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 | $

[Innoviva Reports Second Quarter 2025 Financial Results & Company Progress](index=1&type=section&id=Innoviva%20Reports%20Second%20Quarter%202025%20Financial%20Results%3B%20Highlights%20Recent%20Company%20Progress) Innoviva reported strong Q2 2025 financial results, driven by its GSK royalties portfolio and significant momentum from IST-marketed products, highlighted by the U.S. launch of ZEVTERA and FDA's acceptance of the zoliflodacin NDA with Priority Review [Executive Summary](index=1&type=section&id=Executive%20Summary) Innoviva reported strong Q2 2025 financial results, driven by its GSK royalties portfolio and significant momentum from IST-marketed products, with key achievements including the U.S. launch of ZEVTERA and the FDA's acceptance of the zoliflodacin NDA with Priority Review - Strong royalties portfolio performance with **$67.3 million** in revenue[1](index=1&type=chunk)[4](index=4&type=chunk) - IST achieved U.S. net product sales of **$29.0 million**, reflecting **54% year-over-year growth**[1](index=1&type=chunk)[4](index=4&type=chunk) - ZEVTERA (ceftobiprole medocaril sodium, for injection) launched in the U.S.[1](index=1&type=chunk)[3](index=3&type=chunk) - Zoliflodacin NDA accepted by FDA with Priority Review; PDUFA date set for December 15, 2025[2](index=2&type=chunk)[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Pavel Raifeld highlighted impressive financial and operational results, emphasizing strong performance from the GSK royalties portfolio and IST products, expressing satisfaction with the ZEVTERA launch and critical regulatory milestones for zoliflodacin - Innoviva delivered impressive financial and operational results, with strong performance from GSK royalties and IST-marketed products[3](index=3&type=chunk) - Successful U.S. launch of ZEVTERA, the first and only FDA-approved cephalosporin for MRSA-related Staphylococcus aureus bacteremia[3](index=3&type=chunk) - FDA's acceptance of zoliflodacin NDA and Priority Review are critical regulatory milestones; potential first new antibiotic in decades for gonorrhea[3](index=3&type=chunk) - The business is dynamic, well-capitalized, and resilient, with multiple opportunities to create value through thoughtful capital allocation[3](index=3&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Innoviva reported Q2 2025 gross royalty revenue of $67.3 million, stable year-over-year, with net product sales significantly increasing to $35.5 million, and a substantial turnaround in net income to $63.7 million [Second Quarter 2025 Key Financial Metrics](index=1&type=section&id=Second%20Quarter%202025%20Key%20Financial%20Metrics) Innoviva reported Q2 2025 gross royalty revenue of $67.3 million, stable year-over-year, with net product sales significantly increasing to $35.5 million, and a substantial turnaround in net income to $63.7 million Second Quarter 2025 Financial Highlights | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :----------- | | Gross Royalty Revenue (GSK) | $67.3 | $67.2 | +$0.1 | | Net Product Sales (Total) | $35.5 | $21.7 | +$13.8 | | U.S. Net Product Sales | $29.0 | $18.8 | +54% | | Income from Operations | $48.8 | $54.7 | -11% | | Net Favorable Changes in Fair Values of Equity and Long-term Investments | $24.4 | ($90.7) | Significant turnaround | | Net Income (Loss) | $63.7 | ($34.7) | Significant turnaround | | Basic EPS | $1.01 | ($0.55) | Significant turnaround | | Cash and Cash Equivalents | $397.5 | N/A | N/A | | Royalty and Net Product Sales Receivables | $88.3 | N/A | N/A | - Income from operations decreased primarily due to a non-recurring milestone payment and cost-sharing reimbursement from a partner in 2024, as well as increased research and development costs for zoliflodacin[8](index=8&type=chunk) - Net favorable changes in fair values of equity and long-term investments were primarily due to share price appreciation of Armata Pharmaceuticals and other equity investments[8](index=8&type=chunk) [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, total revenue was $100.3 million, a slight increase from $99.9 million in Q2 2024, with net income significantly improving to $63.7 million ($1.01 basic EPS) compared to a net loss of $34.7 million ($-0.55 basic EPS) in the prior year Condensed Consolidated Statements of Income (Q2 2025 vs Q2 2024) | Metric (in thousands) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------ | :-------- | :-------- | :------------ | :------------ | | **Revenue:** | | | | | | Royalty revenue, net | $63,880 | $63,742 | $121,687 | $122,157 | | Net product sales | $35,493 | $21,651 | $65,772 | $40,735 | | License and other revenue | $910 | $14,505 | $1,456 | $14,505 | | **Total revenue** | **$100,283** | **$99,898** | **$188,915** | **$177,397** | | **Gross profit** | **$83,146** | **$84,986** | **$156,461** | **$145,074** | | **Operating expenses:** | | | | | | Selling, general and administrative | $26,412 | $27,740 | $53,903 | $58,145 | | Research and development | $7,983 | $2,560 | $12,379 | $6,438 | | **Total operating expenses** | **$34,395** | **$30,300** | **$66,282** | **$64,583** | | **Income from operations** | **$48,751** | **$54,686** | **$90,179** | **$80,491** | | Changes in fair values of equity method investments, net | $13,082 | ($60,108) | ($467) | ($24,766) | | Changes in fair values of equity and long-term investments, net | $11,280 | ($30,556) | ($54,019) | ($43,891) | | **Net income (loss)** | **$63,688** | **($34,685)** | **$17,104** | **$1,847** | | **Basic EPS** | **$1.01** | **($0.55)** | **$0.27** | **$0.03** | | **Diluted EPS** | **$0.77** | **($0.55)** | **$0.24** | **$0.03** | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $1,333.6 million from $1,301.1 million at December 31, 2024, primarily driven by an increase in cash and cash equivalents to $397.5 million Condensed Consolidated Balance Sheets (as of June 30, 2025 vs Dec 31, 2024) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | **Assets:** | | | | Cash and cash equivalents | $397,532 | $304,964 | | Royalty and product sale receivables | $88,261 | $86,366 | | Inventory, net | $48,996 | $33,725 | | Equity method and equity and long-term investments | $349,110 | $393,957 | | Intangible assets | $195,411 | $208,433 | | **Total assets** | **$1,333,572** | **$1,301,060** | | **Liabilities and Stockholders' Equity:** | | | | Other current liabilities | $48,117 | $39,507 | | Convertible senior notes, due 2025, net | $191,903 | $192,028 | | Convertible senior notes, due 2028, net | $257,019 | $256,316 | | **Innoviva stockholders' equity** | **$714,821** | **$691,159** | | **Total liabilities and stockholders' equity** | **$1,333,572** | **$1,301,060** | [Cash Flows Summary](index=6&type=section&id=Cash%20Flows%20Summary) For the six months ended June 30, 2025, net cash provided by operating activities increased to $92.7 million, while net cash used in investing activities significantly decreased, resulting in a $92.6 million increase in cash and cash equivalents Cash Flows Summary (Six Months Ended June 30, 2025 vs 2024) | Metric (in thousands) | 6 Months 2025 | 6 Months 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 change in cash | $92,568 | $23,490 | | Cash and cash equivalents at end of period | $397,532 | $217,003 | [Key Business and R&D Highlights](index=2&type=section&id=Key%20Business%20and%20R%26D%20Highlights) Innoviva's strategic healthcare assets were valued at $449.3 million, with significant progress including the U.S. launch of ZEVTERA and the FDA's Priority Review acceptance for zoliflodacin [Strategic Healthcare Assets Update](index=2&type=section&id=Update%20on%20Strategic%20Healthcare%20Assets) Innoviva's portfolio of strategic healthcare assets was valued at $449.3 million as of June 30, 2025, with excellent progress including Armata Pharmaceuticals' positive Phase 2 data in Staphylococcus aureus bacteremia - Innoviva's portfolio of strategic assets was valued at **$449.3 million** as of June 30, 2025[7](index=7&type=chunk) - Armata Pharmaceuticals recently announced positive Phase 2 data in Staphylococcus aureus bacteremia[3](index=3&type=chunk) [Product Development and Commercialization](index=2&type=section&id=Product%20Development%20and%20Commercialization) Innoviva Specialty Therapeutics (IST) commercially launched ZEVTERA in the U.S. in July 2025, while the FDA accepted zoliflodacin's New Drug Application (NDA) with Priority Review and set a PDUFA target action date of December 15, 2025 [ZEVTERA Launch](index=2&type=section&id=ZEVTERA%20%28ceftibiprole%29) Innoviva Specialty Therapeutics commercially launched ZEVTERA in the U.S. in July 2025, an advanced-generation cephalosporin antibiotic for various bacterial infections - IST commercially launched ZEVTERA in the U.S. in July 2025[8](index=8&type=chunk) - ZEVTERA is an advanced-generation cephalosporin antibiotic approved for Staphylococcus aureus bloodstream infections (bacteremia) (SAB) in adults, acute bacterial skin and skin structure infections (ABSSSI) in adults, and community-acquired bacterial pneumonia (CABP) in adults and pediatric patients[8](index=8&type=chunk) - ZEVTERA is marketed in the U.S. through an exclusive license from Basilea Pharmaceutica International Ltd[9](index=9&type=chunk) [Zoliflodacin Regulatory Progress](index=2&type=section&id=Zoliflodacin) The FDA accepted the zoliflodacin New Drug Application (NDA) in June 2025, granting Priority Review with a PDUFA target action date of December 15, 2025 - In June 2025, the U.S. FDA accepted the zoliflodacin New Drug Application (NDA), granted Priority Review, and assigned a PDUFA target action date of December 15, 2025[8](index=8&type=chunk) - Zoliflodacin is an investigational, first-in-class, single oral dose, spiropyrimidinetrione antibiotic for the treatment of uncomplicated gonorrhea, developed in partnership with The Global Antibiotic Research & Development Partnership (GARDP)[8](index=8&type=chunk) - The FDA indicated in its Day-74 letter that it did not plan to hold an Advisory Committee meeting to discuss the zoliflodacin NDA[8](index=8&type=chunk) [About Innoviva](index=3&type=section&id=About%20Innoviva) Innoviva is a diversified holding company with a core royalties portfolio, a leading critical care and infectious disease platform, and strategic investments in healthcare assets [Company Overview and Portfolio](index=3&type=section&id=Company%20Overview%20and%20Portfolio) Innoviva is a diversified holding company with a core royalties portfolio, a leading critical care and infectious disease platform (Innoviva Specialty Therapeutics, IST), and strategic investments in healthcare assets - Innoviva is a diversified holding company with a core royalties portfolio, a leading critical care and infectious disease platform (Innoviva Specialty Therapeutics, IST), and a portfolio of strategic investments in healthcare assets[9](index=9&type=chunk) - Innoviva's royalty portfolio includes respiratory assets partnered with Glaxo Group Limited (GSK), specifically royalties from sales of RELVAR/BREO ELLIPTA and ANORO ELLIPTA[9](index=9&type=chunk) - Innoviva's other innovative healthcare assets (via IST) include XACDURO (for hospital-acquired/ventilator-associated bacterial pneumonia), GIAPREZA (to increase blood pressure in shock), XERAVA (for complicated intra-abdominal infections), ZEVTERA (advanced-generation cephalosporin antibiotic), and the investigational zoliflodacin (for uncomplicated gonorrhea)[9](index=9&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section provides important disclaimers regarding forward-looking statements, highlighting inherent risks and uncertainties, and lists contact information for corporate communications and investor relations [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section contains forward-looking statements subject to substantial risks, uncertainties, and assumptions, which may differ materially from actual results due to various factors, and Innoviva assumes no obligation to update these statements - The press release contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995, intended to be covered by safe harbor provisions[11](index=11&type=chunk) - Such statements involve substantial risks, uncertainties, and assumptions, and actual results may differ materially due to factors like lower than expected royalty revenue, commercialization risks, timing of clinical studies and regulatory approvals, and capital deployment[11](index=11&type=chunk) - Innoviva assumes no obligation to update its forward-looking statements on account of new information, future events, or otherwise, except as required by law[11](index=11&type=chunk) [Contacts](index=4&type=section&id=Contacts) Provides contact information for Innoviva's Corporate Communications and for Investors and Media inquiries - Corporate Communications Contact: David Patti, (908) 421-5971, david.patti@inva.com[12](index=12&type=chunk) - Investors and Media Contact: Argot Partners, (212) 600-1902, innoviva@argotpartners.com[12](index=12&type=chunk)

Innoviva (INVA) FY Conference Summary Company Overview - Innoviva was originally formed to manage royalties on respiratory products co-developed with GSK, which are now successfully commercialized by GSK [4][5] - The company has three business segments: 1. Royalty business segment 2. Infectious disease and critical care franchise 3. Strategic healthcare asset portfolio [5][6] Key Business Segments Royalty Business Segment - Innoviva receives approximately $2.5 billion annually from royalties on two products, Brio and Anoro, which are expected to continue generating revenue for an extended period [6][12] - Brio generated $1.4 billion and Anoro $700 million in net revenue last year [13][14] - Two-thirds of revenue comes from ex-U.S. markets, providing significant diversification and growth opportunities [15][16] Infectious Disease and Critical Care Franchise - This segment generated over $100 million in revenue last year, growing at over 50% annually [6][24] - The company launched a new infectious disease product, Zaftera, which is expected to further accelerate revenue growth [25][30] - The total revenue opportunity for this portfolio is projected to exceed $500 million, primarily through organic growth [30][31] Strategic Healthcare Asset Portfolio - Valued at approximately $500 million, this portfolio includes stakes in companies addressing significant unmet medical needs [7][35] - Notable investments include Syndeyo, a neuroscience company, and Armada, a bacteriophage specialist [36][42] - The company anticipates significant value creation from these investments, particularly if their products succeed in clinical trials [36][43] Market Environment and Risks - Innoviva is well-positioned to navigate regulatory and pricing pressures, with a robust gross margin expected under various tariff scenarios [9][10] - The company sees opportunities in the current market dislocations, allowing for attractive capital deployment [10][11] - The macroeconomic environment has not significantly impacted operations, although fundraising for early-stage companies may be tighter [44][45] Financial Strategy and Capital Allocation - Innoviva maintains a conservative capital structure and has completed a $100 million share buyback program [51] - The company is focused on strategic investments to accelerate growth and profitability [52][56] - Future growth will be driven by both the hospital business and the strategic healthcare asset portfolio [56] Upcoming Catalysts - The launch of the fourth commercial product, Zephyra, and continued progress on regulatory approvals for other products are key events to watch [58][59] - The company is approaching an inflection point in several areas, indicating potential for significant future growth [62] Conclusion - Innoviva presents a unique business model with embedded downside protection and substantial upside potential, driven by its diversified revenue streams and strategic investments [62][63]

Financial Performance - First quarter 2025 gross royalty revenue from GSK was $61.3 million, a slight decrease from $61.9 million in the first quarter of 2024[192]. - First quarter 2025 net product sales totaled $30.3 million, a 58% increase from $19.1 million in the first quarter of 2024, with U.S. net product sales contributing $26.4 million[192]. - Income from operations for the first quarter of 2025 was $41.4 million, representing a 61% increase from $25.8 million in the same period last year[192]. - First quarter 2025 net loss was $46.6 million, or ($0.74) per share, compared to net income of $36.5 million, or $0.58 per share, for the first quarter of 2024[192]. - Total royalty revenue, net, decreased marginally to $57.8 million for the three months ended March 31, 2025, compared to $58.4 million for the same period a year ago[199]. - Total net product sales increased by 59% to $30.3 million for the three months ended March 31, 2025, compared to $19.1 million in the same period of 2024[200]. - U.S. sales of GIAPREZA rose by 45% to $17.4 million, while XACDURO saw a significant increase of 170% to $5.8 million[200]. Expenses and Cash Flow - Research and development expenses increased by 13% to $4.4 million, primarily due to advancements in the product candidate zoliflodacin[203]. - Selling, general and administrative expenses decreased by 10% to $27.5 million, reflecting reduced promotional efforts compared to the previous year[204]. - Net cash provided by operating activities was $48.6 million for the three months ended March 31, 2025, up from $37.0 million in the same period of 2024[213]. - The company recorded a decrease in interest expense by 19% to $4.7 million, attributed to lower costs on deferred royalty obligations[207]. Investments and Assets - Innoviva's portfolio of strategic assets was valued at $457.6 million as of March 31, 2025, with $34.7 million invested in various strategic healthcare assets in the first quarter[196]. - As of March 31, 2025, total cash and cash equivalents amounted to $319.1 million, with royalties receivable from GSK totaling $61.3 million[211]. - Changes in fair values of equity method investments resulted in a loss of $13.5 million for the three months ended March 31, 2025, compared to a gain of $35.3 million in 2024[208]. - The company has approximately $20.9 million in outstanding purchase commitments under the Commercial Supply Agreement with Corden Pharma[223]. Future Outlook - Zoliflodacin NDA is on track for filing with the U.S. FDA in the first half of 2025[192]. - The company anticipates launching ZEVTERA® in the U.S. in mid-2025 following an exclusive distribution and license agreement with Basilea[196]. - The company anticipates that its cash resources will be sufficient to meet operational needs for at least the next 12 months[212]. Obligations and Risks - Contractual obligations include $192.5 million related to 2025 Notes and $261.0 million related to 2028 Notes, with interest payments of 2.5% and 2.125%, respectively[219]. - The company has short-term and long-term obligations related to operating leases amounting to $2.6 million, with $1.3 million payable through December 31, 2025, and another $1.3 million payable through 2029[220]. - The maximum royalty rate under the La Jolla Royalty Agreement is 18%, with maximum aggregate royalty payments to HCR capped at $225.0 million[221]. - The company has no outstanding debt with variable interest rates, and its debt bears fixed interest rates[225]. - The company is exposed to fluctuations in the fair value of certain investments in equity and debt securities, which could result in material gains or losses[226]. - Inflationary factors, including increases in raw material costs and overhead, may adversely affect the company's operating results in the near future[227]. - The company faces foreign exchange risk from transactions denominated in currencies other than U.S. dollars, but the majority of its cash and vendor relationships are in U.S. dollars, mitigating significant impact risks[228].

Financial Performance - First quarter 2025 gross royalty revenue from GSK was $61.3 million, slightly down from $61.9 million in Q1 2024[3] - U.S. net product sales for Q1 2025 reached $26.4 million, reflecting a 52% year-over-year growth from $17.4 million in Q1 2024[3] - Income from operations for Q1 2025 was $41.4 million, a 61% increase from $25.8 million in Q1 2024[3] - The first quarter 2025 net loss was $46.6 million, compared to a net income of $36.5 million in Q1 2024[7] - Innoviva's total revenue for Q1 2025 was $88.6 million, compared to $77.5 million in Q1 2024[12] Cash and Investments - Cash and cash equivalents totaled $319.1 million as of March 31, 2025[7] - Innoviva's strategic healthcare assets were valued at $457.6 million as of March 31, 2025, with $34.7 million invested in various assets during Q1 2025[5] - Net cash provided by operating activities increased to $48,617 million in Q1 2025 from $37,047 million in Q1 2024, representing a growth of approximately 31%[15] - Net cash used in investing activities decreased to $(34,674) million in Q1 2025 from $(43,038) million in Q1 2024, indicating a reduction of about 19%[15] - Cash and cash equivalents at the end of the period rose to $319,090 million in Q1 2025, up from $178,357 million in Q1 2024, reflecting an increase of approximately 79%[15] - The net change in cash for Q1 2025 was $14,126 million, compared to a net decrease of $(15,156) million in Q1 2024[15] - Cash and cash equivalents at the beginning of the period were $304,964 million in Q1 2025, compared to $193,513 million in Q1 2024, showing an increase of about 57%[15] Regulatory and Product Developments - The NDA filing for zoliflodacin is on track for submission to the U.S. FDA in the first half of 2025[7] - The U.S. commercial launch of ZEVTERA (ceftobiprole) is anticipated by mid-2025[2] Fair Value Changes - The company reported unfavorable changes in fair values of equity and long-term investments totaling $78.8 million in Q1 2025, compared to favorable changes of $22.0 million in Q1 2024[3]

Core Insights - Armata Pharmaceuticals has secured a $10 million credit agreement with Innoviva, its largest shareholder, to advance the development of its phage product candidates [1][3] - The financing will support the clinical development of lead therapeutic phage candidates AP-PA02 and AP-SA02, targeting infections from Pseudomonas aeruginosa and Staphylococcus aureus [2][3] - The secured credit agreement includes a term loan facility with a 14.0% annual interest rate, maturing on March 12, 2026 [3][4] Company Overview - Armata Pharmaceuticals is a clinical-stage biotechnology company focused on high-purity pathogen-specific bacteriophage therapeutics for antibiotic-resistant bacterial infections [5] - The company is developing a pipeline of natural and synthetic phage candidates, including those for Pseudomonas aeruginosa and Staphylococcus aureus [5] - Armata is committed to advancing phage therapy with expertise in drug development and in-house cGMP manufacturing [5]

Financial Performance - Total revenue for the year ended December 31, 2024, was $358.7 million, an increase of 15.5% compared to $310.5 million in 2023[513]. - Royalty revenue for 2024 was $241.7 million, slightly up from $238.8 million in 2023, while net product sales increased significantly to $97.5 million from $60.6 million[513]. - The company reported a net income of $23.4 million for 2024, a decrease from $179.7 million in 2023, resulting in a basic net income per share of $0.37[513][515]. - Net income for the year ended December 31, 2024, was $23,392,000, compared to $179,722,000 in 2023, indicating a significant decline[518]. - Basic net income per share for 2024 was $0.37, a decrease from $2.75 in 2023, indicating a significant decline in profitability[595]. - Net income attributable to Innoviva stockholders for 2024 was $23.392 million, a decrease from $179.722 million in 2023 and $213.921 million in 2022[595]. Assets and Liabilities - Total current assets increased to $554.3 million in 2024 from $344.2 million in 2023, driven by higher cash and cash equivalents of $305.0 million[511]. - Total liabilities decreased to $556.7 million in 2024 from $556.1 million in 2023, with long-term debt significantly reduced to $256.3 million from $446.2 million[511]. - As of December 31, 2024, total stockholders' equity is $691,159,000, a decrease from $674,955,000 in 2023[518]. - The total paid-in capital as of December 31, 2024, is $692,329,000, a decrease from $1,093,340,000 in 2023[518]. - The accumulated deficit as of December 31, 2024, is $(1,797,000), an improvement from $(25,189,000) in 2023[518]. Expenses - Research and development expenses for 2024 were $13.7 million, down from $33.9 million in 2023, indicating a strategic shift in investment[513]. - Selling, general and administrative expenses rose to $115.7 million in 2024 from $98.2 million in 2023, reflecting increased operational costs[513]. - Cash paid for income taxes in 2024 was $11,793 million, compared to $53,855 million in 2022[522]. Cash Flow - Net cash provided by operating activities increased to $188,690 million in 2024, compared to $141,064 million in 2023 and $201,726 million in 2022[521]. - Cash and cash equivalents at the end of the period increased to $304,964 million in 2024, up from $193,513 million in 2023[521]. - The company reported a net cash used in investing activities of $63,786 million in 2024, slightly down from $66,761 million in 2023[521]. Product Development and Sales - The company commenced commercial sales of its new product XACDURO® in Q3 2023, approved for treating hospital-acquired and ventilator-associated pneumonias[526]. - The company plans to submit a New Drug Application for zoliflodacin in early 2025, targeting uncomplicated gonorrhea treatment[526]. - Total net product sales for 2024 reached $97.492 million, representing a significant increase of 60.8% from $60.617 million in 2023 and a substantial increase from $19.694 million in 2022[604]. - The company recognized a noncontrolling interest of $38,471,000 upon initial consolidation of Entasis[518]. Royalty Revenue - The company has a royalty revenue structure with GSK, receiving 15% on the first $3.0 billion of annual global net sales of RELVAR®/BREO® ELLIPTA®[525]. - The total royalty revenue for 2024 was $241.733 million, compared to $238.846 million in 2023, reflecting a stable revenue stream despite the loss of TRELEGY royalties[600]. - Royalties from RELVAR/BREO for 2024 were $207.925 million, slightly down from $208.042 million in 2023, while ANORO royalties increased to $47.631 million from $44.627 million[600]. Investments and Acquisitions - The acquisition of La Jolla Pharmaceutical Company was completed on August 22, 2022, expanding the company's portfolio[526]. - The total assets acquired from the acquisition of La Jolla amounted to $287.951 million, with total liabilities assumed of $81.392 million, resulting in net assets acquired of $206.559 million[670]. - The company extended a term loan to Armata in July 2023 for $25.0 million at an interest rate of 14% per annum, maturing on January 10, 2025[685]. - The company recognized a non-controlling interest of $38.5 million as of February 17, 2022, with a net loss attributable to non-controlling interest of $13.6 million included in consolidated net income for the year ended December 31, 2022[663]. Goodwill and Fair Value - The company recognizes goodwill as the excess of the purchase consideration over the fair value of acquired net assets in a business combination[543]. - The goodwill from the acquisition of La Jolla is primarily attributable to its assembled workforce and is not expected to be deductible for tax purposes[670]. - The fair value of investments held by ISP Fund LP decreased from $311.8 million in 2023 to $255.7 million in 2024, indicating a significant reduction in asset value[650]. Stock and Compensation - The company repurchased common stock totaling $14,925,000 during the year, including accrued excise tax[518]. - Stock-based compensation for the year 2024 amounted to $6,374,000, up from $5,837,000 in 2023[518]. - The weighted-average shares used to compute diluted net income per share for 2024 were 74.187 million, down from 86.876 million in 2023[595].