What changed in this filing

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Item 1. Financial Statements

2026-05-06 compared with 2025-11-05 · 264 added, 441 removed, 596 unchanged (54% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable

Receivables from collaboration arrangement

Receivable from collaboration arrangement

Prepaid expenses

8 unchanged sentences

Intangible assets

Deferred tax assets, net

Liabilities and Stockholders’ Equity

4 unchanged sentences

Deferred revenue

Convertible subordinated notes due 2025, net of issuance costs

Income tax payable

Other accrued liabilities

2 unchanged sentences

Other long-term liabilities

Deferred tax liabilities, net

Income tax payable, long-term

7 unchanged sentences

73,808 and 74,636 issued and outstanding as of

September 30, 2025 and December 31, 2024, respectively

March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

Retained earnings (accumulated deficit)

Retained earnings

Total stockholders’ equity

5 unchanged sentences

(In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Royalty revenue, net of amortization of

capitalized fees paid of $ 3,456 in the

three months ended September 30, 2025

and 2024, and $ 10,368 in the nine months

ended September 30, 2025 and 2024

three months ended March 31, 2026

Net product sales

3 unchanged sentences

amortization of inventory fair value

adjustments, excluding amortization

of intangible assets)

Amortization of acquired intangible assets

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Other expense, net

Income before income taxes

Income (loss) before income taxes

Income tax expense, net

Net income and comprehensive income

Net income per share:

Shares used to compute net income per share:

Net income (loss) and comprehensive income (loss)

Net income (loss) per share:

Shares used to compute net income (loss) per share:

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2026

Stockholders’

5 unchanged sentences

tax withholding

Repurchase of common stock,

including accrued excise tax

Stock-based compensation

Balance as of March 31, 2026

Exercise of stock options and

issuance of common stock units

and stock awards, net of

repurchase of shares to satisfy

tax withholding

Accrued excise tax on common

stock repurchase applied against

tax liability

Stock-based compensation

Conversion of 2025 Notes to common stock

Balance as of June 30, 2025

Exercise of stock options and

issuance of common stock units

and stock awards, net of

repurchase of shares to satisfy

tax withholding

Stock-based compensation

Conversion of 2025 Notes to common stock

Exercise of warrants

Balance as of September 30, 2025

Nine Months Ended September 30, 2024

Retained Earnings

Treasury Stock

Three Months Ended March 31, 2025

Stockholders’

Balance as of January 1, 2025

Issuance of common stock units

and stock awards, net of

repurchase of shares to

satisfy tax withholding

Repurchase of common stock

Stock-based compensation

Balance as of March 31, 2024

Exercise of stock options and

3 unchanged sentences

tax withholding

Repurchase of common stock

Retirement of treasury stock

Stock-based compensation

Balance as of June 30, 2024

Exercise of stock options and

issuance of common stock units

and stock awards, net of

repurchase of shares to satisfy

tax withholding

Stock-based compensation

Balance as of September 30, 2024

Balance as of March 31, 2025

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

7 unchanged sentences

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

Acquired in-process research and development assets

Other non-cash items

1 unchanged sentence

Accounts receivable

Receivables from collaboration arrangement

Receivable from collaboration arrangement

Prepaid expenses

7 unchanged sentences

Purchases of trading securities

Proceeds from trading securities

Purchases of equity investments managed by ISP Fund LP

2 unchanged sentences

Purchases of property and equipment

Cash paid for in-process research and development assets acquired

Sale of property and equipment

Net cash provided by (used in) investing activities

3 unchanged sentences

Proceeds from issuances of common stock, net

Proceeds from exercise of warrants

Payment for repurchase of convertible subordinated notes due 2025

Net cash provided by (used in) financing activities

2 unchanged sentences

Cash and cash equivalents at end of period

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental Disclosure of Cash Flow Information:

1 unchanged sentence

Cash paid for income taxes

Supplemental Disclosure of Non-cash Investing and Financing Activities:

2025 Notes converted to common stock

Supplemental Disclosure of Non-cash Investing Activities:

Accrued interest income converted to long-term investments

5 unchanged sentences

Innoviva, Inc.

(and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a company with a portfolio of royalties and innovative healthcare assets.

(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”).

2 unchanged sentences

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

Our commercial and marketed products include GIAPREZA ® (angiotensin II), approved to increase blood pressure in adults with septic or other distributive shock;

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

and XACDURO ® (sulbactam for injection;

durlobactam for injection), approved for the treatment of hospital-acquired and ventilator-associated pneumonias caused by Acinetobacter in adults.

In addition, ZEVTERA ® (ceftobiprole), an advanced-generation cephalosporin antibiotic, is exclusively commercialized by us in the U.S.

under a distribution and license agreement with Basilea Pharmaceutica Ltd., (“Basilea”), which we entered into in December 2024.

We continue to advance our pipeline, zoliflodacin, potentially a first-in-class, single-dose oral treatment for uncomplicated gonorrhea.

In June 2025, the U.S.

Food and Drug Administration (“FDA”) accepted the new drug application (“NDA”) for zoliflodacin, which has received Qualified Infectious Disease Product designation (“QIDP”), granting it priority review and the potential for extended market exclusivity.

We have established a wholly owned, critical care and infectious disease operating platform, anchored by four differentiated commercial products and supported by a promising late-stage development asset.

Additionally, we strategically deploy capital and maintain economic interests in various healthcare companies, including a significant equity stake in Armata Pharmaceuticals, a company focused on development of bacteriophages with potential use across a range of infectious and other serious diseases.

Our wholly owned, critical care and infectious disease operating platform, with a hospital focus, is anchored by a portfolio of four commercial and marketed products, as well as an FDA-approved product which is expected to be available to patients in the second half of 2026:

• 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;

• 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 which commercially launched in the third quarter of 2025;

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

In addition, we own other strategic healthcare assets, such as a significant equity 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 several other healthcare companies through our portfolio approach.

Basis of Presentation

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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, beginning in the second quarter of 2025, ZEVTERA ® .

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.

Three of our customers each account fo r 21 %, 20 % and 19 %, respectively, of our net product sales for the three months ended September 30, 2025 , and 24 %, 24 % and 22 %, respectively for the nine months ended September 30, 2025.

These same customers account for 15 %, 26 % and 15 %, respectiv ely, of our receivables from net product sales, which are included in “Accounts receivable” in our unaudited condensed consolidated balance sheet as of September 30, 2025.

Three of our customers each account for 27 %, 21 % and 20 %, respectively, of our net product sales for the three months ended September 30, 2024, and 31 %, 23 % and 23 % for the nine months ended September 30, 2024.

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

Three of our customers each account fo r 27 %, 25 % and 25 %, respectively, of our net product sales for the three months ended March 31, 2026 , and 29 %, 27 % and 27 %, respectively, for the three months ended March 31, 2025.

Three of our customers account for 36 %, 31 % and 16 %, respectiv ely, of our receivables from net product sales, which are included in “Accounts receivable” in our unaudited condensed consolidated balance sheet as of March 31, 2026.

Three of our customers 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.

We did no t have an allowance for expected credit losses on our receivable from collaboration arrangement and accounts receivable as of March 31, 2026 and December 31, 2025.

Refer to Item 1A.

1 unchanged sentence

Segment Reporting

Operating segments are defined as components of an enterprise for which discrete financial information is available and are evaluated regularly by the chief operating decision maker (“CODM”) in making decisions about resource allocation and assessing performance.

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 15, “Segment Reporting”, for more information.

9 unchanged sentences

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.

1 unchanged sentence

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 direct transaction costs.

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.

3 unchanged sentences

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 unaudited condensed consolidated financial statements.

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.

1 unchanged sentence

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 unaudited condensed consolidated statements of income and comprehensive income.

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.

We also invested 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 condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

Revenue Recognition

13 unchanged sentences

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

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

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.

20 unchanged sentences

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 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

2 unchanged sentences

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

For a licensing arrangement that includes services, we recognize revenue over time using an input method, representing the transfer of goods or services as we perform activities over the term of the arrangement.

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 the 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 condensed consolidated statements of income and comprehensive income.

Research and Development Expenses

4 unchanged sentences

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.

Recently Issued Accounting Pronouncement Adopted

In December 2023, the FASB issued 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.

This ASU became effective for us on January 1, 2025, at which time it was adopted.

We will include the required disclosures, to the extent applicable, within our annual financial statements as of and for the year ended December 31, 2025.

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.

Recently Adopted Accounting Pronouncements

In November 2024, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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.

Effective January 1, 2026, we adopted ASU 2024-04 on a prospective basis.

The adoption of this standard did not have a material impact on our consolidated 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.

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

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.

Effective January 1, 2026, we adopted ASU 2025-05.

The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncement Not Yet Adopted

ASU 2024-03 is effective for the Company in annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

We are currently evaluating the potential impact that ASU 2024-03 may have on our consolidated financial statements and related disclosures.

Net Income Per Share

1 unchanged sentence

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 senior notes due 2025 (the “2025 Notes”) and our convertible senior notes due 2028 (the “2028 Notes”) using the if-converted method.

If 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 dilutive potential common stock equivalents.

The following table shows the computation of basic and diluted net income per share for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

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 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.

The following table shows the computation of basic and diluted net income (loss) per share for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

(In thousands except per share data)

Net income, basic

interest expense on 2025 Notes, net of tax effect

Net income (loss), basic

interest expense on 2028 Notes, net of tax effect

Net income, diluted

Net income (loss), diluted

Weighted-average shares used to compute basic

net income per share

Dilutive effect of 2025 Notes

net income (loss) per share

Dilutive effect of 2028 Notes

1 unchanged sentence

incentive plan and employee stock purchase plan

Dilutive effect of outstanding warrant

Weighted-average shares used to compute diluted

net income per share

Net income per share

Net income (loss) per share

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:

Three Months Ended September 30,

Nine Months Ended September 30,

The following common stock equivalents were not included in the computation of diluted net income (loss) per share because their effect was anti-dilutive for the periods presented:

Three Months Ended March 31,

(In thousands)

6 unchanged sentences

Net Revenue from Collaboration Arrangement

Net revenue recognized under our GSK Agreements was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Net revenue recognized under our GSK Agreement was as follows:

Three Months Ended March 31,

(In thousands)

- RELVAR/BREO

Royalties - RELVAR ® /BREO ®

Royalties - ANORO ®

Total royalties

amortization of capitalized fees paid

Total net royalty revenue

Total royalty revenue

Net Product Sales

Total net product sales were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

and the rest of world as follows:

• approximately 63 % and 37 %, respectively, for the three months ended September 30, 2025, and 75 % and 25 %, respectively, for the nine months ended September 30, 2025.

• approxim ately 71 % and 29 %, respectively, for the three months ended September 30, 2024, and 82 % and 18 %, respectively, for the nine months ended September 30, 2024.

License Revenue

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

License and Collaboration Arrangements

• approximately 83 % from customers located in the U.S.

and 17 % from the rest of the world for the three months ended March 31, 2026;

• approximately 87 % from customers located in the U.S.

and 13 % from the rest of the world for the three months ended March 31, 2025.

License and Other Revenue

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

License, Collaboration and Other Arrangements

Out-License Agreements

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

Entasis Therapeutics Holdings Inc.

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

(“Zai Lab”) (Nasdaq:

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

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 three and nine months ended September 30, 2025 and 2024 were not material.

Such amounts recorded for the three months ended March 31, 2026 and 2025 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 were $ 0.4 million and $ 1.5 million for the three and nine months ended September 30, 2025 , respectively.

We recognized $ 8.0 million in license revenue for the nine months ended September 30, 2024 under this agreement as a result of the achievement of a regulatory milestone.

Royalties under this arrangement based on the product sales were $ 1.1 million and $ 0.5 million for the three months ended March 31, 2026 and 2025, respectively.

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 $ 0.4 million and $ 1.0 million in license revenue for the three and nine months ended September 30, 2025, respectively, and $ 0.8 million and $ 7.3 million for the three and nine months ended September 30, 2024, respectively.

As of September 30, 2025 and December 31, 2024, outstanding amounts under this amendment of $ 1.4 million and $ 1.6 million, respectively, were included in “Accounts receivable” in our unaudited condensed consolidated balance sheets.

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”) for their commercial use.

We recognized $ 14.9 million and $ 17.4 million in net product sales for the cost of the Supplied Inventory for the three and nine months ended September 30, 2025, respectively.

We recognized $ 5.5 million in net product sales for the cost of the Supplied Inventory for the three and nine months ended September 30, 2024 .

Amounts outstanding under this agree ment of $ 7.4 million and $ 0.6 million are included in “Accounts receivable” in our unaudited condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively.

We have recorded deferred revenue of $ 10.4 million as of September 30, 2025 and other accrued liabilities of $ 5.3 million as of December 31, 2024 under this agreement.

The amount as of December 31, 2024 was recorded as other accrued liabilities pending finalization of the February and August 2025 amendments mentioned above.

Under the Amended Zai Agreement, we recognized $ 0.2 million and $ 0.5 million in license revenue for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026 and December 31, 2025, outstanding amounts under this amendmen t of $ 1.6 million an d $ 1.8 million, respectively, were included in “Accounts receivable” in our unaudited condensed consolidated balance sheets.

We recognized $ 5.4 million and $ 0.8 million in net product sales for the cost of the Supplied Inventory for the three months ended March 31, 2026 and 2025, respectively.

Amounts outstanding under this agreement of $ 8.4 million and $ 6.7 million were included in “Accounts receivable” in our unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively.

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 license revenue under this agreement of $ 0.1 million and $ 1.0 million for the three and nine months ended September 30, 2025 , respectively, and $ 3.4 million for the three and nine months ended September 30, 2024.

License revenue recognized under this agreement for the three months ended March 31, 2026 was no t material .

We did no t recognize license revenue for the three months ended March 31, 2025 under this agreement.

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 $ 0.8 million in reimbursements from GARDP under this agreement as a reduction to research and development expense during the three and nine months ended September 30, 2025.

The reimbursable amounts from GARDP for the three and nine months ended September 30, 2024 were no t material.

Reimbursements from GARDP under this agreement are recorded as a reduction to research and development expense.

Reimbursements recorded from GARDP during the three months ended March 31, 2026 and 2025 were no t material.

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

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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.

An application for marketing approval was filed with the FDA in early 2025.

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

PAION Pharma GmbH

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

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

PAION is currently a subsidiary of the Humanwell Healthcare Group.

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

Royalty revenue recognized under this agreement for the three and nine months ended September 30, 2025 were $ 0.7 million and $ 1.8 million, res pectively.

Royalty revenue recognized under this agreement for the three and nine months ended September 30, 2024 was no t material.

Royalty revenue recognized under this agreement was $ 0.6 million for the three months ended March 31, 2026 and was no t material for the same period in 2025.

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 $ 1.3 million and $ 2.7 million in cost reimbursements for the three and nine months ended September 30, 2025, respectively.

Cost reimbursements recognized under this agreement for the three and nine months ended September 30, 2024 were no t material.

Cost reimbursements under the PAION Supply Agreement were no t material for the three months ended March 31, 2026 and $ 0.6 million for the three months ended March 31, 2025.

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”).

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

Under the Everest License, we are eligible to receive remaining sales milestone payments of up to an aggregate of $ 20.0 million.

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

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

Royalty revenue from Everest recognized f or the three months ended September 30, 2025 was immaterial.

We recognized $ 2.0 million in royalty revenue from Everest for the nine months ended September 30, 2025 .

Royalty revenue recognized for the three and nine months ended September 30, 2024 was $ 0.6 million and $ 2.3 million, respectively.

Royalty revenue from Everest recognized for the three months ended March 31, 2026 and 2025 was no t material.

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.

R evenue recognized under the Everest Supply Agreement for the three and nine months ended September 30, 2025 was no t materi al and $ 1.8 million, respectively .

Revenue recognized under the Everest Supply Agreement for the three and nine months ended September 30, 2024 was $ 0.9 million and $ 2.6 million, respectively .

R evenue recognized under the Everest Supply Agreement was no t material for the three months ended March 31, 2026 and $ 1.0 million for the three months ended March 31, 2025 .

In-License Agreements

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in July 2025.

Royalty expense incurred on the sales was immaterial during the three and nine months ended September 30, 2025.

Royalty expense incurred on the sales was no t material during the three months ended March 31, 2026.

We did no t incur any royalty expense under this agreement during the three months ended March 31, 2025.

George Washington University

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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 for the three and nine months ended September 30, 2025 were $ 1.1 million and $ 3.3 million, respectively.

Royalty expense incurred for the three and nine months ended September 30, 2024 were $ 1.0 million and $ 2.5 million, respectively .

Royalty expense incurred under the GW License for the three months ended March 31, 2026 and 2025 were $ 1.3 million and $ 1.1 million, respectively.

Harvard University

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

Royalty expense incurred under the Harvard License for the three and nine months ended September 30, 2025 wer e $ 0.3 million and $ 1.0 million, respectively.

Royalty expense incurred for the three and nine months ended September 30, 2024 were $ 0.3 million and $ 1.5 million, respectively.

Royalty expense incurred under the Harvard License for the three months ended March 31, 2026 and 2025 was no t material.

Business Transfer and Subscription Agreement with AstraZeneca

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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 ® for the three and nine months ended September 30, 2025 and 2024 was no t material.

The royalty expense in respect of durlobactam arising from our net product sales of XACDURO ® was no t material for the three months ended March 31, 2026 and 2025.

Massachusetts Institute of Technology

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Consolidated Entity

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

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 condensed 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 and we expect to receive distributions of our capital accounts through April 2026.

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 condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, and the remaining equity investments managed by ISP Fund LP are expected to be distributed through April 2026.

Cash distributions of $ 43.9 million and $ 28.0 million were received in August 2025 and April 2025, respectively.

We report in our condensed 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 September 30, 2025, we continued to hold approxi mately 100 % of the economic interest of the Partnership.

As of September 30, 2025 and December 31, 2024, total assets of the Partnership were $ 115.7 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 September 30, 2025 and December 31, 2024, total liabilities were $ 0.1 million and $ 0.2 million, respectively.

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

During the three and nine months ended September 30, 2025 , we recorded $ 0.4 million and $ 1.9 million, respectively, in investment-related expense incurred by the Partnership, generated $ 0.8 million and $ 3.2 million, respectively, in interest income, and recorded $ 11.7 million in net realized and unrealized gains and $ 69.2 million in net realized and unrealized losses, respectively, as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

During the three and nine months ended September 30, 2024, we recorded an immaterial amount and $ 0.3 million, respectively, of net investment-related expense incurred by the Partnership and $ 17.8 million and $ 59.8 million, respectively, of net realized and unrealized losses as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

As of March 31, 2026, we continued to hold approxi mately 100 % of the economic interest of the ISP Fund LP (“Partnership”).

As of March 31, 2026 and December 31, 2025, total assets of the Partnership were $ 31.7 million and $ 79.7 million, respectively, with the majority attributable to either current portion of ISP Fund investment or to equity and long-term investments.

As of March 31, 2026 and December 31, 2025 , total liabilities were $ 0.2 million.

During the three months ended March 31, 2026, $ 47.5 million in cash was distributed to us by the Partnership.

The remaining equity investments managed by the Partnership are expected to be distributed in 2026.

During the three months ended March 31, 2026, we recorded $ 0.4 million in investment-related expense incurred by the Partnership, generated $ 0.1 million in interest income, recorded $ 14.9 million in net realized losses and $ 14.5 million in net unrealized gains as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

During the three months ended March 31, 2025, we recorded $ 0.8 million in investment-related expense incurred by the Partnership, generated $ 1.2 million in interest income, recorded $ 2.5 million in net realized gains and $ 83.7 million in net unrealized losses as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

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

September 30,

(In thousands)

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Total common stock

Preferred stock - Privately held healthcare companies

Preferred stock - Privately held healthcare company

United States

Warrants - Privately held healthcare companies

Money market fund and cash

Total investments held by ISP Fund LP

Equity and Other Investments and Fair Value Measurements

Equity and Long-Term Investments and Fair Value Measurements

Equity and Other Investments in Armata

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

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 convertible note and the term loans issued in July 2023 (the “Armata July 2023 Term Loan”) and in March 2024 (the “Armata March 2024 Term Loan”) to March 12, 2026.

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.

As of September 30, 2025, Innoviva collectively o wns 25,076,769 shares of Armata’s common stock, representing a 69.2 % equity interest, and held 10,653,847 warra nts with exercise prices ranging from $ 3.25 to $ 5.00 per share.

Innoviva also held $ 30.1 million in principal amount of Armata’s 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.

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

As of September 30, 2025 , the fair values of our holdings of Armata common stock, warrants, the convertible note, the term loan issued in 2023, the term loan issued in 2024, the term loan issued in March 2025 and the term loan issued in August 2025 were estimated at $ 74.7 million, $ 7.8 million, $ 56.9 million, $ 32.7 million, $ 42.7 million, $ 10.8 million and $ 15.4 million , respectively.

As of December 31, 2024, the fair values of our holdings of Armata common stock, warrants, the convertible note, the term loan issued in 2023, and the term loan issued in 2024 were estimated at $ 46.4 million, $ 5.9 million, $ 42.1 million, $ 30.2 million and $ 39.3 million, respectively.

For the common stock and warrants, we recorded $ 30.8 million and $ 30.3 million in unrealized gain for the three and nine months ended September 30, 2025 , respectively, and $ 18.2 million and $ 43.0 million in unrealized loss for the three and nine months ended September 30, 2024, respectively, as changes in fair values of equity method investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

For the convertible note, we recorded $ 13.0 million and $ 14.9 million in unrealized gain for the three and nine months ended September 30, 2025 , respectively, and $ 2.2 million and $ 6.4 million in unrealized loss for the three and nine months ended September 30, 2024, respectively, as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

For the term loan issued in July 2023, we recorded 1.1 million and $ 2.5 million in unrealized gain for the three and nine months ended September 30, 2025 , respectively, and $ 1.4 million and $ 2.4 million in unrealized gain for the three and nine months ended September 30, 2024, respectively, as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

For the term loan issued in March 2024, we recorded $ 1.5 million and $ 3.5 million in unrealized gain for the three and nine months ended September 30, 2025 , respectively, and $ 2.0 million and $ 3.3 million in unrealized gain for the three and nine months ended September 30, 2024, respectively, as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

For the term loan issued in March 2025, we recorded $ 0.4 million and $ 0.9 million in unrealized gain for the three and nine months ended September 30, 2025, respectively, as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statement of income and comprehensive income.

For the term loan issued in August 2025, we recorded $ 0.4 million in unrealized gain for the three and nine months ended September 30, 2025 as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statement of income and comprehensive income.

In January 2026, we entered into various amendments to existing agreements with Armata, extending the maturities of the convertible note and the term loans issued in July 2023, March 2024 and March 2025 to June 1, 2027.

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

The maturity date of the term loan issued in August 2025 remained unchanged at January 11, 2029.

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 at the earlier of January 26, 2031 or the approval by the FDA of any of Armata's product candidates for marketing and commercial distribution.

As of March 31, 2026, our ownership in Armata was 68.4 %.

As of March 31, 2026, the fair values of our holdings of 25,076,769 shares of Armata common stock, 10,653,847 warra nts, a $ 30.1 million convertible note and $ 85.1 million in term loans were estimated at $ 256.8 million, $ 94.6 million, $ 148.3 million, and $ 103.7 million , respectively.

As of December 31, 2025 , the fair values of these holdings were estimated at $ 157.5 million, $ 36.2 million, $ 101.4 million, and $ 102.8 million, respectively.

For the Armata common stock and warrants, we recorded $ 157.7 million in unrealized gain and $ 13.5 million in unrealized loss as changes in fair values of equity method investments, net, in the unaudited condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025, respectively.

For the Armata convertible note, we recorded $ 47.0 million in unrealized gain and $ 4.3 million in unrealized loss as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025, respectively.

For the Armata term loans, we recorded $ 0.8 million and $ 1.0 million in unrealized gain as changes in fair values of equity and long-term investments, net, in the unaudited condensed, consolidated statements of income and comprehensive income for the three months ended March 31, 2026 and 2025, respectively.

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

Income Statement Information

Three Months Ended June 30,

Nine Months Ended June 30,

Three Months Ended December 31,

(In thousands)

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

As of September 30, 2025, ITH owns 36,742,250 shares of InCarda’s common and preferred stock and 2,490,033 warrants, representing a 9.1 % equity interest.

I TH also invested $ 0.4 million and $ 0.5 million in the principal amounts of InCarda’s convertible notes issued in Januar y 2024 (the “InCarda 2024 Convertible Note”) and February 2025 (the “InCarda 2025 Convertible Note”), respectively (collectively, the “InCarda Convertible Notes”).

With the exception of the InCarda Convertible Notes and the warrants, we account for our 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.

We account for the convertible note as trading securities, measured at fair value.

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.

As of September 30, 2025 and December 31, 2024, we recorded as equity and long-term investments in the unaudited condens ed consolidated balance sheets $ 4.8 million in carrying amount of InCarda’s Series C preferred stock and $ 0.1 million in fair value of the InCarda warrants.

As of September 30, 2025 and December 31, 2024 , we recorded as equity and long-term investments in the unaudited condensed 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 September 30, 2025 , we recorded $ 0.9 million in fair value of the InCarda Convertible Notes, as equity and long-term investments in the unaudited condensed consolidated balance sheet.

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

During the three and nine months ended September 30, 2025 and 2024, the change to the carrying amount of our investments in InCarda was not material.

As of March 31, 2026 and December 31, 2025, ITH owns 36,742,250 shares of InCarda’s common and preferred stock and 2,490,033 warrants, representing a 9.5 % equity interest.

Over the years, ITH has also invested $ 2.1 million in InCarda’s convertible notes.

As of March 31, 2026 and December 31, 2025 , we recorded $ 7.5 million in carrying amount of InCarda ’s preferred stock, approximately $ 0.1 million in fair value of warrants and $ 2.1 million in fair value of convertible notes as equity and long-term investments in the unaudited condensed consolidated balance sheets.

During the three months ended March 31, 2026 and 2025 , the change to the carrying amount of our investments in InCarda was no t material.

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.

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

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

On January 13, 2025, ITH and ImaginAb executed an amendment to extend the maturity date of the convertible note from January 31, 2025 to May 30, 2025 .

As of September 30, 2025, and December 31, 2024, we held an 11.8 % equity interest in ImaginAb.

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

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

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

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

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

As of September 30, 2025 and December 31, 2024 , our investment in the preferred stock and common stock amounted to $ 7.6 mi llion and was recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

There was no change in the carrying amount of our equity investments in ImaginAb during the three and nine months ended September 30, 2025 and 2024.

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 by ImaginAb, the 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 condensed consolidated balance sheet.

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

Duri ng the three and nine months ended September 30, 2024, we recorded $ 0.1 million and $ 0.4 million, respectively, in net unrealized gain on the ImaginAb Convertible Note as changes in fair values of equity and long-term investments, net in the unaudited condensed consolidated statements of income and comprehensive income.

As of March 31, 2026, and December 31, 2025, we held an 11.8 % equity ownership in ImaginAb.

As of March 31, 2026 and December 31, 2025 , our investment of $ 7.6 mi llion was recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

There w as no change in the carrying amount of our equity investments in ImaginAb during the periods presented.

Convertible Promissory Notes in Syndeio Biosciences

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rebranded as Syndeio.

From 2021 to 2024, ITH invested in Syndeio a total of $ 51.5 million in convertible notes (the “Syndeio 2021 Convertible Note”).

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.

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 September 30, 2025, and December 31, 2024 , the fair value of the Syndeio 2021 Convertible Note was estimated at $ 77.7 million and $ 50.9 million, respectively, and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

We recorded $ 6.3 million and $ 26.8 million in unrealized gain for the three and nine months ended September 30, 2025 , respectively, as changes in fair values of equity and long-term investments, net in the unaudited condensed consolidated statements of income and comprehensive income.

We recorded $ 0.4 million and $ 0.7 milli on in unrealized loss for the three and nine months ended September 30, 2024, respectively, as changes in fair values of equity and long-term investments, net in the unaudited condensed consolidated statements of income and comprehensive income.

As of September 30, 2025, the fair value of the S yndeio 2025 Convertible Note was estimated at $ 15.1 million and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheet.

We recorded $ 0.6 million in unrealized loss for the three months ended September 30, 2025 as changes in fair values of equity and long-term investments, net in the una udited condensed consolidated statement of income and comprehensive income.

We recorded immaterial unrealized gains for the nine months ended September 30, 2025.

Equity Investment in Nanolive

In 2022, ITH invested $ 10.6 million in 18,750,000 shares of the 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.

As of September 30, 2025 and December 31, 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.

From 2021 to 2024, ITH invested a total of $ 51.5 million including $ 0.9 million in transaction costs in Syndeio ’s convertible notes (the “Syndeio 2021 Convertible Note”).

In 2025, ITH invested a total of $ 25.8 million in Syndeio ’s new convertible notes (the “Syndeio 2025 Convertible Note”).

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.

On March 25, 2026, ITH entered into another Note Amendment Agreement with Syndeio to amend the Syndeio 2021 Convertible Note.

Under the Note Amendment Agreement, the principal amount of the Syndeio 2021 Convertible Note was increased from $ 60.8 million to $ 66.5 million, which represents the principal and accrued interest as of the amendment date and an additional cash investment of $ 5.0 million.

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

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.

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 September 30, 2025 and December 31, 2024 , $ 10.6 million was recorded as equity and long-term investme nts in the unaudited condensed consolidated balance sheets and there was no change to the carrying amount of our investment.

As of March 31, 2026, and December 31, 2025 , the fair value of the Syndeio 2021 Convertible Note was estimated at $ 66.5 million and $ 62.9 million, respectively, and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

We recorded $ 12.2 million in unrealized loss and $ 19.1 million in unrealized gain for the three months ended March 31, 2026 and 2025, respectively, as changes in fair values of equity and long-term investments, net in the unaudited condensed consolidated statements of income and comprehensive income.

As of March 31, 2026 and December 31, 2025, the fair value of the Syndeio 2025 Convertible Note was estimated at $ 22.9 million and $ 24.5 million, respectively, and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

We recorded $ 1.6 million in unrealized loss and $ 0.2 million in unrealized gain for the three months ended March 31, 2026 and 2025, respectively, as changes in fair values of equity and long-term investments, net in the unaudited condensed consolidated statement of income and comprehensive income.

Equity Investment in Nanolive

In 2022, ITH 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 March 31, 2026 , no Innoviva designee is serving on Nanolive’s six -member board.

As of March 31, 2026 and December 31, 2025 , we held 13.0 % of Nanolive equity ownership.

As of March 31, 2026 and December 31, 2025 , $ 10.6 million was recorded as equity and long-term investme nts in the unaudited condensed 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 13, “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.

As of September 30, 2025, the fair value of the Lyndra Convertible Note was estimated at $ 6.8 million and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheet.

We recorded $ 2.4 million i n unrealized loss for the three and nine months ended September 30, 2025 as changes in fair values of equity and long-term investments, net, in the unaudited condensed consolidated statements of income and comprehensive income.

In 2025, we invested $ 9.2 million in the convertible promissory note of Lyndra Therapeutics, Inc.

(“Lyndra”), which was then a clinical-stage company with a novel drug delivery platform that enables the administration of ultra-long-acting oral drugs and received a $ 3.3 million partial repayment on the note, reducing the outstanding principal to $ 5.9 million.

As of March 31, 2026 and December 31, 2025, the fair value of the note was estimated at $ 3.5 million and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

There was no change in the carrying amount of the note during the periods presented.

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 March 31, 2026 and December 31, 2025 , we held 5.4 % a nd 5.6 %, respectively, of Beacon equity ownership.

As of March 31, 2026 and December 31, 2025 , our $ 17.5 million investment in Beacon was recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets, and there was no change to the carrying amount of our investment.

Reconciliation of Equity and Long-Term Investments Balances

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Purchases of trading securities

Proceeds from trading securities

Purchases of equity and other long-term investments

Net sales and purchases of investments managed by ISP Fund

Changes in fair value, net

2 unchanged sentences

Purchases of trading securities

Proceeds from trading securities

Net sales and purchases of investments managed by ISP Fund

1 unchanged sentence

Reclassification of current portion

Equity and long-term investments as of September 30, 2025

Equity and long-term investments as of March 31, 2026

Available-for-Sale Securities

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Available-for-sale securities are summarized below:

September 30, 2025

March 31, 2026

(In thousands)

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(1) Money market funds are included in cash and cash equivalents in the condensed consolidated balance sheets.

As of September 30, 2025 and December 31, 2024, all available-for-sale investments were money market funds, and there was no credit loss recognized.

As of March 31, 2026 and December 31, 2025 , all available-for-sale investments were money market funds, and there was no credit loss recognized.

Fair Value Measurements

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

Estimated Fair Value Measurements as of September 30, 2025 Using:

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 March 31, 2026 Using:

Types of Instruments

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Convertible debt investment - InCarda 2024 Convertible Note

Convertible debt investment - InCarda 2025 Convertible Note

Convertible debt investment - InCarda February 2025 Convertible Note

Convertible debt investment - InCarda October 2025 Convertible Note

Convertible debt investment - Syndeio 2021 Convertible Note

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Term loan investment - Armata March 2024 Term Loan

Term loan investment - Armata March 2025 Term Loan

Term loan investment - Armata August 2025 Term Loan

Convertible debt investment - Armata Note

Convertible debt investment - InCarda 2024 Convertible Note

Convertible debt investment - ImaginAb Note

Convertible debt investment - InCarda February 2025 Convertible Note

Convertible debt investment - InCarda October 2025 Convertible Note

Convertible debt investment - Syndeio 2021 Convertible Note

Convertible debt investment - Syndeio 2025 Convertible Note

Convertible debt investment - Lyndra Convertible Note

Total assets measured at estimated fair value

Total fair value of debt

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 of 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 for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.

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.

The fair value of our 2028 Notes is based on recent trading price of the instrument.

Goodwill and Intangible Assets

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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 September 30, 2025 and December 31, 2024 was $ 17.9 million .

The carrying amount of goodwill as of March 31, 2026 and December 31, 2025 was $ 17.9 million .

We have no t recognized any impairment losses related to goodwill 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 September 30, 2025 and December 31, 2024 were as follows:

September 30, 2025

The carrying basis and accumulated amortization of recognized intangible assets as of March 31, 2026 and December 31, 2025 were as follows:

March 31, 2026

(In thousands)

Marketed products

In-process research and development

Collaboration agreement

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Marketed products

In-process research and development

Collaboration agreement

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

The useful l ife of the remaining in-process research and development of $ 2.6 million, which pertains to zoliflodacin, will be determined upon commercialization of the underlying product candidate;

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

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.

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

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

The upfront fee of $ 4.0 million paid to Basilea for the exclusive commercialization right of ZEVTERA ® in the U.S.

in December 2024 was recorded as an intangible asset and is being amortized over the initial term of the agreement (refer to Note 4, “License and Collaboration Arrangements”).

We recognized amortization expense of $ 6.6 million and $ 19.6 million fo r the three and nine months ended September 30, 2025 , respectively.

We recognized amortization expense of $ 6.5 million and $ 19.4 million for the three and nine months ended September 30, 2024, respectively.

As discussed in Note 4 “License, Collaboration and Other 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 $ 6.6 million and $ 6.5 million fo r the three months ended March 31, 2026 and 2025, respectively.

Future amortization expense is expected to be $ 20.0 million for th e remainder of 2026, $ 26.6 million for each of the years from 2027 to 2030 and $ 49.2 million thereafter.

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Inventory consisted of the following:

September 30,

(in thousands)

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Total inventory

As of September 30, 2025 and December 31, 2024, total inventory included net fair value adjustments resulting from the acquisition of La Jolla of approximatel y $ 5.0 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 $ 3.5 million and $ 4.1 million f or the three and nine months ended September 30, 2025 , respectively.

The fair value adjustments recorded as part of cost of products sold amounted to $ 1.8 million and $ 12.1 million for the three and nine months ended September 30, 2024, respectively.

As of March 31, 2026 and December 31, 2025, total inventory included net fair value adjustments resulting from the acquisition of La Jolla of approximatel y $ 2.2 million and $ 3.4 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 $ 1.1 million and $ 0.2 million f or the three months ended March 31, 2026 and 2025, respectively.

Other Accrued Liabilities

Other accrued liabilities consisted of the following:

September 30,

(in thousands)

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Total other accrued liabilities

(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”.

Other Long-term Liabilities

Other long-term liabilities consisted of the following:

September 30,

(in thousands)

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The following table summarizes stock-based compensation expense:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Black-Scholes-Merton assumptions used in calculating the estimated value of stock options granted by Innoviva on the date of grant were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Risk-free interest rate

4.1 % - 4.4 %

4.14 % - 4.65 %

Expected term (in years)

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34.3 % - 34.9 %

35.8 % - 36.8 %

Dividend yield

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$ 7.17 - $ 7.92

$ 4.97 - $ 7.76

Stockholders' Equity

For the three and nine months ended September 30, 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 September 30, 2025.

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

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

The 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.

The share repurchase program was completed in April 2024.

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.

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.

For the three months ended March 31, 2026 , we repurchased 971,066 shares in the open market at an average price of $ 21.06 per share for a total amount of approximately $ 20.4 million.

From program inception through March 31, 2026, we have repurchased Innoviva common stock in the open market for a total price of approximately $ 25.0 million.

Repurchases subsequent to March 31, 2026 and through April 30, 2026, were not material.

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.

Our debt consists of the following:

September 30,

(In thousands)

Unamortized debt discount and issuance costs

Total debt, net

Current portion of long-term debt, net

Total long-term debt, net

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 sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

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, beginning on February 15, 2018.

The initial conversion rate for the 2025 Notes was 57.9240 shares of our common stock per $1,000 principal amount of the 2025 Notes (which was equivalent to an initial conversion price of approximately $ 17.26 per share).

The conversion rate was subject to customary anti-dilution adjustments in certain circumstances.

The 2025 Notes would mature on August 15, 2025 , unless repurchased or converted in accordance with their terms prior to such date.

Prior to February 15, 2025, the 2025 Notes would be convertible at the option of the holders only upon the occurrence of specified events and during certain periods, as described below .

On or after February 15, 2025, holders of the 2025 Notes 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 of the 2025 Notes.

In the event of default or a fundamental change (as defined in the indenture), holders of the 2025 Notes had the option to require us to repurchase all or a portion of their 2025 Notes at price equal to 100 % of the principal amount of the 2025 Notes, plus any accrued and unpaid interest.

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 balance of the 2025 Notes 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 was 2.90 %.

Our 2025 Notes balance consisted of the following as of December 31, 2024:

(In thousands)

Debt discount and issuance costs, net

Net carrying amount

The following table sets forth total interest expense recognized related to the 2025 Notes for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

Approximately $ 192.5 million of the principal amount was converted into 11,148,918 shares of our common stock.

The remaining principal balance of $ 25,000 was fully paid in cash upon the maturity date on August 15, 2025 .

The annual effective interest rate on the 2025 Notes in 2025 up to its settlement was 2.90 %.

The following table sets forth total interest expense recognized related to the 2025 Notes for the three months ended March 31, 2025:

(In thousands)

Three Months Ended March 31, 2025

Contractual interest expense

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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;

• 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.

The annual effective interest rate on the 2028 Notes is 2.70 %.

Our outstanding 2028 Notes balance consisted of the following:

September 30,

(In thousands)

Debt issuance costs, net

Debt discount and issuance costs, net

Net carrying amount

The following table sets forth total interest expense recognized related to the 2028 Notes for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

The following table sets forth total interest expense recognized related to the 2028 Notes for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

(In thousands)

Contractual interest expense

Amortization of debt issuance costs

Amortization of debt discount and issuance costs

Total interest and amortization expense

Debt Maturities

The aggregate scheduled maturities of our convertible debt as of September 30, 2025 were as follows:

The aggregate scheduled maturities of our convertible debt as of March 31, 2026 were as follows:

(In thousands)

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The La Jolla Royalty Agreement is subject to maximum aggregate royalty payments to HCR of $ 225.0 million.

For the three and nine months ended September 30, 2025 , we recognized interest expense of $ 1.6 million and $ 4.7 million, respectively.

For the three and nine months ended September 30, 2024, we recognized interest expense of $ 2.6 million and $ 8.1 million, respectively.

The carrying value of the deferred royalty obligation as of September 30, 2025 and December 31, 2024 was $ 64.3 million and $ 69.5 million, respectively (refer to Note 8, “Balance Sheet Components”).

During the nine months ended September 30, 2025 and 2024 , we made royalty payments to HCR of $ 9.5 million and $ 6.4 million, respectively.

The deferred royalty obligation was valued using Level 3 inputs, and its carrying value as of September 30, 2025 approximates fair value.

For the three months ended March 31, 2026 and 2025 , we recognized interest expense of $ 3.7 million and $ 1.6 million, respectively.

The carrying value of the deferred royalty obligation as of March 31, 2026 and December 31, 2025 was $ 62.0 million and $ 62.2 million, respectively (refer to Note 8, “Balance Sheet Components”).

During the three months ended March 31, 2026 and 2025 , we made royalty payments to HCR of $ 3.7 million and $ 3.0 million, respectively.

The deferred royalty obligation was valued using Level 3 inputs, and its carrying value as of March 31, 2026 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 ® .

The annual effective interest rate of the deferred royalty obligation for the current period is 9.74 %.

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 September 30, 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 $ 36.7 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 ® .

As of March 31, 2026 , the annual effective interest rate of the deferred royalty obligation for the current period is 26.29 %.

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 September 30, 2025 and December 31, 2024.

As a result of this assessment, we determined that the fair value of the embedded derivatives is not material and, therefore, not recognized as of March 31, 2026 and December 31, 2025 .

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 unaudited condensed consolidated statements of income and comprehensive income.

Any material change in the fair value of the embedded derivatives will be recorded as either a gain or loss in the consolidated statements of income and comprehensive income.

Commitments and Contingencies

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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 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 cost were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Supplemental cash flow information related to leases was as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Cash paid for amounts included in the measurement of operating lease liabilities

Operating lease right-of-use asset obtained in exchange for operating lease obligations

As of September 30, 2025, our operating leases have weighted-average remaining term of approximately 2.6 years and the weighted average discount rate on our operating lease liabilities was 6.9 %.

Future minimum payments on our operating leases as of September 30, 2025 were as follows:

As of March 31, 2026, our operating leases have weighted-average remainin g term of approximately 9.4 years and the weighted average discount rate on our operating lease liabilities was 5.3 %.

Future minimum payments on our operating leases as of March 31, 2026 were as follows:

(In thousands)

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Under the agreement, we committed to minimum purchase commitments through December 31, 2027.

As of September 30, 2025 , we have approximately $ 1.4 million, $ 7.3 million and $ 5.9 million in outstanding purchase commitments under the agreement for the remainder of 2025 and for the years 2026 and 2027, respectively.

As of March 31, 2026 , we have approximately $ 7.1 million and $ 5.9 million U.S.

dollar equivalent in purchase commitments under the agreement for the remainder of 2026 and for the year 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.

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.

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 (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.

We are not currently a party to any material legal proceedings.

Indemnification and Other Contingencies

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In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees.

No material demands have been made upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our unaudited condensed 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 September 30, 2025 , we have not accrued any material liabilities in the unaudited condensed consolidated financial statements as a result of these provisions.

To date, we have not incurred any material costs and, as of March 31, 2026 , we have no t accrued any material liabilities in the unaudited condensed consolidated financial statements as a result of these provisions.

Asset Acquisition

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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 was $ 1.1 million and was capitalized within property and equipment.

We recorded income tax expense of $ 7.9 million and $ 24.8 million for the three and nine months ended September 30, 2025 , respectively, compared to income tax expense of $ 5.6 million and $ 9.6 million for the three and nine months ended September 30, 2024, respectively.

The Company’s effective income tax rate for the nine months ended September 30, 2025 was 18.8 % co mpared to 40.5 % for the same period in 2024.

The income tax expense for the nine months ended September 30, 2025 and 2024 was determined based upon estimates of the Company’s effective income tax rates in various jurisdictions.

Our effective tax rate for the nine months ended September 30, 2025 was lower than the expense computed at the U.S.

federal statutory income tax rate due primarily to foreign-derived intangible income tax deduction and research and development credits, partially offset by nondeductible expenses and state income taxes.

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 March 31, 2026.

We recorded income tax expense of $ 48.0 million and $ 8.0 million for the three months ended March 31, 2026 and 2025, respectively.

The Company’s effective income tax rate for the three months ended March 31, 2026 was 20.5 % co mpared to ( 20.7 %) for the same period in 2025.

The income tax expense for the three months ended March 31, 2026 and 2025 was determined based upon estimates of the Company’s effective income tax rates in various jurisdictions.

Our effective tax rate for the three months ended March 31, 2026 was lower than the U.S.

federal statutory income tax rate primarily related to foreign-derived intangible income tax deduction and research and development credits, partially offset by discrete tax expenses related to unrealized gains on investment.

Segment Reporting

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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 (loss).

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 (loss) also helps inform reinvestment strategies to strengthen our market position and drive innovation.

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 ® , XERAVA ® , XACDURO ® , and ZEVTERA ® , as well as license and other revenues.

We also generate revenue from net product sales of GIAPREZA ® , XACDURO ® , XERAVA ® and ZEVTERA ® , as well as license and other revenues.

Refer to Note 3, “Revenue Recognition”, for more information on our revenues for the periods presented.

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The table below presents the financial information used by the CODM to assess performance, which reconciles to the consolidated net income:

Three months ended September 30,

Nine Months Ended September 30,

Three months ended March 31,

(In thousands)

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Research and development - Internal expenses

Research and development - Acquired IPR&D

Changes in fair values of equity method investments, net

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Income tax expense, net

Consolidated net income

Subsequent Events

On October 7, 2025, ITH entered into a Series B Preferred Stock Purchase Agreement with Beacon Biosignals, Inc.

(“Beacon”) to purchase 1,448,303 shares of Beacon Series B preferred stock for $ 17.5 million.

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

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 repurchase program will be subject to the Securities and Exchange Commission Rule 10b-18 and Rule 10b5-1 requirements 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 obligate us to acquire any amount of common stock.

Consolidated net income (loss)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements