Innoviva, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 97 Consolidated Statements of Income and Comprehensive Income for each of the three years in the period ended December 31, 2025 98 Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2025 99 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2025 100 Notes to Consolidated Financial Statements 102 Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 143 96 Table of Contents INNOVIVA, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 550,941 $ 304,964 Accounts receivable 34,966 20,392 Receivable from collaboration arrangements 58,351 65,974 Inventory 39,172 33,725 Prepaid expenses 26,721 21,063 Current portion of ISP Fund investments (Note 5) 15,727 107,532 Other current assets 1,637 656 Total current assets 727,515 554,306 Property and equipment, net 1,555 514 Equity method investments 193,726 52,293 Equity and long-term investments 404,497 341,664 Capitalized fees paid, net 56,138 69,961 Right-of-use assets 10,929 2,453 Goodwill 17,905 17,905 Intangible assets 182,156 208,433 Deferred tax assets, net — 12,054 Other assets 40,744 41,477 Total assets $ 1,635,165 $ 1,301,060 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 4,966 $ 2,132 Accrued personnel-related expenses 9,100 7,376 Accrued interest payable 1,618 3,422 Deferred revenue 4,270 1,126 Income tax payable 274 — Convertible notes, due 2025, net of issuance costs — 192,028 Other accrued liabilities 29,468 29,999 Total current liabilities 49,696 236,083 Long-term debt, net of discount and issuance costs 257,731 256,316 Other long-term liabilities 66,091 64,275 Deferred tax liabilities, net 31,793 — Income tax payable, long-term 57,013 53,227 Commitments and contingencies (Note 13) Stockholders’ equity: Preferred stock: $ 0.01 par value, 230 shares authorized, no shares issued and outstanding — — Common stock: $ 0.01 par value, 200,000 shares authorized, 74,636 and 62,665 issued and outstanding as of December 31, 2025 and 2024 respectively 747 627 Additional paid-in capital 902,726 692,329 Retained earnings (accumulated deficit) 269,368 ( 1,797 ) Total stockholders’ equity 1,172,841 691,159 Total liabilities and stockholders’ equity $ 1,635,165 $ 1,301,060 See accompanying notes to consolidated financial statements. 97 Table of Contents INNOVIVA, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (In thousands, except per share data) Year Ended December 31, 2025 2024 2023 Revenue: Royalty revenue, net of amortization of capitalized fees paid of $ 13,823 in each of the years ended December 31, 2025, 2024 and 2023 $ 236,479 $ 241,733 $ 238,846 Net product sales 172,130 97,492 60,617 License and other revenue 2,719 19,486 11,000 Total revenue 411,328 358,711 310,463 Cost of products sold (inclusive of amortization of inventory fair value adjustments, excluding amortization of intangible assets) 77,384 36,598 41,040 Cost of license revenue — — 1,600 Amortization of acquired intangible assets 26,277 25,902 21,784 Gross profit 307,667 296,211 246,039 Operating expenses: Selling, general and administrative 113,318 115,690 98,232 Research and development 30,604 13,654 33,922 Total operating expenses 143,922 129,344 132,154 Income from operations 163,745 166,867 113,885 Changes in fair values of equity method investments, net 141,433 ( 64,253 ) 77,392 Changes in fair values of equity and long-term investments, net 20,160 ( 59,161 ) 11,129 Interest and dividend income 21,086 19,141 15,818 Interest expense ( 16,698 ) ( 22,209 ) ( 19,157 ) Other expense, net ( 2,864 ) ( 2,997 ) ( 4,969 ) Income before income taxes 326,862 37,388 194,098 Income tax expense, net ( 55,697 ) ( 13,996 ) ( 14,376 ) Net income and comprehensive income $ 271,165 $ 23,392 $ 179,722 Net income per share: Basic $ 4.02 $ 0.37 $ 2.75 Diluted $ 3.30 $ 0.36 $ 2.20 Shares used to compute net income per share: Basic 67,395 62,726 65,435 Diluted 84,760 74,187 86,876 See accompanying notes to consolidated financial statements. 98 Table of Contents INNOVIVA, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Additional Retained Earnings Total Common Stock Paid-In (Accumulated Treasury Stock Stockholders’ Shares Amount Capital Deficit) Shares Amount Equity Balance as of December 31, 2022 69,188 $ 692 $ 1,163,836 $ ( 204,911 ) 32,005 $ ( 393,829 ) $ 565,788 Exercise of stock options and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding 293 3 89 — — — 92 Repurchase of common stock, including accrued excise tax ( 6,174 ) ( 62 ) ( 76,422 ) — — — ( 76,484 ) Stock-based compensation — — 5,837 — — — 5,837 Net income — — — 179,722 — — 179,722 Balance as of December 31, 2023 63,307 $ 633 $ 1,093,340 $ ( 25,189 ) 32,005 $ ( 393,829 ) $ 674,955 Exercise of stock options and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding 345 3 1,321 — — — 1,324 Repurchase of common stock, including accrued excise tax ( 987 ) ( 9 ) ( 14,916 ) — — — ( 14,925 ) Accrued excise tax on common stock repurchase applied against tax liability — — 39 — — — 39 Stock-based compensation — — 6,374 — — — 6,374 Retirement of treasury stock — — ( 393,829 ) — ( 32,005 ) 393,829 — Net income — — — 23,392 — — 23,392 Balance as of December 31, 2024 62,665 $ 627 $ 692,329 $ ( 1,797 ) — $ — $ 691,159 Exercise of stock options and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding 459 5 2,405 — — — 2,410 Repurchase of common stock, including accrued excise tax ( 228 ) ( 2 ) ( 4,575 ) — — — ( 4,577 ) Accrued excise tax on common stock repurchase applied against tax liability — — 59 — — — 59 Conversion of 2025 Notes to common stock 11,149 111 192,364 — — — 192,475 Exercise of warrants 591 6 10,692 — — — 10,698 Stock-based compensation — — 9,452 — — — 9,452 Net income — — — 271,165 — — 271,165 Balance as of December 31, 2025 74,636 $ 747 $ 902,726 $ 269,368 — $ — $ 1,172,841 See accompanying notes to consolidated financial statements. 99 Table of Contents INNOVIVA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities Net income $ 271,165 $ 23,392 $ 179,722 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes 43,847 ( 12,617 ) 4,400 Amortization of capitalized fees and depreciation of property and equipment 13,951 13,951 13,921 Amortization of acquired intangible assets 26,277 25,902 21,784 Inventory fair value step-up adjustment included in cost of products sold 4,841 13,820 27,164 Stock-based compensation 9,452 6,374 5,837 Amortization of debt discount and issuance costs 1,887 2,110 2,065 Changes in fair values of equity method investments, net ( 141,433 ) 64,253 ( 77,392 ) Changes in fair values of equity and long-term investments, net ( 20,160 ) 59,161 ( 11,129 ) Acquired in-process research and development assets 9,368 — — Other non-cash items 1,897 ( 722 ) ( 517 ) Changes in operating assets and liabilities: Accounts receivable ( 14,574 ) ( 5,938 ) ( 5,053 ) Receivables from collaboration arrangements 7,623 3,647 ( 14,949 ) Inventory ( 12,919 ) ( 6,808 ) ( 12,004 ) Prepaid expenses ( 5,658 ) 567 7,929 Other assets ( 1,078 ) ( 38,186 ) ( 2,965 ) Accounts payable 2,834 ( 4,585 ) 3,778 Accrued personnel-related expenses and other accrued liabilities ( 5,790 ) 3,044 ( 1,498 ) Accrued interest payable ( 1,804 ) — ( 937 ) Deferred revenue 3,144 ( 151 ) ( 817 ) Income tax payable 4,060 41,476 1,725 Net cash provided by operating activities 196,930 188,690 141,064 Cash flows from investing activities Acquisition of intangible asset — ( 4,000 ) — Purchases of trading securities ( 60,899 ) ( 59,617 ) ( 65,132 ) Proceeds from trading securities 8,427 — — Purchases of equity and long-term investments ( 17,500 ) — ( 1,218 ) Purchases of equity investments managed by ISP Fund LP — ( 32,270 ) ( 31,164 ) Sales of equity investments managed by ISP Fund LP 28,164 75,756 72,500 Purchases and sales of other investments managed by ISP Fund LP, net 92,791 ( 43,486 ) ( 41,336 ) Cash paid for acquired in-process research and development assets ( 9,368 ) — — Purchases of property and equipment ( 1,131 ) ( 270 ) ( 411 ) Sale of property and equipment 12 101 — Net cash provided by (used in) investing activities 40,496 ( 63,786 ) ( 66,761 ) Cash flows from financing activities Repurchase of common stock ( 4,532 ) ( 14,777 ) ( 75,728 ) Repurchase of shares to satisfy tax withholding ( 143 ) ( 142 ) ( 77 ) Proceeds from issuances of common stock, net 2,553 1,466 170 Proceeds from exercise of warrants 10,698 — — Payment for repurchase of convertible subordinated notes due 2023 — — ( 96,204 ) Payment for repurchase of convertible senior notes due 2025 ( 25 ) — — Net cash provided by (used in) financing activities 8,551 ( 13,453 ) ( 171,839 ) Net increase (decrease) in cash and cash equivalents 245,977 111,451 ( 97,536 ) Cash and cash equivalents at beginning of period 304,964 193,513 291,049 Cash and cash equivalents at end of period $ 550,941 $ 304,964 $ 193,513 100 Table of Contents Year Ended December 31, 2025 2024 2023 Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ 10,353 $ 10,359 $ 11,381 Cash paid for income taxes $ 19,113 $ 11,793 $ — Supplemental Disclosure of Non-cash Investing and Financing Activities: 2025 Notes converted to common stock $ 192,475 $ — $ — Accrued interest income converted to long-term investments $ 830 $ 3,584 $ 2,666 See accompanying notes to consolidated financial statements. 101 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Operations Innoviva, Inc. (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. 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”). 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: 15 % on the first $ 3.0 billion of annual global net sales and 5 % for all annual global net sales above $ 3.0 billion; and royalties from the sales of ANORO ® ELLIPTA ® , which tier upward at a range from 6.5 % to 10 %. 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; and • 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 The accompanying consolidated financial statements include the accounts of Innoviva, our wholly owned subsidiaries and certain variable interest entities (“VIE”) for which we are the primary beneficiary. 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 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 The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Management evaluates its significant accounting policies and estimates on an ongoing basis. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances. These estimates also form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Concentrations of Credit Risk and of Significant Suppliers and Partners Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and equity and long-term investments. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits. 102 Table of Contents 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 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 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 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 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; • 31 %, 24 % and 24 %, respectively, of our net product sales for the year ended December 31, 2024; and, • 31 %; 27 % and 27 %, respectively, of our net product sales for the year ended 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 Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. Refer to Note 16, “Segment Reporting”, for more segment information. Variable Interest Entities 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. To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all the facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes identifying the activities that most significantly impact the VIE’s economic performance and identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE (management and representation on the Board of Directors) and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE. To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests that are deemed to be variable interests in the VIE. This assessment requires us to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. 103 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Cash and Cash Equivalents We consider all highly liquid investments purchased with a maturity of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. Accounts Receivable Accounts receivable are recorded net of estimates for prompt-pay discounts, chargebacks, returns and rebates. Allowances for prompt-pay discounts and chargebacks are based on contractual terms. We estimate the allowance for credit losses based on existing contractual payment terms, actual payment patterns of customers and individual customer circumstances. Inventory Inventory is stated at the lower of cost or estimated net realizable value on a first-in, first-out basis. We periodically analyze inventory levels and write down inventory as cost of products sold when the following occurs: 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. Property and Equipment 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 Shorter of remaining lease terms or useful life Laboratory equipment, furniture and fixtures 5 – 7 years Software and computer equipment 3 years Equity and Long-Term Investments We invest from time to time in equity and debt securities of private or public companies. If we determine that we have control over these companies under either voting or VIE models, we consolidate them in our consolidated financial statements. If we determine that we do not have control over these companies under either voting or VIE models, we then determine if we have an ability to exercise significant influence via voting interests, board representation or other business relationships. We may account for the investments where we exercise significant influence using either an equity method of accounting or at fair value by electing the fair value option under Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments . 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 and comprehensive income. 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. 104 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy: Level 1 —Quoted prices for identical instruments in active markets. Level 2 —Quoted prices for similar instruments in active markets; quoted prices for identical 3or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 —Unobservable inputs and little, if any, market activity for the assets. Financial instruments include cash equivalents, accounts receivable, receivables from collaborative arrangements, accounts payable, and accrued liabilities, equity investments and convertible promissory notes. The carrying values of cash equivalents, receivables from collaborative arrangements, accounts payable, and accrued liabilities approximate their estimated fair values due to the relatively short-term nature of these instruments. Capitalized Fees Paid We capitalize fees paid to licensors related to agreements for approved products or commercialized products. We capitalize these fees as capitalized fees paid (“Capitalized Fees”) and amortize them on a straight-line basis over their estimated useful lives upon the commercial launch of the product, shortly after its regulatory approval. The estimated useful lives of these Capitalized Fees are determined on a country-by-country and product-by-product basis, as the later of the expiration or termination of the last patent right covering the compound in such product in such country and 15 years from first commercial sale of such product in such country, unless the Collaboration Agreement is terminated earlier. Consistent with our policy for classification of costs under the research and development collaborative arrangements, the amortization of these Capitalized Fees is recognized as a reduction of royalty revenue. We review our Capitalized Fees for impairment on a product-by-product basis for each major geographic area when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of Capitalized Fees is measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate. The determination of recoverability typically requires various estimates and assumptions, including estimating the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. We derive the required cash flow estimates from near-term forecasted product sales and long-term projected sales in the corresponding market. Goodwill and Intangible Assets 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. 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. 105 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Operating Leases Right-of-use assets represent our right to use an underlying asset over the lease term and include any lease payments made prior to the lease commencement date and are reduced by lease incentives. Lease liabilities represent the present value of the total lease payments over the lease term, calculated using an estimated incremental borrowing rate. Lease expense is recognized on a straight-line basis over the expected lease term. Revenue Recognition 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 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. Revenue is recognized through a five-step process: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price for the contract; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue as a performance obligation is satisfied. Royalty Revenue 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 Revenue from product sales is recognized when our customers obtain control of the product and is recorded at the transaction price, net of estimates for variable consideration consisting of chargebacks, discounts, returns and rebates. Variable consideration is estimated using the expected-value amount method, which is the sum of probability-weighted amounts in a range of possible consideration amounts. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary materially from our estimates, we will adjust these estimates, which will affect revenue from product sales and earnings in the period such estimates are adjusted. These items may include: • Chargebacks: Chargebacks are discounts we provide to distributors in the event that the sales prices to end users are below the distributors’ acquisition price. This may occur due to a direct contract with a health system, a group purchasing organization (“GPO”) agreement or a sale to a government facility. Chargebacks are estimated based on known chargeback rates and recorded as a reduction of revenue on delivery to our customers. • Discounts: We offer customers various forms of incentives and consideration, including prompt-pay and other discounts. We estimate discounts primarily based on contractual terms. These discounts are recorded as a reduction of revenue on delivery to our customers. • Returns: 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. • Rebates: 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. 106 Table of Contents 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 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. If the performance obligation is satisfied over time, we use judgment in determining the appropriate method of measuring progress for purposes of recognizing revenue. 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 Research and development expenses are recognized in the period that services are rendered or goods are received. Research and development expenses consist of salaries and benefits, laboratory supplies, facilities and other overhead costs, research-related manufacturing costs, contract service and clinical-related service costs performed by third party research organizations, research institutions and other outside service providers. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the related services are performed. We also utilize significant judgment and estimates to record accruals for estimated ongoing research costs based on the progress of the studies and progress of research manufacturing activities. Interest Expense on Deferred Royalty Obligation Interest expense related to the deferred royalty obligation is recognized over the expected repayment term of the deferred royalty obligation using the effective interest method. The assumptions used in determining the expected repayment term of the deferred royalty obligation require us to make estimates that could impact the effective interest rate. Each reporting period, we estimate the expected repayment term of the deferred royalty obligation based on forecasted net sales of GIAPREZA ® . Changes in interest expense resulting from changes in the effective interest rate, if any, are recorded on a prospective basis. Refer to Note 12, “Debt”, for more information. 107 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fair Value of Stock‑Based Compensation Awards We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our employee stock purchase plan (“ESPP”). The Black-Scholes-Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. We use the “simplified” method as described in Staff Accounting Bulletin No. 107, “ Share-Based Payment ,” for the expected option term. We use our historical volatility to estimate expected stock price volatility. Restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are measured based on the fair market values of the underlying stock on the dates of grant. Stock-based compensation expense is calculated based on awards ultimately expected to vest and is reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. Our estimated annual forfeiture rates for stock options, RSUs and RSAs are based on our historical forfeiture experience. The estimated fair value of stock options, RSUs and RSAs is expensed on a ratable or straight-line basis over the expected term of the grant or expected term of the vesting. Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable that the shares awarded are expected to vest. 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. Income Taxes We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The recognition and measurement of tax benefits requires significant judgment. Our judgment might change as new information becomes available. We continue to evaluate our deferred tax assets each reporting period to determine whether adjustments to our valuation allowance are required and deferred tax assets will be realized based on the consideration of all available positive and negative evidence, including the differences between our anticipated and actual future operating results, using a “more likely than not” standard. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we determine whether the factors underlying the sustainability assertion have changed and whether the amount of the recognized tax benefit is still appropriate. Related Parties 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 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. 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.” 108 Table of Contents 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. ASU 2024-03 is effective for the Company in annual reporting periods beginning after December 15, 2027, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the potential impact that ASU 2024-03 may have on our financial statement disclosures. In November 2024, the FASB issued ASU 2024-04, Debt — Debt with Conversion and Other Options (Subtopic 470-20), which clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. 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. 2. 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. 109 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, (In thousands except per share data) 2025 2024 2023 Numerator: Net income, basic $ 271,165 $ 23,392 $ 179,722 Add: interest expense on 2023 Notes, net of tax effect — — 89 Add: interest expense on 2025 Notes, net of tax effect 2,882 3,468 5,116 Add: interest expense on 2028 Notes, net of tax effect 5,776 — 6,377 Net income, diluted $ 279,823 $ 26,860 $ 191,304 Denominator: Weighted-average shares used to compute basic net income per share 67,395 62,726 65,435 Dilutive effect of 2023 Notes — — 187 Dilutive effect of 2025 Notes 6,900 11,150 11,150 Dilutive effect of 2028 Notes 9,955 — 9,955 Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan 491 311 149 Dilutive effect of outstanding warrant 19 — — Weighted-average shares used to compute diluted net income per share 84,760 74,187 86,876 Net income per share Basic $ 4.02 $ 0.37 $ 2.75 Diluted $ 3.30 $ 0.36 $ 2.20 Anti‑dilutive Securities The following common stock equivalents were not included in the computation of diluted net income per share because their effect was anti‑dilutive for the periods presented: Year Ended December 31, (In thousands) 2025 2024 2023 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,535 1,196 1,333 Outstanding stock warrant — 591 591 Outstanding 2028 Notes — 9,955 — Total 1,535 11,742 1,924 110 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. REVENUE RECOGNITION Net Revenue from Collaboration Arrangement 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: Year Ended December 31, (In thousands) 2025 2024 2023 Royalties – RELVAR/BREO $ 204,021 $ 207,925 $ 208,042 Royalties – ANORO 46,281 47,631 44,627 Total royalties 250,302 255,556 252,669 Less: amortization of capitalized fees paid ( 13,823 ) ( 13,823 ) ( 13,823 ) Total royalty revenue $ 236,479 $ 241,733 $ 238,846 LABA Collaboration As a result of the launch and approval of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® in the U.S., Japan and Europe, we paid milestone fees to GSK totaling $ 220.0 million during the year ended December 31, 2014. The milestone fees paid to GSK were recognized as capitalized fees paid, which are being amortized over their estimated useful lives commencing upon the commercial launch of the product. The amortization is recorded as a reduction to the royalties from GSK. We are entitled to receive annual royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® as follows: 15 % on the first $ 3.0 billion of annual global net sales and 5 % for all annual global net sales above $ 3.0 billion. Sales of single‑agent LABA medicines and combination medicines would be combined for the purposes of this royalty calculation. 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 %. Net Product Sales Total net product sales were as follows: Year Ended December 31, (In thousands) 2025 2024 2023 GIAPREZA ® $ 73,611 $ 55,037 $ 41,294 XACDURO ® 74,393 21,070 2,003 XERAVA ® 23,516 21,385 17,320 ZEVTERA ® 610 — — Total net product sales $ 172,130 $ 97,492 $ 60,617 We derived our net product sales: • approximately 69 % from customers located in the U.S. and 31 % from the rest of the world for the year ended December 31, 2025; • approximately 83 % from customers located in the U.S. and 17 % from the rest of the world for the year ended December 31, 2024; and, • approximately 91 % from customers located in the U.S. 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 and the Grant Agreement with Gates Foundation in Note 4, “License, Collaboration and Other Arrangements”. 111 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. LICENSE, COLLABORATION AND OTHER ARRANGEMENTS Out-License Agreements Zai Lab 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 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 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 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. 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 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. 112 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) GARDP 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 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. We retained commercial rights in all other countries worldwide, including the major markets in North America, Europe and Asia-Pacific. We also retained the right to use and grant licenses to our zoliflodacin technology to perform our obligations under the GARDP Collaboration Agreement and for any purpose other than gonorrhea or community-acquired indications. If we believe that the results of the Phase 3 registrational trial of zoliflodacin would be supportive of an application for marketing approval, we are obligated to use our best efforts to file an application for marketing approval with the FDA within six months of the completion of the trial and to use commercially reasonable endeavors to file an application for marketing approval with the European Medicines Agency (“EMA”). Each party is responsible for using commercially reasonable efforts to obtain marketing authorizations for the product candidate in their respective territories. 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 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 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. 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 Pursuant to the Everest Medicines Limited (“Everest”) License, La Jolla granted Everest an exclusive license to develop and commercialize XERAVA ® for the treatment of complicated intra-abdominal infections (“cIAI”) and other indications in mainland China, Taiwan, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines (collectively, the “Everest Territory”). Under the Everest License, we recognized $ 8.0 million in license revenue for the year ended December 31, 2023 as a result of an achievement of a regulatory milestone during the period. We are eligible to receive additional sales milestone payments of up to an aggregate of $ 20.0 million. 113 Table of Contents 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. Royalties are payable with respect to each jurisdiction in the Everest Territory until the latest to occur of: (i) the last-to-expire of specified patent rights in such jurisdiction in the Everest Territory; (ii) expiration of marketing or regulatory exclusivity in such jurisdiction in the Everest Territory; 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, 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. 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 Basilea 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 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 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 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 Pursuant to the Harvard University (“Harvard”) License, Harvard exclusively licensed to La Jolla certain intellectual property rights relating to tetracycline-based products, including XERAVA ® , including the exclusive rights to certain issued patents and patent applications covering such products. Under the Harvard License, we are obligated to use commercially reasonable efforts to develop, commercialize, market and sell tetracycline-based products, including XERAVA ® . For each product covered by the Harvard License, we are obligated to make certain payments for the following: (i) up to approximately $ 15.1 million upon the achievement of certain clinical development and regulatory milestones; (ii) a 5 % royalty on direct U.S. net sales of XERAVA ® ; (iii) a single-digit tiered royalty on direct ex-U.S. net sales of XERAVA ® , starting at a minimum royalty rate of 4.5 %, with step-ups to a maximum royalty of 7.5 % based on the achievement of annual net product sales thresholds; and (iv) 20 % on payments received from sublicensees. The obligation to pay royalties under this agreement extends through the last-to-expire patent covering tetracycline-based products, including XERAVA ® . 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. 114 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Business Transfer and Subscription Agreement with AstraZeneca Entasis entered into a Business Transfer and Subscription Agreement with AstraZeneca, AstraZeneca UK Limited and AstraZeneca Pharmaceuticals LP (collectively, “AstraZeneca”) (the “AstraZeneca Agreement”) in 2015, which was amended and restated through 2018, pursuant to which Entasis obtained, among other things, worldwide rights to durlobactam and zoliflodacin. Under the AstraZeneca Agreement, we are obligated to pay AstraZeneca a one-time milestone payment of $ 5.0 million within three months of achieving a specified cumulative net sales milestone for durlobactam. 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 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 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. (“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 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. 5. CONSOLIDATED ENTITY ISP Fund LP 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. The Partnership Agreement provides for Sarissa Capital to receive management fees from the Partnership, payable quarterly in advance, measured based on the Net Asset Value of Strategic Partners’ capital account in the Partnership. In addition, General Partner is entitled to an annual performance fee based on the Net Profits of the Partnership during the annual measurement period. 115 Table of Contents 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. ISP Fund LP is determined to be an investment company under ASC 946, Financial Services – Investment Companies , as it meets all fundamental characteristics of an investment company, and its activities are consistent with those of an investment company. Since ISP Fund LP is subject to investment company industry specific guidance, we have retained the industry-specific guidance applied by the Partnership. 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. 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, 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. 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 statements of income and comprehensive 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 statements of income and comprehensive income. The following is a summary of individual investments held by ISP Fund at each balance sheet date: December 31, In thousands 2025 2024 Common stock - Publicly traded healthcare companies United States $ 52,392 $ 84,039 United Kingdom 8,874 1,989 Total common stock 61,266 86,028 Preferred stock - Privately held healthcare companies United States 2,748 53,591 Warrants - Privately held healthcare companies — 8,507 Money market fund and cash 15,727 107,532 Total investments held by ISP Fund LP $ 79,741 $ 255,658 6. EQUITY AND LONG-TERM INVESTMENTS AND FAIR VALUE MEASUREMENTS Equity and Other Investments in Armata 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. 116 Table of Contents 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. 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. 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. 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. Pursuant to the Credit Agreement, the balance on the Armata Convertible Note, including all accrued and unpaid interest thereon, will convert into shares of Armata ’s common stock upon the occurrence of a qualified financing, as defined in the Credit Agreement. Any portion of the balance on the Armata Convertible Note, including all accrued and unpaid interest thereon, may also be converted into shares of Armata’ s common stock at our option once a registration statement covering the resale of such securities has been declared effective by the SEC. The Armata Convertible Note is secured by substantially all of the assets of Armata and its domestic and foreign material subsidiaries. On July 10, 2023, ISO and Armata executed an amendment to the Armata Convertible Note extending the maturity date from January 10, 2024 to January 10, 2025 . On November 12, 2024, ISO and Armata executed an amendment to the Armata Convertible Note extending the maturity date from January 10, 2025 to January 10, 2026 . On July 10, 2023, ISO and Armata entered into a Credit and Security Agreement (the “July 2023 Credit and Security Agreement"), under which we extended a term loan to Armata (the “Armata July 2023 Term Loan”) in an aggregate amount of $ 25.0 million. The Armata July 2023 Term Loan is subject to an interest rate of 14 % per annum and is due to mature on January 10, 2025 . The July 2023 Credit and Security Agreement is secured by substantially all of the assets of Armata and its domestic and foreign material subsidiaries. On November 12, 2024, ISO and Armata executed an amendment to the Armata July 2023 Term Loan extending the maturity date from January 10, 2025 to January 10, 2026 . 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 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. 117 Table of Contents 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 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 Armata’s common stock and warrants under the equity method using the fair value option. The fair value of Armata’s common stock is measured based on its closing market price. The warrants purchased in 2020, 2021 and 2022 have an exercise price of $ 2.87 , $ 3.25 and $ 5.00 per share, respectively. 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: Armata’s closing market price on the valuation date, the risk-free interest rate computed based on the U.S. Treasury yield, the remaining contractual term as the expected term, and the expected stock price volatility calculated based on the historical volatility of the common stock of Armata and its peer companies. 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 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. 118 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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: Balance Sheet Information September 30, (In thousands) 2025 2024 Current assets $ 16,930 $ 22,389 Noncurrent assets $ 72,586 $ 75,848 Current liabilities $ 139,950 $ 118,204 Noncurrent liabilities $ 45,154 $ 31,006 Income Statement Information Twelve Months Ended September 30, (In thousands) 2025 2024 2023 Revenue $ 5,054 $ 5,467 $ 4,052 Loss from operations $ ( 33,350 ) $ ( 38,476 ) $ ( 41,639 ) Net loss $ ( 46,901 ) $ ( 41,363 ) $ ( 59,512 ) 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. 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. Based on our evaluation, we determined that InCarda 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. 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. Certain InCarda warrants held by us expired in March 2023 and we wrote off their carrying value of $ 0.1 million during 2023. 119 Table of Contents 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 %. 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 $ 2.9 million during the second quarter of 2023. 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, 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. On September 14, 2023, ITH entered into a securities purchase agreement with ImaginAb to purchase another 405,852 shares of ImaginAb Series C-2 preferred stock for $ 0.6 million. 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 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. The ImaginAb Convertible Note is subordinate to certain existing indebtedness of ImaginAb as defined in the ImaginAb Convertible Note. 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 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. 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. 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. There was no change in the carrying amount of our equity investments in ImaginAb. 120 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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”). Shadow Preferred means preferred stock having identical rights, preferences and restrictions as the preferred stock that would be issued in a qualified financing. The number of common stock shares to be issued in a qualified event shall be equal to the amount due on the conversion date divided by the lesser of a capped conversion price (the “Capped Conversion Price”) and the qualified event price (the “Qualified Event Price”). The Capped Conversion Price is calculated as $50.0 million divided by the number of shares of common stock outstanding at such time on a fully diluted basis. 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 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. 121 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 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. ITH also has the right to designate another member, who will be mutually acceptable to ITH and another stockholder, to Nanolive’s board. As of December 31, 2025 , no Innoviva designee is serving on Nanolive’s six -member board. 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. Based on our evaluation, we determined that Nanolive 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. 122 Table of Contents 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. 123 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Reconciliation of Equity and Long-Term Investments Balances The following table reconciles the change in balances in “Equity and Long-Term Investments” as of each balance sheet date: (In thousands) Equity and long-term investments as of December 31, 2023 $ 444,432 Purchases of trading securities 63,201 Changes in fair value, net ( 59,161 ) Reclassification of current portion ( 107,532 ) Other 724 Equity and long-term investments as of December 31, 2024 $ 341,664 Purchases of trading securities 61,729 Proceeds from trading securities ( 8,427 ) Purchases of equity and other long-term investments 17,533 Net sales and purchases of investments managed by ISP Fund ( 120,955 ) Changes in fair value, net 20,160 Reclassification of current portion 91,805 Other 988 Equity and long-term investments as of December 31, 2025 $ 404,497 Available-for-Sale Securities The estimated fair value of available-for-sale securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below: December 31, 2025 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Money market funds (1) $ 530,278 $ — $ — $ 530,278 Total $ 530,278 $ — $ — $ 530,278 (1) Money market funds are included in cash and cash equivalents in the consolidated balance sheets . December 31, 2024 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Money market funds (1) $ 289,441 $ — $ — $ 289,441 Total $ 289,441 $ — $ — $ 289,441 (1) Money market funds are included in cash and cash equivalents in the consolidated balance sheets. As of December 31, 2025 and 2024, all available-for-sale securities were money market funds, and there was no credit loss recognized. 124 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fair Value Measurements 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: Quoted Price in Active Markets for Significant Other Significant Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets Money market funds $ 530,278 $ — $ — $ 530,278 Investments held by ISP Fund LP 76,993 — 2,748 79,741 Equity investment - Armata Common Stock 157,482 — — 157,482 Equity investment - Armata Warrants — 36,244 — 36,244 Equity investment - InCarda Warrants — — 43 43 Term loan investment - Armata July 2023 Term Loan — — 32,899 32,899 Term loan investment - Armata March 2024 Term Loan — — 43,290 43,290 Term loan investment - Armata March 2025 Term Loan — — 11,125 11,125 Term loan investment - Armata August 2025 Term Loan — — 15,534 15,534 Convertible debt investment - Armata Note — — 101,358 101,358 Convertible debt investment - InCarda 2024 Convertible Note — — 436 436 Convertible debt investment - InCarda February 2025 Convertible Note — — 475 475 Convertible debt investment - InCarda October 2025 Convertible Note — — 1,225 1,225 Convertible debt investment - Syndeio 2021 Convertible Note — — 62,937 62,937 Convertible debt investment - Syndeio 2025 Convertible Note — — 24,490 24,490 Convertible debt investment - Lyndra Convertible Note — — 3,492 3,492 Total assets measured at estimated fair value $ 764,753 $ 36,244 $ 300,052 $ 1,101,049 Liability 2028 Notes $ — $ 267,013 $ — $ 267,013 125 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Estimated Fair Value Measurements as of December 31, 2024 Using: Quoted Price in Active Significant Markets for Other Significant Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets Money market funds $ 289,441 $ — $ — $ 289,441 Investments held by ISP Fund LP 193,560 — 62,098 255,658 Equity investment - Armata Common Stock 46,392 — — 46,392 Equity investment - Armata Warrants — 5,901 — 5,901 Equity investment - InCarda Warrants — — 59 59 Convertible debt investment - Armata Note — — 42,095 42,095 Term loan investment - Armata July 2023 Term Loan — — 30,197 30,197 Term loan investment - Armata March 2024 Term Loan — — 39,275 39,275 Convertible debt investment - InCarda 2024 Convertible Note — — 436 436 Convertible debt investment - ImaginAb Note — — 4,950 4,950 Convertible debt investment - Syndeio 2021 Convertible Note — — 50,881 50,881 Total assets measured at estimated fair value $ 529,393 $ 5,901 $ 229,991 $ 765,285 Liabilities Debt 2025 Notes $ — $ 222,353 $ — $ 222,353 2028 Notes — 251,213 — 251,213 Total fair value of debt $ — $ 473,566 $ — $ 473,566 There were no transfers between Level 1, Level 2 or Level 3 during the periods presented. The fair values of our equity investments in Armata’s common stock and publicly traded investments held by ISP Fund LP are based on the quoted prices in active markets and are classified as Level 1 financial instruments. 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 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. 126 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. CAPITALIZED FEES PAID Capitalized fees paid, which consist of registrational and launch-related milestone fees paid to GSK, were as follows: December 31, (In thousands) Amortization period 2025 2024 United States 2013-2030 $ 120,000 $ 120,000 Europe 2013-2029 60,000 60,000 Japan 2013-2029 40,000 40,000 Gross carrying value 220,000 220,000 Accumulated amortization ( 163,862 ) ( 150,039 ) Net carrying value $ 56,138 $ 69,961 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, 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 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. 8. 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 . We have no t recognized any impairment losses related to goodwill and intangible assets during the periods presented. Intangible assets with definite lives are amortized over their estimated useful lives. The carrying basis and accumulated amortization of recognized intangible assets as of December 31, 2025 and 2024 were as follows: December 31, 2025 Useful Life Gross Accumulated Net Carrying (In thousands) (Years) Amount Amortization Amount Marketed products 8 - 10 $ 226,300 $ ( 70,299 ) $ 156,001 Collaboration agreement 10 35,400 ( 9,245 ) 26,155 Total $ 261,700 $ ( 79,544 ) $ 182,156 December 31, 2024 Useful Life Gross Accumulated Net Carrying (In thousands) (Years) Amount Amortization Amount Marketed products 8 - 10 $ 223,700 $ ( 47,559 ) $ 176,141 In-process research and development 2,600 — 2,600 Collaboration agreement 10 35,400 ( 5,708 ) 29,692 Total $ 261,700 $ ( 53,267 ) $ 208,433 Intangible assets recognized as a result of the acquisition of Entasis amounted to $ 106.7 million, which consisted of Entasis’ in-process research and development related to its antibacterial therapeutic product candidates and a collaboration agreement amounting to $ 71.3 million and $ 35.4 million, respectively. 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. 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. 127 Table of Contents 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 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. 9. BALANCE SHEET COMPONENTS Inventory Inventory consisted of the following: December 31, (In thousands) 2025 2024 Raw materials $ 16,330 $ 11,113 Work-in-process 17,871 20,529 Finished goods 4,971 2,083 Total inventory $ 39,172 $ 33,725 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. Other Accrued Liabilities Other accrued liabilities consisted of the following: December 31, (In thousands) 2025 2024 Accrued contract manufacturing costs $ 8,220 $ 1,071 Accrued clinical and research expenses 185 611 Accrued professional services 5,845 8,682 Current portion of lease liabilities 418 1,572 Royalty obligation payable 3,690 2,951 Current portion of deferred royalty obligation 8,124 6,438 Accrued license fees and royalties 1,964 1,727 Other (1) 1,022 6,947 Total other accrued liabilities $ 29,468 $ 29,999 (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”. 128 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other Long-Term Liabilities Other long-term liabilities consisted of the following: December 31, (In thousands) 2025 2024 Long-term portion of deferred royalty obligation $ 54,104 $ 63,096 Long-term portion of lease liabilities 10,868 1,179 Other 1,119 — Total other long-term liabilities $ 66,091 $ 64,275 10. STOCK‑BASED COMPENSATION Equity Incentive Plans In May 2012, we adopted the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of incentive stock options, nonstatutory stock options, RSAs, RSUs and Stock Appreciation Rights to employees, non-employee directors and consultants. As of December 31, 2025 , total shares remaining available for issuance under the 2012 Plan were 20 . Employee Stock Purchase Plan Under the 2004 Employee Stock Purchase Plan (the “2004 ESPP”), our employees may purchase common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The 2004 ESPP provided for consecutive and overlapping offering periods of 24 months in duration, with each offering period composed of four consecutive six-month purchase periods. The purchase periods ended on either May 15 or November 15. The 2004 ESPP contributions were limited to a maximum of 15 % of an employee’s eligible compensation. The maximum number of shares that an employee may purchase in any purchase period was 2,500 . An employee may not purchase shares with a value greater than $ 25,000 in any calendar year. On April 13, 2023, the Board of Directors adopted the 2023 ESPP (the “2023 ESPP”). The 2023 ESPP, which supersedes the 2004 ESPP, was approved by the Company’s stockholders on May 22, 2023. Under the 2023 ESPP, eligible employees may purchase common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value of the stock at the beginning or end of each applicable purchase period. The 2023 ESPP provides for offering periods of six months , which ends on either May 15 or November 15. The 2023 ESPP contributions are limited to a maximum of 15 % of an employee’s eligible compensation. The maximum number of shares that an employee may purchase in any purchase period is 2,500 . An employee may not purchase shares with a value greater than $ 25,000 in any calendar year. A total of 2.5 million shares of our common stock was reserved and available for issuance under the 2023 ESPP. As of December 31, 2025 , total shares remaining available for issuance under the 2023 ESPP were 2,385,766 . Director Compensation Program Our non-employee directors receive compensation for services provided as a director. 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. 129 Table of Contents 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. These grants are non‑discretionary. 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 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 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. 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. Dividend equivalents are subject to the same terms and conditions, including vesting, as the RSUs to which they attach and are paid in cash upon vesting. Stock‑Based Compensation Expense Stock‑based compensation expense is included in the consolidated statements of income and comprehensive income as follows: Year Ended December 31, (In thousands) 2025 2024 2023 Selling, general and administrative $ 8,930 $ 6,040 $ 4,645 Research and development 522 334 1,192 Total $ 9,452 $ 6,374 $ 5,837 Stock‑based compensation expense included in the consolidated statements of income and comprehensive income by award type is as follows: Year Ended December 31, (In thousands) 2025 2024 2023 Stock options $ 3,995 $ 2,738 $ 1,980 RSUs 5,041 3,348 3,663 RSAs 76 123 168 ESPP 340 165 26 Total stock-based compensation expense $ 9,452 $ 6,374 $ 5,837 As of December 31, 2025, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows: (In thousands) Unrecognized Compensation Cost Weighted-Average Amortization Period (Years) Stock options $ 9,140 2.6 RSUs 13,354 2.8 RSAs 22 0.7 ESPP 225 0.4 Total unrecognized compensation expense $ 22,741 130 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Compensation Awards The following table summarizes equity award activity under the 2012 Plan and prior plans and related information: (In thousands, except per share data) Number of outstanding options Weighted-Average Exercise Price of Outstanding Options Number of outstanding RSUs Weighted-Average Fair Value per Share at Grant Number of outstanding RSAs Weighted-Average Fair Value per Share at Grant Balance as of December 31, 2024 2,067 $ 15.23 598 $ 15.00 7 $ 15.50 Granted 870 $ 18.00 662 $ 18.18 — $ — Exercised ( 85 ) $ 15.09 Released RSUs and RSAs ( 300 ) $ 15.10 ( 5 ) $ 15.78 Forfeited ( 17 ) $ 15.87 ( 36 ) $ 15.70 — $ — Expired ( 1 ) $ 14.11 Balance as of December 31, 2025 2,834 $ 16.08 924 $ 17.22 2 $ 14.77 Vested and expected to vest as of December 31, 2025 2,834 $ 16.08 924 $ 17.22 As of December 31, 2025 , the aggregate intrinsic value of options outstanding and options exercisable was $ 11.1 million and $ 6.4 million, respectively . As of December 31, 2024, the aggregate intrinsic value of options outstanding and options exercisable was $ 5.0 million and $ 2.4 million, respectively . As of December 31, 2025, 1,267,886 options were exercisable. 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 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 no t material for the year ended December 31, 2025, 2024, and 2023. Valuation Assumptions Black-Scholes-Merton weighted-average assumptions used in calculating the estimated value of stock options granted by Innoviva on the dates of grant were as follows: Year Ended December 31, 2025 2024 2023 Risk-free interest rate 4.2 % 4.2 % 4.0 % Expected term (in years) 6.07 6.10 6.09 Volatility 34.5 % 35.5 % 37.8 % Dividend yield 0.0 % 0.0 % 0.0 % Weighted-average estimated fair value of stock options granted $ 7.48 $ 8.17 $ 5.57 11. 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 131 Table of Contents 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 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. 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. From January to April 2024, we repurchased 986,928 shares in the open market at an average price of $ 15.12 per share for a total amount of approximately $ 14.9 million. The share repurchase program was completed in April 2024. 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. 12. DEBT Our debt consists of the following: December 31, (In thousands) 2025 2024 2025 Notes $ — $ 192,500 2028 Notes 261,000 261,000 Total debt 261,000 453,500 Less: Unamortized debt discount and issuance costs ( 3,269 ) ( 5,156 ) Total debt, net 257,731 448,344 Less: Current portion of long-term debt, net — ( 192,028 ) Total long-term debt, net $ 257,731 $ 256,316 Convertible Subordinated Notes Due 2023 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 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: 132 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, (In thousands) 2023 Contractual interest expense $ 85 Amortization of debt issuance costs 11 Total interest and amortization expense $ 96 Convertible Senior Notes Due 2025 On August 7, 2017, we completed a private placement of $ 192.5 million aggregate principal amount of our 2025 Notes. 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: December 31, (In thousands) 2024 Principal $ 192,500 Debt discount and issuance costs, net ( 472 ) Net carrying amount $ 192,028 The following table sets forth total interest expense recognized related to the 2025 Notes for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, (In thousands) 2025 2024 2023 Contractual interest expense $ 3,002 $ 4,813 $ 4,813 Amortization of debt issuance costs 472 733 712 Total interest and amortization expense $ 3,474 $ 5,546 $ 5,525 Convertible Senior Notes Due 2028 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 . 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. 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. 133 Table of Contents 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. 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. 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. Holders of the 2028 Notes may convert all or a portion of their 2028 Notes prior to the close of business on September 15, 2027, only under the following circumstances: • after March 31, 2022, 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 2028 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 2028 Notes on such day; and, • 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. The 2028 Notes will be redeemable, in whole or in part, at our option at any time, and from time to time, on or after March 20, 2025, and on or before the 75th scheduled trading day immediately before the maturity date but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any 2028 Note for redemption will constitute a make-whole fundamental change (as defined in the indenture governing the 2028 Notes) with respect to that 2028 Note, in which case the conversion rate applicable to the conversion of that 2028 Note will be increased in certain circumstances if it is converted after it is called for redemption. If we undergo a fundamental change, subject to certain conditions, holders may require us to purchase for cash all or any portion of their 2028 Notes. The fundamental change purchase price will be 100 % of the principal amount of the 2028 Notes to be purchased plus any accrued and unpaid interest to, but excluding, the fundamental change purchase date. The indenture governing the 2028 Notes contains customary terms and covenants, including a merger covenant and that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% of the aggregate principal amount of the outstanding Notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Notes to be due and payable immediately. In connection with the offering of the 2028 Notes, we entered into privately negotiated capped call transactions. The cap price of the capped call transaction is initially $ 33.9850 per share and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the 2028 Notes. 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. 134 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The annual effective interest rate on the 2028 Notes is 2.70 %. Our outstanding 2028 Notes balance consisted of th e following: December 31, (In thousands) 2025 2024 Principal $ 261,000 $ 261,000 Debt discount and issuance costs, net ( 3,269 ) ( 4,684 ) Net carrying amount $ 257,731 $ 256,316 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, (In thousands) 2025 2024 2023 Contractual interest expense $ 5,546 $ 5,546 $ 5,546 Amortization of debt discount and issuance costs 1,415 1,377 1,342 Total interest and amortization expense $ 6,961 $ 6,923 $ 6,888 Debt Maturities The aggregate scheduled maturities of our convertible debt as of December 31, 2025 are as follows: (In thousands) Amount Year ending December 31, 2026 $ — 2027 — 2028 261,000 Total $ 261,000 Deferred Royalty Obligation As part of our acquisition of La Jolla, we recorded the fair value of its deferred royalty obligation in connection with La Jolla’s royalty financing agreement (“La Jolla Royalty Agreement”) with HealthCare Royalty Partners (“HCR”). Under the terms of the La Jolla Royalty Agreement, HCR is entitled to receive quarterly royalties on worldwide net sales of GIAPREZA® until either January 1, 2031 or when the maximum aggregate royalty payments have been made, whichever occurs first. Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The maximum royalty rate through December 31, 2023 was 14 %. 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 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, 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 %. 135 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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, 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. HCR has no recourse against any asset other than GIAPREZA ® . Certain contract provisions within the La Jolla Royalty Agreement that could result in an acceleration of amounts due under the La Jolla Royalty Agreement are recognized as embedded derivatives that require bifurcation from the deferred royalty obligation and fair value recognition. We determined the fair value of each derivative by assessing the probability of each event occurring, as well as the potential repayment amounts and timing of such repayments that would result under various scenarios. As a result of this assessment, we determined that the fair value of the embedded derivatives is immaterial and, therefore, not recognized as of December 31, 2025 and 2024. 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 and comprehensive income. 13. COMMITMENTS AND CONTINGENCIES Operating Lease We have operating leases for our corporate headquarters, office spaces and laboratory facilities. In 2019, we entered into an operating lease for our headquarters in Burlingame, California for approximately 2,111 rentable square feet. The lease commenced in November 2019 with an initial term of thirty-six calendar months, which was subsequently amended to expire in December 2027 . 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: Year Ended December 31, (In thousands) 2025 2024 2023 Straight line operating lease costs $ 1,424 $ 1,200 $ 1,428 Variable lease costs 91 14 189 Total lease costs $ 1,515 $ 1,214 $ 1,617 Supplemental cash flow information related to leases are as follows: Year Ended December 31, (In thousands) 2025 2024 2023 Cash paid for amounts included in the measurement of operating lease liabilities: $ 1,705 $ 1,464 $ 1,542 Operating lease right-of-use assets obtained in exchange for operating lease obligations 10,022 1,156 — 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 %. 136 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Future minimum lease payments on our operating leases as of December 31, 2025 are as follows: (In thousands) Amount Year ending December 31, 2026 $ 1,005 2027 1,327 2028 1,224 2029 1,335 2030 1,454 Thereafter 8,516 Total undiscounted lease payments 14,861 Less: imputed interest ( 3,575 ) Total operating lease liabilities $ 11,286 Purchase Commitments In April 2024, we entered into a Commercial Supply Agreement with Corden Pharma CHENÔVE SAS (“Corden”), under which we engaged Corden to manufacture and supply certain products related to XACDURO ® and to perform certain services and studies. Under the agreement, we committed to minimum purchase commitments through December 31, 2027. 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. Legal Proceedings From time to time, the Company is involved in legal proceedings in the ordinary course of its business. We are not currently a party to any material legal proceedings except as discussed below. On February 15, 2022, La Jolla received a paragraph IV notice of certification (the “First Notice Letter”) from Gland Pharma Limited (“Gland”) advising that Gland had submitted an Abbreviated New Drug Application (“ANDA”) to the FDA seeking approval to manufacture, use or sell a generic version of GIAPREZA ® in the U.S. prior to the expiration of U.S. Patent Nos.: 9,220,745; 9,572,856; 9,867,863; 10,028,995; 10,335,451; 10,493,124; 10,500,247; 10,548,943; 11,096,983; and 11,219,662 (the “GIAPREZA ® Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). The First Notice Letter alleges that the GIAPREZA ® Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Gland’s ANDA. On March 29, 2022, La Jolla filed a complaint for patent infringement of the GIAPREZA ® Patents against Gland and certain related entities in the United States District Court for the District of New Jersey in response to Gland’s ANDA filing. In accordance with the Hatch-Waxman Act, because GIAPREZA ® is a new chemical entity and La Jolla filed a complaint for patent infringement within 45 days of receipt of the First Notice Letter, the FDA cannot approve Gland’s ANDA any earlier than 7.5 years from the approval of the GIAPREZA ® NDA unless the District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed. On February 22, 2023, La Jolla received a paragraph IV notice of certification (the “Second Notice Letter”) from Gland advising that Gland had amended its ANDA filing to include a paragraph IV certification alleging that all claims of the newly-issued and Orange Book-listed U.S. Patent No. 11,559,559 (the “’559 Patent”), which covers GIAPREZA ® , are invalid, unenforceable and/or not infringed. On March 22, 2023, La Jolla filed a First Amended Complaint in this litigation adding Gland’s marketing and distribution partners for its ANDA angiotensin II product, Fresenius Kabi USA LLC and Fresenius Kabi SwissBiosim GmbH (collectively, the “Fresenius Kabi Defendants”), as co-defendants. On April 7, 2023, La Jolla filed a Second Amended Complaint in response to the Second Notice Letter, adding claims that the manufacture, use, sale, offer for sale, or import of Gland’s ANDA angiotensin II product will infringe the ’559 Patent. 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 137 Table of Contents 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. As required by law, the settlement is subject to review by the U.S. Department of Justice and the Federal Trade Commission. Indemnifications and Other Contingencies In the ordinary course of business, we may provide indemnifications of varying scope and terms to vendors, directors, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by us, our negligence or willful misconduct, violations of law, or intellectual property infringement claims made by third parties. 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 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, 2025, we have no t accrued any liabilities in the consolidated financial statements as a result of these provisions. 14. 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. 15. INCOME TAXES The components of income before provision for income taxes are as follows: Year Ended December 31, 2025 2024 2023 Domestic $ 327,060 $ 37,362 $ 194,034 Foreign ( 198 ) 26 64 Income before provision for income taxes $ 326,862 $ 37,388 $ 194,098 138 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Income tax expense consists of the following: Year Ended December 31, (In thousands) 2025 2024 2023 Current Federal $ 6,578 $ 23,438 $ 7,799 State 3,477 3,175 2177 Foreign 1,795 — — Total current 11,850 26,613 9,976 Deferred Federal 42,745 ( 12,606 ) 6,594 State 1,102 ( 11 ) ( 2,194 ) Total deferred 43,847 ( 12,617 ) 4,400 Total income tax expense, net $ 55,697 $ 13,996 $ 14,376 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, 2025 (In thousands) $ % U.S. federal tax at statutory rate $ 68,682 21.0 % State and local effects (1) 2,739 0.9 % Foreign tax effects Other - Withholding taxes 1,796 0.6 % Enactment of new tax laws — — % Cross-border tax laws Foreign-derived intangible income ( 7,543 ) ( 2.3 )% Tax credits Foreign tax credit ( 1,555 ) ( 0.5 )% Research and development credit ( 324 ) ( 0.1 )% Change in valuation allowance ( 11,726 ) ( 3.6 )% Nontaxable or nondeductible items 407 0.1 % Changes in unrecognized tax benefits 3,709 1.1 % Other adjustments ( 488 ) ( 0.2 )% Effective tax rate $ 55,697 17.0 % (1) For tax year 2025, state taxes in Kentucky made up the majority (greater than 50 percent) of the tax effect in this category. 139 Table of Contents 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, 2024 2023 (In thousands) $ % $ % Expected tax at federal statutory rate $ 7,846 21.0 % $ 40,747 21.0 % State income tax expense, net of federal benefit 1,864 5.0 % 1,433 0.7 % Federal and state research credits ( 90 ) ( 0.2 )% ( 1,582 ) ( 0.8 )% Section 250 deduction ( 11,767 ) ( 31.5 )% ( 15,274 ) ( 7.9 )% Change in valuation allowance 18,386 49.2 % ( 12,167 ) ( 6.2 )% Other ( 2,243 ) ( 6.0 )% 1,219 0.6 % Total income tax expense, net $ 13,996 37.5 % $ 14,376 7.4 % 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. 2023-09: Year Ended December 31, (In thousands) 2025 Federal $ 17,300 State and local jurisdiction 1,377 Foreign 436 Net cash paid for income taxes $ 19,113 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. Significant components of our deferred tax assets and deferred tax liabilities are as follows: December 31, (In thousands) 2025 2024 Deferred tax assets Net operating loss carryforwards $ 172,440 $ 176,989 Research and development tax credit carryforwards 21,270 21,359 Unrealized losses on investment, net — 11,481 Deferred royalty obligation, net 15,654 17,452 Accruals and reserves 2,479 — Other 5,942 6,832 Total deferred tax assets before valuation allowance 217,785 234,113 Valuation allowance ( 176,151 ) ( 187,635 ) Total deferred tax assets 41,634 46,478 Deferred tax liabilities Depreciation and amortization ( 32,205 ) ( 31,626 ) Unrealized gains on investment, net ( 37,823 ) — Inventory fair value adjustment ( 986 ) ( 2,798 ) Other ( 2,413 ) — Net deferred tax assets (liabilities) $ ( 31,793 ) $ 12,054 140 Table of Contents 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. Significant management judgment is required in determining whether a valuation allowance against the deferred tax assets is required. We have considered all available evidence, both positive and negative, such as our historical operating results and predictability of future taxable income, in making such determination. We are also required to exercise significant management’s judgment in forecasting future taxable income. Specifically, we evaluate the following criteria when considering a valuation allowance: • the history of tax net operating losses in recent years; • predictability of operating results; • profitability for a sustained period of time; and • level of profitability on a quarterly basis. 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 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. 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. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. 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 A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows: (In thousands) Amount Unrecognized tax benefits as of December 31, 2022 $ 16,324 Net increase in tax portions for 2023 3,119 Unrecognized tax benefits as of December 31, 2023 19,443 Net increase in tax portions for 2024 41,851 Unrecognized tax benefits as of December 31, 2024 61,294 Net increase in tax portion for 2025 1,415 Unrecognized tax benefits as of December 31, 2025 $ 62,709 We are subject to taxation in the U.S. 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. 141 Table of Contents INNOVIVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. SEGMENT REPORTING We operate as a single operating and reportable segment, focused on creating value for our stockholders. We achieve this by maximizing the value of our respiratory royalty portfolio and growing our investments in innovative healthcare assets that address critical unmet medical needs. Our Chief Executive Officer, as the chief operating decision-maker (“CODM”), evaluates the Company’s financial performance and operational efficiency using consolidated net income. This helps guide decisions related to commercial operations, product development, and regulatory compliance, ensuring resources are allocated effectively to support growth initiatives. Consolidated net income also helps inform reinvestment strategies to strengthen our market position and drive innovation. The accounting policies of the segment are the same as those described in Note 1, “Description of Operations and Summary of Significant Accounting Policies”. 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 ® , 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. Our long-term assets are located within the United States. The CODM does not review assets at a different level or category than the amounts disclosed in the consolidated balance sheets. The table below presents the financial information used by the CODM to assess performance, which reconcile to the consolidated net income: Year Ended December 31, (In thousands) 2025 2024 2023 Total revenue $ 411,328 $ 358,711 $ 310,463 Less: Cost of products sold 77,384 36,598 41,040 Cost of license revenue — — 1,600 Amortization of acquired intangible assets 26,277 25,902 21,784 Selling and marketing 36,502 31,441 30,739 General and administrative 76,816 84,249 67,493 Research and development - External services and expenses 15,705 7,408 20,051 Research and development - Internal expenses 5,531 6,246 13,871 Research and development - Acquired IPR&D 9,368 — — Changes in fair values of equity method investments, net ( 141,433 ) 64,253 ( 77,392 ) Changes in fair values of equity and long-term investments, net ( 20,160 ) 59,161 ( 11,129 ) Interest and dividend income ( 21,086 ) ( 19,141 ) ( 15,818 ) Interest expense 16,698 22,209 19,157 Other expense, net 2,864 2,997 4,969 Income tax expense, net 55,697 13,996 14,376 Consolidated net income $ 271,165 $ 23,392 $ 179,722 142 REP ORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Innoviva, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Innoviva, Inc. 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 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 143 Consolidated Entities and Equity and Long-term Investments—Primary Beneficiary Determination for Variable Interest Entities—Refer to Notes 1, 5, and 6 to the consolidated financial statements. Critical Audit Matter Description The Company invests in equity and debt securities of private and public companies. The Company evaluates its interests in these entities to determine whether they meet the definition of a variable interest entity (VIE) or a voting interest entity (VOE) and whether the Company is required to consolidate these entities. A VIE is consolidated by its primary beneficiary, which is the party that has both 1) the power to direct the activities that most significantly impact the economic performance of the VIE and 2) a variable interest that absorbs losses or receives benefits from the VIE that could potentially be significant to the VIE. To determine whether a variable interest that the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company’s involvement with the VIE. In general, the parties that make the most significant decisions affecting the VIE (management and representation on the Board of Directors) and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE. The Company will reconsider whether an entity is a VIE and whether the Company is the primary beneficiary of the entity upon the occurrence of certain types of events. The determination of the primary beneficiary of a VIE requires significant management judgment. We identified the primary beneficiary determination for the Company’s VIEs as a critical audit matter due to the complexity of the accounting principles related to the determination of the primary beneficiary of a VIE and the significant judgment required by management in evaluating the Company’s role in establishing the VIE, their ongoing rights and responsibilities and identifying which party, if any, has power over those activities. This required a high degree of auditor judgment and an increased extent of effort, including the involvement of professionals with consolidation accounting expertise, when performing audit procedures to evaluate the Company’s determination of whether it is the primary beneficiary for its VIEs. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the primary beneficiary determination for VIEs included the following, among others: • We tested the effectiveness of controls over the Company’s primary beneficiary determination for its VIEs, including management’s determination of the party that has the power to direct the activities that most significantly impact the economic performance of the VIE and a variable interest that absorbs losses or receives benefits from the VIE that could potentially be significant to the VIE. • We evaluated the appropriateness of the Company’s accounting conclusions for consolidated and unconsolidated VIEs through the following: o Evaluated the investment structures and terms of the agreements, including reading the purchase agreements and other related documents which govern the formation and activities of the entity (the Contractual Arrangements). o Tested whether the Company appropriately determined the primary beneficiary by evaluating the Contractual Arrangements of the entity to determine if the Company has the power to direct activities that most significantly impact the economic performance of the VIE, and if the Company has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could be significant to the VIE. o For certain VIEs, with the assistance of professionals with expertise in consolidation accounting, evaluated the appropriateness of the Company’s determination of the primary beneficiary of the VIE. o Evaluated the Company’s disclosures related to the primary beneficiary determination of its consolidated entities and unconsolidated VIEs /s/ Deloitte & Touche LLP San Jose, California February 25, 2026 We have served as the Company’s auditor since 2022. 144 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.