumstances indicating the uncertainties that preclude you from making a
reasonable estimate.

In disclosure-type format, the Company responds as follows to the first
two bullet points of the Staff’s comments with regard to telavancin, the
Company’s only product candidate currently in Phase 3 clinical studies. In the
subsequent paragraphs, the Company supplementally sets forth the facts and
circumstances precluding the Company from making a reasonable estimate of (a)
the information called for by the third bullet point of the Staff’s comment
with respect to telavancin and (b) the information called for by all three
bullet points with respect to the Company’s other programs. The disclosure-type
format referenced in the first sentence of this paragraph follows:

“The efforts necessary to complete the telavancin program for which we
are responsible include: (i) conclusion of patient enrollment, which is
estimated to occur for the complicated skin and skin structure infections
(cSSSI) study during the first half of 2006 and for the hospital-acquired
pneumonia (HAP) study during the second half of 2006; (ii) publication of
the results of these studies; (iii) submission of a new drug application
(NDA) to the United States Food and Drug Administration (FDA) for the cSSSI
study, which is estimated to occur during the second half of 2006, and a subsequent
amendment of the NDA to include the HAP indication; and (iv) manufacture
of launch supply of drug product by third party manufacturers, which is
anticipated to be complete by the second half of 2007. The completion of
patient enrollment, publication of results and submission

(6) See, e.g. page 4 of the
2005 10-K regarding the discontinuation of the Company’s overactive bladder
program based on the results of Phase 1 studies.

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of an NDA principally involve costs of third party contract research
organizations involved in the Phase 3 studies and consultants involved in the
NDA process, and the manufacture of launch supply principally involves costs of
third party contract manufacturing organizations. We anticipate that our
aggregate external costs associated with the telavancin Phase 3 program to be
between $125 million and $150 million.”

The Company supplementally informs the Staff as follows:

With regard to potential cash inflows to the Company related to telavancin,
on page 36 of the 2005 10-K in the “Collaboration Arrangements”
section of Item 7, the Company already discloses that up to $136
million of the potential $156 million of clinical and regulatory milestone
payments from Astellas Pharma Inc. (“Astellas”), the Company’s collaborative
partner in the telavancin program, are payable by Astellas upon completion of
clinical studies and submission and approval of NDAs for cSSSI and HAP (7). The
potential royalty revenue from Astellas, however, is subject to a number of
contingencies, including the Phase 3 studies concluding that telavancin is
safe and effective in humans, the FDA’s approval of the NDA, the timely and
regulatory-compliant manufacture of sufficient quantities of telavancin for
commercial launch, appropriate pre-launch preparation by the Company and
Astellas to enable a successful launch of telavancin, the acceptance of
telavancin by physicians and the medical community in general, and the relative
success of competitive products (8).  These
prerequisites to the commercialization of telavancin are dependent upon the
performance of third parties, decisions by the FDA and other uncertainties that
make the timing and likelihood of receiving royalties, if any, highly
uncertain.

With respect to the Company’s earlier-stage programs, the anticipated
completion dates and therefore the anticipated costs of completion of these
programs are highly variable and depend on numerous factors including the
results of pre-clinical and clinical studies, the Company’s ability to
collaborate with third parties that could assume some or all of the costs of
such development programs, the pace at which our collaborative partners move
programs forward, and the timing of approvals sought from the FDA and foreign
regulatory agencies.  Given these
contingencies, an estimation of completion dates and the costs to reach
completion for each of these programs would be subject to a high degree of
variability rendering such estimations not meaningful and potentially
misleading to investors.  In response to
the third bullet point of the Staff’s comment, the Company respectfully submits
that it does not have the ability to accurately estimate the

(7) This information is also
disclosed on page 6 of the 2005 10-K in Item 1 under “Our Relationship with
Astellas”.

(8) See Risk Factors in Item 1A
of the 2005 10-K, in particular the risk factors entitled “If the product candidates that we develop on
our own or through collaborative partners are not approved by regulatory
agencies, including the Food and Drug Administration, we will be unable to
commercialize them” and “If our product candidates, in particular telavancin,
which is currently in Phase 3 clinical studies, are determined to be
unsafe or ineffective in humans, our business will be adversely affected” on
page 16, “If our partners do not
satisfy their obligations under our agreements with them, we will be unable to
develop our partnered product candidates as planned” on page 18, “We rely on a number of manufacturers for our
product candidates and our business will be seriously harmed if these
manufacturers are not able to satisfy our demand and alternative sources are
not available” on page 20, “We
face substantial competition from companies with more resources and experience
than we have, which may result in others discovering, developing or
commercializing products before or more successfully than we do” on page
21 and “If approved, telavancin may not
be accepted by physicians, patients, third party payors, or the medical community
in general” on page 22.

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 timing of material net cash
inflows, if any, from the Company’s programs.  For the Company’s programs that have not been
licensed by a third party and are currently in pre-clinical development and
Phase 1 and Phase 2 studies, the hurdles and risks that these programs face,
and the