What changed in this filing

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Item 1. Financial Statements

2026-08-05 compared with 2026-05-06 · 184 added, 131 removed, 729 unchanged (30% of the section changed)

38 unchanged sentences

72,637 and 74,636 issued and outstanding as of

March 31, 2026 and December 31, 2025, respectively

June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Royalty revenue, net of amortization of

capitalized fees paid of $ 3,456 in the

three months ended March 31, 2026

three months ended June 30, 2026

and 2025, and $ 6,912 in the six months

ended June 30, 2026 and 2025

Net product sales

19 unchanged sentences

Income (loss) before income taxes

Income tax expense, net

Income tax benefit (expense), net

Net income (loss) and comprehensive income (loss)

5 unchanged sentences

(In thousands)

Three Months Ended March 31, 2026

Six Months Ended June 30, 2026

Stockholders’

9 unchanged sentences

Balance as of March 31, 2026

Three Months Ended March 31, 2025

Exercise of stock options and

issuance of common stock units

and stock awards, net of

repurchase of shares to satisfy

tax withholding

Repurchase of common stock,

including accrued excise tax

Stock-based compensation

Balance as of June 30, 2026

Six Months Ended June 30, 2025

Stockholders’

7 unchanged sentences

Balance as of March 31, 2025

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

Balance as of June 30, 2025

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

Net income (loss)

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

20 unchanged sentences

Purchases of trading securities

Purchases of equity and other long-term investments

Proceeds from trading securities

Purchases of equity investments managed by ISP Fund LP

2 unchanged sentences

Purchases of property and equipment

Net cash provided by (used in) investing activities

Sale of property and equipment

Net cash used in investing activities

Cash flows from financing activities

6 unchanged sentences

Cash and cash equivalents at end of period

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental Disclosure of Cash Flow Information:

2 unchanged sentences

Supplemental Disclosure of Non-cash Investing Activities:

2025 Notes converted to common stock

Accrued interest income converted to long-term investments

53 unchanged sentences

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 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 each account fo r 25 %, 21 % and 21 %, respectively, of our net product sales for the three months ended June 30, 2026 , and 26 %, 23 % and 21 %, respectively, for the six months ended June 30, 2026 .

Three of our customers each account for 26 %, 26 % and 24 %, respectively, of our net product sales for the three months ended June 30, 2025 , and 27 %, 26 % and 25 %, respectively, for the six months ended June 30, 2025 .

Three of our customers account for 30 %, 28 % 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 June 30, 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.

We did no t have an allowance for expected credit losses on our receivable from collaboration arrangement and accounts receivable as of June 30, 2026 and December 31, 2025.

Refer to Item 1A.

32 unchanged sentences

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 March 31, 2026 and December 31, 2025 .

In October 2024, we elected to unwind our capital accounts in the partnership in accordance with the terms of the Partnership Agreement and expect the remaining investments managed by the Partnership to be distributed in 2026.

Revenue Recognition

75 unchanged sentences

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

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

Net Income (Loss) Per Share

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

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

1 unchanged sentence

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,

The following table shows the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands except per share data)

1 unchanged sentence

interest expense on 2025 Notes, net of tax effect

interest expense on 2028 Notes, net of tax effect

Net income (loss), diluted

2 unchanged sentences

Dilutive effect of 2025 Notes

Dilutive effect of 2028 Notes

Dilutive effect of options and awards granted under equity

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 (loss) 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 (loss) per share because their effect was anti-dilutive for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

1 unchanged sentence

plan and employee stock purchase plan

Outstanding stock warrant

Outstanding 2028 Notes

Revenue Recognition

1 unchanged sentence

Net revenue recognized under our GSK Agreement was as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

6 unchanged sentences

Total net product sales were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2 unchanged sentences

and the rest of world as follows:

• 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.

• approximately 71 % and 29 %, respectively, for the three months ended June 30, 2026 , and 76 % and 24 %, respectively, for the six months ended June 30, 2026;

• approximately 82 % and 18 %, respectively, for the three months ended June 30, 2025 , and 84 % and 16 %, respectively, for the six months ended June 30, 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”.

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

License, Collaboration and Other Arrangements

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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 months ended March 31, 2026 and 2025 were not material.

Such amounts recorded for the six months ended June 30, 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 $ 1.1 million and $ 0.5 million for the three months ended March 31, 2026 and 2025, respectively.

We recognized $ 4.0 million in license revenue for the three and six months ended June 30, 2026 under this agreement as a result of the achievement of a regulatory milestone.

Royalties under this arrangement based on the product sales were $ 0.9 million and $ 2.0 million for the three and six months ended June 30, 2026, respectively, and $ 0.6 million and $ 1.1 million for the three and six months ended June 30, 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 $ 0.2 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.

Under the Amended Zai Agreement, we recognized $ 0.6 million in license revenue for the six months ended June 30, 2025 .

License revenue for three and six months ended June 30, 2026 and the three months ended June 30, 2025 were no t material.

As of June 30, 2026 and December 31, 2025, outstanding amounts under this amendmen t of $ 1.8 million 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”) at cost for their commercial use.

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 recognized $ 9.5 million and $ 14.9 million in net product sales for the cost of the Supplied Inventory for the three and six months ended June 30, 2026 , respectively, and $ 1.7 million and $ 2.5 million for the three and six months ended June 30, 2025, respectively.

Amounts outstanding under this agreement of $ 13.1 million and $ 6.7 million were included in “Accounts receivable” in our unaudited condensed consolidated balance sheets as of June 30, 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.

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.

License revenue recognized under this agreement for the three and six months ended June 30, 2026 was no t material .

We recognized license revenue under this agreement of $ 0.9 million for the three and six months ended June 30, 2025.

Reddy’s Laboratories

In June 2026, Entasis entered into an exclusive distribution and license agreement with Dr.

Reddy's Laboratories Ltd.

(“DRL”) to commercialize XACDURO ® in certain countries.

A one-time, nonrefundable upfront payment of $ 3.4 million was recognized as license revenue for the three and six months ended June 30, 2026.

Entasis is also entitled to receive development, launch and commercial milestone payments, as well as tiered royalties based on DRL's annual net sales.

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”).

1 unchanged sentence

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.

Reimbursements recorded from GARDP during the three and six months ended June 30, 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.

2 unchanged sentences

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 was filed with the FDA in early 2025.

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

In May 2026, Entasis entered into an amendment to the GARDP Collaboration Agreement under which Entasis granted GARDP a non-exclusive license to use Entasis’ technology in certain European countries and received a one-time, nonrefundable upfront payment of $ 2.0 million, which was recorded as license revenue for the three and six months ended June 30, 2026.

Furthermore, Entasis is entitled to receive future regulatory milestone payment and royalties on net sales of NUZOLVENCE ® .

PAION Pharma GmbH

5 unchanged sentences

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

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.

Royalty revenue recognized under this agreement was $ 0.8 million and $ 1.4 million for the three and six months ended June 30, 2026 , respectively, and was no t material for the same periods 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.

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.

Cost reimbursements under the PAION Supply Agreement were $ 1.8 million for the three and six months ended June 30, 2026, and $ 0.8 million and $ 1.4 million for the three and six months ended June 30, 2025, respectively.

Everest Medicines Limited

6 unchanged sentences

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

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

Royalty revenue from Everest recognized for the three and six months ended June 30, 2026 was $ 0.9 million.

Royalty revenue recognized for the three and six months ended June 30, 2025 was $ 2.0 million.

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 was no t material for the three months ended March 31, 2026 and $ 1.0 million for the three months ended March 31, 2025 .

R evenue recognized under the Everest Supply Agreement was $ 1.3 million for the three and six months ended June 30, 2026, and $ 0.8 million and $ 1.8 million for the three and six months ended June 30, 2025, respectively.

In-License Agreements

7 unchanged sentences

in July 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.

Royalty expense incurred on the sales was no t material during the three and six months ended June 30, 2026 and 2025.

George Washington University

3 unchanged sentences

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 months ended March 31, 2026 and 2025 were $ 1.3 million and $ 1.1 million, respectively.

Royalty expense incurred under the GW License for the three and six months ended June 30, 2026 were $ 1.4 million and $ 2.7 million, respectively, and $ 1.1 million and $ 2.2 million for the three and six months ended June 30, 2025, respectively.

Harvard University

9 unchanged sentences

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 months ended March 31, 2026 and 2025 was no t material.

Royalty expense incurred under the Harvard License for the three and six months ended June 30, 2026 was no t material.

Royalty expense incurred for the three and six months ended June 30, 2025 was $ 0.6 million and $ 0.7 million, respectively.

Business Transfer and Subscription Agreement with AstraZeneca

5 unchanged sentences

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

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

The royalty expense in respect of durlobactam arising from our net product sales of XACDURO ® was no t material during the periods presented.

Massachusetts Institute of Technology

3 unchanged sentences

Consolidated Entity

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.

As of June 30, 2026, we continued to hold approxi mately 100 % of the economic interest of the ISP Fund LP (“Partnership”).

As of June 30, 2026 and December 31, 2025, total assets of the Partnership were $ 34.5 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 June 30, 2026 and December 31, 2025 , total liabilities were $ 0.1 million.

During the six months ended June 30, 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.

During the three and six months ended June 30, 2026 , we recorded $ 0.1 million and $ 0.5 million, respectively, in investment-related expense incurred by the Partnership, generated $ 0.1 million and $ 0.2 million, respectively, in interest income and recorded $ 3.1 million and $ 2.7 million, respectively, in net realized and 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 six months ended June 30, 2026, we recorded $ 14.9 million in net realized losses and $ 17.6 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 and six months ended June 30, 2025, we recorded $ 0.7 million and $ 1.5 million, respectively, in investment-related expense incurred by the Partnership, generated $ 1.2 million and $ 2.4 million, respectively, in interest income, and recorded $ 0.4 million in net realized and unrealized gains and $ 80.9 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.

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

4 unchanged sentences

Total common stock

Preferred stock - Privately held healthcare company

Preferred stock - Privately held healthcare companies

United States

9 unchanged sentences

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 June 30, 2026 , our ownership in Armata was 67.5 %.

In May 2026, ISO and Armata entered into a Credit and Security Agreement, under which ISO extended a term loan to Armata (the “Armata May 2026 Term Loan”) in the aggregate principal amount of $ 25.0 million.

The loan bears interest at a rate of 14 % per annum and matures on January 11, 2029 .

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

As of June 30, 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 $ 110.1 million in term loans were estimated at $ 162.5 million, $ 57.0 million, $ 105.0 million, and $ 133.1 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.

For the Armata common stock and warrants, we recorded $ 131.8 million in unrealized loss and $ 25.8 million in unrealized gains as changes in fair values of equity method investments, net, in the unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2026, respectively, and $ 13.1 million in unrealized gain and $ 0.4 million in unrealized loss for the three and six months ended June 30, 2025, respectively.

For the Armata convertible note, we recorded $ 43.3 million in unrealized loss and $ 3.7 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 and six months ended June 30, 2026, respectively, and $ 6.2 million and $ 1.9 million in unrealized gain for the three and six months ended June 30, 2025, respectively.

For the Armata term loans, we recorded $ 4.5 million and $ 5.3 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 and six months ended June 30, 2026 , respectively, and $ 2.9 million and $ 3.9 million in unrealized gain for the three and six months ended June 30, 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 December 31,

Three Months Ended March 31,

Six Months Ended March 31,

(In thousands)

Loss from operations

Net income (loss)

Equity and Other Investments in InCarda

1 unchanged sentence

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

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.

As of June 30, 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.

As of June 30, 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 and six months ended June 30, 2026 and 2025 , the change to the carrying amount of our investments in InCarda was no t material.

Equity and Other Investments in ImaginAb

1 unchanged sentence

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

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.

As of June 30, 2026, and December 31, 2025, we held an 11.8 % of equity ownership in ImaginAb.

As of June 30, 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

Equity and Other Investments in Syndeio Biosciences

Syndeio Biosciences, Inc.

11 unchanged sentences

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

On June 11, 2026, ITH and other existing Syndeio investors entered into a Series B Preferred Stock Purchase Agreement with Syndeio, pursuant to which ITH purchased 3.75 million shares of Series B Preferred Stock for $ 30.0 million.

Concurrently, the Syndeio 2025 Convertible Note with an outstanding balance of $ 27.0 million, including principal and accrued interest, was converted into 4.2 million shares of Series B-2 Preferred Stock, and $ 1.1 million of the Syndeio 2021 Convertible Note was converted into 175,000 shares of Series B-2 Preferred Stock.

As of June 30, 2026, we held 44.4 % of equity ownership in Syndeio.

On the same date, ITH also entered into an amendment to the Syndeio 2021 Convertible Note to increase the principal amount to $ 66.5 million, representing the remaining principal after the aforementioned conversion and accrued interest.

All other material terms remained unchanged.

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

2 unchanged sentences

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

We account for our investment in Syndeio Series B and Series B-2 preferred stock using the measurement alternative because Syndeio ’s equity securities are not publicly traded and do not have a readily determinable fair value.

As of June 30, 2026, our equity investments of $ 58.2 million were recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

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 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.

As of June 30, 2026, and December 31, 2025 , the fair value of the Syndeio 2021 Convertible Note was estimated at $ 70.3 million and $ 62.9 million, respectively, and recorded as equity and long-term investments in the unaudited condensed consolidated balance sheets.

We recorded $ 3.7 million in unrealized gain and $ 8.5 million in unrealized loss for the three and six months ended June 30, 2026, respectively, and $ 1.4 million and $ 20.5 million in unrealized gain for the three and six months ended June 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 also recorded $ 1.2 million of accrued interest as interest income for the three and six months ended June 30, 2026 in the unaudited condensed consolidated statements of income and comprehensive income.

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

We recorded $ 1.2 million in interest income for the three and six months ended June 30, 2026 , $ 2.9 million and $ 1.3 million in unrealized gain for the three and six months ended June 30, 2026, respectively, and $ 0.4 million and $ 0.6 million in unrealized gain for the three and six months ended June 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.

Equity Investment in Nanolive

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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.

As of June 30, 2026 , no Innoviva designee is serving on Nanolive’s six -member board.

As of June 30, 2026 and December 31, 2025 , we held 13.0 % of Nanolive equity ownership.

As of June 30, 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

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.

(“Lyndra”), which was then a clinical-stage company with a novel drug delivery platform that enables the administration of ultra-long-acting oral drugs.

In 2025, we received a $ 3.3 million partial repayment on the note, reducing the outstanding principal to $ 5.9 million.

As of June 30, 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.

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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.

As of June 30, 2026 and December 31, 2025, we held 5.4 % a nd 5.6 %, respectively, of equity ownership in Beacon.

As of June 30, 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

Purchases of equity and other long-term investments

Net sales and purchases of investments managed by ISP Fund

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Reclassification of current portion

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

Equity and long-term investments as of June 30, 2026

Available-for-Sale Securities

1 unchanged sentence

Available-for-sale securities are summarized below:

March 31, 2026

June 30, 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 March 31, 2026 and December 31, 2025 , all available-for-sale investments were money market funds, and there was no credit loss recognized.

As of June 30, 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 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:

Estimated Fair Value Measurements as of June 30, 2026 Using:

Types of Instruments

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Term loan investment - Armata August 2025 Term Loan

Term loan investment - Armata May 2026 Term Loan

Convertible debt investment - Armata Note

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Convertible debt investment - Syndeio 2021 Convertible Note

Convertible debt investment - Syndeio 2025 Convertible Note

Convertible debt investment - Lyndra Convertible Note

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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 March 31, 2026 and December 31, 2025 was $ 17.9 million .

The carrying amount of goodwill as of June 30, 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 March 31, 2026 and December 31, 2025 were as follows:

March 31, 2026

The carrying basis and accumulated amortization of recognized intangible assets as of June 30, 2026 and December 31, 2025 were as follows:

June 30, 2026

(In thousands)

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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.

We recognized amortization expense of $ 6.6 million and $ 13.2 million fo r the three and six months ended June 30, 2026, respectively, and $ 6.5 million and $ 13.0 million for the three and six months ended June 30, 2025, respectively.

Future amortization expense is expected to be $ 13.4 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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Total inventory

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.

As of June 30, 2026 and December 31, 2025, total inventory included net fair value adjustments resulting from the acquisition of La Jolla of approximatel y $ 1.4 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 $ 0.9 million and $ 2.0 million f or the three and six months ended June 30, 2026, respectively, and $ 0.4 million and $ 0.6 million for the three and six months ended June 30, 2025, respectively.

Other Accrued Liabilities

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Stock-Based Compensation

Equity Incentive Plan

In May 2026, our stockholders approved the 2026 Equity Incentive Plan (the “2026 Plan”).

The 2026 Plan provides for the grant of incentive stock options, nonstatutory stock options, RSAs, RSUs, Stock Appreciation Rights and other stock-based awards to employees, non-employee directors and consultants.

A total of 9,000,000 shares of our common stock are reserved for issuance under the 2026 Plan.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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Research and development

Valuation Assumptions

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 March 31,

Risk-free interest rate

4.1 % - 4.4 %

Expected term (in years)

33.5 % - 33.8 %

34.3 % - 34.9 %

Dividend yield

Weighted-average estimated fair value of stock options granted

$ 7.95 - $ 8.00

$ 7.17 - $ 7.92

Stockholders' Equity

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.

For the three months ended June 30, 2026, we repurchased 1,403,247 shares in the open market at an average price of $ 22.36 per share for a total amount of approximately $ 31.4 million.

For the six months ended June 30, 2026 , we repurchased 2,374,313 shares in the open market at an average price of $ 21.83 per share for a total amount of approximately $ 51.8 million.

From program inception through June 30, 2026 , we have repurchased Innoviva common stock in the open market for a total price of approximately $ 56.4 million.

Subsequent to June 30, 2026 , and through July 31, 2026, we have repurchased 453,798 shares in the open market for a total of approximately $ 10.0 million.

All repurchased shares were retired.

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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:

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

(In thousands)

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Six Months Ended

June 30, 2025

Contractual interest expense

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Net carrying amount

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,

The following table sets forth total interest expense recognized related to the 2028 Notes for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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Debt Maturities

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

The aggregate scheduled maturities of our convertible debt as of June 30, 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 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.

We recognized interest expense of $ 3.7 million and $ 7.4 million for the three and six months ended June 30, 2026, respectively, and $ 1.5 million and $ 3.1 million for the three and six months ended June 30, 2025, respectively.

The carrying value of the deferred royalty obligation as of June 30, 2026 and December 31, 2025 was $ 61.6 million and $ 62.2 million, respectively (refer to Note 8, “Balance Sheet Components”).

During the six months ended June 30, 2026 and 2025 , we made royalty payments to HCR of $ 7.6 million and $ 6.1 million, respectively.

The deferred royalty obligation was valued using Level 3 inputs, and its carrying value as of June 30, 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 ® .

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

As of June 30, 2026 , the annual effective interest rate of the deferred royalty obligation for the current period is 26.38 %.

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 not material and, therefore, not recognized as of March 31, 2026 and December 31, 2025 .

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 June 30, 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.

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The components of lease cost were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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Supplemental cash flow information related to leases was as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

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

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:

As of June 30, 2026, our operating leases have a weighted-average remainin g term of approximately 9.2 years and the weighted average discount rate on our operating lease liabilities was 5.3 %.

Future minimum payments on our operating leases as of June 30, 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 March 31, 2026 , we have approximately $ 7.1 million and $ 5.9 million U.S.

As of June 30, 2026 , we have approximately $ 4.4 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.

7 unchanged sentences

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 March 31, 2026 , we have no t 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 June 30, 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 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.

The fixed assets have not been placed in service and, therefore, no depreciation has been recognized as of June 30, 2026 .

We recorded income tax benefit of $ 24.6 million and income tax expense of $ 23.4 million for the three and six months ended June 30, 2026, respectively, and income tax expense of $ 8.9 million and $ 16.9 million for the three and six months ended June 30, 2025, respectively.

The Company’s effective income tax rate for the six months ended June 30, 2026 was 18.5 % co mpared to 49.7 % for the same period in 2025.

The income tax expense for the six months ended June 30, 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 six months ended June 30, 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.

12 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six Months Ended June 30,

(In thousands)

11 unchanged sentences

Other expense, net

Income tax expense, net

Income tax expense (benefit), net

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