Core Viewpoint - Goldman Sachs initiated coverage on Innoviva Inc. with a Sell rating and a price target of $17.00, resulting in a pre-market share decline of over 1% Group 1: Company Strategy and Performance - Innoviva has successfully reinvested cash flows from royalties on GSK's respiratory drugs Breo Ellipta and Anoro Ellipta into its critical care and infectious disease portfolio, leading to an 80% outperformance relative to the XBI index since 2021 [1] Group 2: Future Risks and Challenges - The company faces rising risks ahead of its 2031 royalty patent cliff, with GSK royalties expected to account for 60% of 2025 revenues, which will be impacted by loss of exclusivity and Inflation Reduction Act-related pressures [2] - There is increased pressure on Innoviva's infectious disease therapeutics segment due to a challenging commercial environment [3] - Concerns have been raised regarding the company's key 2026 pipeline launch, which may face competition from a generic standard of care and might not fully utilize Innoviva's existing commercial platform [3]

Group 1 - Innoviva, Inc. (NASDAQ: INVA) is highlighted as a promising biotech stock with a recent price target increase from H.C. Wainwright to $45 from $40, maintaining a Buy rating [1] - Oppenheimer initiated coverage of Innoviva with an Outperform rating and a price target of $35, emphasizing the significance of its specialty therapeutics and royalty commercial results for share performance [2] - The company is engaged in the development, commercialization, and financial management of biopharmaceuticals, although some analysts suggest that certain AI stocks may offer better investment potential [3]

Innoviva FY Conference Summary Company Overview - Innoviva is focused on maximizing the value of royalty streams from respiratory products developed in collaboration with Glaxo Group Limited (GSK) [2][3] - The company has transitioned to a three-part business structure, emphasizing capital allocation in high unmet medical needs with strong growth potential [3] Key Business Segments 1. **Royalty Portfolio** - Expected to generate over $1 billion in royalty revenue over the next five years based on analyst consensus [3] - Major products include ANORO® ELLIPTA® and RELVAR®/BREO® ELLIPTA®, which achieved over $2 billion in sales over the last 12 months [6] - Strong intellectual property protection extends revenue longevity into the early 2030s [7] 2. **Innoviva Specialty Therapeutics (IST)** - Achieved approximately $130 million in sales and license revenue in the last 12 months, growing over 50% year-on-year [4] - The platform includes four marketed products and one late-stage pipeline candidate, with significant growth potential [4][8] - Products like GIAPREZA® and XACDURO® are key revenue drivers, with GIAPREZA® expected to see further growth from potential guideline inclusion [9][10] 3. **Strategic Healthcare Investments** - Valued at approximately $450 million, focusing on assets with attractive risk-reward profiles [4] Financial Performance - The therapeutics business has nearly tripled since its formation in 2022, with over 50% year-on-year growth in US product sales [5] - The company has consistently beaten analyst expectations, providing a reliable source of cash flows and profitability [5] Growth Drivers - Recent product launches, including ZEVTERA® and the potential approval of zoliflodacin, are expected to drive further revenue growth [5][12] - IST's products are designed to address significant unmet medical needs, particularly in infectious diseases [10][11] Market Positioning - Innoviva is well-positioned to weather market volatility due to its profitability, cash position, and diversified business structure [13] - The company anticipates reaching over $500 million in annual sales in the U.S. from its current portfolio [13] Conclusion - Innoviva is committed to delivering innovation in areas of critical unmet medical need, with a strong focus on growth and profitability [14]

Summary of Innoviva (INVA) 2025 Conference Call Company Overview - **Company**: Innoviva (INVA) - **Industry**: Healthcare, specifically focusing on respiratory, infectious disease, and critical care therapeutics - **Key Products**: ANORO® ELLIPTA®, RELVAR®/BREO® ELLIPTA®, GIAPREZA®, ZEVTERA®, zoliflodacin Core Business Segments 1. **Royalties**: - Generates approximately **$250 million** in annual revenue, considered resilient and durable [3][26] - Royalties stem from respiratory products co-developed with Glaxo Group Limited (GSK) [2] 2. **Innoviva Specialty Therapeutics (IST)**: - Focuses on infectious disease and critical care, generating over **$100 million** in revenue last year, with a growth rate of **50%** [4][6] - Recent product launches include ZEVTERA® and upcoming zoliflodacin, with aspirations for revenues exceeding **$500 million** in the U.S. [7][20] 3. **Strategic Healthcare Assets**: - Portfolio valued at just under **$500 million**, includes stakes in companies with disruptive potential [4] Growth Potential and Strategy - The IST business is designed for differentiated assets in high unmet medical needs, with plans for both organic and inorganic growth [8][10] - The company is exploring additional investments outside the IST business, particularly in strategic healthcare assets [11] Product Insights - **GIAPREZA®**: - Rapid revenue growth post-relaunch, with potential tailwinds from updated sepsis guidelines [13] - **ZEVTERA®**: - Launched in July, approved for three indications, with positive initial reception [17] - **zoliflodacin**: - Targets uncomplicated gonorrhea, addressing a significant unmet need with a once-dosed oral option [19][20] - Anticipated PDUFA date in December, with potential for telehealth prescriptions [21] Market Dynamics - Drug resistance is a global issue, with Innoviva's products positioned to address rising resistance rates [15][16] - The company is aware of competitive pressures but believes in the resilience of its existing products [29] Strategic Investments - Innoviva has extended credit to Armata, a bacteriophage company, which has shown promising clinical results [30][31] - Investment in Sindeo, focused on neuroscience and depression, with potential for significant value creation [36] Financial Position - Innoviva is well-capitalized with approximately **$400 million** in cash and generating cash flow, allowing for strategic capital deployment [38] Conclusion - Innoviva is positioned for growth through its diversified business segments, innovative product pipeline, and strategic investments, while maintaining a strong financial foundation to navigate market volatility [39]

Financial Data and Key Metrics Changes - The company reported over 50% year-over-year growth in the Innoviva Specialty Therapeutics (IST) business for Q2 [26] - The royalty portfolio has consistently exceeded analyst expectations, with projections of over $1 billion in royalty revenue over the next five years [26][27] - The company expects to achieve over $100 million in net sales in the U.S. this year, with peak portfolio sales potentially exceeding half a billion dollars [21] Business Line Data and Key Metrics Changes - The royalty portfolio includes two major products: RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®, which are well-established and provide stable revenues [9][10] - The IST business has seen significant growth driven by products like GIAPREZA® and XACDURO®, with the latter being one of the most successful antibiotic launches in recent years [15][16] - The company recently launched ZEVTERA®, which is expected to contribute positively to the IST business [17][27] Market Data and Key Metrics Changes - The majority of sales for RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® are generated outside the U.S., with these regions showing higher growth potential due to less competition [10][11] - The IST business is positioned to benefit from the growing threat of antimicrobial resistance, which is a major public health concern [16] Company Strategy and Development Direction - The company has a unique business model that includes a royalty portfolio, a fully integrated biopharma business focused on critical care and infectious disease, and strategic healthcare assets [4] - The strategy involves identifying undervalued assets in areas of high unmet medical need, with a focus on long-term growth and profitability [24][25] - The company aims to leverage its stable revenue base from royalties to support growth in its therapeutics business and strategic investments [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic uncertainty but views it as an opportunity to find attractive investments [6][8] - The company is optimistic about the upcoming FDA PDUFA decision for zoliflodacin, which targets a significant market need [19][20] - Management expects continued growth in the IST business and stable revenue from the royalty portfolio [29] Other Important Information - The company has made significant progress in its strategic healthcare assets, including a promising phase two trial result from Armada Pharmaceutical [27][28] - The company has a history of returning capital to shareholders, including a $100 million share buyback last year [33] Q&A Session Summary Question: What are the growth drivers for the IST business? - Major growth drivers include commercial execution for GIAPREZA® and the successful launch of XACDURO® [15][16] Question: How significant is the upcoming FDA PDUFA decision for zoliflodacin? - The decision is seen as a major milestone with significant market potential due to the high incidence of gonorrhea and resistance issues with current treatments [19][20] Question: What is the sales magnitude opportunity for the IST division? - The company expects over $100 million in net sales this year, with potential peak sales exceeding half a billion dollars [21] Question: How does the company prioritize capital allocation between its business segments? - The IST business is generating revenue on its own, allowing for thoughtful and opportunistic capital allocation [31][32] Question: What types of assets is the company looking to acquire? - The company is interested in both unique situations and more mainstream assets needing capital, focusing on areas where it can add value [34][35]

Financial Data and Key Metrics Changes - The company reported over 50% year-over-year growth in the Innoviva Specialty Therapeutics (IST) business for Q2 [27] - The royalty portfolio has consistently exceeded analyst expectations, with projections of over $1 billion in royalty revenue over the next five years [27][28] - The IST business is expected to achieve over $100 million in net sales in the U.S. this year, with peak portfolio sales projected to exceed half a billion dollars [22] Business Line Data and Key Metrics Changes - The royalty portfolio includes two major products: RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®, which are expected to maintain stable revenues due to their characteristics as maintenance therapies [9][10] - The IST business has successfully launched products like GIAPREZA® and XACDURO®, with the latter being one of the most successful antibiotic launches in recent years [16][18] - The recent launch of ZEVTERA® is anticipated to contribute positively to the IST business moving forward [28] Market Data and Key Metrics Changes - The majority of sales for RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® are generated outside the U.S., with these regions showing higher growth potential due to less competition [10][11] - The IST business is positioned to benefit from the growing threat of antimicrobial resistance, which is a significant public health concern [17] Company Strategy and Development Direction - The company aims to leverage its stable royalty revenues to invest in high-growth potential assets in areas of unmet medical need [4][24] - The strategy includes a focus on differentiated products in the hospital and infectious disease space, with a long-term vision for growth [15][16] - The company is open to evaluating opportunities to expand its IST footprint and is looking for both core and adjacent assets in the hospital space [39] Management's Comments on Operating Environment and Future Outlook - Management views the current macro environment as a time of opportunity despite uncertainties, with a focus on mitigating risks and finding attractive investments [6][8] - The upcoming FDA PDUFA decision for zoliflodacin is seen as a major milestone with significant growth potential in treating gonorrhea [20][21] - The company expects to maintain momentum in its royalty business and continue growth in the IST business, with high expectations for product launches [30] Other Important Information - The company has a diverse portfolio of strategic healthcare assets that are seen as high growth potential investments [23] - Recent achievements include a groundbreaking phase two clinical trial result from Armada Pharmaceutical, which could shift treatment paradigms for difficult-to-treat infections [28][29] Q&A Session Summary Question: What are the growth drivers for the IST business? - The growth drivers include commercial execution for GIAPREZA® and the successful launch of XACDURO®, addressing high unmet medical needs in the hospital space [16][18] Question: How does the company prioritize capital allocation between different business segments? - The company is thoughtful about capital allocation, focusing on opportunities for growth in the IST business while also supporting strategic healthcare assets [32][33] Question: What areas is the company looking to expand in the IST business? - The company is open to evaluating opportunities in both core infectious disease and critical care areas, as well as adjacent markets [39]

Financial Data and Key Metrics Changes - The company reported over 50% year-over-year growth in the Innoviva Specialty Therapeutics (IST) business for Q2 [27] - The royalty portfolio has consistently exceeded analyst expectations, with projections of over $1 billion in royalty revenue over the next five years [27][28] - The IST business is expected to achieve over $100 million in net sales in the U.S. this year, with peak portfolio sales projected to exceed half a billion dollars [22] Business Line Data and Key Metrics Changes - The royalty portfolio includes two major products: RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®, which are expected to maintain stable revenues due to their characteristics as maintenance therapies [9][10] - The IST business has successfully launched products like GIAPREZA® and XACDURO®, with the latter being one of the most successful antibiotic launches in recent years [16][18] - The recent launch of ZEVTERA® is anticipated to contribute positively to the IST business moving forward [28] Market Data and Key Metrics Changes - The majority of sales for RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® are generated outside the U.S., with these regions showing higher growth potential due to less competition [10][11] - The IST business is positioned to benefit from the growing threat of antimicrobial resistance, which is a significant public health concern [17] Company Strategy and Development Direction - The company has a unique business model that includes a royalty portfolio, a fully integrated biopharma business focused on critical care and infectious disease, and a portfolio of strategic healthcare assets [4][5] - The strategy involves identifying undervalued assets in areas of high unmet medical need, with a focus on long-term growth and profitability [24][26] - The company aims to leverage its stable revenue base from royalties to support growth in its therapeutics business and strategic investments [33][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic uncertainty but views it as an opportunity to find attractive investments [6][8] - The company is optimistic about the upcoming FDA PDUFA decision for zoliflodacin, which targets a significant market need in treating gonorrhea [20][21] - The company expects continued growth in both the royalty and IST businesses, with a strong pipeline of products and strategic healthcare assets [30][31] Other Important Information - The company has a productive partnership with Glaxo Group Limited (GSK) for its royalty products, which are well-established and mature [11] - Recent achievements include a groundbreaking phase two clinical trial result from Armada Pharmaceutical, indicating a potential paradigm shift in treating difficult infections [28][29] Q&A Session Summary Question: What are the growth drivers for the IST business? - The major growth drivers include commercial execution for GIAPREZA® and the successful launch of XACDURO®, addressing high unmet medical needs [16][18] Question: How does the company prioritize capital allocation between different business segments? - The company is thoughtful about capital allocation, focusing on opportunities for growth in the IST business while also supporting strategic healthcare assets [32][33] Question: What areas is the company looking to expand in the IST business? - The company is open to evaluating opportunities in the hospital space, particularly in infectious disease and critical care, leveraging its operational expertise [39]

Innoviva (INVA) Conference Summary Company Overview - Innoviva was originally founded to manage royalty revenues from products developed with and licensed to GSK, specifically Breo and Anoro [4][5] - The company has three business pillars: 1. Steady royalty stream from GSK's respiratory products 2. Fast-growing critical care and infectious disease platform (Innoviva Specialty Therapeutics, IST) with products growing over 50% annually 3. Diversified portfolio of promising healthcare assets valued at approximately $450 million [5][6] Core Business Strategy - Innoviva aims to unlock value without typical binary risks associated with biopharma companies, being profitable and well-capitalized [7][8] - The company has a stable revenue stream from royalties, providing downside protection across market conditions [7][8] - The IST business offers high growth potential with multiple products addressing unmet medical needs [8] GSK Royalties - Innoviva receives royalties from Breo and Anoro, which are maintenance therapies for asthma and COPD, making them less susceptible to competition [10][11] - The products are protected by a robust IP estate with exclusivity expected to last until the early 2030s in major markets [11][12] - Wall Street consensus estimates approximately $1 billion in royalty revenues over the next five years [12] IST Business - IST has seen over 50% revenue growth year-on-year, with a focus on building a sustainable business in infectious disease and critical care [18][19] - The company is preparing for the PDUFA date for ozoliflodacin, a late-stage product candidate, and has launched Zafthera, addressing a significant market need [19][26] - Zafthera targets approximately 120,000 staphylococcus bacteremia patients annually in the U.S., with a significant portion from resistant strains [23][24] Strategic Healthcare Assets - Innoviva seeks opportunities addressing significant unmet medical needs with substantial commercial potential [37][38] - The company holds a 60% stake in Armata, which is advancing phage therapy with promising clinical data [39][40] - Innoviva is also invested in Syndeya, which has a differentiated platform for CNS disorders, currently in phase two trials [41][42] Capital Allocation Strategy - Innoviva is well-capitalized with approximately $400 million in cash, allowing for thoughtful capital allocation decisions [44] - The company focuses on expanding its specialty therapeutics business and investing in productive assets within its strategic healthcare portfolio [44][45] - Share repurchases remain an option as part of the capital allocation strategy [45] Conclusion - Innoviva is positioned uniquely in the biopharma space with a diversified business model that mitigates risks while pursuing growth opportunities across its three pillars [8][31]

Core Insights - Armata Pharmaceuticals announced positive topline results from the Phase 1b/2a diSArm trial for its therapeutic candidate AP-SA02, demonstrating efficacy in treating complicated S. aureus bacteremia [3][4] - The company entered into a secured credit agreement with Innoviva for $15 million, maturing in 2029, to support the development of AP-SA02 [4] - Financial results for Q2 2025 showed a loss from operations of approximately $6.8 million, a significant reduction from a loss of approximately $11.9 million in Q2 2024 [8][16] Financial Overview - Grant and award revenue for Q2 2025 was $2.2 million, compared to no grant revenue in Q2 2024 [6] - Research and development expenses decreased to approximately $6.4 million in Q2 2025 from approximately $8.5 million in Q2 2024 [7] - General and administrative expenses also decreased to approximately $2.6 million in Q2 2025 from approximately $3.4 million in Q2 2024 [8] Development Updates - The diSArm study met all primary endpoints for safety, tolerability, and clinical response, with AP-SA02 showing improved clinical outcomes compared to the best available antibiotic therapy [4] - Armata plans to hold an End of Phase 2 meeting with the FDA later this year to discuss the design of a pivotal trial for AP-SA02 [4] - The company received an additional $4.65 million in non-dilutive funding from the U.S. Department of Defense to support the diSArm study and FDA meeting preparations [4] Cash Position - As of June 30, 2025, Armata had approximately $4.3 million in unrestricted cash and cash equivalents, down from $9.3 million as of December 31, 2024 [9] - The company reported a net loss of $16.3 million for the six months ended June 30, 2025, compared to a net income of $9 million for the same period in 2024 [16]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of stockholders' equity, and cash flow statements, along with detailed notes explaining the company's operations, accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :--------------------------------------- | :------------------------------- | | Cash and cash equivalents | $397,532 | $304,964 | | Total current assets | $651,778 | $554,306 | | Total assets | $1,333,572 | $1,301,060 | | Total current liabilities | $246,563 | $236,083 | | Total liabilities | $618,751 | $649,898 | | Total stockholders' equity | $714,821 | $691,159 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Condensed Consolidated Statements of Income and Comprehensive Income (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $100,283 | $99,898 | $188,915 | $177,397 | | Gross profit | $83,146 | $84,986 | $156,461 | $145,074 | | Income from operations | $48,751 | $54,686 | $90,179 | $80,491 | | Income (loss) before income taxes | $72,598 | $(39,279) | $34,009 | $5,845 | | Net income (loss) | $63,688 | $(34,685) | $17,104 | $1,847 | | Basic Net income (loss) per share | $1.01 | $(0.55) | $0.27 | $0.03 | | Diluted Net income (loss) per share | $0.77 | $(0.55) | $0.24 | $0.03 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance as of January 1, 2025 | Balance as of March 31, 2025 | Balance as of June 30, 2025 | | :-------------------- | :---------------------------- | :--------------------------- | :-------------------------- | | Common Stock (Shares) | 62,665 | 62,771 | 63,011 | | Common Stock (Amount) | $627 | $628 | $630 | | Additional Paid-In Capital | $692,329 | $694,658 | $698,884 | | Retained Earnings (Accumulated Deficit) | $(1,797) | $(48,381) | $15,307 | | Total Stockholders' Equity | $691,159 | $646,905 | $714,821 | - The **company completed a $100.0 million share repurchase program in April 2024, repurchasing 986,928 shares for approximately $14.9 million, all of which were retired**. In April 2024, the **company also retired all shares held in treasury from a 2021 strategic buyback of GSK's common shares, recording $393.8 million in additional paid-in capital**[137](index=137&type=chunk)[138](index=138&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $92,690 | $80,765 | | Net cash used in investing activities | $(1,552) | $(43,038) | | Net cash provided by (used in) financing activities | $1,430 | $(14,237) | | Net increase in cash and cash equivalents | $92,568 | $23,490 | | Cash and cash equivalents at end of period | $397,532 | $217,003 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of Operations and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Description%20of%20Operations%20and%20Summary%20of%20Significant%20Accounting%20Policies) Innoviva operates with a diversified portfolio including respiratory royalties from GSK, a critical care and infectious disease platform (Innoviva Specialty Therapeutics), and strategic investments in healthcare companies. The company's accounting policies are consistent with U.S. GAAP, with no material changes from the prior annual report - **Innoviva's royalty portfolio includes respiratory assets partnered with GSK: RELVAR®/BREO® ELLIPTA® (15% on first $3.0B annual global net sales, 5% above $3.0B) and ANORO® ELLIPTA® (6.5% to 10% tiered royalties)**[21](index=21&type=chunk) - **Commercial and marketed products include GIAPREZA® (septic/distributive shock), XERAVA® (complicated intra-abdominal infections), XACDURO® (hospital-acquired/ventilator-associated pneumonias), and ZEVTERA® (advanced-generation cephalosporin antibiotic, launched in U.S. in July 2025)**[22](index=22&type=chunk) - The **company is advancing zoliflodacin, a potential first-in-class, single-dose oral treatment for uncomplicated gonorrhea, with its NDA accepted by the FDA in June 2025, granted Priority Review and a PDUFA target action date of December 15, 2025**[22](index=22&type=chunk)[191](index=191&type=chunk) - Innoviva maintains strategic economic interests in various healthcare companies, including a **significant equity stake in Armata Pharmaceuticals, focused on bacteriophage development**[23](index=23&type=chunk) [Note 2. Net Income (Loss) Per Share](index=14&type=section&id=Note%202.%20Net%20Income%20(Loss)%20Per%20Share) This note details the computation of basic and diluted net income (loss) per share, including adjustments for convertible notes and stock awards, and identifies anti-dilutive securities not included in diluted EPS calculations Net Income (Loss) Per Share Calculation (in thousands except per share data) | Metric (in thousands except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss), basic | $63,688 | $(34,685) | $17,104 | $1,847 | | Net income (loss), diluted | $65,258 | $(34,685) | $20,248 | $1,847 | | Basic EPS | $1.01 | $(0.55) | $0.27 | $0.03 | | Diluted EPS | $0.77 | $(0.55) | $0.24 | $0.03 | Anti-Dilutive Securities (in thousands) | Anti-Dilutive Securities (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Outstanding options and awards | 1,630 | 1,897 | 1,389 | 1,542 | | Outstanding stock warrant | — | 591 | — | 591 | | Outstanding 2025 Notes | — | 11,150 | — | 11,150 | | Outstanding 2028 Notes | — | 9,955 | — | 9,955 | | Total | 1,630 | 23,593 | 1,389 | 23,238 | [Note 3. Revenue Recognition](index=15&type=section&id=Note%203.%20Revenue%20Recognition) This note provides a detailed breakdown of the company's revenue streams, including net royalty revenue from GSK, net product sales from its commercial portfolio, and license revenue from collaboration agreements Net Royalty Revenue (in thousands) | Revenue Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | RELVAR/BREO Royalties | $54,737 | $53,980 | $105,627 | $106,118 | | ANORO Royalties | $12,599 | $13,218 | $22,972 | $22,951 | | Total net royalty revenue | $63,880 | $63,742 | $121,687 | $122,157 | Net Product Sales (in thousands) | Product Sales (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GIAPREZA® | $17,329 | $13,109 | $35,602 | $25,190 | | XACDURO® | $10,731 | $2,344 | $18,514 | $4,579 | | XERAVA® | $7,094 | $6,198 | $11,317 | $10,966 | | ZEVTERA® | $339 | — | $339 | — | | Total net product sales | $35,493 | $21,651 | $65,772 | $40,735 | - **License and other revenue for the three months ended June 30, 2025, was $910 thousand, down from $14,505 thousand in the prior year, primarily due to a non-recurring regulatory milestone payment in 2024**[13](index=13&type=chunk) [Note 4. License and Collaboration Arrangements](index=16&type=section&id=Note%204.%20License%20and%20Collaboration%20Arrangements) This note details various out-license agreements with partners like Zai Lab, GARDP, PAION Pharma GmbH, and Everest Medicines Limited, as well as in-license agreements with Basilea, George Washington University, and Harvard University, outlining the terms, milestones, and royalty structures for product development and commercialization - Under the **Zai Agreement, SUL-DUR was approved by China's NMPA in May 2024 and launched in mainland China in January 2025, generating $0.6 million and $1.1 million in royalties for the three and six months ended June 30, 2025, respectively**[60](index=60&type=chunk) - The **GARDP Collaboration Agreement involves the development of zoliflodacin for uncomplicated gonorrhea, with GARDP funding the Phase 3 trial and Innoviva retaining commercial rights in major markets**[65](index=65&type=chunk)[66](index=66&type=chunk) - **Innoviva entered an exclusive distribution and license agreement with Basilea in December 2024 for ZEVTERA® in the U.S., with commercial launch in July 2025**[72](index=72&type=chunk) - **Royalty revenue from Everest Medicines for XERAVA® was $2.0 million for the three and six months ended June 30, 2025, compared to $1.2 million and $1.8 million for the same periods in 2024**[70](index=70&type=chunk) [Note 5. Consolidated Entity - ISP Fund LP](index=21&type=section&id=Note%205.%20Consolidated%20Entity%20-%20ISP%20Fund%20LP) Innoviva consolidates ISP Fund LP under the VIE model, holding approximately 100% economic interest. The fund invests in healthcare, pharmaceutical, and biotechnology sectors, with an election made in October 2024 to unwind capital accounts through April 2026 - **ISP Fund LP's total assets were $147.5 million as of June 30, 2025, down from $255.7 million as of December 31, 2024**[79](index=79&type=chunk) - For the six months ended June 30, 2025, **ISP Fund LP recorded $80.9 million in net realized and unrealized losses from equity and long-term investments, compared to $42.0 million in losses for the same period in 2024**[80](index=80&type=chunk) ISP Fund LP Investments (in thousands) | Investment Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Common stock - Publicly traded healthcare companies (U.S.) | $41,294 | $84,039 | | Common stock - Publicly traded healthcare companies (U.K.) | $3,325 | $1,989 | | Preferred stock - Privately held healthcare companies (U.S.) | $2,644 | $53,591 | | Warrants - Privately held healthcare companies | — | $8,507 | | Money market fund and cash | $100,200 | $107,532 | | Total investments held by ISP Fund LP | $147,463 | $255,658 | [Note 6. Equity and Other Investments and Fair Value Measurements](index=22&type=section&id=Note%206.%20Equity%20and%20Other%20Investments%20and%20Fair%20Value%20Measurements) This note details Innoviva's equity and other investments in various biotechnology and pharmaceutical companies, including Armata, InCarda, ImaginAb, Syndeio, Nanolive, and Lyndra. It outlines the company's ownership stakes, the types of financial instruments held (common stock, warrants, convertible notes, term loans), and the methodologies used for fair value measurements, categorizing them into Level 1, Level 2, and Level 3 inputs - **Innoviva holds a 69.3% equity interest in Armata Pharmaceuticals, along with warrants, convertible notes, and term loans totaling $147.2 million in fair value as of June 30, 2025**[84](index=84&type=chunk)[87](index=87&type=chunk) - For the three months ended June 30, 2025, Innoviva recorded a **$13.1 million unrealized gain on Armata common stock and warrants, a significant improvement from a $60.1 million unrealized loss in the prior year period**[88](index=88&type=chunk) - The **fair value of Syndeio 2021 Convertible Note increased to $71.3 million as of June 30, 2025, from $50.9 million as of December 31, 2024, with a $20.5 million unrealized gain for the six months ended June 30, 2025**[107](index=107&type=chunk) - **Innoviva recorded the Lyndra Convertible Note at its original cost of $9.2 million as of June 30, 2025, believing its proprietary platform supports full recovery despite winding down operations**[114](index=114&type=chunk)[115](index=115&type=chunk) [Note 7. Goodwill and Intangible Assets](index=29&type=section&id=Note%207.%20Goodwill%20and%20Intangible%20Assets) This note details the company's goodwill and intangible assets, including their carrying amounts, amortization schedules, and the impact of acquisitions. Goodwill remained stable, while definite-lived intangible assets are amortized over their estimated useful lives - **Goodwill remained at $17.9 million as of June 30, 2025, with no impairment losses recognized**[126](index=126&type=chunk) Intangible Assets (in thousands) | Intangible Asset Type (in thousands) | Useful Life (Years) | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (December 31, 2024) | | :----------------------------------- | :------------------ | :---------------------------------- | :------------------------------------ | | Marketed products | 8-10 | $164,873 | $176,141 | | In-process research and development | - | $2,600 | $2,600 | | Collaboration agreement | 10 | $27,938 | $29,692 | | Total | | $195,411 | $