Revenue and Sales Performance - Gross royalty revenue from GSK for Q2 2024 was $67.2 million, a 2.3% increase from $65.7 million in Q2 2023[164]. - Net product sales for Q2 2024 reached $21.7 million, representing a 38% increase compared to $15.7 million in Q2 2023[164]. - Total net royalty revenue increased to $63.7 million for the three months ended June 30, 2024, compared to $62.3 million for the same period in 2023[171]. - Total royalty revenue from RELVAR®/BREO® ELLIPTA® was $53.98 million for the three months ended June 30, 2024, compared to $54.45 million for the same period in 2023[171]. - Net product sales for Q2 2024 reached $21.7 million, a 38.2% increase from $15.7 million in Q2 2023, driven by sales of GIAPREZA®, XERAVA®, and XACDURO®[172][174]. - License revenue for Q2 2024 was $14.5 million, including $8.0 million from a regulatory milestone with Zai Lab, compared to $3.0 million in Q2 2023[174]. Product Development and Approvals - The company commenced commercial sales of XACDURO® in Q3 2023, which was approved by the FDA on May 23, 2023[162]. - Zoliflodacin, an investigational treatment for uncomplicated gonorrhea, reported positive Phase 3 clinical trial data on November 1, 2023, with an NDA submission expected in early 2025[167]. - XACDURO® was approved in China in May 2024 and named the preferred agent for treating Carbapenem-resistant Acinetobacter baumannii infections in July 2024[165]. Financial Performance and Expenses - Cost of products sold for Q2 2024 was $8.5 million, a decrease of 6% from $9.0 million in Q2 2023[175]. - Research and development expenses significantly decreased to $2.6 million in Q2 2024, down 83% from $15.0 million in Q2 2023, primarily due to the FDA approval of XACDURO®[177][178]. - Selling, general and administrative expenses increased to $27.7 million in Q2 2024, an 18% rise from $23.5 million in Q2 2023, attributed to resource reallocation and increased marketing efforts[179]. - Interest expense for Q2 2024 was $5.8 million, a 32% increase from $4.4 million in Q2 2023, mainly due to higher effective interest rates[182]. - The company recorded an income tax benefit of $4.6 million for Q2 2024, compared to an expense of $4.5 million in Q2 2023, with an effective tax rate of 68.4%[185]. Cash Flow and Financial Position - As of June 30, 2024, the company had net cash and cash equivalents of $217.0 million and accounts receivable totaling $26.8 million[186]. - Net cash provided by operating activities for the six months ended June 30, 2024, was $80.8 million, an increase of 26.4% from $63.9 million in the same period of 2023[188][189]. - Net cash used in investing activities for the six months ended June 30, 2024, was $43.0 million, compared to $35.7 million in the same period of 2023, reflecting an increase of 20.5%[191][192]. - Net cash used in financing activities for the six months ended June 30, 2024, was $14.2 million, significantly reduced from $146.2 million in the same period of 2023[193]. - Cash and cash equivalents are expected to be sufficient for at least the next 12 months to meet debt service and operating needs[187]. Strategic Initiatives and Acquisitions - The company expanded its portfolio through the acquisitions of Entasis Therapeutics and La Jolla Pharmaceutical in July and August 2022, respectively[162]. - The company’s corporate strategy focuses on maximizing the potential value of respiratory assets and pursuing opportunistic acquisitions in the healthcare industry[163]. Risks and Obligations - The company has contractual obligations of $192.5 million related to 2025 Notes and $261.0 million related to 2028 Notes, with interest rates of 2.5% and 2.125% respectively[194]. - The maximum royalty rate under the La Jolla Royalty Agreement increased to 18% starting January 1, 2024, with maximum aggregate royalty payments capped at $225.0 million[195]. - The company has approximately $9.7 million in outstanding purchase commitments under a Commercial Supply Agreement for the remainder of 2024[196]. - The company is exposed to inflationary pressures, which may adversely affect operating results in the near future[199]. - The company faces foreign exchange risk due to transactions in currencies other than U.S. dollars, but the majority of cash and investments are in U.S. dollars, mitigating significant impact[200].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10-Q For the transition period from to (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR Commission File Number: 000-30319 INNOVIVA, INC. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation or Or ...

Exhibit 99.1 Innoviva Reports First Quarter 2024 Financial Results; Highlights Recent Company Progress Core royalty platform on track; receiving GSK royalties of $61.9 million Achieved net product revenues of $19.1 million, representing 66% year-over-year growth driven by launch of XACDURO and growth of key core product GIAPREZA Strong pipeline progress: positive Phase 3 zoliflodacin clinical trial results in uncomplicated gonorrhea highlighted at ESCMID Global 2024; on track to submit NDA in early 2025 Der ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Burlingame, CA (Address of principal executive offices) Registrant's telephone number, including area code: (650) 238-9600 | Title of Each Class | Trading Symbol(s) | Name of Each Exchange On Which Registe ...

Exhibit 99.1 Innoviva Reports Fourth Quarter and Full Year 2023 Financial Results; Highlights Recent Company Progress Core royalty platform on track; received GSK royalties of $69.6 million for fourth quarter Achieved net product revenues of $19.7 million for the fourth quarter of 2023 representing 35% year on year growth Strong pipeline progress in 2023: Approval and launch of first pathogen targeted antibacterial XACDURO for treatment of HABP/VABP caused by Acinetobacter infections; positive topline Phase ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-30319 INNOVIVA, INC. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-30319 INNOVIVA, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 94-3265960 (State or Other Jurisdiction of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-30319 INNOVIVA, INC. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation or Or ...

[PART I](index=4&type=section&id=PART%20I) Innoviva is a diversified holding company with a portfolio of royalties and innovative healthcare assets [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Innoviva manages GSK-partnered respiratory royalties and an expanded portfolio of commercial and development-stage healthcare products [Overview](index=4&type=section&id=Overview) Innoviva is a diversified holding company with GSK-partnered respiratory royalties and commercial products from recent acquisitions - Innoviva, Inc. is a diversified holding company with a portfolio of royalties and other healthcare assets[17](index=17&type=chunk) - Key royalty assets include RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® from a collaboration with GSK[17](index=17&type=chunk) - Recent acquisitions of Entasis Therapeutics (July 11, 2022) and La Jolla Pharmaceutical (August 22, 2022) expanded the portfolio to include commercial products GIAPREZA® and XERAVA®, and development pipeline assets like SUL-DUR[18](index=18&type=chunk) [Our Strategy](index=4&type=section&id=Our%20Strategy) Innoviva's strategy maximizes GSK royalty value, optimizes operations, and diversifies through opportunistic healthcare acquisitions - Corporate strategy focuses on increasing stockholder value by maximizing respiratory assets partnered with GSK, optimizing operations, and augmenting capital allocation[20](index=20&type=chunk) - Diversifying royalty management business through opportunistic acquisitions of promising healthcare companies and assets[20](index=20&type=chunk) - Recent acquisitions of Entasis and La Jolla created a robust hospital and infectious disease platform[20](index=20&type=chunk) [Our Royalty Product Portfolio](index=4&type=section&id=Our%20Royalty%20Product%20Portfolio) Innoviva's royalty portfolio includes GSK-partnered respiratory products RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®, facing competition - Innoviva's royalty portfolio includes RELVAR®/BREO® ELLIPTA® (FF/VI) and ANORO® ELLIPTA® (UMEC/VI), developed under a LABA Collaboration Agreement with GSK[21](index=21&type=chunk) GSK Royalty Rates | Product | Royalty Rate (Annual Global Net Sales) | | :------ | :------------------------------------ | | RELVAR®/BREO® ELLIPTA® | **15%** on first **$3.0 billion**, **5%** above **$3.0 billion** | | ANORO® ELLIPTA® | Tiered, ranging from **6.5% to 10%** | - The market for these respiratory products is highly competitive, facing numerous approved bronchodilator drugs, combination therapies, and generic versions of established products like Advair® and Symbicort®[23](index=23&type=chunk)[25](index=25&type=chunk) [Our Integrated Hospital / Infectious Disease Business](index=7&type=section&id=Our%20Integrated%20Hospital%20%2F%20Infectious%20Disease%20Business) Innoviva's hospital/infectious disease business features commercial products GIAPREZA® and XERAVA®, with regulatory exclusivity - Commercial products include GIAPREZA® (angiotensin II) for septic or other distributive shock and XERAVA® (eravacycline) for complicated intra-abdominal infections (cIAI)[18](index=18&type=chunk)[27](index=27&type=chunk) - GIAPREZA® was approved based on the ATHOS-3 study, showing a **70%** MAP response in treated patients vs. **23%** in placebo, with a median time to response of ~5 minutes[29](index=29&type=chunk)[33](index=33&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - XERAVA® was approved based on IGNITE1 and IGNITE4 studies, demonstrating noninferiority in clinical cure rates for cIAI, including against resistant pathogens[43](index=43&type=chunk)[47](index=47&type=chunk)[52](index=52&type=chunk) - Both GIAPREZA® and XERAVA® are New Chemical Entities (NCEs) and have Qualified Infectious Disease Product (QIDP) designation, granting additional market exclusivity[59](index=59&type=chunk)[62](index=62&type=chunk)[124](index=124&type=chunk) [Our Product Candidates](index=15&type=section&id=Our%20Product%20Candidates) Innoviva's pipeline includes SUL-DUR for carbapenem-resistant infections and zoliflodacin for gonorrhea, both with QIDP designation - SUL-DUR is a novel IV antibiotic for carbapenem-resistant Acinetobacter infections, with positive Phase 3 ATTACK trial data showing **19.0%** mortality vs. **32.3%** for colistin and significantly lower nephrotoxicity (**13.2% vs. 37.6%**)[65](index=65&type=chunk)[72](index=72&type=chunk) - SUL-DUR received FDA Fast Track and QIDP designation in September 2017 and FDA Priority Review for its NDA in November 2022, with a target PDUFA date of May 29, 2023[72](index=72&type=chunk)[78](index=78&type=chunk)[124](index=124&type=chunk) - Zoliflodacin is a potential single oral dose cure for uncomplicated gonorrhea, targeting drug-resistant strains, and is currently in a global Phase 3 registration trial with anticipated enrollment completion in 2023[87](index=87&type=chunk)[95](index=95&type=chunk) - Zoliflodacin has QIDP designation and aims to address the global public health threat of gonorrhea, with **82.4 million** cases worldwide in 2020[90](index=90&type=chunk)[124](index=124&type=chunk) [Manufacturing](index=21&type=section&id=Manufacturing) Innoviva relies on third-party manufacturers for commercial products and candidates, adhering to cGMPs and regulatory standards - Manufacturing of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® is performed by GSK[103](index=103&type=chunk) - Innoviva relies on third-party manufacturers for GIAPREZA and XERAVA, and for raw materials, drug substance, and finished drug product for preclinical and clinical trials of product candidates[104](index=104&type=chunk)[105](index=105&type=chunk) - Contract manufacturers must comply with FDA's current Good Manufacturing Practices (cGMPs) and other applicable laws and regulations[104](index=104&type=chunk) [Government Regulation](index=21&type=section&id=Government%20Regulation) Products are subject to extensive U.S. and international regulations covering development, approval, manufacturing, marketing, and reimbursement - Extensive government regulation in the U.S. and other countries covers all stages of product life, from research and development to marketing and post-approval monitoring[106](index=106&type=chunk)[107](index=107&type=chunk)[134](index=134&type=chunk) - The U.S. FDA approval process involves preclinical tests, IND submission, three phases of clinical trials (Phase 1, 2, 3), NDA submission, and facility inspections for cGMP compliance[110](index=110&type=chunk)[111](index=111&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk) - Expedited review programs like Fast Track and QIDP (Qualified Infectious Disease Product) designation can accelerate development and review, and provide additional market exclusivity (e.g., XERAVA and SUL-DUR have QIDP)[123](index=123&type=chunk)[124](index=124&type=chunk)[128](index=128&type=chunk) - Post-approval, products are subject to ongoing review, cGMP compliance, adverse event reporting, and strict regulation of promotional claims, with potential for restrictions or withdrawal if issues arise[130](index=130&type=chunk)[131](index=131&type=chunk) - Reimbursement by third-party payors (government and commercial) is critical for commercial success, with increasing challenges to prices and cost-effectiveness, especially for hospital-administered drugs[140](index=140&type=chunk)[141](index=141&type=chunk) - Healthcare laws such as the federal Anti-Kickback Statute, False Claims Act, and HIPAA regulate business activities and marketing practices, with non-compliance leading to significant penalties[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [Intellectual Property](index=30&type=section&id=Intellectual%20Property) Innoviva protects its product candidates and technologies through patents, trademarks, and trade secrets, with patents extending to 2044 - Commercial success depends on obtaining and maintaining proprietary or intellectual property protection for product candidates, core technologies, and know-how[159](index=159&type=chunk) Intellectual Property Portfolio Summary (as of Feb 15, 2023) | Description | United States (Issued/Pending) | Expiration (US) | Foreign (Issued/Pending) | Expiration (Foreign) | | :---------- | :----------------------------- | :-------------- | :----------------------- | :------------------- | | GIAPREZA | 15 / 10 | 2029 - 2044 | 15 / 25 | 2034 - 2044 | | XERAVA | 4 / 2 | 2029 - 2037 | 17 / 15 | 2029 - 2037 | | Other (Tetracycline) | 5 / 1 | 2030 - 2037 | 32 / 17 | 2033 - 2037 | | Durlobactam | 4 / 2 (incl. PCT) | 2033 - 2043 | 107 / 6 | 2033 - 2043 | | Zoliflodacin| 7 / 0 | 2029 - 2035 | 74 / 2 | 2029 - 2035 | - The company also relies on trademarks, trade secrets, and confidentiality agreements to protect unpatented know-how and maintain its competitive position[169](index=169&type=chunk) [Our Strategic Partnership with Sarissa Capital](index=31&type=section&id=Our%20Strategic%20Partnership%20with%20Sarissa%20Capital) Innoviva partners with Sarissa Capital for acquisition strategy and invests in ISP Fund LP for healthcare equity securities - Innoviva entered a Strategic Advisory Agreement with Sarissa Capital (a related party) to assist in developing and executing its acquisition strategy[170](index=170&type=chunk)[171](index=171&type=chunk) - Innoviva Strategic Partners LLC, a wholly-owned subsidiary, became a limited partner in ISP Fund LP, contributing **$300.0 million** initially and an additional **$110.0 million** in 2022 for investments in healthcare, pharmaceutical, and biotechnology equity securities[172](index=172&type=chunk)[173](index=173&type=chunk) [Human Capital](index=32&type=section&id=Human%20Capital) Innoviva had **101** employees as of December 31, 2022, focusing on recruitment, retention, and DEI through competitive compensation - As of December 31, 2022, Innoviva had **101 full-time employees**, none represented by a labor union[174](index=174&type=chunk) - Key human capital objectives include identifying, recruiting, integrating, retaining, and motivating employees through competitive compensation, benefits, and a focus on Diversity, Equity, and Inclusion (DEI)[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) Executive Officers (as of Feb 28, 2023) | Name | Age | Positions Held | | :------------ | :-- | :---------------------- | | Pavel Raifeld | 39 | Chief Executive Officer | | Marianne Zhen | 54 | Chief Accounting Officer| - Innoviva is a diversified holding company with a portfolio of royalties and innovative healthcare assets[17](index=17&type=chunk)[18](index=18&type=chunk)[400](index=400&type=chunk) - The corporate strategy is focused on increasing stockholder value by maximizing respiratory assets, optimizing operations, augmenting capital allocation, and diversifying through opportunistic acquisitions in the healthcare industry[20](index=20&type=chunk) GSK Royalty Structure | Product | Royalty Rate (Annual Global Net Sales) | | :------ | :------------------------------------ | | RELVAR®/BREO® ELLIPTA® | **15%** on first **$3.0 billion**, **5%** above **$3.0 billion** | | ANORO® ELLIPTA® | Tiered, ranging from **6.5% to 10%** | [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Innoviva faces risks from competition, partner dependence, development uncertainties, acquisitions, debt, and regulatory/economic factors - Significant risks include substantial competition for RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®, dependence on GSK's commercialization efforts, and potential for reduced royalty revenue due to generic competition or pricing pressures[182](index=182&type=chunk)[184](index=184&type=chunk)[188](index=188&type=chunk)[191](index=191&type=chunk) - Product development risks involve clinical trial failures, delays in regulatory approval, undesirable side effects, and challenges in achieving market acceptance for new product candidates[182](index=182&type=chunk)[230](index=230&type=chunk)[242](index=242&type=chunk)[273](index=273&type=chunk) - Operational risks include difficulties integrating acquired businesses (Entasis, La Jolla), reliance on third parties for clinical trials and manufacturing, and the potential for unsuccessful acquisitions or strategic collaborations[182](index=182&type=chunk)[251](index=251&type=chunk)[257](index=257&type=chunk)[261](index=261&type=chunk)[291](index=291&type=chunk)[293](index=293&type=chunk)[296](index=296&type=chunk) - Financial risks include significant debt obligations (**$549.7 million** as of Dec 31, 2022), potential limitations on net operating loss carryforwards, and the volatility of the company's stock price[182](index=182&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[209](index=209&type=chunk)[377](index=377&type=chunk) - Other risks encompass intellectual property protection challenges, compliance with complex government regulations (including healthcare laws and potential price controls), and adverse impacts from global economic and political conditions[182](index=182&type=chunk)[298](index=298&type=chunk)[322](index=322&type=chunk)[335](index=335&type=chunk)[341](index=341&type=chunk)[348](index=348&type=chunk)[355](index=355&type=chunk)[381](index=381&type=chunk) [Item 1B. Unresolved Staff Comments](index=69&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments are reported [Item 2. Properties](index=69&type=section&id=Item%202.%20Properties) Innoviva maintains headquarters in California and office/lab facilities in Massachusetts, sufficient for current operations - Headquarters: **2,111 sq ft** office space in Burlingame, CA, lease expires December 2023[384](index=384&type=chunk) - Other material property: ~**20,000 sq ft** office and laboratory facility in Waltham, MA, lease expires December 2025[384](index=384&type=chunk) - Current facilities are sufficient, and additional space is expected to be available on commercially reasonable terms for expansion[384](index=384&type=chunk) [Item 3. Legal Proceedings](index=69&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 13, 'Commitments and Contingencies,' in financial statements - Legal proceedings information is incorporated by reference from Note 13, 'Commitments and Contingencies,' in the financial statements[385](index=385&type=chunk) [Item 4. Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Innoviva, Inc [PART II](index=70&type=section&id=PART%20II) This section covers market information for common equity, related stockholder matters, and issuer purchases of equity securities [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=70&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Innoviva's common stock trades on Nasdaq, with a **$100.0 million** share repurchase program initiated in October 2022 - Innoviva's common stock trades on Nasdaq under the symbol "INVA" since January 11, 2016 (formerly "THRX")[388](index=388&type=chunk) - As of February 14, 2023, there were **64 stockholders** of record[389](index=389&type=chunk) Share Repurchases (Q4 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------------------------- | :------------------------------- | :--------------------------- | | December 1, 2022 to Dec 31, 2022 | 647,394 | $13.13 | | Total | 647,394 | $13.13 | - The Board authorized a **$100.0 million** share repurchase program on October 31, 2022[390](index=390&type=chunk) - Subsequent to December 31, 2022, and through February 24, 2023, an additional **1,522,947 shares** were repurchased for approximately **$19.2 million**[406](index=406&type=chunk) [Item 6. [Reserved]](index=71&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=72&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Innoviva's 2022 financial performance reflects strategic acquisitions, divestitures, and operational shifts, impacting net income and cash flows [Management Overview](index=72&type=section&id=Management%20Overview) Innoviva is a diversified holding company managing royalties and healthcare assets, expanded by recent acquisitions - Innoviva is a diversified holding company with a portfolio of royalties and innovative healthcare assets, including GSK-partnered respiratory products (RELVAR®/BREO® ELLIPTA®, ANORO® ELLIPTA®)[399](index=399&type=chunk) - Acquisitions of Entasis (July 11, 2022) and La Jolla (August 22, 2022) added commercial products GIAPREZA® and XERAVA®, and a development pipeline (SUL-DUR)[400](index=400&type=chunk) - The company's structure is tailored to managing respiratory assets, commercializing marketed products, developing product candidates, and optimizing capital allocation[401](index=401&type=chunk) [Financial Highlights](index=72&type=section&id=Financial%20Highlights) Innoviva's 2022 net income decreased to **$213.9 million** due to investment losses and lower royalties, partially offset by a TRC sale gain Net Income Attributable to Innoviva Stockholders | Year | Net Income (in millions) | | :--- | :----------------------- | | 2022 | $213.9 | | 2021 | $265.9 | - The decrease in net income was mainly driven by a **$153.2 million** unrealized loss on equity and long-term investments and decreased royalty revenues[402](index=402&type=chunk) - A gain of **$266.7 million** was recognized from the sale of TRC, partially offsetting the decreases[402](index=402&type=chunk) - Cash and cash equivalents totaled **$291.0 million** as of December 31, 2022[402](index=402&type=chunk) [Corporate Updates](index=72&type=section&id=Corporate%20Updates) Innoviva completed acquisitions of Entasis and La Jolla, divested TRC ownership, and initiated a **$100.0 million** share repurchase program - Acquired Entasis Therapeutics Holdings Inc. on July 11, 2022, for **$42.4 million**, adding an infectious disease R&D platform and lead asset SUL-DUR[403](index=403&type=chunk) - Sold 15% ownership interest in TRC to Royalty Pharma for **$282.0 million** on July 20, 2022, including a potential **$50.0 million** sales-based milestone[404](index=404&type=chunk) - Acquired La Jolla Pharmaceutical Company on August 22, 2022, for **$150.5 million**, adding commercial products GIAPREZA® and XERAVA®[405](index=405&type=chunk) - Authorized a new **$100.0 million** share repurchase program on October 31, 2022[406](index=406&type=chunk) [Clinical Updates](index=73&type=section&id=Clinical%20Updates) SUL-DUR received FDA Priority Review, and zoliflodacin's Phase 3 trial enrollment is on track for 2023 completion - FDA granted Priority Review for SUL-DUR's NDA on November 30, 2022, for carbapenem-resistant Acinetobacter infections, with a target PDUFA date of May 29, 2023[409](index=409&type=chunk) - Positive safety and efficacy findings from the pivotal Phase 3 ATTACK trial for SUL-DUR were reinforced at the Infectious Disease Society of America annual meeting in October 2022[409](index=409&type=chunk) - Enrollment in the Phase 3 registrational trial for zoliflodacin (for uncomplicated gonorrhea) is on track, with study completion anticipated in 2023[409](index=409&type=chunk) [Collaborative Arrangements with GSK](index=73&type=section&id=Collaborative%20Arrangements%20with%20GSK) Innoviva receives tiered royalties from GSK on RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® sales - LABA Collaboration Agreement with GSK (November 2002) developed once-daily products for COPD and asthma, including RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®[408](index=408&type=chunk)[409](index=409&type=chunk) - Innoviva receives tiered royalties from GSK on sales of RELVAR®/BREO® ELLIPTA® (**15%** on first **$3.0 billion**, **5%** above **$3.0 billion**) and ANORO® ELLIPTA® (**6.5% to 10%**)[411](index=411&type=chunk) - Milestone fees of **$220.0 million** paid to GSK in 2014 are capitalized and amortized over the products' estimated useful lives[410](index=410&type=chunk) - Innoviva no longer receives royalties on TRELEGY® ELLIPTA® sales after selling its TRC ownership interest in July 2022[411](index=411&type=chunk) [Strategic Partnership with Sarissa Capital](index=74&type=section&id=Strategic%20Partnership%20with%20Sarissa%20Capital) Innoviva partners with Sarissa Capital for acquisition strategy and invests in ISP Fund LP for healthcare equity securities - Strategic Advisory Agreement with Sarissa Capital (a related party) provides strategic services for Innoviva's acquisition strategy, free of charge[412](index=412&type=chunk) - Innoviva Strategic Partners LLC contributed **$300.0 million** initially and an additional **$110.0 million** in March 2022 to ISP Fund LP, managed by Sarissa Capital, for investments in healthcare, pharmaceutical, and biotechnology equity securities[413](index=413&type=chunk)[414](index=414&type=chunk) - Capital contributions to ISP Fund LP are subject to a 36-month lock-up period from the contribution date[413](index=413&type=chunk)[414](index=414&type=chunk) [Critical Accounting Policies and Estimates](index=74&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Innoviva's financial reporting relies on critical estimates for business combinations, revenue recognition, impairment, and investment valuation - Business combinations use the acquisition method, recording acquired assets and liabilities at fair value, requiring significant estimates for identifiable intangible assets, future revenues, cash flows, and discount rates[416](index=416&type=chunk)[417](index=417&type=chunk) - Royalty revenue is recognized when earned, net of amortization of capitalized fees, based on partner's net sales reports and estimates for rebates/returns[418](index=418&type=chunk) - Product sales revenue is recognized when customers obtain control, net of variable consideration (chargebacks, discounts, returns, rebates) estimated using the expected-value method[420](index=420&type=chunk)[421](index=421&type=chunk) - Capitalized fees are reviewed for impairment by comparing carrying amount to expected undiscounted future cash flows, requiring estimates of useful life and sales projections[423](index=423&type=chunk) - Equity and long-term investments, particularly Level 3 instruments like InCarda preferred stock/warrants and Gate convertible notes, are measured at fair value using models like Black-Scholes-Merton or Monte Carlo simulation, based on significant unobservable inputs[428](index=428&type=chunk)[429](index=429&type=chunk) [Factors Affecting Comparability](index=77&type=section&id=Factors%20Affecting%20Comparability) Financial comparability is impacted by ASU 2020-06 adoption, Entasis consolidation, TRC sale, and La Jolla acquisition - Comparability of financial results is affected by the adoption of ASU 2020-06 (effective Jan 1, 2022)[431](index=431&type=chunk) - Consolidation of Entasis (Feb 17, 2022) and purchase of remaining noncontrolling interest (July 11, 2022) impact comparability[431](index=431&type=chunk) - Sale of 15% ownership interest in TRC (July 20, 2022) and acquisition of La Jolla (August 22, 2022) also affect comparability[431](index=431&type=chunk) [Results of Operations](index=78&type=section&id=Results%20of%20Operations) Innoviva's 2022 results show decreased royalty revenue, increased R&D and SG&A expenses, a TRC sale gain, and unrealized investment losses Total Net Royalty Revenue (2022 vs. 2021) | Year | Total Net Royalty Revenue (in thousands) | | :--- | :--------------------------------------- | | 2022 | $311,645 | | 2021 | $391,866 | | Change | $(80,221) | - Decrease in royalty revenue primarily due to the sale of TRC ownership interest and pricing pressures/foreign currency changes on RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®[433](index=433&type=chunk) Net Product Sales (2022) | Product | Net Sales (in thousands) | | :-------- | :----------------------- | | GIAPREZA® | $14,200 | | XERAVA® | $5,500 | | Total | $19,700 | Key Expenses (2022 vs. 2021) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | Change ($) (in thousands) | | :------------------------------- | :------------------ | :------------------ | :------------------------ | | Research and development | $41,432 | $576 | $40,856 | | Selling, general and administrative | $63,538 | $16,187 | $47,351 | - Recognized a net gain of **$266.7 million** from the sale of TRC in July 2022[446](index=446&type=chunk) - Recorded **$152.5 million** in unrealized losses on Armata investments in 2022, compared to **$78.7 million** in unrealized gains in 2021[448](index=448&type=chunk) [Liquidity and Capital Resources](index=82&type=section&id=Liquidity%20and%20Capital%20Resources) Innoviva maintains **$291.0 million** in cash, with **$549.7 million** in convertible notes, and sufficient liquidity for near-term needs - Cash and cash equivalents totaled **$291.0 million** as of December 31, 2022[457](index=457&type=chunk) - Generated **$325.5 million** in gross royalty revenues and **$19.7 million** in net product sales in 2022[457](index=457&type=chunk) - Total outstanding convertible notes were **$549.7 million** as of December 31, 2022, with **$96.2 million** (2023 Notes) fully paid in January 2023[458](index=458&type=chunk) - Management believes current cash and cash equivalents are sufficient for debt service, operating needs, and share repurchase program for at least the next 12 months[461](index=461&type=chunk) Cash Flows Summary (2022 vs. 2021) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | | :--------------------------- | :------------------ | :------------------ | | Operating activities | $201,726 | $363,813 | | Investing activities | $(56,634) | $43,722 | | Financing activities | $(55,568) | $(452,497) | - Net income attributable to Innoviva stockholders decreased to **$213.9 million** in 2022 from **$265.9 million** in 2021[402](index=402&type=chunk) - The decrease in net income was mainly driven by a **$153.2 million** unrealized loss on equity and long-term investments and decreased royalty revenue, partially offset by a **$266.7 million** gain from the sale of TRC[402](index=402&type=chunk) - Innoviva completed the acquisition of Entasis Therapeutics on July 11, 2022, for **$42.4 million** cash, and La Jolla Pharmaceutical Company on August 22, 2022, for **$150.5 million** net cash[403](index=403&type=chunk)[405](index=405&type=chunk) - The company sold its 15% ownership interest in Theravance Respiratory Company, LLC (TRC) to Royalty Pharma for **$282.0 million** on July 20, 2022, including a potential **$50.0 million** sales-based milestone[404](index=404&type=chunk) Key Financial Data (2022 vs. 2021) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change ($) (in thousands) | Change (%) | | :----------------------------------------- | :------------------ | :------------------ | :------------------------ | :--------- | | Total net royalty revenue | $311,645 | $391,866 | $(80,221) | (20)% | | Net product sales | $19,694 | $0 | $19,694 | * | | Research and development expenses | $41,432 | $576 | $40,856 | * | | Selling, general and administrative expenses | $63,538 | $16,187 | $47,351 | **293%** | | Net income attributable to Innoviva stockholders | $213,921 | $265,854 | $(51,933) | (20)% | | Cash and cash equivalents (period end) | $291,049 | $201,525 | $89,524 | **44%** | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=84&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Innoviva faces market risks from investment fair value changes, inflation, and foreign exchange rates, though direct foreign exchange impact is minimal - Debt bears fixed interest rates, so cash flows on debt obligations are not subject to variability from interest rate changes[476](index=476&type=chunk) - Exposed to changes in the fair value of equity and debt securities investments, which could result in material gains or losses[477](index=477&type=chunk) - Inflationary factors (e.g., raw material costs, interest rates) could adversely affect operating results, though no material impact has been observed to date[478](index=478&type=chunk) - Foreign exchange risk is considered insubstantial as most cash, investments, and vendor relationships are U.S. dollar-denominated, despite indirect exposure from international royalty revenue[479](index=479&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=85&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Innoviva's audited consolidated financial statements, including balance sheets, income statements, and cash flow statements, with notes - Includes Consolidated Balance Sheets as of December 31, 2022 and 2021[480](index=480&type=chunk) - Includes Consolidated Statements of Income, Comprehensive Income, Stockholders' Equity, and Cash Flows for the three years ended December 31, 2022[480](index=480&type=chunk) - Contains Notes to Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firms[480](index=480&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=134&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure are reported [Item 9A. Controls and Procedures](index=134&type=section&id=Item%209A.%20Controls%20and%20Procedures) Innoviva's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, excluding recent acquisitions - Disclosure controls and procedures were evaluated as effective at reasonable assurance levels as of December 31, 2022[805](index=805&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO 2013 framework[807](index=807&type=chunk) - Management's assessment excluded internal controls of recently acquired La Jolla and Entasis, which constituted approximately **33%** of total assets and **6%** of total revenue[808](index=808&type=chunk) - Deloitte & Touche LLP, the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of internal control over financial reporting[809](index=809&type=chunk)[815](index=815&type=chunk) - The company is integrating acquired operations into its internal control environment and implementing necessary changes, including for inventory management, R&D, and product sales[811](index=811&type=chunk) [Item 9B. Other Information](index=137&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=137&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Innoviva, Inc [PART III](index=138&type=section&id=PART%20III) This section incorporates information on directors, executive compensation, security ownership, related transactions, and accountant fees by reference [Item 10. Directors, Executive Officers and Corporate Governance](index=138&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement - Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement[825](index=825&type=chunk) [Item 11. Executive Compensation](index=138&type=section&id=Item%2011.%20Executive%20Compensation) Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement - Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement[826](index=826&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=138&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details security ownership and equity compensation plans, including outstanding options and shares available for future issuance Securities Authorized for Issuance under Equity Compensation Plans (as of Dec 31, 2022) | Plan Category | Number of securities to be issued upon exercise of outstanding options and vesting of outstanding restricted stock units and restricted stock awards (a) | Weighted‑average exercise price of outstanding options (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :------------------------------------------------------------------------------------------------------------------------------------------------ | :--------------------------------------------------------- | :---------------------------------------------------------------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 1,465,720 | $15.56 | 3,999,265 | - Column (a) includes 947,906 shares from outstanding options and 517,814 shares from outstanding RSUs and RSAs[828](index=828&type=chunk) - Column (c) includes **160,995 shares** of common stock available under the Employee Stock Purchase Plan[828](index=828&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=138&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement - Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement[829](index=829&type=chunk) [Item 14. Principal Accountant Fees and Services](index=138&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement - Information is incorporated by reference from the 2023 Annual Meeting of Stockholders Proxy Statement[830](index=830&type=chunk) [PART IV](index=139&type=section&id=PART%20IV) This section lists financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K [Item 15. Exhibits and Financial Statement Schedules](index=139&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section details financial statements, schedules, and an index of exhibits required by Regulation S-K for the Annual Report on Form 10-K - Includes Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Stockholders' Equity, and Cash Flows for the periods ended December 31, 2022[832](index=832&type=chunk) - Contains Notes to Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firms[832](index=832&type=chunk) - Provides an index of exhibits required by Item 601 of Regulation S-K, including merger agreements, certificates of incorporation, indentures, and various other agreements[832](index=832&type=chunk)[836](index=836&type=chunk) [Item 16. Form 10‑K Summary](index=139&type=section&id=Item%2016.%20Form%2010%E2%80%91K%20Summary) No Form 10-K Summary is provided

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Comprehensive financial data including statements, management analysis, market risks, and internal controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements for Q3 2022 reflect significant impacts from recent acquisitions and asset sales [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1.33 billion due to acquisitions, significantly raising liabilities and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,327,712** | **$926,395** | | Cash and cash equivalents | $300,789 | $201,525 | | Goodwill | $15,995 | $— | | Intangible assets | $258,489 | $— | | **Total Liabilities** | **$686,344** | **$6,816** | | Total current liabilities | $163,884 | $5,807 | | Long-term debt, net | $443,679 | $394,653 | | **Total Stockholders' Equity** | **$641,368** | **$525,935** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2022 revenue decreased due to TRC sale, but a significant gain from the sale boosted net income Q3 2022 vs Q3 2021 Income Statement (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Total Revenue | $67,257 | $97,862 | | Gain on sale of TRC | $266,696 | $— | | Net Income | $229,347 | $102,646 | | Net Income Attributable to Innoviva Stockholders | $265,523 | $72,438 | | Diluted EPS | $2.80 | $0.90 | Nine Months 2022 vs 2021 Income Statement (in thousands, except per share data) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Total Revenue | $265,536 | $284,186 | | Gain on sale of TRC | $266,696 | $— | | Net Income | $288,576 | $323,187 | | Net Income Attributable to Innoviva Stockholders | $282,235 | $255,509 | | Diluted EPS | $3.07 | $2.63 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow provided $192.8 million, with investing and financing activities reflecting acquisitions and debt restructuring Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $192,827 | $265,432 | | Net cash (used in) provided by investing activities | $(47,956) | $63,627 | | Net cash used in financing activities | $(45,567) | $(440,431) | | **Net increase (decrease) in cash** | **$99,304** | **$(111,372)** | | **Cash and cash equivalents at end of period** | **$300,789** | **$135,115** | - Key investing activities included the **$150.5 million** cash paid for the La Jolla acquisition and **$248.2 million** in proceeds from the sale of the company's interest in TRC[18](index=18&type=chunk)[19](index=19&type=chunk) - Financing activities were driven by the issuance of **$252.5 million** in 2028 convertible notes, offset by a **$165.1 million** repurchase of 2023 convertible notes and a **$42.4 million** payment for the Entasis minority interest[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain significant accounting policies and transactions, including major acquisitions and asset sales impacting comparability - The company's portfolio expanded through the acquisition of Entasis (July 11, 2022) and La Jolla (August 22, 2022), adding commercial products GIAPREZA® and XERAVA® and a development pipeline[23](index=23&type=chunk) - On July 20, 2022, the company sold its **15%** ownership interest in Theravance Respiratory Company, LLC (TRC), and is no longer entitled to royalties from TRELEGY® ELLIPTA® sales[22](index=22&type=chunk) - The company adopted ASU 2020-06, simplifying the accounting for convertible instruments, which impacted the accounting for its 2025 Notes and the calculation of diluted EPS[56](index=56&type=chunk)[57](index=57&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial impact of strategic acquisitions and asset sales on revenue, expenses, and liquidity [Overview](index=40&type=section&id=Overview) Innoviva diversified its portfolio through strategic acquisitions of Entasis and La Jolla, and the sale of its TRC interest - Completed the acquisition of Entasis on July 11, 2022, adding an infectious disease R&D platform with lead asset SUL-DUR[194](index=194&type=chunk) - Completed the acquisition of La Jolla on August 22, 2022, for a net cash price of **$150.5 million**, adding commercial products GIAPREZA® and XERAVA®[194](index=194&type=chunk) - Completed the sale of its **15%** ownership interest in TRC to Royalty Pharma for **$282.0 million** on July 20, 2022, plus potential milestones[194](index=194&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Q3 2022 revenue declined due to TRC sale, offset by new product sales, while operating expenses significantly increased Royalty Revenue Breakdown (in thousands) | Royalty Source | Q3 2022 | Q3 2021 | Change % | | :--- | :--- | :--- | :--- | | RELVAR/BREO | $55,663 | $54,092 | 3% | | ANORO | $9,943 | $11,641 | (15)% | | TRELEGY | $— | $35,585 | (100)% | | **Total Royalties** | **$65,606** | **$101,318** | **(35)%** | - Net product sales of **$5.1 million** were recognized from the date of the La Jolla acquisition (Aug 22, 2022) to Sep 30, 2022, comprising **$3.8 million** from GIAPREZA® and **$1.3 million** from XERAVA®[207](index=207&type=chunk) - R&D expenses increased to **$11.7 million** in Q3 2022 from **$0.4 million** in Q3 2021, mainly attributable to Entasis' product development for SUL-DUR[208](index=208&type=chunk)[209](index=209&type=chunk) - SG&A expenses increased to **$27.8 million** in Q3 2022 from **$2.9 million** in Q3 2021, due to the consolidation of Entasis and La Jolla operating expenses[210](index=210&type=chunk)[211](index=211&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) Innoviva maintains strong liquidity with **$300.8 million** cash, sufficient for future operations and debt service - The company ended Q3 2022 with **$300.8 million** in cash and cash equivalents and **$65.6 million** in receivables from GSK[221](index=221&type=chunk) - Management believes cash from future royalties and existing cash reserves will be sufficient to meet needs for at least the next 12 months[222](index=222&type=chunk) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $192,827 | $265,432 | | Net cash (used in) provided by investing activities | $(47,956) | $63,627 | | Net cash used in financing activities | $(45,567) | $(440,431) | - Significant new contractual obligations include interest and principal on the **$261.0 million** 2028 Notes and a deferred royalty obligation to HCR on GIAPREZA® sales, acquired with La Jolla[230](index=230&type=chunk)[232](index=232&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from investments and inflation, though debt obligations have fixed interest rates - The company's debt bears fixed interest rates, mitigating risk from interest rate changes on its debt obligations[235](index=235&type=chunk) - The company is exposed to fair value fluctuations in its investments in equity and debt securities, which could lead to material gains or losses[236](index=236&type=chunk) - Inflationary factors, such as increased costs for raw materials and overhead, may adversely affect future operating results, although the impact to date has not been material[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective, with ongoing integration of internal controls for newly acquired businesses - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022[239](index=239&type=chunk) - The company is integrating the acquired operations of Entasis and La Jolla and implementing new internal controls related to inventory management, R&D, and product sales[241](index=241&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) Additional disclosures include legal proceedings, updated risk factors, and a list of filed exhibits [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is engaged in a patent infringement lawsuit to protect GIAPREZA® from generic competition - La Jolla (now a subsidiary) filed a patent infringement suit against Gland Pharma Limited on March 29, 2022, in response to Gland's ANDA filing for a generic version of GIAPREZA®[243](index=243&type=chunk)[244](index=244&type=chunk) - The lawsuit triggers a stay under the Hatch-Waxman Act, preventing the FDA from approving Gland's ANDA for up to **7.5 years** from the original NDA approval, unless the patents are found invalid, unenforceable, or not infringed[244](index=244&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) Risk factors are supplemented to include those related to the recent acquisitions of Entasis and La Jolla - Risk factors have been supplemented to include those related to the acquisitions of Entasis and La Jolla[245](index=245&type=chunk)[246](index=246&type=chunk) - The company incorporates by reference the risk factors detailed in the standalone 10-K filings of Entasis and La Jolla, and a Form 8-K filed on August 23, 2022[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None reported for the period - None[248](index=248&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) An index of all exhibits filed with the Form 10-Q, including merger agreements and debt indentures - Lists exhibits filed with the report, including merger agreements, debt indentures, and certifications[253](index=253&type=chunk)