Innoviva, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements The information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve substantial risks, uncertainties, and assumptions. All statements contained herein, other than statements of historical fact, including, without limitation, statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, intentions, expectations, goals and objectives may be forward‑looking statements. The words “anticipates,” “believes,” “could,” “designed,” “estimates,” “expects,” “goal,” “intends,” “may,” “objective,” “plans,” “projects,” “pursuing,” “will,” “would” and similar expressions (including the negatives thereof) are intended to identify forward‑looking statements, although not all forward‑looking statements contain these identifying words. We may not actually achieve the plans, intentions, expectations or objectives disclosed in our forward‑looking statements and the assumptions underlying our forward‑looking statements may prove incorrect. Therefore, you should not place undue reliance on our forward‑looking statements. Actual results or events could differ materially from the plans, intentions, expectations and objectives disclosed in the forward‑looking statements that we make. All written and verbal forward‑looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Important factors that we believe could cause actual results or events to differ materially from our forward‑looking statements include, but are not limited to, risks related to: lower than expected future royalty revenue from respiratory products partnered with GSK, the commercialization of RELVAR ® /BREO ® ELLIPTA ® , ANORO ® ELLIPTA ® , GIAPREZA ® , XACDURO ® , XERAVA ® , ZEVTERA ® and NUZOLVENCE ® in the jurisdictions in which these products have been approved; the strategies, plans and objectives of the Company (including the Company’s growth strategy and corporate development initiatives); the timing, manner, and amount of potential capital returns to shareholders; the status and timing of clinical studies, data analysis and communication of results; the potential benefits and mechanisms of action of product candidates; expectations for product candidates through development and commercialization; the timing of regulatory approval of product candidates; and projections of revenue, expenses and other financial items; the timing, manner and amount of capital deployment, including potential capital returns to stockholders; and risks related to the Company’s growth strategy and risks discussed in “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2026, and as amended on March 27, 2026 (“2025 Form 10-K”), and Item 1A of Part II of our Quarterly Reports on Form 10-Q and below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Item 2 of Part I. All forward-looking statements in this Quarterly Report on Form 10-Q are based on current expectations as of the date hereof and we do not assume any obligation to update any forward-looking statements on account of new information, future events or otherwise, except as required by law. We encourage you to read our unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. We also encourage you to read Item 1A of Part I of our 2025 Form 10-K and Item 1A of Part II of our Quarterly Reports on Form 10-Q entitled “Risk Factors,” which contain a more complete discussion of the risks and uncertainties associated with our business. In addition to the risks described above and in Item 1A of Part I of our 2025 Form 10-K and Item 1A of Part II of this report, other unknown or unpredictable factors also could affect our results. Therefore, the information in this report should be read together with other reports and documents that we file with the SEC from time to time, including on Form 10-K, Form 10-Q and Form 8-K, which may supplement, modify, supersede or update those risk factors. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. OVERVIEW Executive Summary Innoviva, Inc. (and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a diversified biopharmaceutical company with a core royalties portfolio, a leading critical care and infectious disease platform known as Innoviva Specialty Therapeutics (“IST”), and a portfolio of strategic investments in healthcare assets. 33 Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/vilanterol, “FF/VI”) and ANORO ® ELLIPTA ® (umeclidinium bromide/ vilanterol, “UMEC/VI”). Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® as follows: 15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion; and royalties from the sales of ANORO ® ELLIPTA ® , which tier upward at a range from 6.5% to 10%. Our wholly owned, critical care and infectious disease operating platform with a hospital focus, is anchored by 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 commercially launched in the third quarter of 2025; and • NUZOLVENCE® (formerly known as zoliflodacin), approved by the FDA on December 12, 2025, for the treatment of uncomplicated urogenital gonorrhea in adults and adolescents. In addition, we own other strategic healthcare assets, such as a significant stake in Armata Pharmaceuticals, Inc. (“Armata”), a leader in development of bacteriophages with potential use across a range of infectious and other serious diseases. We also have economic interests in other healthcare companies through our portfolio approach. Our disciplined focus on deploying capital in areas of significant unmet medical need with high value creation potential has driven a meaningful transformation of our company over the years from a pure-play royalty business to a diversified biopharmaceutical company with a strong, fast-growing, differentiated operating platform and multiple other assets with significant promise. We believe we are well-positioned to deliver significant long-term shareholder value. Our company structure and organization are tailored to our focused activities of managing our respiratory assets partnered with GSK, commercializing our marketed products, developing our product candidates, optimizing capital allocation, and providing for certain essential reporting and management functions of a public company. Second Quarter 2026 and Recent Highlights: Financial Highlights • Total revenue: $119.6 million, representing 19% year-on-year growth compared to $100.3 million for the second quarter 2025. • Royalty revenue: gross royalty revenue from GSK remains stable at $59.8 million in the second quarter of 2026, a 2% increase compared to $58.6 million in the first quarter of 2026. • Net product sales: $51.8 million ($36.6 million U.S. and $15.2 million ex-US), representing 46% growth compared to $35.5 million in the second quarter of 2025. U.S. net product sales primarily consisted of $21.0 million from GIAPREZA ® , $12.0 million from XACDURO ® , and $3.3 million from XERAVA ® . • Income from operations: $50.9 million, compared to $48.8 million for the second quarter 2025, reflecting higher net product sales and continued operating discipline. • Equity and long-term investments: net unfavorable changes in fair value of equity and long-term investments totaled $161.0 million, primarily attributable to a lower share price of Armata . Innoviva’s strategic healthcare investments were valued at $669.5 million as of June 30, 2026, and consisted of $457.7 million in Armata, $177.3 million in other strategic equity and convertible debt, and $34.5 million held by ISP Fund. 34 • Net income: net loss of $83.4 million, or $1.14 basic loss per share, driven primarily by decrease in fair value of equity and long-term investments. • Cash and cash equivalents: Totaled $570.4 million. Royalty and net product sales receivables totaled $110.6 million as of June 30, 2026, a 25% year-on-year increase compared to $88.3 million for the second quarter of 2025. Key Business and R&D Highlights • XACDURO ® (sulbactam for injection; durlobactam for injection) , co-packaged for intravenous use: a targeted antibacterial treatment for patients with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex. o During the second quarter, IST entered into an exclusive distribution and licensing agreement with Dr. Reddy’s Laboratories Ltd., a global pharmaceutical company, for the development and commercialization of XACDURO ® in South and Central America, the Caribbean, Russia and Commonwealth of Independent States countries. • Strategic Healthcare Assets o During the second quarter, Innoviva launched Nortiva Bio (a wholly owned subsidiary), to advance the proprietary LYNX ™ long-acting oral drug delivery platform. The LYNX platform is designed to transform daily oral medicines into less frequent dosing regimens, including once-weekly or once-monthly therapies. The platform is designed to improve patient adherence, stabilize drug exposure, and enhance clinical and commercial value by enabling less frequent oral dosing. o Nortiva is advancing a lead once-monthly oral drug therapy development program (via support from the Gates Foundation) and building an external partnering pipeline to enable the development of long-acting oral versions of branded and generic therapies. • Capital Allocation o During the second quarter of 2026, Innoviva repurchased 1,403,247 shares for $31.4 million under its $125 million share repurchase program. Since inception, and through the end of the second quarter, the Company has repurchased 2,602,168 shares for $56.4 million, reflecting the Company’s continued confidence in its intrinsic value and long-term outlook. o During the second quarter of 2026, Innoviva continued to support companies in its strategic healthcare asset portfolio with $55.0 million aggregate capital commitment. LABA Collaboration In November 2002, we entered into the LABA Collaboration Agreement with GSK to develop and commercialize once-daily LABA products for the treatment of chronic obstructive pulmonary disorder (“COPD”) and asthma (the “LABA Collaboration Agreement”). For the treatment of COPD, the collaboration has developed the following combination products: • RELVAR ® /BREO ® ELLIPTA ® (“FF/VI”) (BREO ® ELLIPTA ® is the proprietary name in the U.S. and Canada and RELVAR ® ELLIPTA ® is the proprietary name outside the U.S. and Canada), a once-daily combination medicine consisting of a LABA, vilanterol (VI), and an inhaled corticosteroid (“ICS”), fluticasone furoate (“FF”), and • ANORO ® ELLIPTA ® (“UMEC/VI”), a once-daily medicine combining a long-acting muscarinic antagonist (“LAMA”), umeclidinium bromide (“UMEC”), with a LABA, vilanterol (VI). 35 As a result of the launch and approval of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® in the U.S., Japan and Europe, in accordance with the LABA Collaboration Agreement, we paid milestone fees to GSK totaling $220.0 million during the year ended December 31, 2014. Although we have no further milestone payment obligations to GSK pursuant to the LABA Collaboration Agreement, we continue to have ongoing commercialization activities under the LABA Collaboration Agreement, including participation in the joint steering committee that are expected to continue over the life of the agreement. The milestone fees paid to GSK were recognized as capitalized fees, which are being amortized over their estimated useful lives commencing upon the commercial launch of the products. We are entitled to receive royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® as follows: 15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion. On sales of ANORO ® ELLIPTA ® , royalties are upward tiering and range from 6.5% to 10%. Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no significant changes in our critical accounting policies as described in the Form 10-K for the year ended December 31, 2025 filed with the SEC on February 25, 2026, and as amended on March 27, 2026. Results of Operations Net Revenue Royalty Revenue Total royalty revenue, net, as compared to the prior year period, was as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Royalties - RELVAR ® /BREO ® $ 47,655 $ 54,737 $ (7,082 ) (13 )% $ 94,931 $ 105,627 $ (10,696 ) (10 )% Royalties - ANORO ® 12,135 12,599 (464 ) (4 )% 23,482 22,972 510 2 % Total royalties 59,790 67,336 (7,546 ) (11 )% 118,413 128,599 (10,186 ) (8 )% Less: amortization of capitalized fees paid (3,456 ) (3,456 ) — * (6,912 ) (6,912 ) — * Total royalty revenue, net $ 56,334 $ 63,880 $ (7,546 ) (12 )% $ 111,501 $ 121,687 $ (10,186 ) (8 )% * Not Meaningful Total net royalty revenue decreased to $56.3 million and $111.5 million for the three and six months ended June 30, 2026, compared to $63.9 million and $121.7 million for the same periods a year ago. The decrease in total net royalty revenue was primarily due to lower net sales driven by pricing pressures in the United States. 36 Net Product Sales Total product sales, net, as compared to prior year period, were as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % U.S. GIAPREZA ® $ 21,004 $ 16,988 $ 4,016 24 % $ 40,735 $ 34,367 $ 6,368 19 % XACDURO ® 11,964 8,507 3,457 41 % 23,534 14,322 9,212 64 % XERAVA ® 3,265 3,129 136 4 % 5,720 6,363 (643 ) (10 )% ZEVTERA ® 351 339 12 * 789 339 450 133 % Total U.S. 36,584 28,963 7,621 26 % 70,778 55,391 15,387 28 % Rest of the world GIAPREZA ® 1,295 341 954 280 % 1,795 1,235 560 45 % XACDURO ® 10,418 2,224 8,194 368 % 16,922 4,192 12,730 304 % XERAVA ® 3,474 3,965 (491 ) (12 )% 3,647 4,954 (1,307 ) (26 )% Total rest of the world 15,187 6,530 8,657 133 % 22,364 10,381 11,983 115 % Total net product sales $ 51,771 $ 35,493 $ 16,278 46 % $ 93,142 $ 65,772 $ 27,370 42 % * Not Meaningful Our net product sales increased overall during the periods presented, driven by higher sales volume resulting from our strategic commercialization efforts and dedication to delivering our critical care products to healthcare systems. The increase in XACDURO ® ex-U.S. product sales is attributable mainly to product sales under an interim supply agreement with Zai Lab, which is billed at cost. License and Other Revenue License and other revenue, as compared to the prior year period, was as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % License and other revenue $ 11,486 $ 910 $ 10,576 * $ 12,942 $ 1,456 $ 11,486 * * Not Meaningful License and other revenue for the three and six months ended June 30, 2026 was derived primarily from our ongoing arrangements with Zai Lab and new agreements with GARDP and DRL as discussed in Note 4, “License, Collaboration and Other Arrangements”, to the Condensed Consolidated Financial Statements. Cost of Products Sold Cost of products sold, as compared to the prior year period, was as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Cost of products sold $ 22,349 $ 10,590 $ 11,759 111 % $ 37,956 $ 19,432 $ 18,524 95 % The cost of products sold also includes the inventory step-up value from the acquisition of La Jolla, which is recorded upon the sale of such inventory. The step-up value included above amounted to $0.9 million and $2.0 million for 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. Our cost of products sold increased during the three and six months ended June 30, 2026, driven by higher product sales volume. As of June 30, 2026, our total inventory included the remaining net fair value adjustments resulting from the acquisition of La Jolla of approximately $1.4 million, which will be recognized as cost of products sold when sales occur in future periods. 37 Research and Development Research and development expenses, as compared to the prior year period, were as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Compensation and related personnel costs $ 2,072 $ 1,179 $ 893 76 % $ 4,147 $ 2,483 $ 1,664 67 % External services 2,463 6,782 (4,319 ) (64 )% 5,069 9,833 (4,764 ) (48 )% Facilities related 596 (28 ) 624 * 1,102 (20 ) 1,122 * Other 59 50 9 18 % 113 83 30 36 % Total research and development expense $ 5,190 $ 7,983 $ (2,793 ) (35 )% $ 10,431 $ 12,379 $ (1,948 ) (16 )% * Not Meaningful Research and development expenses for the three and six months ended June 30, 2026 were $5.2 million and $10.4 million, respectively. The expenses for the current period include additional personnel and facilities costs in support of the acquired IPR&D as discussed in Note 13, “Asset Acquisition”, in the Condensed Consolidated Financial Statements. Research and development expenses for the three and six months ended June 30, 2025, which consisted primarily of the continued advancement of zoliflodacin, approved by the FDA in December 2025, were $8.0 million and $12.4 million, respectively. Selling, General & Administrative Selling, general and administrative expenses, as compared to the prior year period, were as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Selling, general and administrative $ 34,571 $ 26,412 $ 8,159 31 % $ 67,009 $ 53,903 $ 13,106 24 % Our selling, general and administrative expenses increased for the three and six months ended June 30, 2026, compared to the corresponding periods in 2025. The increase during the current period was primarily attributable to our ongoing efforts to expand our sales force to meet demand in new regions, promote our marketed critical care products and drive revenue, maintain regulatory compliance, and support essential administrative functions for general operations. Interest and Dividend Income and Other Expense, Net Interest and dividend income and other expense, net, as compared to the prior year period, was as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Interest and dividend income $ 7,599 $ 4,925 $ 2,674 54 % $ 18,586 $ 9,463 $ 9,123 96 % Other expense, net $ (15 ) $ (777 ) $ 762 (98 )% $ (381 ) $ (1,773 ) $ 1,392 (79 )% Interest and dividend income increased for the three and six months ended June 30, 2026, compared to the same period in 2025, due to higher average balances of our cash equivalents, money market funds and other interest-bearing investments. Other expense, net, was primarily expenses incurred by ISP Fund LP. 38 Interest Expense Interest expense, as compared to the prior year period, was as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Interest expense $ (5,472 ) $ (4,663 ) $ (809 ) 17 % $ (10,909 ) $ (9,374 ) $ (1,535 ) 16 % Our interest expense for the three and six months ended June 30, 2026 and 2025 comprised mainly of the contractual interest expense and the amortization of debt issuance costs for our 2028 Notes, as well as effective interest expense on our deferred royalty obligation related to GIAPREZA ® . The increase for the three and six months ended June 30, 2026, compared to the same period in 2025, was mainly due to higher interest expense on our deferred royalty obligation as a result of higher sales performance of GIAPREZA ® . Changes in Fair Values of Equity Method Investments and Equity and Long-Term Investments Changes in fair values of equity and long-term investments, as compared to the prior year periods, were as follows: Three Months Ended June 30, Change Six Months Ended June 30, Change (In thousands) 2026 2025 $ % 2026 2025 $ % Changes in fair values of equity method investments, net $ (131,834 ) $ 13,082 $ (144,916 ) * $ 25,816 $ (467 ) $ 26,283 * Changes in fair values of equity and long-term investments, net $ (29,153 ) $ 11,280 $ (40,433 ) (358 )% $ 4,422 $ (54,019 ) $ 58,441 (108 )% * Not Meaningful The changes in fair values of equity method investments for the three and six months ended June 30, 2026 were driven by fluctuations in Armata’s stock price during the reporting periods. We recorded $131.8 million in unrealized loss and $25.8 million in unrealized gain for the three and six months ended June 30, 2026, respectively, compared to $13.1 million in unrealized gain and $0.5 million in unrealized loss for the three and six months ended June 30, 2025, respectively. The changes in fair values of other equity and long-term investments primarily reflected the net realized gains and losses and net unrealized gains and losses in our strategic investments in Armata, Syndeio, Lyndra and those investments managed by ISP Fund LP. We recorded $38.8 million in net negative changes in fair values of equity and long-term investments for the three months ended June 30, 2026 and $8.9 million in net positive changes in fair values of equity and long-term investments for the six months ended June 30, 2026, respectively, related to other long-term investments we made in Armata. We recorded net positive changes in fair value of our investments in Syndeio of $6.6 million and net negative changes of $7.2 million for the three and six months ended June 30, 2026, respectively. We recorded $3.0 million and $2.7 million in net positive changes in fair values of equity and long-term investments related to the investments managed by ISP Fund LP for the three and six months ended June 30, 2026, respectively. Provision for Income Taxes 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, compared to income tax expense of $8.9 million and $16.9 million for the three and six months ended June 30, 2025, respectively. The effective income tax rate for the six months ended June 30, 2026 and 2025 was 18.5% and 49.7%, respectively. 39 Liquidity and Capital Resources Liquidity Since our inception, we have financed our operations primarily through private placements and public offerings of equity and debt securities and payments received under collaborative arrangements. For the six months ended June 30, 2026, we generated gross royalty revenues from GSK of $118.4 million, net product sales of $93.1 million and license and other revenue of $12.9 million. Cash and cash equivalents totaled $570.4 million, royalties receivable from GSK totaled $59.8 million and accounts receivable associated with our product sales and license and other revenue totaled $50.8 million as of June 30, 2026. As of June 30, 2026, we had one outstanding convertible note, the 2028 Notes, in an aggregate principal amount of $261.0 million, which will become due in March 2028. Future interest payments associated with this note total $13.9 million. On November 3, 2025, our Board of Directors authorized a share repurchase program under which we may repurchase up to $125.0 million of Innoviva’s outstanding shares of common stock. From program inception through June 30, 2026, we have repurchased Innoviva common stock in the open market for total price of approximately $56.4 million. This program has no termination date, may be suspended or discontinued at any time at our discretion and does not oblige us to acquire any amount of common stock. In 2024, we elected to unwind our capital accounts in ISP Fund LP. During the current year, we received $47.5 million cash distributions and expect to receive the remaining investments in 2026. Adequacy of Cash Resources to Meet Future Needs We believe that our cash and cash equivalents will be sufficient to meet our anticipated debt service and operating needs, as well as our ongoing share repurchase program, for at least the next 12 months based upon current operating plans and financial forecasts. Our long-term capital requirements will depend on many factors including the amount of our royalty revenues, sales growth of our currently marketed products, timing of regulatory approval of our product candidates and outcome of our acquisitions and strategic investments. If our current operating plans and financial forecasts change, we may require additional funding sooner in the form of public or private equity offerings or debt financings. Furthermore, if in our view favorable financing opportunities arise, we may seek additional funding in the form of public or private equity offerings or debt financings at any time. However, future financing may not be available in amounts or on terms acceptable to us, if at all. This could leave us without adequate financial resources to fund our operations as currently planned. In addition, from time to time we may restructure or reduce our debt, including through privately negotiated repurchases, tender offers, redemptions, amendments, or otherwise, all allowable with the terms of our debt agreements. Cash Flows Cash flows, as compared to the prior year period, were as follows: Six Months Ended June 30, (In thousands) 2026 2025 Change Net cash provided by operating activities $ 87,254 $ 92,690 $ (5,436 ) Net cash used in investing activities $ (18,256 ) $ (1,552 ) $ (16,704 ) Net cash provided by (used in) financing activities $ (49,551 ) $ 1,430 $ (50,981 ) Cash Flows from Operating Activities Net cash provided by operating activities for the six months ended June 30, 2026 was $87.3 million, consisting primarily of our net income of $103.2 million, adjusted for net non-cash items, which included $4.9 million of deferred income taxes, $13.2 million of amortization of acquired intangible assets, $7.0 million of amortization of capitalized fees and depreciation of property and equipment, $7.3 million of stock-based compensation and $2.0 million of inventory fair value step-up adjustments, offset by $30.2 million in net changes in fair value of our investments and $22.1 million in net changes in operating assets and liabilities. Net cash provided by operating activities for the six months ended June 30, 2025 was $92.7 million, consisting primarily of our net income of $17.1 million, adjusted for net non-cash items, which included $54.5 million in changes in fair value of our investments, $13.0 million of amortization of acquired intangible assets, $7.0 million of amortization of 40 capitalized fees and depreciation of property and equipment, $4.6 million of stock-based compensation and $1.1 million in amortization of debt discount and issuance costs, partially offset by $4.7 million in net changes in operating assets and liabilities. Cash Flows from Investing Activities Net cash used in investing activities for the six months ended June 30, 2026 of $18.3 million primarily consisted of $65.0 million in purchases of trading securities and other equity investments, $3.3 million in purchases of equity investments managed by ISP Fund LP and $0.9 million in purchases of property and equipment, partially offset by $44.1 million in sales of equity investments managed by ISP Fund LP, and $6.7 million in net purchases and sales of other investments managed by ISP Fund LP. Net cash used in investing activities for the six months ended June 30, 2025 of $1.6 million primarily consisted of $34.7 million in purchases of trading securities, partially offset by $28.0 million in sales of equity investments and net purchases and sales of other investments managed by ISP Fund LP and $5.1 million in proceeds from trading securities. Cash Flows from Financing Activities Net cash used in financing activities for the six months ended June 30, 2026 of $49.6 million was primarily due to $51.3 million in repurchases of our common stock under the ongoing stock repurchase program, partially offset by net proceeds of $2.0 million from issuances of common stock. Net cash provided by financing activities for the six months ended June 30, 2025 of $1.4 million was primarily due to net proceeds from issuances of common stock, partially offset by the repurchase of shares to satisfy tax withholding. Contractual Obligations As of June 30, 2026, our notes payable obligation comprised of $261.0 million related to our 2028 Notes, which are due in 2028. Under the terms of the 2028 Notes, we make interest payments of 2.125% of outstanding principal. Refer to Note 11, “Debt” to the Condensed Consolidated Financial Statements for more information. Our short-term and long-term obligations also include contractual payments related to our operating leases amounting to $14.5 million, with approximately $0.6 million payable through December 31, 2026, amounts ranging between $1.2 million and $1.5 million payable in each of the years 2027 to 2030, and $8.5 million payable thereafter. Refer to Note 12, “Commitments and Contingencies” to the Condensed Consolidated Financial Statements for more information. As part of our acquisition of La Jolla, we recognized its deferred royalty obligation in connection with the La Jolla Royalty Agreement with HCR. Under the terms of the Agreement, HCR is entitled to receive quarterly royalties on worldwide net sales of GIAPREZA ® until either January 1, 2031 or when the maximum aggregate royalty payments have been made, whichever occurs first. Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The maximum royalty rate is 18% based on the terms of the agreement. The La Jolla Royalty Agreement is subject to maximum aggregate royalty payments to HCR of $225.0 million. Additionally, we have certain contingent payment obligations under various in-license agreements which we are required to make royalty payments or milestone payments upon successful completion and achievement of certain milestones. Refer to Note 4, “License, Collaboration and Other Arrangements” to the Condensed Consolidated Financial Statements for more information. We also entered into a Commercial Supply Agreement with Corden Pharma CHENÔVE SAS (“Corden”), under which we engaged Corden to manufacture and supply certain products related to XACDURO ® and to perform certain services and studies. Under the agreement, we committed to minimum purchases through December 31, 2027. As of June 30, 2026, we have approximately $10.3 million U.S. dollar equivalent in outstanding purchase commitments under the agreement. We also enter into other agreements in the normal course of business with vendors for commercial, manufacturing, clinical trials and preclinical studies, and other services and products for operating purposes. 41