What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-26 · 545 added, 678 removed, 968 unchanged (56% of the section changed)

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Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024

Consolidated Statements of Income for each of the three years in the period ended December 31, 2024

Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2024

Consolidated Statements of Income and Comprehensive Income for each of the three years in the period ended December 31, 2025

Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2025

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Deferred revenue

Income tax payable

Convertible notes, due 2025, net of issuance costs

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December 31, 2025 and 2024 respectively

Treasury stock:

at cost, nil and, 32,005 shares as of December 31, 2024

and 2023, respectively

Additional paid-in capital

Accumulated deficit

Retained earnings (accumulated deficit)

Total stockholders’ equity

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INNOVIVA, INC.

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)

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Cost of license revenue

Amortization of acquired intangible assets

Operating expenses:

Selling, general and administrative

Research and development

Amortization of acquired intangible assets

Gain on sale of Theravance Respiratory

Company, LLC (“TRC”)

Loss on extinguishment of debt

Total operating expenses

Income from operations

Changes in fair values of equity method

investments, net

Changes in fair value of equity and

Changes in fair values of equity and

long-term investments, net

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Other expense, net

Total expenses, net

Income before income taxes

Income tax expense, net

Net income attributable to noncontrolling

Net income attributable to Innoviva

Basic net income per share attributable to

Innoviva stockholders

Diluted net income per share attributable to

Innoviva stockholders

Shares used to compute Innoviva

basic and diluted net income per share:

Shares used to compute basic

net income per share

Shares used to compute diluted

Net income and comprehensive income

Net income per share:

See accompanying notes to consolidated financial statements.

INNOVIVA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Year Ended December 31,

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Innoviva stockholders

Shares used to compute net income per share:

See accompanying notes to consolidated financial statements.

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(In thousands)

Retained Earnings

Treasury Stock

Noncontrolling

Stockholders’

Balance as of January 1, 2022

Cumulative adjustment due to adoption of

Distributions to noncontrolling interests

Recognition of noncontrolling interest upon

initial consolidation of Entasis

Equity activity of noncontrolling interests in

a consolidated variable interest entity

Derecognition of noncontrolling interests upon

acquisition of Entasis noncontrolling interest

Exercise of stock options and issuance of

common stock units and stock awards, net of

repurchase of shares to satisfy tax withholding

Capped call options associated with convertible

senior notes due 2028

Conversion of convertible subordinated notes

Repurchase of common stock

Stock-based compensation

Balance as of December 31, 2022

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Balance as of December 31, 2024

Exercise of stock options and

issuance of common stock units

and stock awards, net of

repurchase of shares to satisfy

tax withholding

Repurchase of common stock, including accrued

Accrued excise tax on common stock repurchase

applied against tax liability

Conversion of 2025 Notes to common stock

Exercise of warrants

Stock-based compensation

Balance as of December 31, 2025

See accompanying notes to consolidated financial statements.

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Changes in fair values of equity and long-term investments, net

Loss on extinguishment of debt

Net gain on sale of TRC

Acquired in-process research and development assets

Other non-cash items

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Acquisition of intangible asset

Purchases of equity method investments

Purchases of trading securities

Proceeds from trading securities

Purchases of equity and long-term investments

Purchases of equity investments managed by ISP Fund LP

Purchases of trading security managed by ISP Fund LP

Sales of equity investments managed by ISP Fund LP

Purchases and sales of other investments managed by ISP Fund LP, net

Cash paid for acquired in-process research and development assets

Purchases of property and equipment

Sale of property and equipment

Proceeds from sale of ownership interest in TRC, net

Cash acquired through the consolidation of Entasis

Cash paid for the acquisition of La Jolla, net of cash acquired

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

Distributions to noncontrolling interests

Purchase of Entasis noncontrolling interest

Repurchase of common stock

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Proceeds from issuances of common stock, net

Proceeds from exercise of warrants

Payment for repurchase of convertible subordinated notes due 2023

Purchases of capped call options associated with convertible senior notes due 2028

Proceeds from issuance of convertible senior notes due 2028, net of issuance costs

Net cash used in financing activities

Payment for repurchase of convertible senior notes due 2025

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

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Supplemental Disclosure of Non-cash Investing and Financing Activities:

2025 Notes converted to common stock

Accrued interest income converted to long-term investments

Adoption of ASU 2020-06

See accompanying notes to consolidated financial statements.

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Innoviva, Inc.

(and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a company with a core royalties portfolio, a leading critical care and infectious disease platform known as Innoviva Specialty Therapeutics (“IST”), and a portfolio of strategic investments in other healthcare assets.

Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/vilanterol, “FF/VI”) and ANORO ® ELLIPTA ® (umeclidinium bromide/vilanterol, “UMEC/VI”), and up until July 2022, TRELEGY ® ELLIPTA ® (the combination FF/UMEC/VI).

We sold our 15 % ownership interest in Theravance Respiratory Company, LLC (“TRC”) on July 20, 2022, and are no longer entitled to receive royalties on sales of TRELEGY ® ELLIPTA ® products.

(and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a diversified biopharmaceutical company with a portfolio of royalties, a critical care and infectious disease platform, and a portfolio of strategic healthcare assets.

Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® as follows:

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and royalties from the sales of ANORO ® ELLIPTA ® , which tier upward at a range from 6.5 % to 10 %.

We expanded our portfolio through the acquisition of Entasis Therapeutics Holdings Inc.

(“Entasis”) on July 11, 2022 and the acquisition of La Jolla Pharmaceutical Company (“La Jolla”) on August 22, 2022.

Our commercial and marketed products include GIAPREZA ® (angiotensin II), approved to increase blood pressure in adults with septic or other distributive shock, and XERAVA ® (eravacycline) for the treatment of complicated intra-abdominal infections in adults.

Our new product, XACDURO ® (formerly known as sulbactam-durlobactam or SUL-DUR), was approved by the United States Food and Drug Administration (“FDA”) for the treatment of hospital-acquired and ventilator-associated pneumonias caused by Acinetobacter in adults and we commenced commercial sales of XACDURO ® in the third quarter of 2023.

On December 14, 2024, we entered into an exclusive distribution and license agreement with Basilea Pharmaceutica Ltd., (“Basilea”) for the commercialization of ZEVTERA ® (ceftobiprole), an advanced-generation cephalosporin antibiotic, in the U.S.

We continue to further advance our pipeline and are on track to submit a New Drug Application (“NDA”) for zoliflodacin, potentially first in class, single dose oral drug for the treatment of uncomplicated gonorrhea, to the FDA in early 2025.

Overall, we have a wholly owned robust critical care and infectious disease operating platform with a hospital focus anchored by four differentiated products with significant growth potential and a promising drug candidate.

In addition, we own other strategic healthcare assets, such as a large equity stake in Armata Pharmaceuticals, a leader in development of bacteriophages with potential use across a range of infectious and other serious diseases.

We also have economic interests in other healthcare companies.

Our wholly owned, critical care and infectious disease operating platform with a hospital focus, is anchored by five differentiated approved, commercial and marketed products:

• GIAPREZA ® (angiotensin II) for increasing blood pressure in adults with septic or other distributive shock;

• XACDURO ® (sulbactam for injection;

durlobactam for injection), co-packaged for intravenous use for the treatment of hospital-acquired and ventilator-associated bacterial pneumonia caused by Acinetobacter , commercially launched in 2023 ;

• XERAVA ® (eravacycline) for the treatment of complicated intra-abdominal infections in adults;

• ZEVTERA ® (ceftobiprole), an advanced-generation cephalosporin antibiotic for the treatment of staphylococcus aureus bacteremia , including those with right-sided endocarditis, acute bacterial skin and skin structure infections, and community-acquired bacterial pneumonia, licensed from Basilea Pharmaceutica Ltd, Allschwil (SIX:

BSLN) (“Basilea”) for U.S.

commercialization and commercially launched in the third quarter of 2025;

• NUZOLVENCE ® (formerly known as zoliflodacin), approved by the FDA on December 12, 2025, for the treatment of uncomplicated urogenital gonorrhea in adults and adolescents.

In addition, we own other strategic healthcare assets, such as a significant stake in Armata Pharmaceuticals, Inc., a leader in development of bacteriophages with potential use across a range of infectious and other serious diseases.

We also have economic interests in other healthcare companies through our portfolio approach.

Principles of Consolidation

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All intercompany balances and transactions have been eliminated in consolidation.

For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interest in our consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.

Factors Affecting Comparability

Our historical financial condition and results of operations for the periods presented may not be comparable, either between periods or going forward due to the factors below and as discussed in Note 5, “Consolidated Entities and Acquisitions”.

• Accounting consolidation of Entasis on February 17, 2022 and purchase of remaining noncontrolling interest in Entasis on July 11, 2022;

• Sale of our 15 % ownership interest in TRC on July 20, 2022;

• Acquisition of La Jolla on August 22, 2022.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interest in our consolidated statements of income and comprehensive income equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.

Use of Management’s Estimates

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Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits.

We are dependent on third-party manufacturers to supply active pharmaceutical ingredients (“API”) and drug products for commercial and research and development programs.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We are dependent on third-party manufacturers to supply active pharmaceutical ingredients (“API”) and drug products for research and development and commercial programs.

These programs could be adversely affected by significant interruption in the supply of API or drug products.

Currently, we derive most of our revenues from GSK and our near-term success depends in large part on GSK’s ability to successfully develop and commercialize the products in the respiratory programs partnered with GSK.

Currently, we derive the majority of our revenues from GSK.

Our near-term success depends in large part upon the performance by GSK of its commercial obligations under the GSK Agreements and the commercial success of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .

If GSK does not devote sufficient resources to the commercialization or development of these products, is unsuccessful in its efforts, or chooses to reprioritize its commercial programs, our business would be materially harmed.

If GSK does not devote sufficient resources to the commercialization of these products, is unsuccessful in its efforts, or chooses to reprioritize its commercial programs, our business would be materially harmed.

GSK is responsible for all clinical and other product development, regulatory, manufacturing and commercialization activities for products developed under the GSK Agreements, including RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .

Our royalty revenues may fluctuate due to a variety of factors, many of which are outside of our control.

Our quarterly royalty revenues may fluctuate due to a variety of factors, many of which are outside of our control.

Our royalty revenues under the GSK Agreements may not meet our analysts’ or investors’ expectations due to a number of important factors.

Our revenue for the periods include product sales of GIAPREZA ® , XERAVA ® and XACDURO ® .

Hospitals and other healthcare organizations generally purchase our products through a network of specialty distributors.

These specialty distributors, which are located in the U.S., are considered our customers for accounting purposes.

We do not believe that loss of one of these distributors would significantly impact our ability to distribute our products, as we expect that sales volume would be absorbed by new or remaining distributors.

Three of our customers each account for approximately:

Our revenues also include net product sales of GIAPREZA ® , XERAVA ® , XACDURO ® , and ZEVTERA ® , which we commercially launched in the third quarter of 2025.

In the U.S., hospitals and other healthcare organizations generally acquire our products through a network of specialty distributors, which are regarded as our customers for accounting purposes.

We do not believe that the loss of any one of these distributors would significantly impact our ability to distribute our products, as we expect that the sales volume would be absorbed by either new or remaining distributors.

Our top three customers each account for approximately:

• 24 %, 22 % and 22 %, respectively, of our net product sales for the year ended December 31, 2025;

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27 % and 27 %, respectively, of our net product sales for the year ended December 31, 2023.

These same customers account for 31 %, 18 % and 15 %, respectively, of our receivables from net product sales, which are included in “Accounts receivables, net” in our consolidated balance sheet as of December 31, 2024.

These same customers account for 29 %, 19 % and 15 %, respectively, of our receivables from net product sales, which are included in “Accounts receivables, net” in our consolidated balance sheet as of December 31, 2023.

Our top three customers for the year ended December 31, 2025 account for 29 %, 28 % and 16 %, respectively, of our receivables from net product sales, which are included in “Accounts receivable” in our consolidated balance sheet as of December 31, 2025.

Our top three customers for the year ended December 31, 2024 account for 31 %, 18 % and 15 %, respectively, of our receivables from net product sales, which are included in “Accounts receivables” in our consolidated balance sheet as of December 31, 2024.

Segment Reporting

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Refer to Note 16, “Segment Reporting”, for more segment information.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Variable Interest Entities

The primary beneficiary of a variable interest entity (“VIE”) is required to consolidate the assets and liabilities of the VIE.

The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE.

When we obtain a variable interest in another entity, we assess at the inception of the relationship and upon occurrence of certain significant events whether the entity is a VIE and, if so, whether we are the primary beneficiary of the VIE based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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This assessment requires us to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE.

Business Combination

When we acquire an entity in a business combination, we recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establish the acquisition date as the fair value measurement point.

We recognize and measure goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

Acquisition-related expenses and related restructuring costs are expensed as incurred.

Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed.

For intangible assets, we typically use the income method.

This method starts with a forecast of all of the expected future net cash flows for each asset.

These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Some of the more significant estimates and assumptions inherent in the income method or other methods include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows and the assessment of the asset’s life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry.

Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash and Cash Equivalents

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inventory has become obsolete, inventory has a cost basis in excess of its estimated net realizable value, or inventory quantities are in excess of expected product sales.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property and Equipment

Property and equipment, which consist of laboratory equipment, computer equipment, software, office furniture and fixtures, and leasehold improvements, were not material as of December 31, 2024 and 2023, respectively.

Property and equipment are stated at cost less accumulated depreciation.

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets as follows:

Our property and equipment consist of laboratory equipment, computer equipment, software, office furniture and fixtures, and leasehold improvements.

Property and equipment are stated at cost less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful lives of the respective assets as follows:

Leasehold improvements

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If the fair value option is applied to an investment that would otherwise be accounted for under the equity method, we apply it to all our financial interests in the same entity (equity and debt, including guarantees) that are eligible items.

All gains and losses from fair value changes, unrealized and realized, are presented as changes in fair values of equity method investments, net, and changes in fair values of equity and long-term investments, net, within the consolidated statements of income.

If we conclude that we do not have an ability to exercise significant influence over an investee, we may elect to account for the security without a readily determinable fair value using the measurement alternative method under ASC 321, Investments – Equity Securities .

This measurement alternative method allows us to measure the equity investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

We also invest in ISP Fund LP, which investments consist of money market funds and equity and debt securities in the healthcare, pharmaceutical and biotechnology industries.

Pursuant to the Partnership Agreement entered in December 2020, we became a limited partner of this partnership, and our contributions were subject to a 36-month lock-up period, which restriction prevented us from having control over and access to the contributions and related investments.

The lock-up period for a certain portion of our contributions expired in December 2023.

Strategic Partners did not elect to make a withdrawal in 2023, thereby extending the lock-up period and withdrawal elections into subsequent years.

These investments were classified as long-term investments in the consolidated balance sheet as of December 31, 2023.

In October 2024, Strategic Partners made an election to unwind its capital accounts in the Partnership in accordance with the terms of the Partnership Agreement and we expect to receive distributions of our capital accounts through April 2026.

Accordingly, a portion of these investments, which consist mainly of cash and money market funds that we expect to be distributed in the next 12 months, were classified as “Current portion of ISP Fund investments” in the consolidated balance sheet as of December 31, 2024.

Fair Value of Financial Instruments

We define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

If we conclude that we do not have the ability to exercise significant influence over an investee, we may elect to account for equity security without a readily determinable fair value using the measurement alternative method under ASC 321, Investments - Equity Securities .

This method allows us to measure the investment at cost less impairment, if any, and adjusted for observable price changes in orderly transactions involving the same or a similar investment of the same issuer.

We also invest in ISP Fund LP, whose investments consist of money market funds, trading securities, and equity securities in the healthcare, pharmaceutical and biotechnology industries.

Pursuant to the Partnership Agreement entered into in December 2020, we became a limited partner of the partnership.

In October 2024, we elected to unwind our capital accounts in the partnership in accordance with the terms of the Partnership Agreement and expect to receive distributions through April 2026.

Accordingly, the portion of the cash balance and money market funds expected to be distributed within 12 months from the balance sheet date has been classified as “Current portion of ISP Fund investments,” while the remaining equity investments have been classified as long-term investments in the consolidated balance sheets as of December 31, 2025 and 2024.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Financial Instruments

Our valuation techniques are based on observable and unobservable inputs.

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Goodwill is recognized as the excess of the purchase consideration of an acquired entity over the fair value assigned to assets acquired and liabilities assumed in a business combination.

In addition to recognizing intangible assets acquired in a business combination, we capitalize milestone payments related to in-licensing agreements for approved products as an intangible asset when the contingency for the milestone is resolved and the consideration is issued or becomes issuable.

Goodwill and intangible assets with indefinite useful life are not amortized and are tested for impairment at least annually on the first day of December of each year or more frequently if indicators for potential impairment exist or whenever events or changes in circumstances indicate that the asset’s carrying asset amount may not be recoverable.

Goodwill and intangible assets with an indefinite useful life are not amortized and are tested for impairment at least annually on the first day of December of each year or more frequently if indicators for potential impairment exist or whenever events or changes in circumstances indicate that the asset’s carrying asset amount may not be recoverable.

Intangible assets with definite useful lives are amortized on a straight-line basis over their respective remaining useful lives and are tested for impairment only if indicators for potential impairment exist or whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable.

Significant judgment may be involved in determining if an indicator of impairment has occurred.

Asset Acquisitions

We measure and recognize asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs.

Goodwill is not recognized in asset acquisitions.

In an asset acquisition, the cost of the acquisition is allocated to the assets acquired on the basis of their relative fair values.

The cost allocated to acquire in-process research and development (“IPR&D”) with no alternative future use is charged to research and development expense at the acquisition date.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Operating Leases

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Lease expense is recognized on a straight-line basis over the expected lease term.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue Recognition

We apply the guidance on principal versus agent considerations under ASC Topic 606, Revenue from Contracts with Customers , to determine the appropriate treatment for the transactions between us and third parties.

We apply the guidance on principal versus agent considerations under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), to determine the appropriate treatment for the transactions between us and third parties.

The classification of transactions under our arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants.

Any consideration related to activities in which we are considered the principal, which includ es being in control of the good or service before such good or service is transferred to the customer, are accounted for as product sales.

Any consideration related to activities in which we are considered the principal, which includes being in control of the good or service before such good or service is transferred to the customer, are accounted for as product sales.

Revenue is recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

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Royalty Revenue

We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned.

The net sales reports provided by our partner are based on its methodology and assumptions to estimate rebates and returns, which it monitors and adjusts regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions.

Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate.

We conduct periodic royalty audits to evaluate the information provided by our partner.

Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.

We recognize royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned.

The net sales reports provided by our partner are based on their own methodology and assumptions for estimating rebates and returns, which they monitor and adjust regularly in light of contractual and legal obligations, historical trends, past experience, and projected market conditions.

Our partner may make significant adjustments to its reported sales based on actual results, which could cause fluctuation in our royalty revenue.

We have rights to conduct periodic royalty audits to evaluate the accuracy of the information provided.

Royalties from GSK are recognized as the net of amortization of capitalized fees related to approval and launch milestone payments made to GSK.

Revenue from Product Sales

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These discounts are recorded as a reduction of revenue on delivery to our customers.

We offer customers a limited right of return, generally for damaged or expired product.

We offer customers a limited right of return, generally for damaged or expired products.

We estimate returns based on an internal analysis, which includes actual experience.

The estimates for returns are recorded as a reduction of revenue on delivery to our customers.

We participate in Medicaid rebate programs, which provide assistance to certain low-income patients based on each individual state’s guidelines regarding eligibility and services.

Under the Medicaid rebate programs, we pay a rebate to each participating state, generally within three months after the quarter in which product was sold.

Additionally, we may offer customer incentives and consideration in the form of volume-based or other rebates.

The estimates for rebates are recorded as a reduction of revenue on delivery to our customers.

We continue to assess our estimates of variable consideration as we accumulate additional historical data and will adjust these estimates accordingly.

We participate in Medicaid rebate programs, which provide assistance to certain low-income patients based on each state’s eligibility guidelines and services.

Under these programs, we pay rebates to participating states, typically within three months after the quarter in which the product was sold.

Additionally, we may offer customer incentives and other forms of consideration, such as volume-based or performance-based rebates.

Estimated rebates are recorded as a reduction of revenue on delivery to our customers.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We continue to assess our estimates of variable consideration as we accumulate additional historical data and will adjust these estimates accordingly.

We may also enter into contracts that involve a series of manufacturing processes for products and related components.

For any distinct performance obligation where the manufacturing process does not create an asset with alternative use and there is an enforceable right to payment for the performance completed to date, the related revenue is recognized over time.

For these performance obligations satisfied over time, we use an input method to measure progress.

Specifically, we apply the cost-to-cost method, under which progress is calculated as the ratio of costs incurred to date relative to the total estimated costs of the contract.

This method most accurately depicts the transfer of value to the customer because costs incurred are determined to be proportionate to our performance in satisfying the obligation.

Estimated total contract costs are reassessed periodically.

Changes in estimates are accounted for prospectively as changes in estimates.

License Revenue

At the inception of a licensing arrangement that includes development and regulatory milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price.

We generally recognize these milestone payments as revenues when they are achieved because there is considerable uncertainty in the research and development processes that trigger receipt of these payments under our agreements.

Similarly, we recognize regulatory approval milestone payments as revenues once the product is approved by the applicable regulatory agency.

We generally include these milestone payments in the transaction price when they are achieved because there is considerable uncertainty in the research and development processes that trigger receipt of these payments under our agreements.

Similarly, we include approval milestone payments in the transaction price once the product is approved by the applicable regulatory agency.

For delivery of other goods or services related to a licensing arrangement, we determine whether the performance obligation is satisfied over time or at a point in time.

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We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Grant Revenue

We recognize grant revenue from non-governmental entities in accordance with ASC 958-605, Revenue Recognition Not-for-Profit Entities , when qualifying costs are incurred and the conditions of the grant agreement have been met.

If grant funds are received after costs have been incurred, we record the amount as grant revenue and a corresponding grant receivable.

Cash received from grants in advance of incurring qualifying costs is recorded as deferred revenue and recognized as grant revenue when qualifying costs are incurred.

Grant revenue is included in “License and other revenue” in our consolidated statements of income and comprehensive income.

Research and Development Expenses

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Refer to Note 12, “Debt”, for more information.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Stock‑Based Compensation Awards

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Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We utilize the asset and liability method of accounting for income taxes.

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Related Parties

Sarissa Capital ow ned 11.6 % of o ur outstanding common stock as of December 31, 2024 .

Transactions with Sarissa Capital are described in Note 5, “Consolidated Entities and Acquisitions”.

Sarissa Capital is considered to be a related party because two of its principals are members of our board of directors.

Sarissa Capital owned 11.6 % of our outstanding common stock as of December 31, 2024.

Transactions with Sarissa Capital are described in Note 5, “Consolidated Entity”.

Sarissa Capital was considered to be a related party up until the annual stockholders meeting in May 2025 after which there were no representatives of Sarissa Capital serving on our Board of Directors.

Recently Adopted Accounting Pronouncement

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

This ASU update requires enhanced segment disclosures, primarily related to significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

We adopted ASU 2023-07 for the 2024 fiscal year and provided the enhanced disclosures for the comparative years.

The adoption of ASU 2023-07 did not have a material impact on the Company's financial statements.

Enhanced disclosures related to significant segment expenses are included in Note 15, “Segment Reporting.”

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) .

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures (Topic 740) .

The ASU requires the disclosure of income taxes paid disaggregated by jurisdiction and enhanced disclosures for the entity’s effective tax rate reconciliation as well as other income tax related disclosures.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.

The Company has not early adopted the ASU during 2024 and does not expect the adoption of the amendments to have a significant impact on its financial statements.

We adopted this guidance prospectively as of January 1, 2025, which resulted in additional disclosures in the notes to our consolidated financial statements.

Accordingly, prior periods were not retrospectively adjusted.

See Note 15, “Income Taxes.”

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) , which requires disclosures about specific types of expenses included in the expense captions presented on the face of the statement of income as well as disclosures about selling expenses.

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We are currently evaluating the potential impact that ASU 2024-04 may have on our financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses for Current Accounts Receivable and Contract Assets , which provides a practical expedient for estimating expected credit losses by assuming current conditions remain unchanged over the life of the asset.

The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

We are currently evaluating the potential impact that ASU 2025-05 may have on our estimation methodologies.

In December 2025, the FASB issued Update ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements.

The ASU intends to clarify and improve existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations.

This ASU does not introduce significant changes to recognition or measurement guidance.

The amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the potential impact that ASU 2025-11 may have on our financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements , which provides technical corrections, clarifications, and other minor improvements across a number of Topics.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

We are currently evaluating the potential impact of ASU 2025-12 on our consolidated financial statements and disclosures.

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding.

Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding.

Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our convertible subordinated notes due 2023 (the “2023 Notes”) up until its maturity date on January 15, 2023, our convertible senior notes due 2025 (the “2025 Notes”) up until its maturity date on August 15, 2025, and our convertible senior notes due 2028 (the “2028 Notes”) using the if-converted method.

If the results are in a net loss position, diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive common stock equivalents.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NET INCOME PER SHARE

Basic net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock outstanding.

Diluted net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding.

Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our convertible subordinated notes due 2023 (the “2023 Notes”) up until its maturity date on January 15, 2023, our convertible senior notes due 2025 (the “2025 Notes”), and our convertible senior notes due 2028 (the “2028 Notes”) using the if-converted method.

If the results attributable to Innoviva stockholders are in a net loss position, diluted net loss per share attributable to Innoviva stockholders is computed by dividing the net loss attributable to Innoviva stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive common stock equivalents.

The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2025, 2024 and 2023:

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(In thousands except per share data)

Net income attributable to Innoviva stockholders, basic

Net income, basic

interest expense on 2023 Notes, net of tax effect

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interest expense on 2028 Notes, net of tax effect

Net income attributable to Innoviva stockholders, diluted

Net income, diluted

Weighted-average shares used to compute basic net income

per share attributable to Innoviva stockholders

Dilutive effect of 2023 Notes

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incentive plan and employee stock purchase plan

Dilutive effect of outstanding warrant

Weighted-average shares used to compute diluted net income

per share attributable to Innoviva stockholders

Net income per share attributable to Innoviva stockholders

Net income per share

Anti‑dilutive Securities

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Net Revenue from Collaboration Arrangement

On July 13, 2022, Innoviva’s wholly owned subsidiary, Innoviva TRC Holdings, LLC (“ITH”) entered into an equity purchase agreement (“TRC Equity Purchase Agreement”) with Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) to sell our ownership interest in TRC.

As a result of the sale of our ownership interest in TRC, which was consummated on July 20, 2022, we are no longer entitled to receive 15% of royalty payments made by GSK stemming from sales of TRELEGY ® ELLIPTA ® .

We retained our royalty rights with respect to RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .

We are entitled to receive royalties from GSK with respect to RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .

Net revenue recognized under our GSK Agreements was as follows:

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Royalties – ANORO

Royalties – TRELEGY (1)

Total royalties

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Total royalty revenue

(1) The year ended December 31, 2022 represents the period from January 1, 2022 to July 20, 2022, the date of the sale of our ownership interest in TRC.

LABA Collaboration

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For other products combined with a LABA from the LABA Collaboration, such as ANORO ® ELLIPTA ® , royalties are upward tiering and range from 6.5 % to 10 %.

We are also entitled to 15 % of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to TRC in connection with the Spin-Off, including TRELEGY ® ELLIPTA ® through July 20, 2022, which royalties were upward tiering and ranged from 6.5 % to 10 %.

Net Product Sales

Total net product sales was as follows:

Total net product sales were as follows:

Year Ended December 31,

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Total net product sales

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We derived our net product sales:

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• approximately 91 % from customers located in the U.S.

and 4 % from the rest of the world from the date of acquisition of La Jolla, which occurred on August 22, 2022, to December 31, 2022.

and 9 % from the rest of the world for the year ended December 31, 2023.

License and Other Revenue

Refer to the out-license agreement with Zai Lab and Everest in Note 4, “License and Collaboration Arrangements”.

LICENSE AND COLLABORATION ARRANGEMENTS

Refer to the out-license agreement with Zai Lab and Everest and the Grant Agreement with Gates Foundation in Note 4, “License, Collaboration and Other Arrangements”.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

LICENSE, COLLABORATION AND OTHER ARRANGEMENTS

Out-License Agreements

Entasis entered into a license and collaboration agreement with Zai Lab (Shanghai) Co., Ltd.

Entasis Therapeutics Holdings Inc.

(“Entasis”), our wholly-owned subsidiary, entered into a license and collaboration agreement with Zai Lab (Shanghai) Co., Ltd.

(“Zai Lab”) (Nasdaq:

ZLAB), pursuant to which Zai Lab licensed exclusive rights to durlobactam and SUL-DUR, in the Asia-Pacific region (“the Zai Agreement”).

Under the terms of the Zai Agreement, Zai Lab will fund most of the registrational clinical trial costs in China for SUL-DUR, with the exception of Phase 3 patient drug supply of licensed products.

Zai Lab will conduct development activities and plan and obtain regulatory approval in a specified number of countries in the Asia-Pacific region beyond China after receipt of regulatory approval of a licensed product in China.

Zai Lab is also solely responsible for commercializing licensed products in the Asia-Pacific region and will commercialize licensed products for which it has obtained regulatory approval.

We are obligated to supply Zai Lab with the licensed products for clinical development and, if the licensed product is approved, for commercial use for a certain period unless Zai Lab notifies otherwise.

Under the terms of the Zai Agreement, Zai Lab shall fund most of the registrational clinical trial costs in China for SUL-DUR, with the exception of Phase 3 patient drug supply of licensed products.

Zai Lab shall conduct development activities and plan and obtain regulatory approval in a specified number of countries in the Asia-Pacific region beyond China after receipt of regulatory approval of a licensed product in China.

Zai Lab is also solely responsible for commercializing licensed products in the Asia-Pacific region and shall commercialize licensed products for which it has obtained regulatory approval.

We are obligated to supply Zai Lab with the licensed products for clinical development and for commercial use for a certain period unless Zai Lab notifies otherwise.

Zai Lab may take over manufacturing responsibilities for its own commercialization activities within a specified time period following the effective date of the Zai Agreement.

We ar e eligible to receive up to an aggregate of $ 91.0 million in research and development support payments and development, regulatory and sales milestone payments related to SUL-DUR, imipenem and other combinations with the licensed products.

Zai Lab will pay us a tiered royalty equal to from a high-single digit to low-double digit percentage based on annual net sales of licensed products in the territory, subject to specified reductions for the market entry of competing products, loss of patent coverage of licensed products and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory.

We are eligible to receive up to an aggregate of $ 91.0 million in research and development support payments and development, regulatory and sales milestone payments related to SUL-DUR, imipenem and other combinations with the licensed products.

Zai Lab shall pay us a tiered royalty ranging from a high-single digit to low-double digit percentage based on annual net sales of licensed products in the territory, subject to specified reductions for the market entry of competing products, loss of patent coverage of licensed products and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory.

Payments received for research support and reimbursable clinical trial costs are recorded as a reduction to research and development expense during the period in which the qualifying expenses are incurred.

Such amounts recorded for the years ended December 31, 2025, 2024 and 2023 were not material.

SUL-DUR was approved by China’s National Medical Products Administration in May 2024, and we recognized $ 8.0 million in license revenue for the year ended December 31, 2024 under this agreement.

Following the approval of XACDURO ® by the FDA in May 2023, we recognized $ 3.0 million in license revenue for the year ended December 31, 2023.

SUL-DUR was approved by China’s National Medical Products Administration in May 2024, and was launched by Zai Lab in mainland China in January 2025.

Royalties under this arrangement based on the product sales was $ 2.4 million for the year ended December 31, 2025.

W e recognized $ 8.0 million in license revenue for the year ended December 31, 2024 under this agreement as a result of the achievement of a regulatory milestone.

Following the approval of XACDURO ® by the FDA in May 2023, we recognized $ 3.0 million in license revenue for the year ended December 31, 2023 under this agreement.

In April 2024, we entered into an amendment to the Zai Agreement (the “Amended Zai Agreement”), pursuant to which Zai Lab shall share costs associated with certain new manufacturing and technology transfer activities for XACDURO ® (the “Services”), which were not contemplated under the Zai Agreement and are crucial for regulatory approval in the Asia-Pacific region.

We determined that the Amended Zai Agreement falls within the scope of ASC 606 and Zai Lab is a customer in this arrangement as the Services are an output of our ordinary activities.

We have determined that the Services represent the only performance obligation and are distinct from the performance obligations under the original Zai Agreement.

In addition, the expenses we incur in performing the Services most accurately depict the transfer of value to Zai Lab and maximize the use of observable inputs for measuring progress, therefore, we recognize revenue from this arrangement as the expenses related to Services are incurred.

We recognized $ 8.1 million in license and other revenue for the year ended December 31, 2024 under the Amended Zai Agreement, of which $ 1.6 million is included in “Accounts receivable” in our consolidated balance sheet as of December 31, 2024.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2024, we entered into an interim supply agreement with Zai Lab, under which Zai Lab shall purchase XACDURO ® inventory (the “Supplied Inventory”) for their commercial launch.

We have determined that this agreement falls within the scope of ASC 606.

Zai Lab is a customer and the Supplied Inventory is an output of our ordinary activities.

We have also determined that the Supplied Inventory represents the only performance obligation and is distinct from the performance obligations under the Zai agreements discussed above.

Furthermore, we evaluated that the performance obligation is satisfied over time and that a cost-to-cost measure of progress would be the measure of progress that most accurately depicts the transfer of value to Zai Lab and maximizes the use of observable inputs to measure progress.

We recognized $ 6.3 million in net product sales for the Supplied Inventory for the year ended December 31, 2024, of which $ 0.6 million is included in “Accounts receivable” in our consolidated balance sheet as of December 31, 2024.

Under the Amended Zai Agreement, we recognized $ 1.3 and $ 8.1 million in license and other revenue for the years ended December 31, 2025 and 2024, respectively, of which $ 1.8 m illion and $ 1.6 million were included in “Accounts receivable” in our consolidated balance sheets as of December 31, 2025 and 2024, respectively.

We entered into an interim supply agreement with Zai Lab in June 2024, which was amended in February 2025 and August 2025, under which Zai Lab shall purchase XACDURO ® inventory (the “Supplied Inventory”) at cost for their commercial use.

We recognized $ 37.9 mil lion and $ 6.3 million in net product sales for the cost of the Supplied Inventory for the years ended December 31, 2025 and 2024, respectively, of which $ 6.7 million and $ 0.6 million were included in “Accounts receivable” in our consolidated balance sheets as of December 31, 2025 and 2024, respectively.

Advance payments received under this agreement of $ 5.3 million as of December 31, 2024 was recorded as other accrued liabilities pending finalization of the February and August 2025 amendments mentioned above.

We also entered into a manufacturing stage transfer agreement with Zai Lab in June 2024, which was amended in September 2024 (the “Zai Manufacturing Stage Transfer Agreement”).

Pursuant to this agreement, Entasis shall provide assistance to Zai Lab for building out Zai Lab’s manufacturing site for XACDURO ® and be compensated for Entasis' services and associated costs.

We have determined this agreement falls within the scope of ASC 606.

Zai Lab is a customer and the transfer service is an output of our ordinary activities and represents our only performance obligation, which is distinct from the performance obligations under the Zai agreements.

Furthermore, we have evaluated that the performance obligation is satisfied over time and that the costs we incur in performing the transfer service most accurately depicts the transfer of value to Zai Lab and maximizes the use of observable inputs for measuring progress, therefore, we recognize revenue from this arrangement as the services are provided and the costs are incurred.

We recognized $ 3.4 million in license and other revenue for the year ended December 31, 2024 under the Zai Manufacturing Stage Transfer Agreement, of which $ 0.1 million is included in “Accounts receivable” in our consolidated balance sheet as of December 31, 2024.

In October 2024, we entered into a letter agreement pursuant to which Zai Lab will purchase regulatory starting material (“RSM”) supply for use in the production of XACDURO ® for up to $ 10.9 million.

We will supply the RSM while we continue to work on executing a commercial supply agreement with Zai Lab in accordance with the Zai Agreement.

Based on our assessments, this agreement does not modify any of our existing contracts with Zai Lab discussed above and should be accounted for separately.

We have also determined that this agreement falls within the scope of ASC 606.

However, this does not meet the definition of a contract with a customer since the contract does not identify each party’s rights regarding goods or services.

Accordingly, we deferred the consideration received amounting to $ 5.3 million as of December 31, 2024 in “Other accrued liabilities” until the execution of a commercial supply agreement, which will include all the required terms necessary for identifying each party’s rights regarding goods or services.

We recognized $ 1.1 million and $ 3.4 million in license and other revenue for the years ended December 31, 2025 and 2024, respectively, under the Zai Manufacturing Stage Transfer Agreement.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Entasis entered into a collaboration agreement with the Global Antibiotic Research and Development Partnership (“GARDP”) for the development, manufacture and commercialization of the product candidate zoliflodacin in certain countries (“the GARDP Collaboration Agreement”).

Under the terms of the GARDP Collaboration Agreement, GARDP will use commercially reasonable endeavors to perform and fully fund the Phase 3 registrational trial, including the manufacture and supply of the product candidate containing zoliflodacin, in uncomplicated gonorrhea.

We recorded immaterial reimbursements from GARDP under this agreement as reduction to research and development expense during the periods presented.

Under the terms of the GARDP Collaboration Agreement, GARDP shall use commercially reasonable endeavors to perform and fully fund the Phase 3 registrational trial, including the manufacture and supply of the product candidate containing zoliflodacin, in uncomplicated gonorrhea.

We recorded $ 1.0 million in reimbursements from GARDP under this agreement as a reduction to research and development expense during the year ended December 31, 2025.

We recorded immaterial reimbursements from GARDP as a reduction to research and development expense during the years ended December 31, 2024 and 2023.

In addition, under the GARDP Collaboration Agreement, GARDP was granted a worldwide, fully paid, exclusive and royalty-free license, with the right to sublicense, to use our zoliflodacin technology in connection with GARDP’s development, manufacture and commercialization of zoliflodacin in low-income and specified middle-income countries.

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Each party is responsible for using commercially reasonable efforts to obtain marketing authorizations for the product candidate in their respective territories.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

An application for marketing approval has been filed with the FDA in 2025.

The FDA approved zoliflodacin, marketed as NUZOLVENCE ® , on December 12, 2025.

PAION Pharma GmbH

Pursuant to the PAION AG and PAION Deutschland GmbH (together and individually “PAION”) License, La Jolla granted PAION an exclusive license to commercialize GIAPREZA ® and XERAVA ® in the European Economic Area, the United Kingdom and Switzerland (collectively, the “PAION Territory”).

Pursuant to the PAION AG and PAION Deutschland GmbH (together and individually “PAION”) License, La Jolla Pharmaceutical Company (“La Jolla”), our wholly-owned subsidiary, granted PAION an exclusive license to commercialize GIAPREZA ® and XERAVA ® in the European Economic Area, the United Kingdom and Switzerland (collectively, the “PAION Territory”).

PAION is currently a subsidiary of the Humanwell Healthcare Group.

We are entitled to receive potential commercial milestone payments of up to $ 109.5 million and double-digit tiered royalty payments.

Royalties payable in a given jurisdiction under the PAION License will be subject to reduction on account of generic competition and after patent expiration in that jurisdiction.

Royalties payable in a given jurisdiction under the PAION License are subject to reduction on account of generic competition and after patent expiration in that jurisdiction.

Pursuant to the PAION License, PAION will be solely responsible for the future development and commercialization of GIAPREZA ® and XERAVA ® in the PAION Territory.

PAION is required to use commercially reasonable efforts to commercialize GIAPREZA ® and XERAVA ® in the PAION Territory.

We have not recognized any revenue from PAION related to commercial milestones from the date of acquisition of La Jolla to December 31, 2024.

Royalty revenue recognized under this agreement for the year ended December 31, 2024 was $ 1.5 million .

Royalty revenue recognized under this agreement for the year ended December 31, 2023 and from the date of acquisition of La Jolla to December 31, 2022 was no t material.

La Jolla also entered into the PAION commercial supply agreement (the “PAION Supply Agreement”) whereby La Jolla will supply PAION a minimum quantity of GIAPREZA ® and XERAVA ® through July 13, 2024.

The PAION supply agreement will automatically renew until the earlier of July 13, 2027, or until a new supply agreement is executed.

During the initial term of the supply agreement, we will be reimbursed for direct and certain indirect manufacturing costs at cost.

We recognized $ 1.3 million in cost reimbursements under this agreement for the year ended December 31, 2023.

Amounts recognized under this agreement for the year ended December 31, 2024 and from the date of acquisition of La Jolla to December 31, 2022 were not material.

PAION filed for insolvency in Germany on October 27, 2023 and the insolvency proceedings commenced on January 1, 2024.

PAION announced on December 22, 2023 that it concluded negotiations with Humanwell Healthcare Group and entered into an agreement on the sale of the essential business operations of PAION with the approval of the insolvency administrator in both procedures.

In early 2024, the sale of business operations of PAION was completed and starting February 2024, PAION has continued its business as a subsidiary of the Humanwell Healthcare Group as an independent company under the name PAION Pharma GmbH.

We have not recognized any revenue from PAION related to commercial milestones.

Royalty revenue recognized under this agreement for the year ended December 31, 2025 and 2024 was $ 1.6 million and $ 1.5 million, respectively .

Royalty revenue recognized under this agreement for the year ended December 31, 2023 was no t material.

La Jolla also entered into the PAION commercial supply agreement (the “PAION Supply Agreement”) whereby La Jolla supplies PAION a minimum quantity of GIAPREZA ® and XERAVA ® until the earlier of July 13, 2027, or until a new supply agreement is executed.

During the term of the supply agreement, we are reimbursed for direct and certain indirect manufacturing costs at cost.

We recognized $ 2.7 million and $ 1.3 million in cost reimbursements under this agreement for the years ended December 31, 2025 and 2023, respectively.

Cost reimbursements recognized under this agreement for the years ended December 31, 2024 were no t material.

Everest Medicines Limited

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We are eligible to receive additional sales milestone payments of up to an aggregate of $ 20.0 million.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We are also entitled to receive tiered royalties from Everest at percentages in the low double digits on sales, if any, in the Everest Territory of products containing eravacycline.

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or (iii) 10 years after the first commercial sale of a product in such jurisdiction in the Everest Territory.

Royalty revenue recognized under this agreement for the years ended December 31, 2024 and 2023 was $ 4.7 million and $ 1.4 million, respectively.

Royalty revenue recognized under this agreement from the date of acquisition of La Jolla to December 31, 2022 was no t material.

Royalty revenue recognized under this agreement for the years ended December 31, 2025 , 2024 and 2023 was $ 3.6 million, $ 4.7 million and $ 1.4 million, respectively.

La Jolla also entered into the Everest commercial supply agreement (the “Everest Supply Agreement”) whereby La Jolla will supply Everest a minimum quantity of XERAVA ® and will transfer to Everest certain XERAVA ® -related manufacturing know-how.

We were eligible to be reimbursed for direct and certain indirect manufacturing costs at 110 % of cost through December 31, 2023.

W e recognized $ 3.2 million and $ 2.4 million in revenue under this agreement for the years ended December 31, 2024 and 2023, respectively.

We recognized $ 0.8 million in revenue under this agreement from the acquisition of La Jolla to December 31, 2022.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the Everest Supply Agreement, we are reimbursed for direct and certain indirect manufacturing costs at 110 % of cost.

W e recognized $ 4.0 million, $ 3.2 million and $ 2.4 million in revenue under this agreement for the years ended December 31, 2025, 2024 and 2023, respectively.

In-License Agreements

In December 2024, we entered into an exclusive distribution and license agreement with Basilea, under which we were granted exclusive marketing rights to ZEVTERA ® in the U.S.

The agreement will remain in effect until the expiration of market exclusivity of ZEVTERA ® in the U.S.

in 2034 (the “initial term”), subject to automatic renewal unless either party provides notice.

We paid an upfront fee of $ 4.0 million, which we recognized as an intangible asset and will be amortized over the initial term of the agreement.

We will exclusively purchase ZEVTERA ® (pre-packaging and labeling) from Basilea throughout the term.

We are also obligated to pay Basilea tiered royalties ranging from the high-teens to mid-twenties, as well as tiered milestones, on annual net sales in the U.S.

We anticipate commercializing ZEVTERA ® in mid-year 2025 and, therefore, have not incurred any royalties or sales milestone payments for the year ended December 31, 2024.

The agreement will remain in effect through the expiration of ZEVTERA ® ’s market exclusivity in the U.S.

in 2034 (the “initial term”) and is subject to automatic renewal unless terminated by either party with prior notice.

We paid an upfront fee of $ 4.0 million, which was recognized as an intangible asset and is being amortized over the initial term of the agreement.

Under the agreement, we are required to exclusively purchase ZEVTERA ® (in pre-packaging and labeling form) from Basilea for the duration of the term.

We are also obligated to pay Basilea tiered royalties ranging from the high-teens to mid-twenties, as well as tiered milestone payments based on annual net sales in the U.S.

ZEVTERA ® was commercially launched in the U.S.

in July 2025.

Royalty expense incurred on the sales was immaterial during the year ended December 31, 2025.

There were no royalties or sales milestone payments for the year ended December 31, 2024.

George Washington University

Pursuant to the George Washington University (“GW”) License, GW exclusively licensed to La Jolla certain intellectual property rights relating to GIAPREZA ® , including the exclusive rights to certain issued patents and patent applications covering GIAPREZA ® .

Pursuant to the George Washington University License (the “GW License”), GW exclusively licensed to La Jolla certain intellectual property rights relating to GIAPREZA ® , including the exclusive rights to certain issued patents and patent applications covering GIAPREZA ® .

Under the GW License, we are obligated to use commercially reasonable efforts to develop, commercialize, market and sell GIAPREZA ® .

We are obligated to pay a 6 % royalty on net sales of GIAPREZA ® and 15 % on payments received from sublicensees.

The obligation to pay royalties under this agreement extends through the last-to-expire patent covering GIAPREZA ® .

We recognized $ 3.4 million and $ 2.5 million for the years ended December 31, 2024 and 2023, respectively, under this agreement.

Amounts recognized from the date of acquisition of La Jolla to December 31, 2022 were no t material.

The obligation to pay royalties under the GW License extends through the last-to-expire patent covering GIAPREZA ® .

Royalty expense incurred under the GW License were $ 4.5 m illion, $ 3.4 million and $ 2.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Harvard University

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The obligation to pay royalties under this agreement extends through the last-to-expire patent covering tetracycline-based products, including XERAVA ® .

We recognized $ 1.4 million for the year ended December 31, 2024 under this agreement.

Royalty expense incurred under the Harvard License for each of the years ended December 31, 20 25 and 2024 was $ 1.4 mill ion.

For the year ended December 31, 2023, we recognized $ 1.2 million as cost of license revenue under this agreement as a result of the license revenue we earned under the out-licensing agreement with Everest for the same period.

For the years ended December 31, 2024 and 2023 and from the date of acquisition of La Jolla to December 31, 2022, royalties recognized under this agreement were no t material.

Paratek Pharmaceuticals, Inc.

Pursuant to the Paratek Pharmaceuticals, Inc.

(“Paratek”) License, Paratek non-exclusively licensed to La Jolla certain intellectual property rights relating to XERAVA ® , including non-exclusive rights to certain issued patents and patent applications covering XERAVA ® .

We were obligated to pay Paratek a 2.25 % royalty based on direct U.S.

net sales of XERAVA ® .

Our obligation to pay royalties with respect to the licensed product was retroactive to the date of the first commercial sale of XERAVA ® and continued until there are no longer any valid claims of the Paratek patents, which expired in October 2023 .

For the year ended December 31, 2023, and from the date of acquisition of La Jolla to December 31, 2022, amounts recognized under this agreement were not material.

INNOVIVA, INC.

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We are also obligated to pay AstraZeneca a one-time milestone payment of $ 10.0 million within two years of achieving the first commercial sale of zoliflodacin.

Additionally, we are obligated to pay AstraZeneca tiered, single-digit royalties on the annual worldwide net sales of durlobactam and, the lesser of tiered, single-digit royalties on the worldwide annual net sales of zoliflodacin and a specified share of the royalties we receive from sublicensees of zoliflodacin.

Additionally, we are obligated to pay AstraZeneca tiered, single-digit royalties on the annual worldwide net product sales of durlobactam and, the lesser of tiered, single-digit royalties on the worldwide annual net sales of zoliflodacin and a specified share of the royalties we receive from sublicensees of zoliflodacin.

Royalties on sales of zoliflodacin do not include sales by GARDP in low-income and specified middle-income countries as discussed above.

Our obligation to make these royalty payments expires with respect to each product on a country-by-country basis upon the later of (i) the 10-year anniversary of the first commercial sale of a product in each such country or (ii) when the last patent right covering a product expires in each such country.

Royalty expense on durlobactam arising from our net sales of XACDURO ® for the year ended December 31, 2024 and 2023 was no t material.

CONSOLIDATED ENTITIES AND ACQUISITIONS

Consolidated Entities

Theravance Respiratory Company, LLC

Up until July 20, 2022, we consolidated TRC under the VIE model as we determined that TRC was a VIE and we were the primary beneficiary of the entity because we had the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC.

We held 15 % ownership interest of TRC.

The primary source of revenue for TRC is the royalties generated from the net sales of TRELEGY ® ELLIPTA ® by GSK.

As discussed in Note 3, “Revenue Recognition”, on July 13, 2022, ITH entered into the TRC Equity Purchase Agreement to sell our ownership interest in TRC.

Upon the closing of the transaction on July 20, 2022, we received $ 277.5 million in cash from Royalty Pharma.

We are also entitled to receive up to $ 50.0 million in contingent sales-based milestone payments in the future.

In connection with the closing of the transaction, we also received our portion of TRC’s remaining cash balance of $ 4.4 million from Royalty Pharma rather than through a cash distribution from TRC.

Prior to the closing of the transaction and as part of the agreement, TRC distributed its ownership interests and investments in InCarda Therapeutics (“InCarda”), Inc., ImaginAb, Inc.

(“ImaginAb”), Gate and Nanolive SA (“Nanolive”), which had a total carrying value of $ 39.4 million, to ITH.

We accounted for the transaction similar to an upstream sale between a parent and a VIE under ASC 810-10.

As such, ITH recorded the transferred investments at their respective carrying values and no gain or loss was recognized in the consolidated statement of income.

The summarized financial information of TRC from January 1, 2022 to July 20, 2022, the date of the sale of our ownership interest in TRC, is presented as follows:

(In thousands)

Royalty revenue

Operating expenses

Income from operations

Other income, net

Realized loss

Income tax expense, net

Changes in fair values of equity and

long-term investments, net

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2020, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), contributed $ 300.0 million to ISP Fund LP (the “Partnership”) for investing in “long” positions in the healthcare, pharmaceutical and biotechnology sectors and became a limited partner.

Our obligation to make these royalty payments expires on a country-by-country basis for each product upon the later of (i) the 10-year anniversary of the first commercial sale of a product in that country or (ii) the expiration date of the last patent right covering the product in that country.

The royalty expense in respect of durlobactam arising from our net product sales of XACDURO ® was no t material for the years ended December 31, 2025, 2024 and 2023.

Massachusetts Institute of Technology

In connection with the asset acquisition described in Note 14, “Asset Acquisition” , in September 2025, we entered into a license agreement with Massachusetts Institute of Technology (“MIT”), under which MIT licensed to us certain patent rights relating to a drug delivery device.

Under this agreement, we paid an upfront fee of $ 0.5 million and are obligated to pay a minimal annual maintenance fee.

We are also obligated to pay MIT up to $ 17.5 million in development, regulatory and sales milestone payments, and pay royalties in a low single-digit percentage on future net sales related to the licensed product.

Paratek Pharmaceuticals, Inc.

Pursuant to the Paratek Pharmaceuticals, Inc.

We were obligated to pay Paratek a 2.25 % royalty based on direct U.S.

net sales of XERAVA ® .

Our obligation to pay royalties with respect to the licensed product was retroactive to the date of the first commercial sale of XERAVA ® and continued until there were no longer any valid claims of the Paratek patents, which expired in October 2023 .

For the year ended December 31, 2023, amounts recognized under this agreement were not material.

Grant Agreement with Gates Foundation

In November 2025, we entered into a grant agreement with Gates Foundation, under which Gates Foundation shall fund up to $ 5.0 million in qualifying expenses through January 2027 toward the development of a certain product candidate.

We received an upfront payment of $ 1.6 million, of which we recognized $ 0.1 million as grant revenue included in “License and other revenue” in our consolidated financial statements for the year ended December 31, 2025.

The remaining balance of the upfront payment is recorded as deferred revenue included in “Other accrued liabilities” in our consolidated balance sheet as of December 31, 2025.

CONSOLIDATED ENTITY

In 2020 and 2021, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), contributed a total of $ 300.0 million to ISP Fund LP (the “Partnership”) for investing in “long” positions in the healthcare, pharmaceutical and biotechnology sectors, and became a limited partner.

The general partner of the Partnership (“General Partner”) is an affiliate of Sarissa Capital.

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In addition, General Partner is entitled to an annual performance fee based on the Net Profits of the Partnership during the annual measurement period.

The Partnership Agreement includes a lock-up period of thirty-six months after which Strategic Partners is entitled to make withdrawals from the Partnership as of such lock-up expiration date and each anniversary thereafter, subject to certain limitations.

The lock-up period for the initial contribution of $ 190.0 million, which excludes the amount discussed below, expired in December 2023 .

Strategic Partners did not elect to make a withdrawal in 2023, thereby extending the lock-up period and withdrawal elections into subsequent years.

In May 2021, Strategic Partners received a distribution of $ 110.0 million from the Partnership to provide funding to Innoviva for a strategic repurchase of shares held by GSK.

On March 30, 2022, Strategic Partners made an additional capital contribution of $ 110.0 million to the Partnership pursuant to the letter agreement entered into between Strategic Partners, the Partnership and Sarissa Capital Fund GP LP on May 20, 2021.

The capital contribution is subject to a 36-month lock up period from the contribution date.

We consolidate ISP Fund LP under the VIE model as we have determined that ISP Fund LP is a VIE and we are the primary beneficiary of the entity via our related party relationships with Sarissa Capital entities.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We consolidate ISP Fund LP under the VIE model as we have determined that ISP Fund LP is a VIE and we are the primary beneficiary of the entity.

Our maximum exposure to loss is equal to the amount we invested in the entity.

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In addition, as our investment in the Partnership is a passive investment for the Company and is not part of our main operations, the investments are presented as part of “Equity and long-term investments” in our consolidated balance sheets.

Accordingly, a portion of our investments, which consist of cash and money market funds that we expect to be distributed in the next 12 months, were classified as ISP Fund investments in the consolidated balance sheet as of December 31, 2024, and the remaining equity investments managed by ISP Fund LP are expected to be distributed through April 2026.

We report in our consolidated statements of income any investment gains and losses by the Partnership as part of “Changes in fair value of equity and long-term investments, net”, any interest and dividend income as part of “Interest and dividend income” and any investment expenses as part of “Other expense, net”.

As of December 31, 2024 , we continued to hold 100 % of the economic interest of Partnership.

As of December 31, 2024 and 2023, total assets of the Partnership were $ 255.7 million and $ 311.8 million, respectively, of which the majority was attributable to equity and long-term investments.

As of December 31, 2024 and 2023, total liabilities of the Partnership w ere $ 0.2 mill ion and $ 0.1 million, respectively.

In October 2024, Strategic Partners made an election to unwind its capital accounts in the Partnership in accordance with the terms of the Partnership Agreement.

Accordingly, a portion of our investments, which consist of cash and money market funds that we expect to be distributed within 12 months from the balance sheet date, were classified as “Current portion of ISP Fund investments” in the consolidated balance sheets as of December 31, 2025 and 2024, and the remaining equity investments managed by ISP Fund LP are expected to be distributed through April 2026.

We received cash distributions of $ 121.0 million during the year ended December 31, 2025.

We report in our consolidated statements of income and comprehensive income any investment gains and losses by the Partnership as part of “Changes in fair value of equity and long-term investments, net”, any interest and dividend income as part of “Interest and dividend income” and any investment expenses as part of “Other expense, net”.

As of December 31, 2025 , we continue to hold 100 % of the economic interest of the Partnership.

As of December 31, 2025 and 2024, total assets of the Partnership were $ 79.7 million and $ 255.7 million, respectively, with the majority attributable to either current portion of ISP Fund investment or to equity and long-term investments.

As of December 31, 2025 and 2024, total liabilities of the Partnership were $ 0.2 million.

The Partnership ’s assets can only be used to settle its own obligations.

During the year ended December 31, 2024, the Partnership incurred $ 3.7 million in net investment-related expenses, generated $ 4.4 million interest income, recorded $ 5.3 million in net realized losses and $ 51.5 million in net unrealized losses as changes in fair values of equity and long-term investments, net, in the consolidated statement of income.

During the year ended December 31, 2023, the Partnership incurred $ 4.3 million in net investment-related expenses, generated $ 6.3 million interest income, recorded $ 2.4 million in net realized losses and $ 6.7 million in net unrealized losses as changes in fair values of equity and long-term investments, net, in the consolidated statement of income.

During the year ended December 31, 2022, the Partnership incurred $ 5.2 million in net investment-related expense, generated $ 2.0 million interest income, and recorded net $ 6.8 million realized gains and net $ 9.9 million unrealized losses as changes in fair values of equity and long-term investments, net, in the consolidated statement of income.

We account for the long-term investments held by ISP Fund LP as of December 31, 2024 and 2023 and 2022 as equity investments measured at fair value.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the year ended December 31, 2025, the Partnership incurred $ 2.5 million in net investment-related expenses, generated $ 3.4 million interest incom e, recorded $ 68.7 million in net realized losses and $ 12.7 million in net unrealized gains as changes in fair values of equity and lon g-term investments, net, in the consolidated statements of income and comprehensive income.

The following is a summary of individual investments held by ISP Fund at each balance sheet date:

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Total investments held by ISP Fund LP

Entasis Therapeutics Holdings Inc.

We started investing in Entasis in 2020 as part of our capital allocation strategy of deploying cash generated from royalty income and investing in different life sciences companies.

Entasis at the time was an advanced, late clinical-stage biopharmaceutical company focused on the discovery and development of novel antibacterial products.

Effective in June 2020, after certain conditions were met with respect to the sales of Entasis equity shares, Innoviva had the right to designate two members to Entasis’ board.

Our investment in Entasis consisted of shares of common stock and warrants to purchase shares of Entasis common stock.

The fair value of Entasis’ common stock was measured based on its closing market price at each balance sheet date.

We used the Black-Scholes-Merton pricing model to estimate the fair value of the warrants.

On February 17, 2022, Innoviva Strategic Opportunities, LLC (“ISO”) entered into a securities purchase agreement with Entasis pursuant to which ISO purchased a convertible promissory note for a total purchase price of $ 15.0 million.

The note bore an annual interest rate of 0.59 % and was due to mature and become payable on August 18, 2022 unless it was converted at a conversion price of $ 1.48 before the maturity date.

With this financing, we determined that we had both (i) the power to direct the economically significant activities of Entasis and (ii) the obligation to absorb the losses, or the right to receive the benefits, that could potentially be significant to Entasis and therefore, we were the primary beneficiary of Entasis.

Accordingly, we consolidated Entasis’ financial position and results of operations effective on February 17, 2022.

Our equity ownership interest remained at 59.9 % as of February 17, 2022, and the fair values of our holdings of Entasis common stock and warrants were remeasured and estimated at $ 64.5 million and $ 31.4 million, respectively.

The remeasurement resulted in a $ 7.8 million loss in the first quarter of 2022 which was included in changes in fair values of equity method investments, net, in the consolidated statement of income for the year ended December 31, 2022.

We completed our acquisition of Entasis’ noncontrolling interest on July 11, 2022.

No payments were made toward the convertible promissory note through the date of acquisition of Entasis.

In connection with the acquisition, all of the Entasis warrants were replaced with Innoviva warrants (the “Replacement Warrants”) of equivalent value and bearing the same terms.

The Replacement Warrants were classified as equity.

We recognized the difference between the acquisition price and the carrying value of the acquired noncontrolling interest on July 11, 2022 in our additional paid-in capital.

The fair values assigned to assets acquired and liabilities assumed as of February 17, 2022 were based on management’s best estimates and assumptions.

After the acquisition in July 2022, we adjusted the purchase price allocation based on new and additional information related to product sales forecast provided by Entasis and deferred tax liabilities.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the year ended December 31, 2022, we recorded measurement period adjustments of $ 4.7 million decrease in goodwill, primarily related to a decrease in estimated purchase price of $ 1.4 million, an increase in noncontrolling interests of $ 1.7 million, and an increase in intangible assets of $ 2.5 million.

The cumulative impact of the measurement period adjustments included in the consolidated net income for the year ended December 31, 2022 was not material.

In February 2023, we recorded a measurement period adjustment of $ 1.2 million increase in goodwill, primarily related to a decrease in intangible assets of $ 0.8 million and an increase in deferred tax liabilities of $ 0.4 million.

The measurement period adjustment did not impact the consolidated net income for the year ended December 31, 2023.

The following table represents the adjusted fair values of the assets acquired and liabilities assumed by us in the transaction:

(In thousands)

February 17, 2022

Cash and cash equivalents

Prepaid expenses

Other current assets

Property and equipment, net

Right-of-use assets

Intangible assets

Total assets acquired

Accounts payable

Accrued personnel-related expenses

Other accrued liabilities

Deferred tax liabilities

Total liabilities assumed

Total assets acquired, net

The goodwill arising from the acquisition of Entasis is primarily attributable to Entasis’ assembled workforce and the value associated with growing our business more efficiently.

The goodwill from this acquisition is not expected to be deductible for tax purposes.

Refer to Note 8, “Goodwill and Intangible Assets”, for more discussion on the intangible assets recognized as part of this acquisition.

As a result of the consolidation, we recognized a non-controlling interest of $ 38.5 million as of February 17, 2022.

Our consolidated net income for the year ended December 31, 2022 included the net loss attributable to noncontrolling interest since the consolidation date until the date of acquisition of $ 13.6 million.

La Jolla Pharmaceutical Company

On August 22, 2022, ISO acquired La Jolla for a total consideration of $ 206.6 million.

ISO acquired La Jolla at a price of $ 6.23 per share.

La Jolla brought to Innoviva an established product portfolio, including GIAPREZA ® (angiotensin II), approved to increase blood pressure in adults with septic or other distributive shock and XERAVA ® (eravacycline) for the treatment of complicated intra-abdominal infections (cIAIs).

We incurred approximately $ 5.3 million in acquisition-related costs in connection with this acquisition during the year ended December 31, 2022.

The fair values assigned to assets acquired and liabilities assumed as of August 22, 2022 were based on management’s best estimates and assumptions.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the year ended December 31, 2022, we recorded measurement period adjustments of $ 3.7 million increase in goodwill, primarily related to a decrease in inventory and intangible assets of $ 7.7 million and $ 1.5 million, respectively, and an increase in deferred tax liabilities of $ 2.6 million, partially offset by a decrease in other long-term liabilities of $ 8.3 million.

The cumulative impact of the measurement period adjustments included in the consolidated net income for the year ended December 31, 2022 was not material.

In June 2023, we recorded a measurement period adjustment of $ 13.1 million decrease in goodwill, primarily related to an increase in deferred tax assets of $ 10.5 million and a decrease in deferred tax liabilities of $ 2.6 million.

In August 2023, we recorded a measurement period adjustment of $ 3.0 million increase in goodwill, primarily related to a decrease in deferred tax assets of $ 2.4 million and an increase in deferred tax liabilities of $ 0.6 million.

The cumulative impact of the measurement period adjustments included did not impact the consolidated net income for the year ended December 31, 2023.

The following table represents the adjusted fair values of assets acquired and liabilities assumed by us in the transaction:

(In thousands)

August 22, 2022

Cash and cash equivalents

Short-term marketable securities

Accounts receivable

Prepaid expenses

Other current assets

Property and equipment, net

Right-of-use assets

Intangible assets

Deferred tax assets

Total assets acquired

Accounts payable

Deferred revenue

Other accrued liabilities

Other long-term liabilities

Total liabilities assumed

Total assets acquired, net

The goodwill arising from the acquisition of La Jolla is primarily attributable to La Jolla’s assembled workforce and the value associated with leveraging the workforce to develop and commercialize new drug products in the future and growing our business more efficiently.

The goodwill from this acquisition is not expected to be deductible for tax purposes.

Refer to Note 8, “Goodwill and Intangible Assets”, for more discussion on the intangible assets recognized as part of this acquisition.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pro Forma Financial Information

The following table presents certain unaudited pro-forma financial information for the year ended December 31, 2022 as if the consolidation of Entasis and La Jolla occurred on January 1, 2021.

The unaudited pro forma financial information is presented for informational purposes only, and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place on January 1, 2021, or of results that may occur in the future.

The unaudited pro forma financial information combines the historical results of the Entasis and La Jolla with the Company’s consolidated historical results and includes certain adjustments including, but not limited to, fair value adjustments to equity investments in Entasis’ common stock and warrants, fair value adjustments to inventory, amortization of intangible assets, and interest expense on deferred royalty obligations and acquisition-related costs.

Year Ended December 31,

(In thousands)

Net income attributable to Innoviva stockholders

EQUITY AND LONG-TERM INVESTMENTS AND FAIR VALUE MEASUREMENTS

Equity and Other Investments in Armata

During the first quarter of 2020, Innoviva acquired 8,710,800 shares of common stock as well as warrants to purchase 8,710,800 additional shares of common stock of Armata Pharmaceuticals, Inc.

(“Armata”) for approximately $ 25.0 million in cash.

Armata is a clinical stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections.

During the first quarter of 2021, ISO entered into a securities purchase agreement with Armata to acquire 6,153,847 shares of Armata common stock and warrants to purchase 6,153,847 additional shares of Armata common stock for approximately $ 20.0 million.

Armata also entered into a voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5 % of the total number of shares of Armata’s common stock for voting on the matters related to election or removal of Armata’s board members.

Since the first quarter of 2020, Innoviva and its wholly owned subsidiary, Innoviva Strategic Opportunities, LLC (“ISO”), have invested in the common stock, warrants, convertible note, and term loans of Armata Pharmaceuticals, Inc.

(“Armata”), a clinical stage biotechnology company focused on development of precisely targeted bacteriophage therapeutics for antibiotic-resistant infections.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the first quarter of 2021, Armata entered into a voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5 % of the total number of shares of Armata’s common stock for voting on the matters related to election or removal of Armata’s board members.

The voting agreement will expire on the earlier of the second anniversary of the agreement effective date and approval by the FDA of any of Armata’s product candidates for marketing and commercial distribution.

During the fourth quarter of 2021, ISO also purchased an additional 1,212,122 shares of Armata common stock for approximately $ 4.0 million.

On February 9, 2022, ISO entered into a securities purchase agreement with Armata to acquire 9,000,000 shares of Armata common stock and warrants to purchase 4,500,000 additional shares of common stock with an exercise price of $ 5.00 per share for $ 45.0 million.

The investment closed in two tranches on February 9, 2022 and March 31, 2022.

The investment is intended to aid Armata in advancing its clinical pipeline and strengthening its bacteriophage platform.

On February 9, 2022, Armata also entered a second amended and restated voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5 % of the total number of shares of Armata’s common stock for voting on the matters related to election or removal of Armata’s board members or amend the bylaws of Armata to reduce the maximum number of directors or set the number of directors who may serve on the board of Armata.

On February 9, 2022, Armata entered a second amended and restated voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5 % of the total number of shares of Armata’s common stock for voting on the matters related to election or removal of Armata’s board members or amend the bylaws of Armata to reduce the maximum number of directors or set the number of directors who may serve on the board of Armata.

The voting agreement will expire the earlier of the second anniversary of the agreement effective date and approval by the FDA of any of Armata’s product candidates for marketing and commercial distribution.

In addition, as of February 9, 2022, Armata entered into an amended and restated investor rights agreement with the Company and ISO, pursuant to which for as long as the Company and ISO hold at least 12.5 % of the outstanding shares of Armata’s common stock on a fully-diluted, the Company and ISO shall have the right to designate two directors to Armata’s board of directors, and for so long as the Company and ISO hold at least 8 %, but less than 12.5 %, of the outstanding shares of Armata’s common stock on a fully-diluted basis, the Company and ISO shall have the right to designate one director to Armata’s board of directors, subject to certain conditions and qualifications set forth in the amended and restated investor rights agreement.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On July 10, 2023, Armata entered into an amendment to the amended and restated investor rights agreement with the Company and ISO, pursuant to which the Company and ISO agreed that the voting agreement will expire on the earlier of the fifth anniversary of the original agreement’s effective date, January 26, 2021, or the approval by the FDA of any of Armata’s product candidates for marketing and commercial distribution.

As of December 31, 2024, three of the seven members of Armata’s board of directors are also members of the board of directors of Innoviva.

As of December 31, 2024 and 2023, we owned approximately 69.3 % and 69.4 %, respectively, of Armata’s common stock.

On January 10, 2023, we entered into a Secured Convertible Credit Agreement (the “Credit Agreement”) with Armata, under which we invested in a one-year convertible note (the “Armata Convertible Note”) in an aggregate amount of $ 30.0 million at an interest rate of 8.0 % per annum.

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On March 4, 2024, ISO and Armata entered into a Credit and Security Agreement (the “March 2024 Credit and Security Agreement”), under which we extended a term loan to Armata (the “Armata March 2024 Term Loan”) in an aggregate amount of $ 35.0 million.

The Armata March 2024 Term Loan is subject to an interest rate of 14 % per annum and is due to mature on June 4, 2025 .

The Armata March 2024 Term Loan is subject to an interest rate of 14 % per annum and is originally set to mature on June 4, 2025 .

The March 2024 Credit and Security Agreement is secured by substantially all of the assets of Armata and its domestic and foreign material subsidiaries.

On March 12, 2025, ISO and Armata entered into a Credit and Security Agreement, under which ISO extended a term loan to Armata (the “Armata March 2025 Term Loan”) in a principal amount of $ 10.0 million.

The Armata March 2025 Term Loan bears interest at a rate of 14 % per annum and matures on March 12, 2026 .

The Credit and Security Agreement is secured by substantially all assets of Armata and its domestic and foreign material subsidiaries.

Concurrently, ISO extended the maturity date of the Armata Convertible Note and the Armata July 2023 Term Loan and the Armata March 2024 Term Loan to March 12, 2026.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On August 11, 2025, ISO and Armata entered into a Credit and Security Agreement, under which ISO extended a term loan to Armata (the “Armata August 2025 Term Loan”) in a principal amount of $ 15.0 million.

The Armata August 2025 Term Loan bears an interest rate of 14 % per annum and matures on January 11, 2029 .

The Credit and Security Agreement is secured by substantially all of the assets of Armata and its domestic and foreign material subsidiaries.

A s of December 31, 2025, two of the seven members of Armata’s board of directors are also members of the board of directors of Innoviva.

As of December 31, 2025 and 2024, we collectively owned 25,076,769 shares of Armata's common stock, representing equity interest of approximately 68.8 % and 69.3 %, respectively.

As of December 31, 2025 and 2024, we collectively hold warrants of 10,653,847 and 19,364,647 , respectively, with exercise prices ranging from $ 3.25 to $ 5.00 per share.

Innoviva also held $ 30.1 million in principal amount of the Armata Convertible Note and a total of $ 85.1 million in term loans.

The investments in Armata’s common stock and warrants provide Innoviva and ISO the ability to have significant influence but not control over Armata’s operations.

Armata’s business and affairs are managed under the direction of its board of directors, which Innoviva and ISO do not control.

Based on our evaluation, we determined that Armata is a VIE, but Innoviva and ISO are not the primary beneficiaries of the VIE.

Based on our evaluation, we determined that Armata is a VIE, but Innoviva and ISO are not the primary beneficiary of the VIE.

We have not provided financial or other support that we were not previously contractually required to provide during the periods presented.

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All warrants are exercisable immediately within five years from the issuance date of the warrants and include a cashless exercise option.

The warrants purchased in 2020 expired during the first quarter of 2025.

We use the Black-Scholes-Merton pricing model to estimate the fair value of these warrants with the following input assumptions:

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We account for the Armata Convertible Note as a trading security, measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events and the assumptions of risk-free rate, volatility of stock price and timing of certain qualified events.

We account for the Armata July 2023 Term Loan and the Armata March 2024 Term Loan as trading securities, measured at fair value using income approach based on the discounted value of expected future cash flows.

We account for the Armata term loans as trading securities, measured at fair value using income approach based on the discounted value of expected future cash flows.

As of December 31, 2025, the fair values of our holdings of Armata common stock, warrants, the Armata Convertible Note, the Armata July 2023 Term Loan, the Armata March 2024 Term Loan, the Armata March 2025 Term Loan and the Armata August 2025 Term Loan were estimated at $ 157.5 million, $ 36.2 million, $ 101.4 million, $ 32.9 million, $ 43.3 million, $ 11.1 million and $ 15.5 million, respectively .

As of December 31, 2024 the fair values of our holdings of Armata common stock, warrants, the Armata Convertible Note, the Armata July 2023 Term Loan and the Armata March 2024 Term Loan were estimated at $ 46.4 million, $ 5.9 million, $ 42.1 million, $ 30.2 million and $ 39.3 million, respectively.

For the Armata common stock and warrants, we recorded $ 141.4 million in unrealized gains, $ 64.3 million in unrealized losses and $ 77.4 million in unrealized gains as changes in fair values of equity method investments, net, in the consolidated statements of income and comprehensive income for the years ended December 31, 2025, 2024 and 2023, respectively.

For the Armata Convertible Note, we recorded $ 59.3 million in unrealized gains, $ 9.8 million in unrealized losses and $ 21.8 million in unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income for the years ended December 31, 2025, 2024 and 2023, respectively.

For the Armata July 2023 Term Loan, we rec orded $ 2.7 million, $ 3.2 million and $ 2.0 million in unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income for the years ended December 31, 2025, 2024 and 2023, respectively.

For the Armata March 2024 Term Loan, we recorded $ 4.0 million and $ 4.3 million in unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income for the years ended December 31, 2025 and 2024, respectively.

For the Armata March 2025 Term Loan , we recorded $ 1.1 million in unrealized gain for the year ended December 31, 2025 as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income.

For the Armata August 2025 Term Loan, we recorded $ 0.5 million in unrealized gain for the year ended December 31, 2025 as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2024, the fair values of our holdings of Armata common stock, warrants, the Armata Convertible Note, the Armata July 2023 Term Loan and the Armata March 2024 Term Loan were estimated at $ 46.4 million, $ 5.9 million, $ 42.1 million, $ 30.2 million and $ 39.3 million, respectively .

As of December 31, 2023 the fair values of our holdings of Armata common stock, warrants, the Armata Convertible Note and Armata July 2023 Term Loan were estimated at $ 81.2 million, $ 35.3 million, $ 51.9 million and $ 27.0 million, respectively.

For the Armata common stock and warrants, we recorded $ 64.3 million unrealized losses, $ 77.4 million unrealized gains and $ 152.5 million unrealized losses as changes in fair values of equity method investments, net, in the consolidated statements of income for the years ended December 31, 2024, 2023 and 2022, respectively .

For the Armata Convertible Note, we recorded $ 9.8 million unrealized losses and $ 21.8 million unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income for the years ended December 31, 2024 and 2023, respectively.

For the Armata July 2023 Term Loan, we rec orded $ 3.2 million and $ 2.0 million unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income for the years ended December 31, 2024 and 2023, respectively.

For the Armata March 2024 Term Loan, we recorded $ 4.3 million unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income for the year ended December 31, 2024.

On January 23, 2026, we entered into various amendments to existing agreements with Armata, extending the maturities of the Armata Note, the July 2023 Term Loan, the March 2024 Term Loan and the March 2025 Term Loan to June 1, 2027.

The expiration dates of all outstanding Armata warrants held by us were likewise extended to January 26, 2031 .

In addition, we entered into an amendment to the amended and restated investor rights agreement, pursuant to which the Company and ISO agreed that the voting agreement will expire on the earlier of January 26, 2031 or the approval by the FDA of any of Armata’s product candidates for marketing and commercial distribution.

The summarized financial information, including the portion we do not own, is presented for Armata on a one quarter lag as follows:

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Loss from operations

Equity Method Investment in Entasis

Prior to the consolidation of Entasis’ financial position and results of operations in February 2022, we accounted for Entasis as an equity method investment.

Refer to Note 5, “Consolidated Entities and Acquisitions”, for more information.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Equity Investment in InCarda

During the third quarter of 2020, TRC purchased 20,469,432 shares of Series C preferred stock and a warrant to purchase 5,117,358 additional shares of Series C preferred stock of InCarda Therapeutics, Inc.

(“InCarda”) (the “InCarda 2020 Warrant”) for $ 15.8 million, which included $ 0.8 million of transaction costs.

InCarda is a privately held biopharmaceutical company focused on developing inhaled therapies for cardiovascular diseases.

The investment is intended to fund the ongoing clinical development of InRhythm TM (flecainide for inhalation), InCarda’s lead program, for the treatment of a recent-onset episode of paroxysmal atrial fibrillation.

On July 20, 2022, under the terms of the TRC Equity Purchase Agreement, TRC transferred to Innoviva’s wholly-owned subsidiary, Innoviva TRC Holdings, LLC (“ITH”) all of TRC’s ownership interests and investments in InCarda.

Equity and Other Investments in InCarda

Since the third quarter of 2020, Innoviva TRC Holdings, LLC (“ITH”), a wholly owned subsidiary of Innoviva, has invested in the common stock, preferred stock, warrants and convertible notes of InCarda Therapeutics, Inc.

(“InCarda”), a privately held biopharmaceutical company focused on developing intravenous and inhaled therapies for cardiovascular diseases.

ITH has the right to designate one member to InCarda’s board of directors.

As of December 31, 2025, no ITH designee is serving on InCarda’s six -member board.

We did not exercise the InCarda 2020 Warrant which expired in March 2023 and wrote off its carrying value of $ 0.1 million during 2023.

On March 9, 2022, TRC entered into a Note and Warrant Purchase Agreement (the “InCarda Agreement”) with InCarda to acquire a convertible promissory note (the “InCarda Convertible Note”) and warrants (the “InCarda 2022 Warrant”) for $ 0.7 million.

The InCarda 2022 Warrant expires on March 9, 2027 and is measured at fair value.

On June 15, 2022, the principal amount and the accrued interest of the InCarda Convertible Note were converted into equity securities.

In addition, TRC participated in InCarda’s Series D preferred stock financing by investing $ 2.3 million.

In connection with the new round of financing, InCarda recapitalized its equity structure resulting in TRC owning 4,093,886 shares of InCarda’s common stock, 37,350 shares of its Series A-1 preferred stock, 20,469,432 shares of its Series C preferred stock, 8,771,780 shares of its Series D-1 preferred stock, 3,369,802 shares of its Series D-2 preferred stock, a warrant to purchase 5,117,358 shares of its Series C preferred stock at $ 0.73 per share and a warrant to purchase 2,490,033 shares of its Series D-1 preferred stock at $ 0.20 per share.

As of December 31, 2024 and 2023, we held 9.1 % and 8.1 % of InCarda equity ownership, respectively.

As of December 31, 2025 and 2024, ITH owns 36,742,250 shares of InCarda’s common and preferred stock and 2,490,033 preferred stock warrants.

These represent a 9.5 % and 9.1 % equity interest as of December 31, 2025 and 2024, respectively.

Our investment in InCarda does not provide us with the ability to control or have significant influence over InCarda’s operations.

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Our maximum exposure to loss is equal to the amount we invested in the entity.

With the exception of the InCarda Series D Warrants, which is measured at fair value, we account for the aforementioned investments in InCarda under the measurement alternative.

ITH also invested $ 0.4 million, $ 0.5 million and $ 1.2 million in InCarda's convertible notes issued in January 2024 (the “InCarda 2024 Convertible Note”), February 2025 (the “InCarda February 2025 Convertible Note”) and October 2025 (the “InCarda October 2025 Convertible Note”), respectively (collectively, the (the “InCarda Convertible Notes”).

We account for the InCarda Convertible Notes as trading securities, measured at fair value.

With the exception of the InCarda Convertible Notes and Series D Warrants, which are measured at fair value, we account for the aforementioned investments in InCarda under the measurement alternative.

Under the measurement alternative, the equity investment is initially recorded at its allocated cost, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the same issuer.

Due to InCarda’s equity recapitalization in the second quarter of 2022, TRC reassessed the value of its investments in InCarda using the Option Pricing Model Backsolve valuation methodology.

Key assumptions used in the valuation model included an expected holding period of two years , a risk-free interest rate of 3.2 %, a dividend yield of 0.0 % and an estimated volatility of 122.0 %.

The estimated volatility was calculated based on the historical volatility of a selected peer group of public companies comparable to InCarda.

We recognized an impairment charge of $ 9.0 million during the second quarter of 2022.

Due to certain changes in InCarda’s business operations during the second quarter of 2023, ITH reassessed the value of its investments in InCarda using the Option Pricing Model methodology.

Certain InCarda warrants held by us expired in March 2023 and we wrote off their carrying value of $ 0.1 million during 2023.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Due to certain changes in InCarda’s business operations during the second quarter of 2023, ITH reassessed the value of its then investments in common stock, preferred stock and preferred stock warrants in InCarda using the Option Pricing Model methodology.

Key assumptions used in the valuation model included an expected holding period of two years , a risk-free interest rate of 4.9 %, a dividend yield of 0.0 % and an estimated volatility of 114.2 %.

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We recognized an impairment charge of $ 2.9 million during the second quarter of 2023.

On January 17, 2024, ITH purchased a secured convertible promissory note (the “InCarda Convertible Note”) from InCarda for a total purchase price of $ 0.4 million.

The InCarda Convertible Note bears an annual interest rate of 8 % and shall be due and payable upon the earlier to occur of certain events defined in the InCarda Convertible Note.

The InCarda Convertible Note will convert into equity securities or shadow equity securities of InCarda depending upon the occurrence of a qualified event or a qualified financing event as also defined in the InCarda Convertible Note.

The InCarda Convertible Note is secured by certain intellectual property rights of InCarda.

We account for the InCarda Convertible Note as a trading security, measured at fair value.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2024 and 2023, we recorded as equity and long-term investments in the consolidated balance sheets $ 4.8 million in carrying amount of InCarda’s Series C preferred stock and $ 0.1 million in fair value of the InCarda Series D Warrants.

As of December 31, 2025 and 2024, we recorded as equity and long-term investments in the consolidated balance sheets $ 4.8 million in carrying amount of InCarda’s Series C preferred stock and approximately $ 0.1 million in fair value of the InCarda Series D Warrants.

As of December 31, 2025 and 2024, we recognized as equity and long-term investments in the consolidated balance sheets $ 2.7 million, for InCarda’s Series D-1 preferred stock, Series D-2 preferred stock, and common stock using the measurement alternative.

As of December 31, 2024, we recorded $ 0.4 million in fair value of the InCarda Convertible Note as equity and long-term investments in the consolidated balance sheet.

During the year ended December 31, 2024, there were immaterial changes in the carrying amount of our investments.

We recorded $ 3.1 million and $ 8.7 million in unrealized loss as changes in fair values of equity and long-term investments, net, in the consolidated statements of income for the years ended December 31, 2023 and 2022, respectively.

Equity Investment in ImaginAb

On March 18, 2021, TRC entered into a securities purchase agreement with ImaginAb, Inc.

(“ImaginAb”) to purchase 4,051,724 shares of ImaginAb Series C preferred stock for $ 4.7 million.

On the same day, TRC also entered into a securities purchase agreement with one of ImaginAb’s common stockholders to purchase 4,097,157 shares of ImaginAb common stock for $ 1.3 million.

ImaginAb is a privately held biotechnology company focused on clinically managing cancer and autoimmune diseases via molecular imaging.

$ 0.4 million was incurred for investment due diligence costs and execution and recorded as part of the equity investment in the consolidated balance sheets.

On July 20, 2022, under the terms of the TRC Equity Purchase Agreement, TRC transferred to ITH all of TRC’s ownership interests and investments in ImaginAb.

As of December 31, 2025 and 2024, we recorded $ 2.1 million and $ 0.4 million, respectively, in fair value of the InCarda Convertible Notes as equity and long-term investments in the consolidated balance sheet.

During the years ended December 31, 2025 and 2024, there were immaterial changes in the carrying amount of our investments.

We recorded $ 3.1 million in unrealized loss as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income for the year ended December 31, 2023.

Equity and Other Investments in ImaginAb

Since March of 2021, ITH has invested $ 7.6 million in 8,825,301 shares of common and preferred stock, and $ 4.8 million in a convertible note of ImaginAb, Inc.

(“ImaginAb”), a privately held biotechnology company focused on clinically managing cancer and autoimmune diseases via molecular imaging.

As of December 31, 2025, one of ImaginAb’s six board members was designated by ITH.

As of December 31, 2025 and 2024, we held 11.8 % of ImaginAb equity ownership.

Our investment in ImaginAb does not provide us with the ability to control or have significant influence over ImaginAb’s operations.

Based on our evaluation, we determined that ImaginAb is a VIE, but we are not the primary beneficiary of the VIE.

We have not provided financial or other support that we were not previously contractually required to provide during the periods presented.

Our maximum exposure to loss is equal to the amount we invested in the entity.

On March 14, 2023, ITH entered into a securities purchase agreement with ImaginAb to purchase 270,568 shares of ImaginAb Series C-2 preferred stock for $ 0.6 million.

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On February 23, 2024, ITH purchased a subordinated convertible promissory note (the “ImaginAb Convertible Note”) from ImaginAb for a total purchase price of $ 2.7 million.

The ImaginAb Convertible Note bears an annual interest rate of 10 % and shall be due and payable upon the earlier to occur of January 31, 2025 and certain events defined in the ImaginAb Convertible Note.

The ImaginAb Convertible Note carried an annual interest rate of 10 % and would be due and payable upon the earlier to occur of January 31, 2025 and certain events defined in the ImaginAb Convertible Note.

Under certain circumstances, the ImaginAb Convertible Note is convertible at the option of ITH into ImaginAb’s equity securities at defined conversion prices.

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On October 31, 2024, ITH entered into an agreement with ImaginAb to amend the ImaginAb Convertible Note.

Pursuant to the agreement, the principal amount of the ImaginAb Convertible Note was increased from $ 2.7 million to $ 4.8 million, which represents the principal as of February 23, 2024, accrued interest as of amendment date, commitment fees and an additional cash investment of $ 1.5 million.

Pursuant to the agreement, the principal amount of the ImaginAb Convertible Note was increased from $ 2.7 million to $ 4.8 million, which represented the principal as of February 23, 2024, accrued interest as of amendment date, commitment fees and an additional cash investment of $ 1.5 million.

On January 13, 2025, ITH and ImaginAb executed an amendment to the ImaginAb Convertible Note extending the maturity date from January 31, 2025 to May 30, 2025.

All other material terms of the ImaginAb Convertible Note were unchanged during the aforementioned amendments to the ImaginAb Convertible Note.

As of December 31, 2024, one of ImaginAb’s six board members was designated by ITH.

As of December 31, 2024 and 2023, we held 11.8 % and 12.4 %, respectively, of ImaginAb equity ownership.

Our investment in ImaginAb does not provide us with the ability to control or have significant influence over ImaginAb’s operations.

Based on our evaluation, we determined that ImaginAb is a VIE, but we are not the primary beneficiary of the VIE.

We have not provided financial or other support that we were not previously contractually required to provide during the periods presented.

Our maximum exposure to loss is equal to the amount we invested in the entity.

Because ImaginAb’s equity securities are not publicly traded and do not have a readily determinable fair value, we account for our investment in ImaginAb’s Series C preferred stock, Series C-2 preferred stock and common stock using the measurement alternative.

We account for the ImaginAb Convertible Note as a trading security, measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events and the assumptions of risk-free rate, volatility of stock price and timing of certain qualified events.

As of December 31, 2025 and 2024, our investment in ImaginAb’s Series C preferred stock, Series C-2 preferred stock and common stock amounted to $ 7.6 million and recorded as equity and long-term investments in the consolidated balance sheets.

As of December 31, 2024, we recorded $ 5.0 million in fair value of the ImaginAb Convertible Note as equity and long-term investments in the consolidated balance sheets.

During the year ended December 31, 2024, we recorded $ 0.1 million in net unrealized gain on the ImaginAb Convertible Note as changes in fair values of equity and long-term investments, net, in the consolidated statements of income.

There was no change in the carrying amount of our equity investments in ImaginAb.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Convertible Promissory Note in Gate Neurosciences

On November 24, 2021, TRC entered into a Convertible Promissory Note Purchase Agreement with Gate to acquire a convertible promissory note (the “Gate Convertible Note”) with a principal amount of $ 15.0 million.

Gate is a privately held biopharmaceutical company focused on developing the next generation of targeted nervous system therapies, leveraging precision medicine approaches to develop breakthrough drugs for psychiatric and neurologic diseases.

The investment is intended to fund Gate ’ s ongoing development and research.

The Gate Convertible Note bears an annual interest rate of 8 % and will convert into shares of common stock of Gate upon a qualified event or into shares of shadow preferred stock of Gate (“Shadow Preferred”) upon a qualified financing.

In May 2025, ImaginAb fully settled the convertible note of $ 4.8 million for $ 5.1 million, including $ 0.3 million in accrued interest and commitment fees.

Before the repayment, the ImaginAb Convertible Note was accounted for as a trading security and measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events and the assumptions of risk-free rate, volatility of stock price and timing of certain qualified events.

As of December 31, 2024, we recorded $ 5.0 million in fair value of the ImaginAb convertible note as equity and long-term investments in the consolidated balance sheet.

Changes to the fair value of the ImaginAb convertible note in 2025 through its settlement date were immaterial.

During the year ended December 31, 2024, we recorded $ 0.1 million in net unrealized gain on the ImaginAb convertible note as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income.

Convertible Promissory Note in Syndeio Biosciences

Syndeio Biosciences, Inc.

(formerly known as Gate Neurosciences, Inc.) (“Syndeio”) is a privately held biopharmaceutical company focused on developing the next generation of targeted nervous system therapies, leveraging precision medicine approaches to develop breakthrough drugs for psychiatric and neurologic diseases.

In May 2025, Gate Neurosciences, Inc.

rebranded as Syndeio.

From 2021 to 2022, ITH invested in Syndeio a total of $ 15.0 million in convertible notes (the “Syndeio 2021 Convertible Note”).

The Syndeio 2021 Convertible Note bears an annual interest rate of 8 % and will convert into shares of common stock of Syndeio upon a qualified event or into shares of shadow preferred stock of Syndeio (“Shadow Preferred”) upon a qualified financing.

A qualifying event can be a qualified initial price offering, a qualified merger, or a merger with a special-purpose acquisition company (“SPAC”).

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The Qualified Event Price is the price per share determined by the qualified event.

A qualified financing is a sale or series of sales of preferred stock where (i) at least 50 percent of counterparties are not existing shareholders, (ii) net proceeds to Gate are at least $35.0 million, and (iii) the stated or implied equity valuation of Gate is at least $80.0 million.

On July 20, 2022, under the terms of the TRC Equity Purchase Agreement, TRC transferred to ITH all of TRC’s debt investments in Gate.

On February 2, 2023, ITH entered into a Note Amendment Agreement with Gate to amend the Gate Convertible Note.

Pursuant to the Note Amendment Agreement, the principal amount of the Gate Convertible Note was increased from $ 15.0 million to $ 21.5 million, which represents the original principal, accrued interest as of the amendment date and an additional cash investment of $ 5.0 million.

All other material terms of the Gate Convertible Note were unchanged.

On October 6, 2023, ITH entered into a Second Note Amendment Agreement with Gate to amend the Note Amendment Agreement.

Pursuant to the Second Note Amendment Agreement, the principal amount of the Gate Convertible Note was increased from $ 21.5 million to $ 27.7 million, which represents the amended principal as of February 2, 2023, accrued interest as of the second amendment date and an additional cash investment of $ 5.0 million.

All other material terms of the Gate Convertible Note were unchanged.

On February 13, 2024, ITH entered into a Third Note Amendment Agreement with Gate to amend the Gate Convertible Note.

Pursuant to the Third Note Amendment Agreement, the principal amount of the Gate Convertible Note was increased from $ 27.7 million to $ 33.5 million, which represents the principal and accrued interest as of the third amendment date and an additional cash investment of $ 5.0 million.

All other material terms of the Gate Convertible Note were unchanged.

On August 5, 2024, ITH entered into a Fourth Note Amendment Agreement with Gate to amend the Gate Convertible Note.

Pursuant to the Fourth Note Amendment Agreement, the principal amount of the Gate Convertible Note was increased from $ 33.5 million to $ 39.8 million, which represents the principal and accrued interest as of the fourth amendment date and an additional cash investment of $ 5.0 million.

All other material terms of the Gate Convertible Note were unchanged.

On November 13, 2024, ITH entered into a Fifth Note Amendment Agreement with Gate to amend the Gate Convertible Note.

Pursuant to the Fifth Note Amendment Agreement, the principal amount of the Gate Convertible Note was increased from $ 39.8 million to $ 50.6 million, which represents the principal and accrued interest as of the fifth amendment date and an additional cash investment of $ 10.0 million.

All other material terms, except for the conversion terms of the Gate Convertible Note, remained unchanged.

A qualified financing is a sale or series of sales of preferred stock where (i) at least 50 percent of counterparties are not existing shareholders, (ii) net proceeds to Syndeio are at least $35.0 million, and (iii) the stated or implied equity valuation of Syndeio is at least $80.0 million.

On February 2, 2023, ITH entered into a Note Amendment Agreement with Syndeio to amend the Syndeio 2021 Convertible Note.

Pursuant to the Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 15.0 million to $ 21.5 million, which represents the original principal, accrued interest as of the amendment date and an additional cash investment of $ 5.0 million.

On October 6, 2023, ITH entered into a Second Note Amendment Agreement with Syndeio to amend the Note Amendment Agreement.

Pursuant to the Second Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 21.5 million to $ 27.7 million, which represents the amended principal as of February 2, 2023, accrued interest as of the second amendment date and an additional cash investment of $ 5.0 million.

On February 13, 2024, ITH entered into a Third Note Amendment Agreement with Syndeio to amend the Syndeio 2021 Convertible Note.

Pursuant to the Third Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 27.7 million to $ 33.5 million, which represents the principal and accrued interest as of the third amendment date and an additional cash investment of $ 5.0 million.

On August 5, 2024, ITH entered into a Fourth Note Amendment Agreement with Syndeio to amend the Syndeio 2021 Convertible Note.

Pursuant to the Fourth Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 33.5 million to $ 39.8 million, which represents the principal and accrued interest as of the fourth amendment date and an additional cash investment of $ 5.0 million.

On November 13, 2024, ITH entered into a Fifth Note Amendment Agreement with Syndeio to amend the Syndeio 2021 Convertible Note.

Pursuant to the Fifth Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 39.8 million to $ 50.6 million, which represents the principal and accrued interest as of the fifth amendment date and an additional cash investment of $ 10.0 million.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We have accounted for the Gate Convertible Note as a trading security, measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events and the assumptions of equity value of Gate, risk-free rate, expected stock price, volatility of its peer companies, and the time until a financing is raised.

As of December 31, 2024 and 2023, the fair value of the Gate Convertible Note was estimated at $ 50.9 million and $ 28.0 million, respectively, and recorded as equity and long-term investments in the consolidated balance sheets.

We recorded $ 0.4 million of unrealized loss and $ 0.6 million of unrealized gain as changes in fair values of equity and long-term investments, net, in the consolidated statements of income for the years ended December 31, 2023 and 2022, respectively.

The change in fair value is not material for the year ended December 31, 2024.

On March 3, 2025, ITH entered into a Convertible Promissory Note Purchase Agreement with Syndeio to acquire a convertible promissory note (the “Syndeio 2025 Convertible Note”) with a principal amount of $ 15.0 million.

The Syndeio 2025 Convertible Note bears an annual interest rate of 8 % and will mature on November 24, 2026 .

The Syndeio 2025 Convertible Note will convert into shares of series seed preferred stock of Syndeio upon a qualified initial public offering (“IPO”), or into shares of shadow preferred stock of Syndeio (“Shadow Preferred”) upon a qualified financing.

Shadow Preferred means preferred stock having identical rights, preferences and restrictions as the preferred stock that would be issued in a qualified financing.

On November 11, 2025, ITH entered into a Note Amendment Agreement with Syndeio to amend the Syndeio 2025 Convertible Note.

Pursuant to the Note Amendment Agreement, the principal amount of the Syndeio 2025 Convertible Note was increased from $ 15.0 million to $ 25.8 million, which represents the principal and accrued interest as of the amendment date and an additional cash investment of $ 10.0 million.

All other material terms of the Syndeio 2021 Convertible Note and the Syndeio 2025 Convertible Note remained unchanged during the aforementioned amendments.

Our investments in Syndeio do not provide us with the ability to control or have significant influence over Syndeio’s operations.

Based on our evaluation, we determined that Syndeio is a VIE, but we are not the primary beneficiary of the VIE.

We have not provided financial or other support that we were not previously contractually required to provide during the periods presented.

Our maximum exposure to loss is equal to the amount we invested in the entity.

We account for both the Syndeio 2021 Convertible Note and the Syndeio 2025 Convertible Note as trading securities, measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events and the assumptions of equity value of Syndeio, risk-free rate, expected stock price, volatility of its peer companies, and the time until a financing is raised.

As of December 31, 2025 and 2024, the fair value of the Syndeio 2021 Convertible Note was estimated at $ 62.9 million and $ 50.9 million, respectively, and recorded as equity and long-term investments in the consolidated balance sheets.

We recorded $ 12.1 million in unrealized gain for the year ended December 31, 2025, as change in fair values of equity and long-term investments, net in the consolidated statements of income and comprehensive income.

The change in fair value is no t material for the year ended December 31, 2024.

We recorded $ 0.4 million in unrealized loss as change in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income for the year ended December 31, 2023.

As of December 31, 2025, the fair value of the Syndeio 2025 Convertible Note was estimated at $ 24.5 million and recorded as equity and long-term investments in the consolidated balance sheet.

We recorded $ 1.3 million in unrealized loss for the year ended December 31, 2025, as change in fair values of equity and long-term investments, net in the consolidated statements of income and comprehensive income.

On February 10, 2026, ITH entered into a Note Amendment Agreement with Syndeio to amend the Syndeio 2021 Convertible Note.

Pursuant to the Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 50.6 million to 60.8 million, which represents the principal and accrued interest as of the amendment date and an additional cash investment of $ 5.0 million.

Certain thresholds associated with the definition of qualified financing were likewise amended.

All other material terms of the Syndeio 2021 Convertible Note remained unchanged

Equity Investment in Nanolive

On February 18, 2022, TRC entered into an investment and shareholders agreement with Nanolive to purchase 18,750,000 shares of Nanolive Series C preferred stock for $ 9.8 million (equivalent to 9.0 million CHF).

Nanolive SA is a Swiss privately held life sciences company focused on developing breakthrough imaging solutions that accelerate research in growth industries such as drug discovery and cell therapy.

$ 0.7 million was incurred for investment due diligence costs and execution and recorded as part of the equity and long-term investment in the consolidated balance sheets.

On July 20, 2022, under the terms of the TRC Equity Purchase Agreement, TRC transferred to ITH all of TRC’s ownership interests and investments in Nanolive.

In 2022, ITC invested $ 9.8 million in 18,750,000 shares of preferred stock of Nanolive SA ( “Nanolive”), a Swiss privately held life sciences company focused on developing breakthrough imaging solutions that accelerate research in growth industries such as drug discovery and cell therapy.

ITH has the right to designate one member to Nanolive’s board.

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As of December 31, 2025 , no Innoviva designee is serving on Nanolive’s six -member board.

As of December 31, 2024 and 2023 , we held 13.0 % and 15.3 % of Nanolive equity ownership, respectively.

As of December 31, 2025 and 2024 , we held 13.0 % of Nanolive equity ownership.

Our investment in Nanolive does not provide us with the ability to control or have significant influence over Nanolive’s operations.

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Our maximum exposure to loss is equal to the amount we invested in the entity.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Because Nanolive’s equity securities are not publicly traded and do not have a readily determinable fair value, we account for our investment in Nanolive’s Series C preferred stock using the measurement alternative.

As of December 31, 2025 and 2024, $ 10.6 million of investment in Nanolive was recorded as equity and long-term investments in the consolidated balance sheets, and there was no change to the carrying amount of our investment.

Convertible Promissory Note in Lyndra

On February 27, 2025, Strategic Partners entered into a note purchase agreement with Lyndra Therapeutics, Inc.

(“Lyndra”) to acquire a convertible promissory note (the “Lyndra Convertible Note”) with a principal amount of $ 9.2 million.

Lyndra is a clinical-stage company with a novel drug delivery platform that enables the administration of ultra-long-acting oral drugs.

The Lyndra Convertible Note bears an annual interest rate of 8 % and will mature on November 27, 2025 .

The Lyndra Convertible Note would convert into shares of preferred stock of Lyndra upon a qualified financing as defined in the agreement.

Upon maturity or certain events and if no qualified financing has occurred, the principal and unpaid accrued interest may either be repaid in full in cash plus a certain premium or convert into shares of preferred stock of Lyndra as defined in the agreement.

Our investment in Lyndra does not provide us with the ability to control or have significant influence over Lyndra’s operations.

Based on our evaluation, we determined that Lyndra is a VIE, but we are not the primary beneficiary of the VIE.

We have not provided financial or other support that we were not previously contractually required to provide during the periods presented.

Our maximum exposure to loss is equal to the amount we invested in the entity.

We account for the Lyndra Convertible Note as a trading security, measured at fair value using an income approach based on the discounted value of expected future cash flows.

In late March of 2025, Lyndra began winding down its operations due to a lack of financing.

In September 2025, Lyndra sold the majority of its assets, resulting in a change of control as defined in the Lyndra Convertible Note (Refer to Note 14, “Asset Acquisition”).

Upon the consummation of the change of control, the maturity date of the Lyndra Convertible Note was accelerated, and its principal and accrued interest became due.

Due to Lyndra’s inability to repay the full amount, the note went into default and became subject to a 20 % premium on the principal balance.

Interest will continue to accrue until full repayment.

In October 2025, we received a $ 3.3 million partial repayment on the Lyndra Convertible Note, reducing the outstanding principal to $ 5.9 million.

As of December 31, 2025, the fair value of the Lyndra Convertible Note was estimated at $ 3.5 million and recorded as equity and long-term investments in the consolidated balance sheet.

We recorded $ 2.4 million in unrealized loss for the year ended December 31, 2025 as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income.

Equity Investment in Beacon

Beacon Biosignals, Inc.

(“Beacon”) is an AI-driven neurotechnology company developing treatments for neurological, psychiatric, and sleep disorders.

On October 7 2025, ITH entered into a Preferred Stock Purchase Agreement with Beacon, pursuant to which ITH acquired 1,448,303 shares of Beacon’s Series B Preferred Stock for $ 17.5 million.

As of December 31, 2025, we held 5.6 % of Beacon equity ownership.

Our investment in Beacon does not provide us with the ability to control or have significant influence over Beacon’s operations.

Based on our evaluation, we determined that Beacon is a VIE, but we are not the primary beneficiary of the VIE.

We have not provided financial or other support that we were not previously contractually required to provide during the periods presented.

Our maximum exposure to loss is equal to the amount we invested in the entity.

Because Beacon’s equity securities are not publicly traded and do not have a readily determinable fair value, we account for our investment in Beacon’s Series B preferred stock using the measurement alternative.

As of December 31, 2025, $ 17.5 million of investment in Beacon was recorded as equity and long-term investments in the consolidated balance sheet, and there was no change to the carrying amount of our investment.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reconciliation of Equity and Long-Term Investments Balances

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Purchases of trading securities

Purchases of equity and long-term investments

Changes in fair value, net

Reclassification of current portion

Equity and long-term investments as of December 31, 2024

Purchases of trading securities

Proceeds from trading securities

Purchases of equity and other long-term investments

Net sales and purchases of investments managed by ISP Fund

Changes in fair value, net

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Equity and long-term investments as of December 31, 2025

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Available-for-Sale Securities

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Fair Value Measurements

Our available-for-sale securities, equity and long-term investments and contingent value rights are measured at fair value on a recurring basis and our debt is carried at amortized cost basis.

Our available-for-sale securities and equity and long-term investments are measured at fair value on a recurring basis and our debt is carried at amortized cost basis.

Estimated Fair Value Measurements as of December 31, 2025 Using:

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Equity investment - InCarda Warrants

Convertible debt investment - Armata Note

Term loan investment - Armata July 2023 Term Loan

Term loan investment - Armata March 2024 Term Loan

Convertible debt investment - InCarda Note

Convertible debt investment - ImaginAb Note

Convertible debt investment - Gate Note

Term loan investment - Armata March 2025 Term Loan

Term loan investment - Armata August 2025 Term Loan

Convertible debt investment - Armata Note

Convertible debt investment - InCarda 2024 Convertible Note

Convertible debt investment - InCarda February 2025 Convertible Note

Convertible debt investment - InCarda October 2025 Convertible Note

Convertible debt investment - Syndeio 2021 Convertible Note

Convertible debt investment - Syndeio 2025 Convertible Note

Convertible debt investment - Lyndra Convertible Note

Total assets measured at estimated fair value

Total fair value of debt

INNOVIVA, INC.

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Equity investment - Armata Warrants

Equity investment - InCarda Warrants

Convertible debt investment - Armata Note

Term loan investment - Armata July 2023 Term Loan

Convertible debt investment - Gate Note

Term loan investment - Armata March 2024 Term Loan

Convertible debt investment - InCarda 2024 Convertible Note

Convertible debt investment - ImaginAb Note

Convertible debt investment - Syndeio 2021 Convertible Note

Total assets measured at estimated fair value

Total fair value of debt

Contingent value rights

Total liabilities at estimated fair value

There were no transfers between Level 1, Level 2 or Level 3 during the periods presented.

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The fair values in the warrants in Armata classified within Level 2 are based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.

The Gate Convertible Note, the Armata Convertible Note, the Armata July 2023 Term Loan, the Armata March 2024 Term Loan, The Incarda Covertible Note, the InCarda Warrants, the ImaginAb Convertible Note, private placement positions and convertible notes held by ISP Fund LP, and contingent value rights are classified as Level 3 financial instruments as these securities are not publicly traded and the assumptions used in the valuation model for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.

The investments classified as Level 3 financial instruments are securities that are not publicly traded and the assumptions used in the valuation model of these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.

There are uncertainties on the fair value measurement of the instruments classified under Level 3 due to the use of unobservable inputs and interrelationships between these unobservable inputs, which could result in higher or lower fair value measurements.

The fair values of our 2025 Notes and 2028 Notes are based on recent trading prices of the respective instruments.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CAPITALIZED FEES PAID

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Net carrying value

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

These milestone fees are amortized over their estimated useful lives commencing upon the commercial launch of the product in their respective regions with the amortization recorded as a reduction in revenue from collaborative arrangements.

As of December 31, 2024, the weighted average remaining amortization period wa s 5.2 years.

As of December 31, 2025, the weighted average remaining amortization perio d was 4.2 y ears.

Additional information regarding these milestone fees is included in Note 3, “Revenue Recognition”.

Amortization for each of the years ended December 31, 2025, 2024 and 2023 was $ 13.8 million .

The remaining estimated amortization is $ 13.8 million for each of the years from 2025 to 2027, $ 13.7 million for the year 2028, $ 9.4 million for the year 2029 and $ 5.4 million thereafter.

The remaining estimated amortization is $ 13.8 million for each of the years 2026 and 2027, $ 13.7 million for the year 2028, $ 9.4 million for the year 2029 and $ 5.4 million for the year 2030.

GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets acquired are recognized at fair value as of the acquisition date.

We recognized goodwill of $ 11.5 million and $ 6.4 million from our acquisitions of Entasis and La Jolla, respectively, in 2022.

The carrying amount of goodwill as of December 31, 2025 and 2024 was $ 17.9 million .

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Marketed products

In-process research and development

Collaboration agreement

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Following the FDA approval of XACDURO ® in May 2023, we started amortizing $ 68.7 million of the then in-process research and development as a marketed product, as well as the collaboration agreement, over their estimated useful lives.

The useful life of the remaining in-process research and development of $ 2.6 million will be determined upon commercialization of the underlying product candidate;

thus, no amortization expense for this intangible asset was recognized for the periods presented.

Intangible assets recognized as a result of the acquisition of La Jolla amounting to $ 151.0 million pertain to product rights and developed technologies on La Jolla’s currently marketed products.

Following the FDA approval of NUZOLVENCE ® (formerly zoliflodacin) in December 2025, we started amortizing $ 2.6 million of the then in-process research and development as a marketed product over its estimated useful life.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible assets recognized as a result of the acquisition of La Jolla amounting to $ 151.0 million pertain to product rights and developed technologies on La Jolla’s marketed products.

These are intangible assets with determinable lives and are amortized over their estimated useful lives.

As discussed in Note 4 “License and Collaboration Arrangements”, we capitalized the upfront fee of $ 4.0 million that we paid to Basilea under our exclusive distribution and license agreement as an intangible asset.

This amount is included in marketed products in the table above and will be amortized over the term of the agreement.

As discussed in Note 4 “License and Collaboration Arrangements”, we capitalized the upfront fee of $ 4.0 million that we paid to Basilea for the exclusive commercialization right of ZEVTERA ® in the U.S.

under our exclusive distribution and license agreement as an intangible asset.

This amount is included in marketed products in the table above and is being amortized over the term of the agreement.

We recognized amortization expense of $ 26.3 million, $ 25.9 million and $ 21.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Future amortization expense is expected to be $ 26.6 million for each of the years from 2026 to 2030 and $ 49.2 million thereafter.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

BALANCE SHEET COMPONENTS

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Total inventory

As of December 31, 2024 and 2023, total inventory included net fair value adjustments resulting from the acquisition of La Jolla of approximately $ 9.2 million and $ 23.0 million, respectively , which will be recognized as cost of products sold when sales occur in future periods.

As of December 31, 2025 and 2024, total inventory included net fair value adjustments resulting from the acquisition of La Jolla of approximately $ 3.4 million and $ 9.2 million, respectively , which will be amortized and recognized as cost of products sold when sales occur in future periods.

The fair value adjustments recorded as part of cost of products sold amounted to $ 4.8 million, $ 13.8 million and $ 27.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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(In thousands)

Accrued contract manufacturing expenses

Accrued contract manufacturing costs

Accrued clinical and research expenses

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Total other accrued liabilities

Amount in “Other” as of December 31, 2024 includes $ 5.3 million in consideration received under a letter agreement we have entered into with Zai Lab as discussed in Note 4, “License and Collaboration Arrangements”.

(1) Amount as of December 31, 2024 includes $ 5.3 million advance payments received from our partner for inventory supply as discussed in Note 4, “License and Collaboration Arrangements”.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Long-Term Liabilities

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Long-term portion of lease liabilities

Contingent value rights liability

Total other long-term liabilities

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCK‑BASED COMPENSATION

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Each member of our board of directors who is not an employee receives both cash and equity compensation for services as a director, member of a committee of the board of directors, lead independent director and chairman, as applicable.

In October 2017, both the cash and equity components of the compensation program were amended, effective immediately (the “October 2017 Amendments”).

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Each of our independent directors receives periodic automatic grants of equity awards under a program implemented under the 2012 Plan.

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Only our independent directors or affiliates of such directors are eligible to receive automatic grants under the 2012 Plan.

Under the program, each individual who first became a non-employee director will, on the date such individual joins the board of directors, automatically be granted a one‑time grant of RSUs covering a number of shares of our common stock calculated as $ 125,000 ($ 250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share (the “Initial RSUs”), plus a one‑time grant of RSUs covering a number of shares of our common stock calculated as $ 225,000 ($ 250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, which would be pro-rated for the number of whole months remaining until the anniversary of the prior year’s stockholders’ meeting, rounded down to the nearest whole share (the “Pro Rata RSUs”).

Under the program, each individual who first became a non-employee director will, on the date such individual joins the board of directors, automatically be granted a one‑time grant of RSUs covering a number of shares of our common stock calculated as $ 125,000 divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share (the “Initial RSUs”), plus a one‑time grant of RSUs covering a number of shares of our common stock calculated as $ 225,000 divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, which would be pro-rated for the number of whole months remaining until the anniversary of the prior year’s stockholders’ meeting, rounded down to the nearest whole share (the “Pro Rata RSUs”).

The Initial RSUs vest in two equal annual installments, while Pro Rata RSUs vest in a single installment at the sooner of the next annual stockholder meeting or the one-year grant anniversary, in each case subject to the non-employee director’s continuous service through the applicable vesting date.

Annually, upon his or her re‑election to the board of directors at the Annual Meeting of Stockholders, each non-employee director is automatically granted an RSU covering a number of shares of our common stock calculated as $ 225,000 ($ 250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share.

Annually, upon his or her re‑election to the board of directors at the Annual Meeting of Stockholders, each non-employee director is automatically granted an RSU covering a number of shares of our common stock calculated as $ 225,000 divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share.

These RSUs will vest at the sooner of the next annual stockholder meeting or the one-year anniversary of grant, subject to the non-employee director’s continuous service through the applicable vesting date.

Following the amendment to our non-employee director compensation program, both the annual RSUs and Initial RSUs described above remained unchanged with the exception that the number of shares of our common stock subject to each award has been reduced.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

These RSUs will vest in full upon the director’s death, the occurrence of a change in control or, with respect to awards made after the October 2017 Amendments, the director’s disability before the director’s service terminates.

These RSUs will vest in full upon the director’s death, the occurrence of a change in control, or the director’s disability before the director’s service terminates.

Director RSUs carry dividend equivalent rights to be credited with an amount equal to all cash dividends paid on the underlying shares of common stock while unvested.

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Stock‑Based Compensation Expense

Stock‑based compensation expense is included in the consolidated statements of income as follows:

Stock‑based compensation expense is included in the consolidated statements of income and comprehensive income as follows:

Year Ended December 31,

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Research and development

Stock‑based compensation expense included in the consolidated statements of income by award type is as follows:

Stock‑based compensation expense included in the consolidated statements of income and comprehensive income by award type is as follows:

Year Ended December 31,

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Total unrecognized compensation expense

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Compensation Awards

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as of December 31, 2025

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2025 , the aggregate intrinsic value of options outstanding and options exercisable was $ 11.1 million and $ 6.4 million, respectively .

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The weighted average remaining contractual term of options outstanding was 7.68 years and 8.04 years as of December 31, 2025 and 2024, respectively.

The total intrinsic value of the options exercised was no t material for the year ended December 31, 2024, 2023 and 2022.

The total estimated fair value of options vested was $ 2.5 million and $ 1.9 million for the years ended December 31, 2024 and 2023, respectively.

The total estimated fair value of options vested was no t material for the year ended December 31, 2022.

The total intrinsic value of the options exercised was no t material for the years ended December 31, 2025, 2024 and 2023.

The total estimated fair value of options vested was $ 3.8 million, $ 2.5 million and $ 1.9 million the years ended December 31, 2025, 2024 and 2023, respectively.

The total estimated fair value of RSUs vested was $ 4.6 million, $ 3.2 million and $ 3.9 million for the years December 31, 2025, 2024 and 2023, respectively.

The total estimated fair value of RSAs vested was not material for the year ended December 31, 2024, 2023, and 2022.

The total estimated fair value of RSAs vested was no t material for the year ended December 31, 2025, 2024, and 2023.

Valuation Assumptions

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Stockholders’ Equity

For the year ended December 31, 2025, a total of 590,703 warrants were exercised into an equivalent number of our common shares at an exercise price of $ 18.11 per share, resulting in approximately $ 10.7 million in proceeds.

There were no outstanding warrants as of December 31, 2025.

On November 3, 2025, our board of directors authorized a new share repurchase program under which we may repurchase up to $ 125.0 million of our outstanding shares of common stock.

The timing and amount of any share repurchases under the share

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

repurchase program will be subject to the Securities and Exchange Commission Rule 10b-18 and Rule 10b5-1 requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will be determined by our management in its discretion based on ongoing assessments of the capital needs of the business, the market price of our common stock, prevailing stock prices, general market conditions, and other considerations.

Share repurchases under the program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination thereof or by other means in accordance with federal securities laws.

This program has no termination date, may be suspended or discontinued at any time at our discretion and does not oblige us to acquire any amount of common stock.

From program inception through December 31, 2025, we repurchased 227,855 shares in the open market at an average price of $ 20.09 per share for a total amount of approximately $ 4.6 millio n.

Subsequent to December 31, 2025 and through February 13, 2026, we have repurchased 569,443 shares in the open market at an average price of $ 19.88 per share for a total amount of approximately $ 11.4 million.

All repurchased shares were retired.

On October 31, 2022, our board of directors authorized a share repurchase program under which we may repurchase up to $ 100.0 million of our outstanding shares of common stock.

The repurchase program authorized the repurchase by the Company of its common stock in open market transactions, including pursuant to a trading plan in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), privately negotiated transactions, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination thereof or by other means in accordance with federal securities laws.

The repurchase program authorized the repurchase by the Company of its common stock in open market transactions, including pursuant to a trading plan in accordance with Rule 10b-18 promulgated under the Exchange Act, privately negotiated transactions, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination thereof or by other means in accordance with federal securities laws.

The authorization permitted management to repurchase shares of the Company’s common stock from time to time at management’s discretion.

Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions.

From program inception through December 31, 2022, we repurchased 647,394 shares in the open market at an average price of $ 13.13 per share for a total amount of approximately $ 8.5 million.

For the year ended December 31, 2023, we repurchased 6,173,565 shares in the open market at an average price of $ 12.39 per share for a total amount of approximately $ 76.5 million.

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The share repurchase program was completed in April 2024.

All of the repurchased shares were retired.

In April 2024, we retired all shares held in treasury resulting from our strategic buyback of GSK’s common shares in the Company in 2021.

All repurchased shares were retired.

In April 2024, we retired all the shares held in treasury resulting from our strategic buyback of GSK’s common shares in the Company in 2021.

We recorded the corresponding cost of treasury stock of $ 393.8 million in additional paid-in capital.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our debt consists of the following:

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In January 2013, we completed an underwritten public offering of $ 287.5 million aggregate principal amount of our 2023 Notes, which matured on January 15, 2023.

The 2023 Notes bore interest at the rate of 2.125 % per year that is payable semi-annually in arrears in cash on January 15 and July 15 of each year, beginning on July 15, 2013.

The 2023 Notes were convertible, at the option of the holder, into shares of our common stock at an initial conversion rate of 35.9903 shares per $1,000 principal amount of the 2023 Notes, subject to adjustment in certain circumstances, which represented an initial conversion price of approximately $ 27.79 per share.

In connection with the offering of the 2023 Notes, we entered into two privately negotiated capped call option transactions with a single counterparty.

The capped call option transaction was an integrated instrument consisting of a call option on our common stock purchased by us with a strike price equal to the initial conversion price of $ 27.79 per share for the underlying number of shares and a cap price of $ 38.00 per share, both of which were subject to adjustments consistent with the 2023 Notes.

The cap component was economically equivalent to a call option sold by us for the underlying number of shares with an initial strike price of $ 38.00 per share.

As an integrated instrument, the settlement of the capped call coincided with the due date of the convertible debt.

Upon settlement, we would receive from our hedge counterparty a number of shares of our common shares that would range from zero , if the stock price was below $ 27.79 per share, to a maximum of 2,779,659 shares, if the stock price was above $38.00 per share.

However, if the market price of our common stock, as measured under the terms of the capped call transactions, exceeded $38.00 per share, there was no incremental anti-dilutive benefit from the capped call.

As a result of the partial conversion by certain holders of the 2023 Notes in July 2014, and dividends declared and paid in 2014 and 2015, the conversion rate with respect to our 2023 Notes was adjusted in total to 50.5818 shares of our common stock per $1,000 principal amount of the 2023 Notes, which represented a conversion price of approximately $ 19.77 per share.

As a result of the conversion rate adjustments, the capped call strike price and cap price were also adjusted to $ 19.77 and $ 27.04 , respectively.

For the year ended December 31, 2016, we retired a portion of our 2023 Notes with a face value of $ 14.1 million and carrying value of $ 13.9 million by way of purchase in the open market.

On March 7, 2022, we used $ 165.6 million from the sale of the 2028 Notes to repurchase 60 % of the 2023 Notes with a face value of $ 144.8 million.

The carrying value of the repurchased 2023 Notes was $ 144.5 million.

Accrued interest was $ 0.4 million and unamortized debt issuance costs were $ 0.3 million on the date of repurchase.

We recognized a loss on the extinguishment of the 2023 Notes of $ 20.7 million in other expense, net, in the consolidated statement of operations.

The repurchase reduced the outstanding principal balance to $ 96.2 million and unamortized debt issuance costs to $ 0.2 million.

The annual effective interest rate of the 2023 Notes changed from 2.36 % to 2.37 %.

On April 18, 2022, certain 2023 Notes holders converted their notes of $ 3.0 thousand into Innoviva’s common stock.

The outstanding principal balance was reduced slightly to $ 96.2 million.

This remaining balance was fully paid upon the maturity date in January 2023.

The 2023 Notes carried interest at the rate of 2.125 % per year that was payable semi-annually in arrears in cash on January 15 and July 15 of each year.

From time to time, the total face value of the 2023 Notes was reduced through partial conversion, retirement and repurchase.

The remaining balance of $ 96.2 million was fully paid in cash upon the maturity date in January 2023.

The following table sets forth total interest expense recognized related to the 2023 Notes for the year ended December 31, 2023:

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table sets forth total interest expense recognized related to the 2023 Notes for the years ended December 31, 2023 and 2022:

Year Ended December 31,

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On August 7, 2017, we completed a private placement of $ 192.5 million aggregate principal amount of our 2025 Notes.

The proceeds include the 2025 Notes sold pursuant to the $ 17.5 million over-allotment option granted by us to the initial purchasers, which option was exercised in full.

The 2025 Notes were sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The 2025 Notes are senior unsecured obligations and bear interest at a rate of 2.5 % per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2018.

The 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election.

The initial conversion rate for the 2025 Notes is 57.9240 shares of our common stock per $1,000 principal amount of the 2025 Notes (which is equivalent to an initial conversion price of approximately $ 17.26 per share), representing a 30.0 % conversion premium over the last reported sale price of the Company’s common stock on August 1, 2017, which was $ 13.28 per share.

The conversion rate is subject to customary anti-dilution adjustments in certain circumstances.

The 2025 Notes will mature on August 15, 2025 , unless repurchased or converted in accordance with their terms prior to such date.

Prior to February 15, 2025, the 2025 Notes will be convertible at the option of the holders only upon the occurrence of specified events and during certain periods, as described below.

From, and including, February 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2025 Notes will be convertible at any time.

Holders of the 2025 Notes may convert all or a portion of their 2025 Notes prior to the close of business on February 15, 2025 only under the following circumstances:

• after September 30, 2017, if our closing common stock price for at least 20 days out of the most recent 30 consecutive trading days of the preceding quarter is greater than 130 % of the current conversion price of the 2025 Notes;

• for five consecutive business days, if the average trading price per $1,000 of Notes during the prior 10 consecutive trading days is less than 98 % of the product of our closing common stock price and the conversion rate of the 2025 Notes on such day;

• upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental changes (as defined in the indenture governing the 2025 Notes) or a transaction resulting in our common stock converting into other securities or property or assets.

On or after February 15, 2025, holders of the 2025 Notes may convert their 2025 Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2025 Notes.

In the event of default or a fundamental change (as defined above), holders of the 2025 Notes may require us to repurchase all or a portion of their 2025 Notes at price equal to 100 % of the principal amount of the 2025 Notes, plus any accrued and unpaid interest.

Effective January 1, 2022, we adopted ASU 2020-06 using a modified retrospective method, under which financial results reported in prior periods were not adjusted.

Prior to the adoption of ASU 2020-06, we separately accounted for the liability and equity components of the 2025 Notes by allocating the proceeds between the liability component and the embedded conversion option (“equity component”) due to our ability to settle the conversion obligation of the 2025 Notes in cash, common stock or a combination of cash and common stock, at our option.

The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using the income approach.

The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt.

The equity component of the 2025 Notes of $ 67.3 million was recognized as a debt discount and represents the difference between the proceeds from the issuance of the 2025 Notes and the fair value of the liability of

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the 2025 Notes on the date of issuance.

The excess of the principal amount of the liability component over its carrying amount (“debt discount”) was amortized to interest expense using the effective interest method over the term of the 2025 Notes.

The equity component was not remeasured as long as it continued to meet the conditions for equity classification.

Additionally, we separated the total issuance costs of $ 5.4 million incurred into liability and equity components in proportion to the allocation of the initial proceeds, resulting in liability issuance costs of $ 3.5 million and equity issuance costs of $ 1.9 million.

Issuance costs attributable to the liability component were amortized on a straight-line basis, which approximated the effective interest rate method, to interest expense over the term of the 2025 Notes.

The issuance costs attributable to the equity component were netted against the equity component in additional paid-in capital.

The annual effective interest rate of the liability component of the 2025 Notes was 8.87 %.

Upon adoption of ASU 2020-06 on January 1, 2022, we combined the liability and equity components of the 2025 Notes assuming that the instrument was accounted for as a single liability from inception to the date of adoption.

We similarly combined the liability and equity components of the issuance costs.

The issuance costs are presented as a deduction from the outstanding principal balance of the 2025 Notes and are amortized on a straight-line basis over the term of the 2025 Notes under the effective interest rate method.

Beginning January 1, 2022, the annual effective interest rate on the 2025 Notes is 2.88 %.

Our outstanding 2025 Notes balances consisted of the following:

The 2025 Notes were senior unsecured obligations and carried interest at a rate of 2.5 % per year, payable semi-annually in arrears on February 15 and August 15 of each year.

The 2025 Notes were convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election.

In June 2025, we elected to settle the 2025 Notes in shares.

Holders had the option to convert their 2025 Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

During June 2025, $ 0.5 million of the principal amount was converted into 28,962 shares of our common stock.

During August 2025, $ 192.0 million of the principal amount was converted into 11,119,956 shares of our common stock.

The remaining principal balance of $ 25,000 was fully paid in cash upon the maturity date in August 15, 2025 .

The annual effective interest rate on the 2025 Notes in 2025 up to its settlement was 2.90 %.

For the years ended December 31, 2024 and 2023, the annual effective interest rate on the 2025 Notes was 2.88 %.

Our 2025 Notes balances consisted of the following as of December 31, 2024:

(In thousands)

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In March 2022, we completed a private placement of $ 261.0 million aggregate principal amount of our 2028 Notes, which will mature on March 15, 2028 .

The proceeds include the 2028 Notes sold pursuant to the $ 45.0 million over-allotment option granted by us to the initial purchasers, of which $ 36.0 million was exercised.

The 2028 Notes were sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The net proceeds from the sale of the $ 261.0 million aggregate principal amount of 2028 Notes were approximately $ 252.6 million after deducting the initial purchasers’ discounts and commissions and our estimated offering expenses.

We used approximately $ 21.0 million of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below.

We used approximately $ 21.0 million of the net proceeds to fund the cost of entering into the capped call transactions described below.

In addition, we used $ 165.6 million of the remaining net proceeds to repurchase $ 144.8 million aggregate principal amount of the 2023 Notes in separate and individually negotiated transactions with certain holders of the 2023 Notes, which closed concurrently with the issuance of the 2028 Notes.

We expect to use the remaining net proceeds for general corporate purposes.

The 2028 Notes bear interest at an annual rate of 2.125 % that is payable semi-annually in arrears in cash on March 15 and September 15 of each year, beginning on September 15, 2022.

The 2028 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election.

The initial conversion rate was 38.1432 shares per $1,000 principal amount of the 2028 Notes, subject to customary anti-dilution adjustment in certain circumstances, which represented an initial conversion price of approximately $ 26.22 per share.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 2028 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election.

Prior to September 15, 2027, the 2028 Notes will be convertible at the option of the holders only upon the occurrence of specified events and during certain periods, and will be convertible on or after September 15, 2027, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2028 Notes.

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• upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental changes (as defined in the indenture governing the 2028 Notes) or a transaction resulting in our common stock converting into other securities or property or assets.

• upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the 2028 Notes) or a transaction resulting in our common stock converting into other securities or property or assets.

On or after September 15, 2027, holders of the 2028 Notes may convert their 2028 Notes at any time until the close of the business on the second day immediately preceding the maturity date of the 2028 Notes.

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The capped call transactions are expected generally to reduce potential dilution to our common stock upon conversion of the 2028 Notes or at our election (subject to certain conditions) offset any cash payments we are required to make in excess of the aggregate principal amount of converted 2028 Notes, as the case may be, with such reduction or offset subject to a cap.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The annual effective interest rate on the 2028 Notes is 2.70 %.

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Net carrying amount

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table sets forth total interest expense recognized related to the 2028 Notes for the years ended December 31, 2024, 2023, and from the issuance through December 31, 2022:

The following table sets forth total interest expense recognized related to the 2028 Notes for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

Date of Issuance Through

(In thousands)

December 31, 2022

Contractual interest expense

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Starting January 1, 2024, the maximum royalty rate was increased to 18 % based on the terms of the Agreement.

The La Jolla Royalty Agreement is subject to maximum aggr egate royalty payments to HCR of $ 225.0 million.

For the years ended December 31, 2024 and 2023, we recognized interest expense of $ 9.8 million and $ 6.5 million, respectively, on the deferred royalty obligation.

From the date of our acquisition of La Jolla through December 31, 2022, we recognized interest expense of $ 1.8 million on the deferred royalty obligation.

The La Jolla Royalty Agreement is subject to maximum aggregate royalty payments to HCR of $ 225.0 million.

For the years ended December 31, 2025, 2024 and 2023, we recognized interest expense of $ 6.3 million, $ 9.8 million and $ 6.5 million, respectively, on the deferred royalty obligation.

The carrying value of the deferred royalty obligation as of December 31, 2025 and 2024 was $ 62.2 million and $ 69.5 million, respectively, (refer to Note 9 “Balance Sheet Components ” ).

During the years ended December 31, 2024 and 2023, we made royalty payments to HCR of $ 9.1 million and $ 5.4 million, respectively.

From the date of acquisition of La Jolla through December 31, 2022, we made royalty payments to HCR of $ 1.0 million.

During the years ended December 31, 2025, 2024 and 2023, we made royalty payments to HCR of $ 12.8 million, $ 9.1 million and $ 5.4 million, respectively.

The deferred royalty obligation was valued using Level 3 inputs, and its carrying value as of December 31, 2025 and 2024 approximates fair value.

The fair value of the deferred royalty obligation was calculated as the discounted deferred royalty obligations based on risk-adjusted revenue projections for GIAPREZA ® .

As of December 31, 2025, the annual effective interest rate of the deferred royalty obligation is 10.03 %.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

value of the deferred royalty obligation was calculated as the discounted deferred royalty obligations based on revenue projections for GIAPREZA ® .

As of December 31, 2024, the annual effective interest rate of the deferred royalty obligation is 9.44 %.

Under the terms of the La Jolla Royalty Agreement, if we are unable to meet certain obligations, including the obligation to use commercially reasonable and diligent efforts to commercialize GIAPREZA ® , HCR would have the right to terminate the La Jolla Royalty Agreement and demand payment of either $ 125.0 million or $ 225.0 million (depending on which obligation we have failed to meet) less aggregate royalties already paid to HCR.

As of December 31, 2024, inclusive of the aggregate royalties paid to HCR by La Jolla under the La Jolla Royalty Agreement prior to our acquisition, La Jolla paid $ 27.2 million of aggregate royalties to HCR.

As of December 31, 2025, inclusive of the aggregate royalties paid to HCR by La Jolla under the La Jolla Royalty Agreement prior to our acquisition, La Jolla paid approximately $ 40.0 million of aggregate royalties to HCR.

In the event that we fail to pay such amount if and when due in a timely manner, HCR would have the right to foreclose on the GIAPREZA ® -related assets.

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We estimate the fair value of the embedded derivatives for each reporting period until either the features lapse or the La Jolla Royalty Agreement is terminated, whichever occurs first.

Any material change in the fair value of the embedded derivatives will be recorded as either a gain or loss in the consolidated statements of income.

Any material change in the fair value of the embedded derivatives will be recorded as either a gain or loss in the consolidated statements of income and comprehensive income.

COMMITMENTS AND CONTINGENCIES

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Our operating leases include a facility lease consisting of 15,500 square feet of office space in Waltham, Massachusetts, which expires in March 2029 .

In November 2025, we entered into an operating lease for approximately 22,881 square feet of office and laboratory space in Lexington, Massachusetts, which expires in April 2036 .

We have the option to terminate this lease, for an early termination fee, before May 2029.

The components of lease costs are as follows:

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for operating lease obligations

Right-of-use assets obtained through acquisitions

As of December 31, 2025, our operating leases have weighted-average remaining term of approximately 9.6 years and the weighted-average discount rate on our operating lease liabilities was 5.3 %.

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Under the agreement, we committed to minimum purchase commitments through December 31, 2027.

As of December 31, 2024, we have approximately $ 6.7 million U.S.

dollar equivalent in outstanding purchase commitments under the agreement for the year 2024, which will be utilized in early 2025.

We also have approximately $ 6.5 million, $ 7.3 million and $ 5.9 million U.S.

We have approximately $ 7.3 million and $ 5.9 million U.S.

dollar equivalent in purchase commitments under the agreement for the years 2026 and 2027, respectively.

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On November 14, 2023, La Jolla filed a Third Amended Complaint adding additional infringement claims against the Fresenius Kabi Defendants.

On February 18, 2025, La Jolla, as well as The George Washington University (collectively, with the La Jolla entities, the “Plaintiffs”) entered into a settlement agreement (the “Settlement Agreement”) with Gland and the Fresenius Kabi Defendants

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(collectively, “Defendants”) resolving the Hatch-Waxman Act concerning Gland’s ANDA filing.

Under the terms of the Settlement Agreement, Plaintiffs granted Defendants a perpetual, royalty-free and fully paid-up, non-exclusive, non-sublicensable, non-transferable right and license solely to make, have made, use, sell, offer to sell, import, and/or distribute the product that is subject to Gland’s ANDA in the United States commencing in the early 2030s, subject to certain exceptions as is customary in these type of agreements.

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In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees.

No material demands have been made upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect in our consolidated financial statements.

No material demands have been made upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our consolidated financial statements.

We also maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors.

To date, we have not incurred any material costs and, as of December 31, 2024, we have not accrued any liabilities in the consolidated financial statements as a result of these provisions.

To date, we have not incurred any material costs and, as of December 31, 2025, we have no t accrued any liabilities in the consolidated financial statements as a result of these provisions.

ASSET ACQUISITION

In September 2025 , we entered into an Asset Purchase Agreement with Lyndra to acquire the IPR&D and certain fixed assets related to its Lynx long-acting drug delivery platform.

We made an upfront cash payment of $ 10.2 million and incurred $ 0.3 million in direct transaction costs.

We are also obligated to pay up to $ 20.0 million upon the achievement of certain development, regulatory and sales milestone payments, as well as royalties in a low single-digit percentage on future net sales of the first approved therapeutic product.

Based on the qualitative and quantitative assessments performed under ASC 805, Business Combinations , we concluded that the set of assets acquired did not meet the definition of a business and, therefore, accounted for the transaction as an asset acquisition.

The assets acquired in the transaction were recorded at their allocated costs based on their relative fair values.

The allocated cost of the IPR&D acquired was $ 9.4 million, which was charged to research and development expense as it had no alternative future use at the time of the acquisition.

The allocated cost of the fixed assets, which consist of laboratory equipment, was $ 1.1 million and was capitalized within property and equipment.

The fixed assets have not been placed in service and, therefore, no depreciation has been recognized as of December 31, 2025.

The components of income before provision for income taxes are as follows:

Year Ended December 31,

Income before provision for income taxes

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income tax expense consists of the following:

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Total income tax expense, net

The impacts of the differences between the expected U.S.

federal statutory income tax to our income tax expense are as follows:

We adopted ASU 2023-09 on a prospective basis beginning with the year ended December 31, 2025.

The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S.

federal statutory tax amount and rate to our actual global effective amount and rate of the year ended December 31, 2025 :

Year Ended December 31,

(In thousands)

federal tax at statutory rate

State and local effects (1)

Foreign tax effects

Other - Withholding taxes

Enactment of new tax laws

Cross-border tax laws

Foreign-derived intangible income

Foreign tax credit

Research and development credit

Change in valuation allowance

Nontaxable or nondeductible items

Changes in unrecognized tax benefits

Other adjustments

Effective tax rate

(1) For tax year 2025, state taxes in Kentucky made up the majority (greater than 50 percent) of the tax effect in this category.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

Year Ended December 31,

(In thousands)

Expected tax at federal statutory rate

State income tax expense (benefit), net of federal benefit

State income tax expense, net of federal benefit

Federal and state research credits

Foreign derived intangible income deduction

Noncontrolling interest

Impact of consolidation and deconsolidation of subsidiaries

Section 250 deduction

Change in valuation allowance

Total income tax expense, net

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the income taxes paid (net of any refunds received) for the year ended December 31, 2025 in accordance with the new guidance in ASU No.

Year Ended December 31,

(In thousands)

State and local jurisdiction

Net cash paid for income taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

4 unchanged sentences

Research and development tax credit carryforwards

Unrealized loss on investment, net

Unrealized losses on investment, net

Deferred royalty obligation, net

Accruals and reserves

Total deferred tax assets before valuation allowance

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Depreciation and amortization

Unrealized gain on investment, net

Unrealized gains on investment, net

Inventory fair value adjustment

Net deferred tax assets (liabilities)

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We record deferred tax assets if the realization of such assets is more likely than not to occur.

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• level of profitability on a quarterly basis.

As of December 31, 2024 , we had federal net operating loss carryforwards of approximately $ 520.6 million , $ 456.5 million of which do not expire.

As of December 31, 2024, we also had state net operating loss carryforwards of approximately $ 1.0 billion , which will expire beginning 2030 and state research tax credits of approximately $ 33.3 million , which do not expire.

As of December 31, 2025 , we had federal net operating loss carryforwards of approximately $ 497.7 million , $ 448.2 of which do not expire.

We also had state net operating loss carryforwards of approximately $ 1,028.9 million , which will expire beginning 2030 , and state research tax credits of approximately $ 33.6 million, which will expire beginning 2033 .

Utilization of net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar state provisions.

Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized.

We conducted an Internal Revenue Code of 1986, as amended, Section 382 (“Section 382”) analysis of the Company through December 31, 2024 to determine whether an ownership change had occurred since inception.

We conducted an Internal Revenue Code of 1986, as amended, Section 382 (“Section 382”) analysis through December 31, 2025 to determine whether an ownership change had occurred since inception.

The Section 382 study concluded that it is more likely than not that the Company did not experience an ownership change during the testing period.

If we ever undergo an ownership change, the utilization of the pre-ownership change net operating loss carryforwards or pre-ownership change tax attributes, such as research tax credits, to offset the post-ownership change income may be subject to an annual limitation, pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.

However, notwithstanding the applicable annual limitations, no portion of the net operating loss or credit carryforwards is expected to expire before becoming available to reduce federal and state income tax liabilities as a result of those identified ownership changes.

If we undergo an ownership change, the utilization of the pre-ownership change net operating loss carryforwards or pre-ownership change tax attributes, such as research tax credits, to offset the post-ownership change income may be subject to an annual limitation, pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.

Similar rules may apply under state tax laws.

As of December 31, 2025, $ 146.5 million of Entasis’ federal net operating losses and $ 351.2 million of La Jolla’s federal operating losses from the acquisitions in 2022, both subject to annual limitations, were available for future utilization.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

As of December 31, 2024 and 2023, we had no accrued interest or penalties due to the Company ’s net operating losses available to offset any tax adjustments.

We do not have any tax positions for which a significant change in the total amount of gross unrecognized tax benefits is reasonably possible within 12 months of December 31, 2024.

As of December 31, 2025 and 2024, we have accrued interest or penalties of $ 3.3 million and $ 0.4 million, respectively

Uncertain Tax Positions

6 unchanged sentences

Unrecognized tax benefits as of December 31, 2024

Net increase in tax portions for 2024

Net increase in tax portion for 2025

Unrecognized tax benefits as of December 31, 2025

The increase of $ 41.9 million in 2024 was primarily due to our strategic intercompany intellectual property alignment across different jurisdictions.

We are subject to taxation in the U.S.

and various state and foreign jurisdictions.

and various state jurisdictions.

The tax years 2006 through 2013, 2015 and forward remain open to examination by the federal and most state tax authorities due to net operating loss and overall credit carryforward positions.

We are not currently subject to any income tax audits by federal or state taxing authorities.

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“BEPS Pillar Two”), and various governments around the world have enacted, or are in the process of enacting legislation.

We are in the process of evaluating whether and when these new rules may come into effect and apply to us, including the eligibility to qualify for safe harbor rules .

We plan to treat the tax if any as a period cost.

We do not believe that the Pillar Two rules apply to us yet.

As such, the potential future quantitative impact of the enacted or substantively enacted legislation is not yet reasonably estimable.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SEGMENT REPORTING

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Our revenues are generated primarily from our collaborative arrangements and royalty payments from GSK, located in Great Britain.

We also generate revenue from net product sales of GIAPREZA ® , XERAVA ® , and XACDURO ® , as well as license and other revenues.

We also generate revenue from net product sales of GIAPREZA ® , XACDURO ® , XERAVA ® and ZEVTERA ® , as well as license and other revenues.

Refer to Note 3, “Revenue Recognition”, for more information on our revenues for the periods presented.

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The CODM does not review assets at a different level or category than the amounts disclosed in the consolidated balance sheets.

INNOVIVA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below presents the financial information used by the CODM to assess performance, which reconcile to the consolidated net income:

2 unchanged sentences

Total revenue

Cost of products sold - U.S.

Cost of products sold - Rest of the world

Cost of products sold - Amortization of inventory fair value adjustments

Cost of products sold

Cost of license revenue

Amortization of acquired intangible assets

Selling and marketing

General and administrative

Research and development - External services

Research and development - External services and expenses

Research and development - Internal expenses

Amortization of acquired intangible assets

Research and development - Acquired IPR&D

Changes in fair values of equity method investments, net

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Interest expense

Gain on sale of TRC

Loss on extinguishment of debt

Other expense, net

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We have audited the accompanying consolidated balance sheets of Innoviva, Inc.

and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiaries (the “Company”) as of December 31, 2025 and December 31, 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and December 31, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2026, expressed an unqualified opinion on company’s internal control over financial reporting.

Basis for Opinion

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data